Transcript: Alphatec Holdings Q1 2026 Earnings Conference Call

Alphatec Holdings (NASDAQ:ATEC) reported first-quarter financial results on Tuesday. The transcript from the company's first-quarter earnings call has been provided below.

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Summary

Alphatec Holdings reported a 14% overall revenue growth and 17% surgical revenue growth, with improvements in profitability and balance sheet enhancements.

The company adjusted its guidance to reflect current expectations, expecting at least $20 million in free cash flow for the year, despite a near-zero expectation for Q2.

The strategic focus remains on clinical distinction, surgeon adoption, and sales force scaling, with emphasis on procedural approaches that improve surgery outcomes.

EOS installations faced timing challenges, but the company is confident in its long-term strategic value, enabling access to key institutions and driving a 30% revenue lift per surgeon after Insight adoption.

The company is optimistic about its future outlook, maintaining its full-year growth guidance backed by strong surgeon adoption and international business contributions, despite short-term execution issues with EOS.

Full Transcript

Todd

Approximately 35% drop through on the incremental revenue dollar year-over-year for free cash flow,. We continue to expect at least 20 million in free cash flow for the full year. With the second quarter expectations for free cash flow, to approximate zero. We recognize that adjusting our guidance is a significant decision and we believe that the updated guidance appropriately reflects our current outlook as we remain laser-focused on delivering the profitable sales growth implied in our 2026 guidelines. To put our first quarter financial performance in perspective, we drove 14% overall revenue growth, and 17% surgical revenue growth at an annualized scale of approximately $800 million with strong operating leverage, translating into significant profitability expansion while making material improvements to our balance sheet. While the quarter didn't live up to our growth expectations, we are confident in our ability to continue to grow at multiples in the market, translating that into profitability and cash flow. With that, I'll turn the call back to Pat.

