Alphatec Holdings, Inc. Price & Performance (ATEC)

So we're perpetuating that leadership. It's also nice to see the profitability come in very strong. So we're expanding profitability. So we finished Q4 at $21,000,000 which was up ten fifty basis points year over year, which means we're cash flowing. And so we cash flow $9,000,000 for the for the first quarter really since the transformation. And so what we're enjoying is revenue growth profitable leadership. And so, just love where we are and and also love the growth profile forward As we've talked about since the transformation, we're in this for the long haul. [indiscernible] I think the growth reflection from the clinical distinction has been robust. And we love to say around here that we're 8% market share holders with 92% to go.

But when you start to wonder, is the are the numbers reflective of that commitment, you have to say yes. And total revenue CAGR over a five year period has been 40%. Somebody likes what we're doing and has created demand. So we we believe that that robustness continues forward. 19% surgeon adoption, on a five year CAGR. 25% procedural volume on a five year CAGR, and 10% revenue per surgery.

On a five year CAGR.

And so, I think the foundational growth machine and the growth thesis is intact. The beauty about the gross thesis being intact is that the investment thesis is starting to provide powerful leverage. And that was by design. And so we love seeing the type of leverage that's coming forth and us becoming a self sustaining company. That's been the plan for for some time and clearly it's coming to fruition and and it will continue to be robust and it's a commitment that we are absolutely forthright about it and excited about. And so as we look at the full year of 2024, we're back to the whole profitable growth commentary, we finished the year at $612,000,000 which 27% revenue growth.

Of the 06/12 the surgical revenue growth was 2925% growth in established territories, is all that means is same store sales. And when you start to see the expansion of same store sales, you have to say, gosh, there's some acceptance of the clinical thesis that we're putting forward. 18% surgeon user growth, a $31,000,000 adjusted EBITDA love to see the profitability coming in.

First quarter of cash flowing since the transformation said that, but it's worth repeating. We launched the Eos Insight software as well as there's a record EOS order book in dollars. So there's a lot of enthusiasm with regard to what we're doing with EOS and it makes total sense clinically love to be participating in the second largest market in the world, which is Japan. And so we did our first cases there. And we hosted a deformity summit, which would be requisite of our commitment to the deformity space. And so I would tell you, I'm totally bullish on the route forward, thrilled about the year and all turn it over to Todd to provide some additional color. Well, thank you, Pat, and good afternoon, everyone. I'll begin today with fourth quarter twenty twenty four P and L highlights. Total revenue was $177,000,000 up 28% compared to the prior year.

And up 17% sequentially.

The $177,000,000 in revenue was comprised of $107,000,000 in surgical revenue and 20,000,000 of EOS revenue. Fourth quarter surgical revenue of $157,000,000 grew 28 represents $34,000,000 of year over year growth our largest dollar growth in a quarter ever. The improvement was fueled by procedural volume growth of 19% and average revenue per procedure growth of 7%. Our lateral franchise continues to be the primary driver of this growth. Seasonality contributed to fourth quarter EOS revenue of $20,000,000 up 32% compared to last year, Demand for EOS is robust, with record order volume in the quarter. That along with the positive reception of Eos Insight positions us well for strong system installations and the accompanied implant pull through in the coming years. Now turning to the remainder of the P and L fourth quarter, non GAAP gross margin was 70%, flat compared to the previous year, Non GAAP R and D was $13,000,000 and approximately 8% of sales, top line growth drove 200 basis points of leverage, while we continue to invest in innovation at a level slightly higher than the 2023, on an absolute dollar basis Non GAAP SG and A was $105,000,000 and approximately 60% of sales. Over half of the 800 basis points of year over year improvement came from infrastructure leverage with the balance from variable expense rate.

Improvements. Included in this period's SG and A is a step up in depreciation related to purchase of instrument As a percent of sales, depreciation increased about 50 basis points year over year, Excluding that impact, SG and A improved eight fifty basis points. We reported total non GAAP operating expense of $119,000,000 which was approximately 67% of sales. In the fourth quarter, we took measures to improve our operational discipline. Strategically realigning and reducing the organization and rigorously evaluating discretionary spend and investment dollar allocation. The increased operating discipline is beginning to add to what was already a powerful operating leverage opportunity. And contributed to Q4 marking our first non GAAP operating profit since the remake of the organization began. I'll turn next to adjusted EBITDA which was positive for the third consecutive quarter. Fourth quarter adjusted EBITDA was $21,000,000 equating to a 12% margin. And over 1,000 basis points of improvement compared to the prior year period. The improvement in adjusted EBITDA margin was driven by eight fifty basis points of SG and A leverage and 200 basis points of R and D leverage and represents a very meaningful drop through of the year over year growth in revenue dollars to adjusted EBITDA.

