Alphatec Q2 Earnings Call Highlights

Key Points

• Q2 revenue rose 15% to $214 million, driven by 20% growth in surgical case volume and a 24% increase in surgeon users. Adjusted EBITDA climbed 53% to $36 million, with margin expanding to 17%, while the company generated approximately $1 million in positive free cash flow.
• Alphatec maintained its 2026 revenue outlook of approximately $882 million and raised adjusted EBITDA guidance to $140 million from $134 million. Full-year free cash flow is still expected to reach at least $20 million.
• Revenue per case declined 2.7% year over year, primarily because of lower biologics attachment and case mix, prompting the company to lower its full-year revenue-per-case outlook to a low-single-digit decline. EOS Insight adoption and the Valence technology platform remain key growth initiatives.

Alphatec NASDAQ: ATEC reported second-quarter 2026 revenue of $214 million, up 15% from a year earlier, as growth in surgical procedures and surgeon adoption supported higher profitability and positive free cash flow.

Chairman and CEO Pat Miles said surgical revenue rose 17% to $196 million, while surgical case volume increased about 20% and surgeon users increased approximately 24%. He characterized those metrics as evidence of both increasing utilization by existing surgeons and adoption by new surgeons.

“We’re adding surgeons. They are doing more with us,” Miles said. “The business is working, and we are scaling.”

Profitability and Cash Flow Expand

CFO Todd Koning said adjusted EBITDA totaled $36 million, up approximately 53% year over year and $15 million sequentially. Adjusted EBITDA margin expanded 420 basis points to 17%.

Gross margin increased 260 basis points from the prior-year quarter to 72.5%, which Koning attributed to inventory efficiency, cost reductions and product mix. Operating expenses rose 11%, but declined by approximately 260 basis points as a percentage of revenue.

The company generated $34 million in operating cash flow during the quarter and invested about $33 million in inventory and instrument sets, producing approximately $1 million in positive free cash flow. Alphatec said this exceeded its expectation for roughly breakeven free cash flow and marked its fourth consecutive quarter of positive trailing-12-month free cash flow.

Alphatec ended the quarter with approximately $119 million in cash and $85 million in available borrowing capacity, for roughly $204 million of total liquidity. During the quarter, the company completed a new term loan A and revolving credit facility with J.P. Morgan and TD Cowen. Koning said the financing consolidated two legacy facilities, extended maturities to 2031 and is expected to reduce annual interest expense by more than $6 million.

Revenue Per Case and Biologics Remain Areas of Focus

While procedure volume and surgeon adoption grew, overall revenue per case declined approximately 2.7% year over year. Koning said the decline reflected case mix, strong international growth and lower biologics attachment. Biologics attachment stabilized in the second quarter but remained below prior-year levels.

Revenue per case improved 1.5% sequentially, however, and average revenue per case in the company’s core lateral, ALIF and cervical procedures increased from a year earlier, according to Koning.

In response to analyst questions, Miles said the company sees opportunities to improve biologics attachment through greater sales discipline and new products. He also cited the company’s TheraCell transaction and its expectation of becoming the second company in the market with BMP, or bone morphogenetic protein.

Koning said approximately three-quarters of the difference between the company’s revenue-per-procedure performance and its internal expectations during the quarter was related to biologics. Alphatec now expects average revenue per case to decline in the low single digits for the full year, rather than remain approximately flat as previously anticipated. The company said the expected improvement in biologics attachment is largely assumed only in the fourth quarter.

EOS and Technology Strategy

EOS revenue was $17 million in the quarter, compared with $14 million in the first quarter and roughly flat from a year earlier. The company said demand for EOS systems remained strong, while installations can vary from quarter to quarter.

Alphatec said EOS Insight adoption is expanding and is beginning to support surgical implant demand. Among established EOS Insight accounts, implant revenue increased approximately 32% within six months after implementation, according to Koning.

Miles said EOS systems provide access to academic institutions and other facilities that were previously difficult for the company to reach. He described EOS Insight as a tool that can support diagnosis, pre-surgical planning, intraoperative reconciliation and follow-up. During the question-and-answer session, he said EOS Insight penetration was in the range of 15% to 20% of the EOS installed base, with adoption moving faster than expected as data-sharing arrangements are completed.

The company also discussed its Valence technology platform. Miles said early clinical experience has shown that surgeons find value in the technology and its workflow, while utilization and customer feedback continue to shape the product’s development. He said recent FDA clearances for intraoperative alignment and Contour 3D, an automated rod bender, expanded Valence’s capabilities.

“We don’t view Valence as another navigation platform,” Miles said. “We believe it will become the operating system to which more of the procedural experience is orchestrated.”

Guidance Maintained; EBITDA Outlook Raised

Alphatec maintained its full-year 2026 revenue outlook of approximately $882 million, representing roughly 15% growth. The guidance includes approximately $805 million of surgical revenue, up about 17%, and approximately $77 million of EOS revenue.

• Second-half surgical revenue growth is expected to accelerate to 18%, compared with 17% in the first half.
• Surgical case volume is expected to increase in the high teens during the second half.
• Full-year free cash flow is still expected to be at least $20 million.
• Third-quarter free cash flow is expected to be between $4 million and $6 million.

The company raised its full-year adjusted EBITDA outlook to approximately $140 million, representing a 16% margin, from its previous outlook of $134 million. Koning said the increase reflected expectations for improved gross margins and continued operating discipline.

Regarding free cash flow, Koning said inventory and instrument-set investment was intentionally front-loaded in the first half to support surgeon adoption and anticipated second-half growth. He said lower fourth-quarter investment in inventory and sets, combined with expected EBITDA growth, was expected to support a significant increase in free cash flow later in the year.

Miles said the company continues to see growth opportunities in lateral procedures, deformity, EOS-driven surgeon access, biologics, international markets and sales-force productivity. He added that Alphatec is seeing international growth in markets including Japan, Australia and New Zealand, though the company did not provide a geographic breakdown of procedure growth.

About Alphatec (NASDAQ:ATEC)

Alphatec Holdings, Inc NASDAQ: ATEC is a medical technology company focused on the design, development and commercialization of products for the surgical correction of degenerative spinal conditions. The company's portfolio centers on interbody implants, biologics, fixation devices and surgical planning tools intended to improve patient outcomes in spinal fusion procedures. Alphatec's flagship offerings include customizable interbody cages, bone graft materials and specialized instrumentation designed for minimally invasive and open spinal surgeries.

Founded as Alphatec Spine in 1985 and rebranded as Alphatec Holdings in 2018, the company has grown from a single-product organization into a multi-platform innovator in the spine market.

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