Pat

Thanks Todd. Our strategy hasn't changed because we know it works. We start with clinical distinction. If it doesn't matter in the OR, it doesn't matter. But if it makes surgery better in the OR, it matters to us greatly. This is how we have built the best procedural approaches in our industry. Second is surgeon adoption,. We don't sell products. We develop approaches that improve surgery, elevate workflows, and build trust. We know this philosophy is effective because our surgeon demand remains very high. Third is a sales engine. We're continually assembling and improving upon a sales force that is disciplined, aligned and energized and built to scale. Put that together and it's very straightforward. Do something clinically meaningful. Surgeons adopt and we scale it. We're not focused on widgets, or, as we like to say, the currency of our business.. We assemble procedures from the ground up. Everything you see here is designed to work together. That's what has driven and will continue to drive our model. We don't sell one thing, be it a screw, a plate, an implant or a rod. We offer procedural approaches that make surgery better, and better procedures over time lead to expanded indications, greater complexity and increased revenue. While we call that a convoyed sales effect, it's really just a result of designing procedures the right way, leading to better patient outcomes. We start in lateral for a reason, because it is where we have the greatest collection of know how and how we most distinguish. The surgery works. It's reproducible, efficient, and surgeons feel comfortable with it very quickly. I was in a case Last Friday, an L4,5 spondy, 15 minutes in disc height was restored in under an hour. The case was done with minimal blood loss and morbidity. That same case used to take four hours. And it was a very different experience. Far less reproducible for the surgeon, far less predictable for the patient. PTP has profoundly improved surgery for both surgeon and patient. That's what creates confidence. And once surgeons experience reproducible success in lateral, they don't stay with just that procedure. They expand their utility into cervical T lift, posterior fixation, all things across the board. Our growth isn't dependent on just adding incremental surgeons. It's expanding indications for procedures they adopt and moving them to other approaches, which is what happens after they trust you. That's what the model is really about and that's how it compounds. EOS continues to be a big deal for us.. And while installation timing was a challenge in the quarter, the EOS experience is playing out exactly as we expected. First, EOS edge gets us in the door with leading institutions that were hard to impossible for us to access previously. Places like Duke, nyu, hss, Northwestern, University of Virginia, University of Maryland, just to name a few. Then EOS becomes part of the workflow. Pre surgical planning, interoperative reconciliation and follow up. Then it starts driving the case volume, insight, patient specific rods alignment. And over time it builds something more valuable than any one product. It's data generation that's the moat.. We're already seeing EOs impact about 30% revenue lift per surgeon after Insight adoption. So EOS isn't just additive, it's multiplicative. What's happening with Insight right now is important. We're moving from imaging to intelligence, 3D alignment,, patient specific planning, starting to predict outcomes, not just react to them. And every case makes the system better. That's how this compounds. We are creating a true structured data advantage. At the core of this is our ability to take EOS imaging and convert it into quantitative, actionable intelligence,. It's becoming smarter, more predictive and more embedded into clinical decision making. That's how you build clinical distinction. This is where owning the image and translating into data matters. Valence is early,, but it's doing exactly what we needed to do. It fits seamlessly into the surgical workflow. It doesn't get in the way. The footprint is very small. It actually makes the case cleaner. And that's everything. If it disrupts the surgeon's workflow, it doesn't get used. We're seeing strong utility, positive surgeon feedback and real usage and the same pattern we've seen before. It works. Surgeons trust it, it grows. That's how this is playing out. Japan looks very familiar in a good way. We're leading with lateral, building early confidence and seeing surgeons engage. I have seen it firsthand. I was in the OR a couple of weeks ago and the surgery was methodical, predictable and reproducible. This is the same pattern they adopt. They do more, they expand. It's early, but it's exactly what we wanted to see. In closing, when I think about a tech, it's pretty straightforward,. We're focused 100% in spine. We built real leadership in lateral. We're doing the same thing in deformity with eos. And we put the infrastructure in place to scale. Most importantly, we're growing and becoming more profitable at the same time. We've established a system and ecosystem that builds upon itself. Last point. Why people are coming here, surgeons and reps, because we care about what they care about. We don't push widgets. We give them procedures and increasingly information that improves predictability and patient outcomes, that drives surgeon interest and adoption, leading to more cases that in turn attracts sales agents and builds careers. And that's why ATEC, is the preferred destination in spine. With that, we will take questions.

Operator

As a reminder, sell side analysts planning to ask a question must be registered through the dedicated analyst link included in today's materials. If you have not yet registered, please do so now to be included in the Q and A queue. If you would like to ask a question, please press star, 1 to raise your hand. To withdraw your question, press star, 1 again. We will now open the floor up for questions in consideration of others, please limit yourself to one question. Our first question comes from the line of Matthew Blackman with TD Cowan. Your line is open. Please go ahead.

Matthew Blackman (Equity Analyst)

Good afternoon, everybody. Can you hear me okay, We can hear you. Yep.

Operator

You guys hear me okay? Yep. Go ahead, Matthew.

Matthew Blackman (Equity Analyst)

Thank you. Thank you. So I guess this is not really a fair question, but I do need to ask it in the context of the LRP guidance. 2027 feel confident, comfortable today reaffirming that billion dollar revenue number. Obviously all the other pieces feel like they're in a good place, but the billion dollar top line, particularly in the context of, you know, I think consensus is at about 4 or 5% higher than that. Just any thoughts on that 2027 LRP number where consensus is relative to how things shook out here in the first quarter and relative to the new guide, just the big step up that's implied to get to that 2027 number, particularly that consensus number. I'll leave it at that. That's my one question. Thank you.

Operator

A reminder to unmute yourself locally. Matt, can you hear us? Matt, can you hear us?

Matthew Blackman (Equity Analyst)

I can hear you now.

Operator

Could you repeat your question for us please?