You can see in the chart on this slide that the profit margin expansion that we are executing has been significant and consistent. Top line momentum coupled with operational discipline has resulted in a deliberate profitability improvement That execution in conjunction with the cost optimization measures that we completed in the fourth quarter gives us confidence in our ability to deliver on our financial commitments and translate revenue growth into profit, and cash flow. Turning to the balance sheet, we ended the fourth quarter with $139,000,000 in cash, including approximately $50,000,000 in proceeds related the term loan expansion announced last quarter. Debt at face value was $590,000,000 We continue to evaluate alternatives for the $316,000,000 convertible notes due August 2026 and expect continued financial execution to increase our options and the attractiveness of those options. We achieved a pivotal milestone in the fourth quarter We generated free cash flow of $9,000,000 The primary contributors were strong adjusted EBITDA and our transition beyond the period heavy investment in instruments and inventory that enabled us to onboard multiple sizable U. S. Geographies over the last eighteen months and positions us well continue to invest in the sales channel. I'll turn next to full year 2024 results Total revenue was $612,000,000 up 27% compared to the prior year.

The $612,000,000 revenue was comprised of $545,000,000 in surgical revenue and $67,000,000 of EOS revenue. Surgical revenue grew 29% compared to 2023. Driven by procedural volume growth of 19% and average revenue per procedure growth of 8% EOS revenue was $67,000,000 up 13% year over year. Non GAAP gross margin was 70%, up 40 basis points compared to the prior year. GAAP R and D for the full year was $54,000,000 and approximately 9% of sales. Improvement of 190 basis points compared to the prior year. Non GAAP SG and A was $4.00 $7,000,000 and approximately 67% of sales, an improvement of two ninety basis points compared to the prior year. Half of that improvement was driven by infrastructure leverage, [indiscernible] 2024 adjusted EBITDA was $31,000,000 and approximately 5% of sales, a year over year improvement of $40,000,000 and six ninety basis points compared to the 2023 results.

Drop through of incremental revenue dollars to adjusted EBITDA was 31% for the full year. Up significantly from the 22% in 2023. We are demonstrating growth leadership and profit margin expansion while investing in the future growth of the business. Cash used in 2024 was $128,000,000 in line with our expectations and an improvement of $31,000,000 compared to 2023. Next, I'll provide detail on full year 2025 outlook. We expect adoption of our unique procedural approach to drive revenue growth 20% to approximately $732,000,000 consistent with the outlook shared in our January pre announcement. That includes surgical revenue growth of 21% approximately $657,000,000 which will be fueled by mid teens surgical volume growth, and mid single digit revenue per surgery growth. We expect EOS revenue of approximately $75,000,000 The next slide provides context for the contributors of our surgical revenue growth. I'll begin with the procedural volume growth, which is driven by the impact of ATEC clinical distinction on surgeon adoption and utilization. You can see in the chart on the top left that surgeon adoption has been steady and strong growing another 18% in 2024. [indiscernible] Another consistent and recurring contributor to volume growth is surgeon utilization. The top middle chart depicts the steady ramp in utilization that each of our new surgeon cohorts has demonstrated over time.

Our procedural solutions earned surgeon confidence. That creates loyalty and encourages surgeons to partner with us in more cases. Including increasingly complex cases. Each new surgeon relationship that we develop typically unlock a multiyear utilization growth opportunity as our penetration of their business grows. Average revenue per surgery increases as our mix shifts towards procedures that require more products per surgery like PTP and LDP and towards surgeries with greater complexity all of which feature higher revenue per procedure than overall average. Innovation is providing another tailwind, Our portfolio now features expandable implants and corpectomy implants, which along with an improving biologics attach rate are contributing to higher revenue per case.