Matthew Blackman (Equity Analyst)

Sure. My one question was actually in regards to the 2027 LRP, aside from all the margins sort of metrics which are all tracking above plan, you know the revenue target, a billion dollars, you know, more, so just looking at in the context of where consensus is, which is about 4 to 5% higher than that with the new guidance here for 2027, it's a pretty big incremental revenue step up to get to that number. Just your level of comfort here sitting today with that LRP revenue number for 2027. And Chief sent you willing to comment on where consensus is sitting for 2027. Just given some of these puts and takes that you're absorbing here early here in 2027. Thank you so much. Can you guys hear me? Anyone?

Todd

Matt. All right, let me give a shot here answering your question. So Hank, your question ultimately is, given the fact that we've adjusted our guidance to reflect our current expectations around our EOS number, I would tell you that the guide in terms of where we are on EOS and the adjustment that we've made is really to reflect some very near term execution issues that we believe that we've addressed through adding incremental sales talent and downstream marketing resources to the organization. And so we fundamentally believe that that's going to just address the issues that we have. And I think the guidance would suggest that as ultimately we believe that we've addressed the foundational issues that are execution related. So as we would expect to exit this year more in line with what our original guide would have assumed and therefore believe that we are on track to accomplish the goals that we laid out in the context of our long range plan.

Matthew Blackman (Equity Analyst)

Okay, I'll leave it at that. I'll get back in queue.

Operator

Our next question comes from the line of Alan Gong with JP Morgan. Your line is open. Please go ahead.

Alan Gong (Equity Analyst)

Thanks for the question. Mine is kind of on the forward trajectory and specifically the pricing per case headwind, that you saw this quarter. It was good to see volume stick back up to 20% plus. But it sounds like that price per case headwind, could be sticking around especially as cervical and some of your faster growing businesses sound like they're going to continue to put pressure onto that. Is that the right way to think about it going forward? That maybe for this year we should be forecasting continued revenue per case headwinds offset by volume growth?

Todd

Yeah, Alan, I think that our guidance implies kind of, high teens volume growth with kind of, flattish revenue per procedure growth or essentially no growth on the revenue per procedure. And your commentary and your understanding, I think is correct in the sense that as I called out in my prepared comments, our revenue per procedure growth or the score of the decline this quarter was really a function of mix attributed to both strong cervical procedures because cervical procedures have a lower revenue per procedure contribution as well as a strong performance in our international business, which does currently have a lower revenue per procedure profile as well. And then the third piece is a little bit more execution related associated with our biologics attachment rate. And so again there we believe that we've got some upcoming product launches and improvements in our execution, associated with that part of the business as well. And so as we think about how to, how to model our revenue per procedure for the balance of the year, we're thinking about that to be flat on a year over year basis.

Pat

I would just add, you know, if you look at the places where we make investments, we get a response. And if you look across lateral, it grew, ASB grew. It was reflective of exactly what we intended from the build perspective. And so to me it's frustrating to see the mix impact the overall. But where we're investing and where we're distinguishing ourselves, I think we're prospering.

Todd

Yeah, I think that's a good point, Pat. In the context of the prepared remarks, we said lateral grew 2%, revenue per procedure, ALIF grew 4%, and ultimately cervical grew 8%. We've made significant investments in those areas.

Alan Gong (Equity Analyst)

Right, got it. And then I guess a question on, you know, your ability to reiterate adjusted ebitda. It's definitely good to see you able to, you know, kind of keep cost under control. But, you know, seems as though, you know, there are some areas where you potentially may need to increase investment, you know, such as what you had talked, but for EOS Insight. So how should we think about, you know, balancing potential need for increased investment and you know, driving revenue growth? How do you kind of balance those two things? Where are your priorities? Thank you.

Todd

Yeah, you know, I think it's, it's, it's an interesting question. And you know, one of the things that I feel great about is, is the infrastructure is in place and you know what's, what's interesting is when you grow 39% year over year in EOS Edge base,, just the opportunity for you to exploit that base is very evident.. What's maddening about this business is the installation elements. And what happens is there's always a build out with regard to installation. So it makes some of the installation choppy which the revenue rec reflects the installation. And so I don't see it as an investment requirement for us to grow. You know we're growing 30% by surgeon in accounts that have EOS. The thesis is totally intact. And that's like to me I'm thrilled about the reflection of the demand profile around those places where we have systems installed and we have the EOS Insight software installed. And so to me this is, this is just you know the, the quarter by quarter dynamics of, of a long term execution. And so I'm, I'm totally thrilled about the EOS business in general. Irritated by the lumpiness, but don't see a some new investment profile required at all.

Operator

Okay, our next question comes from the line of Matt Mixick with Barclays. Your line is open. Please go ahead.

Matt Mixick (Equity Analyst)

Hey, can you hear me okay?

Pat

Yeah, we can hear you. Excellent. Thank you. So I know this call seems to be moving a little bit, a little bit slow here with the audio thing. So I'll try to keep this tight. And to one maybe just obviously the numbers in surgical putting aside for a second, came in a little bit later than expected. Know we didn't hear or see anything in the quarter that would suggest there was kind of anything quote like wrong with time or anything tripping up companies in. Fine. You know, can you maybe talk a little bit about if there was some phasing in Q1,, if there was some, I don't know, new territories catching up, difficult comps like regional. I don't know if there was storms. Not many companies have said much about storms but, but was that a fact? Was there anything that you'd say, you know what this really embedded if you know this any kind of color and maybe confidence of sequential performance either sequentially, acceleration sequentially, anything you can help us understand about the sequence from here to get to your new full year number. And thanks so much. Yeah Matt, I'll start with just a little bit of color and then let Todd jump in. But, but you know I, I would say you know the, the most comforting part is that the momentum reflected in the business where we most distinguish, continues to be profoundly robust. And so that, that's, that's the Part that, that I think we find most comforting. And you know, the clearly the surgeon additions up over 20%. It speaks to a business in demand. And so it was kind of a goofy quarter. I'll let Todd provide his view. But it's like we're seeing strength right out of the gate in Q2. And so to me, this is quarter by quarter lumpiness.

Todd

Matt, maybe just to put a little bit more finer point on that or add to that, you know, I think your question about like the Q1 in total, I mean, clearly there's been some, there was some weather in kind of late January. You know, I think FedEx was restrained for almost an entire week. I think the Northeast had two, two storms. Now there's weather every year. So how much of that is. Is discrete impact here? Probably some amount given the fact I think there was more weather this year than historically is, is normal. So I think there's that consideration. You know, I think the, the question of really just, you know, at the end of the day where we, we exited March was probably a bit softer than we had expected it to end. And you know, I think we attribute that to just some of the growth that we didn't see in our traditional posterior kind of open procedures, and, and some bio attachment along with that. I think to Pat's point though, the good news is you started to see definitely a sequential improvement in April, which ultimately gives us confidence as we grow into the second quarter and the seasonality we see from Q1 to Q2. And so I think it's important to kind of keep in context that historically the seasonality between kind of April and March and all of that's a little bit hard to predict. And so fundamentally I think we believe that we're in a good spot relative to our guidance and our guidance philosophy hasn't changed. And so, you know, I think the other thing, just more structurally going from Q1 to Q2, you obviously have the deformity season that comes up starts in kind of late May and into June. And so that will ultimately drive some improvement there. When you think about our overall demand profile and the investment we've made in sets and inventory to support that increased demand that's there. And you know, again, I think we take a step back and we look at the overall volume growth and the surge in adoption and that is really what gives us a level of confidence that, you know, we're in the same spot relative to where we expected to be coming into the year on a full year growth basis expectation. And so, you Know, I think we ultimately hang our hat on the strong surgeon adoption and the volumetric components of the business.

Matt Mixick (Equity Analyst)

So history, utilization, maybe just one. I don't know if you can still hear me, but just, you know, I noticed that surgeon vaccine was up year over year. I mean, it is obviously up 22%, but it's faster than a year ago. Surgeon adoption, growth and anything just on the same thematic question of like acceleration of trends or momentum and is that how much of a leading indicator is that? Is the fact that it's growing faster now? What would you attribute that to? And does that tell us anything about what to expect in the coming quarters as well? The fact that that's I guess, accelerating instead of slowing. And thanks again for taking the.

Pat

Yeah, you know, my, again, my general sense is the volume of people adopting our lateral portfolio is growing and is growing at an expedient rate,. And so, you know, the frustrating part is, I think to Todd's point is it's like, you know, you see the growth profile, you see the price surgery with regard to the lateral contribution. And then the stuff where I think is more conventional, I would say short segment surgery that's open, that is like everybody else's, just seemed flat. And then the biologic impact I think was bad, therapeutic can't come fast enough. And so it's one of those things where it's like, again, I think the procedural strategy has been well adopted. I think the EO stuff is working as planned, the clearly distinguishing and lateral. But, you know, when we're not profoundly different than somebody else, we don't do profoundly better than everybody else.

Todd

I think the only thing I'd add there, Matt, would just be the continuing growing contribution from our international business,. I think that, that both is a surgeon adoption story as well as a revenue contributor, and a growing revenue contributor, as we grow through the rest of the year.

Pat

And the beauty of that thing is it's completely reflective of the lateral thesis that the company's been built on. And we're seeing the same type of adoption dynamics happen internationally. So to me, that's a great reflection.

Operator

Our next question comes from the line of Matthew o' Brien with Piper Sandler. Your line is open. Please go ahead.

Amil

Good afternoon, this is Amil. I'm forgot. Thanks for taking our question. I wanted to ask on sort of the cadence for the rest of the year. You know, it sounds like the majority of work has been done here in terms of realigning the sales team for eos. You know, new reps coming on board, some investment and additional marketing resources. So I presume it'll take some time for these new reps to ramp though. So just as we look at the cadence for the rest of the year, you know, when would you anticipate things in the EOS franchise getting back on track for foreseeable future?

Todd

Yeah, this is Todd. I think our expectation is that begins to contribute in a more full capacity in the second half. And so that's really how we're thinking about it. We think the overall growth in the second quarter should be similar to our first quarter results at about 14%. Then I think our guide implies essentially 17% overall revenue growth in the second half as EOS contributes more meaningfully..

Pat

You know, just to make sure that I appreciate the question too. It's like, you know, the cadence of adding surgical sales rep has been totally consistent and they're coming from all players. And so, you know, what you're getting is just the consistency of the reflection of attracting more salespeople. So that that's going on as it has in the same cadence and is not slowed at all. And so, you know,, that, that part I think is, is just, is just continuing. If, if anything, really the focal part of the, the frustration is around EOS placements. And the dynamic is, is we got to continue to improve as a capital equipment provider. But you know, when you miss by three units or whatever, whatever five units, like in the grand scheme of thing, what it doesn't do is impede the belief in being, or what's going on in the field. And what's going on in the field is the absolute expansion of the utility of the device once we get in place.

Operator

Our next question comes from the line of David Saxon with nida. Your line is open. Please go ahead.

David Saxon (Equity Analyst)

Yeah, great. Good afternoon. Thanks for taking my question. Maybe to start, I just want to clarify, Todd, the comment you just made about second quarter, you said something about 14. Can you clarify? Is that 14 million for EOS for the second quarter or 14% overall growth for the second quarter?

Todd

My commentary, David, was that we would expect the overall growth to mirror first quarter's overall growth at 14%.

David Saxon (Equity Analyst)

Okay, great. And then my, my one question is just on the follow up on the, the revenue per case assumption in the guidance. So like specifically what's embedded in that in terms of how us case mix trends over the balance of the year and biologics attachment rate, really just, trying to understand if cervical mix continues to be strong and you know, no change to the biologics attachment rate, kind of, what's the risk to the flat revenue per revenue per case assumption. Thanks so much.

Todd

Yeah David, I think the idea here is that we would continue to see a relative contribution of cervical to the overall business as we've seen the strength of its growth over the last really number of quarters that that business continues to grow and we continue to to drive adoption through that procedural mix. You know we saw about 38% biologics attachment rate. We would expect that to go up a couple points. You know I think things that would make sense there why we believe that is one I just a greater salesforce execution and focus on that front as well as the fact that you enter deformity season and those deformity season cases tend to be longer, longer constructs,. So one you get just more revenue per case on average, from that. Plus they tend to have a higher utilization of biologics as well. And so that's more or less where we believe that the growth in or excuse me, the that is how I constructed the revenue per procedure math for the balance of the year.

David Saxon (Equity Analyst)

Great, thank you.

Operator

Our next question comes from the line of Caitlin Roberts with Canaccord Genuity. Your line is open. Please go ahead.

Caitlin Roberts (Equity Analyst)

Hi, thanks for taking the question. Maybe just to turn back to eos and I think you noted the weakness was execution-related,. If you could provide any more color on that specifically and if any of the weakness was related to, you know, more the capital environment, or appetite by facilities. And then just following on from that, do any of those hurdles translate into, you know, the other capital parts of your business with balance and navigation? Yeah, thanks for the question.

Todd

I would say that the EOS thing bleeding into the Valence thing is really a non starter. One of the challenges associated with EOS has always been the structural build out. It's like literally you're doing construction on a room, just based upon the size of the unit. And so what happens is if you have more EOS unit that requires more build out, the predictability associated with the delivery becomes or the installation becomes less. And it's one of those things where it's like when we said hey, we're going to get better with regard to the sales piece, we're going to get better with regard to the downstream marketing piece, we're going to get better with regard to the support piece. The support piece really is making sure that we're aligned with regard to the timing associated with the installation. And so those things are somewhat challenging. They have nothing to do with valence. And you know, I always hate, you know to suggest that we're a proxy for anything, you know, with regard to understanding the capital equipment environment, it's just tough to tell. And so we're. We're frustrated, over the lack of execution. We committed to a number of units. We didn't fulfill the number of units. I got to tell you, the demand profile is phenomenal, and the thesis of it is great.. The construction and installation is less good. And so that's kind of the way I think about the business. But I don't see it bleeding into anything else. I just see it as an execution flaw.

Caitlin Roberts (Equity Analyst)

Thank you.

Operator

Our next question comes from the line of Tom Steffen with Stifle. Your line is open. Please go ahead.

Tom Steffen (Equity Analyst)

Great. Hey, guys, thanks for taking the questions. Wanted to ask about the 2026 surgical outlook. Hopefully I have some of these numbers correct. I think surgical up 17% in the quarter, full year guidance also 17%. Comps get much more difficult. You talked about March below expectations, but April came back. Business seemingly has become a little unpredictable. I feel like in the last couple quarters. So, Todd or Pat, what gives you the confidence in maintaining the outlook for Surgical? When you decelled again in one Q and with guidance implying the stacks re accelerate, is it April? Are there incremental drivers that can continue to support growth? Thank you.

Pat

Yeah, this is Pat. You know, it's like, I'll always provide the color and I'll let Todd, you know, make me right or not based upon the numbers. The thing that gives us confidence is just the demand profile around the procedures that most distinguish us and the volume of surgeons that continue to. To flock toward us. Like to see a historical growth rate in the volume of surgeons and then to see historically what they've done from a utilization perspective gives us a lot of confidence. If you like looking at kind of the demographics of the types of surgery and seeing, you know, that, you know, what we were losing more is some conventional stuff. Q2 and Q3 are conventional fests, if you will. It's a lot of long reconstruction stuff. The way that EOS is impacting our business, I would say that gives us a lot of confidence. And so as I look at just the demographics of how the revenue was reflected, I remain totally bullish. And so, clearly, the comps get harder. But it's one of those things where

Todd

it's like when the business is coming in as you expected it from a procedural type standpoint and you see the surgeons joining. For me, it just gives me. It feels like a tailwind. And Tom, I think your. Your question is totally A fair one in terms of, you know, the deceleration that we've seen and, and how do we think about Q2 onwards in light of our Q1 performance? And, and so I would point to a couple things. One, you know, I made the comment about March was not as good as we had expected. Although April has, has rebounded and, and feel, feel like that gives us a good platform into Q2. And so I think fundamentally a lot of this is where do you start? And so I think the April start is a, is a confidence builder there. Second point I'd make is just the structural increase from Q1 to Q2 in terms of the deformity season. We've invested in incremental assets, whether that be small stature sets or, and, or rather patient positioners. And so like we know that demand is there and so we have invested to fulfill the expectation of that demand to come. And that happens both in Q2 and Q. I think we talked about our ability to drive increased biologics attachment rate through focused sales execution efforts. The international contribution continues to get better as we walk through the year. And I think that has been demonstrated as we've gone. And so our confidence there is high as well. And so I think for all those reasons we believe that the path from, you know, Q1 to Q2 and onwards is very much intact. And then I think just if you look at the total surgeon adoption, again, I think it's just a great leading indicator. It historically has been and I think, you know, to have sales you got to have customers and the customers are growing at 20% plus.

Tom Steffen (Equity Analyst)

Got it. Thanks guys.

Operator

Our next question comes from the line of Ross Osborne with Wells Fargo. Your line is open. Please go ahead.

Ross Osborne (Equity Analyst)

Hi, thanks for taking our questions. So maybe moving on to Valence. Would you discuss placements to date and what early pull through numbers look like?

Pat

Yeah, not going to speak to the specific numbers, you know, in, you know, I think what we, or at least how we characterize this year was one of let's get as much experience as we can, let's make sure the product is absolutely perfect, it is doing everything that we've expected.. And so I would tell you that, you know, and these are things that you won't appreciate is my presumption. Clearly not trying to be insulting, but there's an infield camera that is hugely elegant and just the ability to have the surgeon control the elements in the room is exactly what you want. You also don't want a huge piece of capital. It's not a huge piece of Capital. And so it's doing everything that we, we've expected. It's been utilized in PTP mostly. You know, it's, it's trending toward more than the numbers, that we provided for the year as a target. And, and so, we're totally bullish on it, super excited about just the, the type of clinical impact it can have and the, and the workflow that's been initiated with its design. And so again, hugely confident, hugely bullish. The ability to integrate the best neurophysiology in class with the most elegant, seamlessly effective workflow will, will increase the volume of, of PTP users. There's no question in my mind. So it's going as planned.

Ross Osborne (Equity Analyst)

Thank you.

Operator

Our next question comes from the line of Keith Hinton with Freedom Capital Markets. Your line is open. Please go ahead.

Nakul

Hey guys, good afternoon, this is Nakul on for Keith. First of all, thank you for taking our questions. We have two questions, the first one being the revenue per procedure, appearing to be down approximately 4% year over year. We think that's the first case of down year over year since at least 2021 or maybe earlier. What are the drivers there and how are you thinking about revenue per procedures for the rest of 2026 and in the out-years?

Todd

Yeah, so as I shared my prepared remarks, you've got about a clearly a mix impact from a stronger growth in our cervical procedures. Cervical procedures carry a lower revenue per procedure profile than our overall average. And so since that led the growth that pulled the overall average revenue per procedure down. The second is our strong performance outside the US they also have a lower revenue per procedure profile than our overall average. And so really the two primary drivers there are mix related and then the final driver is just lower biologics attachment rate. And so that had an impact. I would just tell you though is when you look at our anterior columns, so think about lateral and Alif. Lateral's revenue per procedure grew 2%. ALIF's revenue per procedure grew 4%. Cervical's revenue per procedure grew 8%. And so I think the revenue, per procedure growth or our ability to capture the revenue opportunity in a procedure continues to expand. And that's the important piece to this. And I think that is also a fulfillment of the investment thesis that we've laid forth. Just the last one. So in 2025, growth in surgeon users was in line with procedure growth, which seems to imply procedures for surgeon was around flat year over year. Where are you today in terms of penetration rate with active US point surgeons and going forward, how should we think about the balance between increasing breadth and depth in terms of driving volume growth Also, once again, thanks for taking your questions.

Nakul

Yeah, I mean, we obviously saw another strong quarter of, of surgeon adoption. I think your question on utilization rates, I think if you go back to 2022, we saw utilization rates. We've seen utilization rates grow on average about 3% a year in the US and so clearly on average we're seeing greater utilization. That utilization number is obviously pulled down by the strong adoption numbers that we see. And so the averaged out at about 3%. And you know, we continue to feel good about that. And I think going back to some of the themes of this call, in terms of why we have confidence in our full year guide on the surgical revenue piece, is fundamentally related to the fact that we see strong demand for new surgeons to come here and have always seen that demand translate into procedural adoption. And so, you know, we expect to continue to see that throughout the balance of this year, which gives us kind, you know, confidence in our overall guide.

Operator

Okay, thanks. Our next question comes from the line of Shawn Lee with H.C. wainwright. Your line is open. Please go ahead.

Shawn Lee (Equity Analyst)

Hey, good afternoon guys, and thanks for taking out questions. I just have a bit of a higher level one. So with the EOS revenue and the guidance staying at a low growth this year, I was wondering, does the strategic case of where EOS sits inside the procedural ecosystem,, where, you know, as the platform is a door knocker of a sort, as well as for a driver for surgeon pull through, does that case still hold? And do you think it maybe makes sense to rethink some of the hardware monetization model as well?

Pat

Sean, it doesn't make me think we should. It makes me so enthusiastic about what we're doing. You know, imagine, imagine from where we've come, you know, it's Alphatec spine getting access to the institutions like hss, nyu, Duke, Northwestern, University of Virginia, University of Maryland. It is unbelievable, the type of access that EOS has given us. Probably the thing that I am most disappointed in myself in is enabling you guys to understand the uniqueness of this informatic tool. There is nobody in the business that has a tool that ultimately provides for a preoperative image, a plan integrated into the interoperative experience and then evaluated postoperatively. It's all the same image. And so that provides you what's called a structured data set. And your ability to transit a structured data set is unlike anything anybody else has. And it's all automated. The nemesis of spine surgery Historically has been a lack of data. And so for us to have these structured data set that automatically fuels information into a depot that we could translate to mitigate variables. We've talked in previous calls about the revision rate in Spine and how, you know, mitigating variables is the route to greater predictability. You know, the fact that we've missed on a few installations and then to suggest that we're going to rethink the thesis is not even a consideration. I would tell you that I just got back from the American Academy of Neurosurgery. You know who the big players are. It's Medtronic, Globus and ourselves. You know who the most promising player is? Atex Spine. And so it's, it's one of these things for us to translate this tool in five years it's going to be the father son game. And so it's, it's any inference that there is any blinking with regard to the thesis, is, is, is, is misdirected and so sorry for the diatribe,, but I got to tell you, it's like this. This has to run the size of Texas. You have a team that's committed to the size of Texas and the, and, and you know, the miss on the construction on a few placements of EOs and people question you is a word I would choose not to use. So anyway, appreciate the question.

Shawn Lee (Equity Analyst)

Thanks for that and thanks again for taking our question.

Operator

We have reached the end of the question and answer session. I will now hand the call back to Pat Miles for closing remarks.

Pat Miles

Just a, just a quick comment. I just want to thank everybody for dialing in. I've never been more bullish and enthusiastic, with regard to the build of Atex Spine. I'm thrilled about the volume of people coming over here from competitive companies that are supporting the effort. It's like our best days are out in front of us. The strategic thesis is such the right one. We're going to be the data source in this business. And so just want to share my enthusiasm for where we are and look forward to discussions as the year progresses because we will continue to prosper as we have for the last eight years. So anyway, thanks very much for your interest and look forward to more.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

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