Turning to the outlook for full year 2025 adjusted EBITDA, we expect sales growth to continue to lever the infrastructure we have built contributing to an adjusted EBITDA of $75,000,000 That implies a 37% drop through of the incremental growth in revenue dollars roughly in line with the drop through that we delivered in the second half of twenty twenty four. The chart on the right depicts the deliberate nature and consistency of the Execution has been strong and the improved operating discipline of our organization as we exited 2024 positions us well to deliver on 2025 expectations and our long range plan commitments. Which include a 2027 adjusted EBITDA margin of 18% at $1,000,000,000 in revenue. To recap our financial outlook for this year, we expect continued strong revenue growth to drive incremental profit margin expansion. That along with the benefits of our 2024 investments in instruments and inventory will fuel positive cash flow for the full year in 2025. That's a subtle but important change relative to the previous outlook. Which contemplated cash flow breakeven. The intent of the nuance is to be clear that we view zero as the floor to our With respect to cadence, keep in mind that due to seasonality, Q1 has historically been the largest cash use period during the year.

We expect cash use of $15,000,000 to $20,000,000 in the first quarter of twenty twenty five, with positive cash flow in quarters 02/2004. In conclusion, through our investments in the team and infrastructure, we have built a fast growing spine focused company. We are delivering a return on those investments through durable revenue growth and strong operating leverage. Which resulted in an inflection to adjusted EBITDA profitability in 2024. There's a lot more to come. 2025 will see continued profitability improvement and mark another fiscal milestone. Free cash flow generation and the capacity to self fund future growth. With that, I'll turn the call back over to Pat.

Thanks much, Todd. Our strategy is clearly working. And I would say it's the consistent focus on our objectives that has reflecting that performance.

I always love an objective and a reflective, numeric value. And so as we talked about, people are buying into what we're doing from a revenue perspective because we're creating clinical distinctions, which means surgery is better and outcomes are better. And that reflects in a 40% CAGR over a five year period. We're clearly compelling surgeon adoption, which is a result in in a 19% CAGR, as talked about. And we're expanding and elevating our sales force, which is such a key part of this. And so for those of you out there on the sales side listening, we're open for business and we continue to grow this monster. And so when we started the transformation, it was all about becoming the standard bearer in spine. Our interest is always to revolutionize surgery by improving procedural durability and predictability. The one thing that we know is what plagues the durability and predictability of spine surgery is intraoperative and systemic variables. If you look to your left and we showed this graph before, knee surgery and hip surgery as proxies for revision rates we are well beyond those in spine, which says to us there's ample opportunity to address these these variables in ways that others haven't.

So the way that we're going about that is really through informatics. Informatics is what's going to fuel durability and make our growth leadership sustainable. If you look at what we've done with regard to the construction of our spine procedures, our interoperative leadership, which has led to our growth is Very apparent. And so we're using things like SafeOp, to understand exactly where nerves are and what their health is. We're using things like valence to be precise interoperatively. If the goals are surgery if the goals of surgery are decompression, stabilization, and alignment. Alignment is the last bashing that hasn't had an objective reflection.

EOS is providing us that information that drives an objective reflection of alignment. And so from an interop operative perspective, we have an ecosystem that's reflective of the goals of surgery in a way that no one else has. If we look forward to the future and we start to look at some of the systemic issues associated with controlling the variables, that undermine the predictability of spine surgery, we think that EOSIS such a core element So what we're doing is we will utilize EOS to understand what type of surgery to do. What type of should the patient be intervened upon at all, as well as what are the requirements operation to fulfill that surgery. And so we feel like this is such a foundational element. If those companies don't have informatics that ultimately mitigate variables, they're going to be left behind in this realm. And so our enthusiasm is to really continue to draft off the all of the advantages of being 100% spine focused. Who would have known that we're the largest pure play spine company out there and I think that we're the best position to ultimately move the field forward. Which means mitigating the variables that undermine the durability of spine.

So With that, we will go to questions. Our first question comes from Brooks O'Neil at Lake Street Capital Markets. Good afternoon, guys. Congrats on Congratulations on a terrific year.

So Pat, you highlighted ongoing industry disruption in the press release and we all know that Stryker is leaving and others are pursuing non spying opportunities out there in the marketplace.

What assurance can you give us that you're not going to elevate spending again in 2025 to take advantage of that disruption that you are focused on the profit delivery that you guys talked about in your prepared remarks. Thanks a lot. Yes. Thanks, Brooks.

The beauty of having a good plan is having this already conjured into it. And I think we got beat around a little bit for previous investments because we were so bullish on the dynamics of a of a disrupted marketplace. And so I would tell you that a lot of the investments have been made and the contemplation with regard to expanding the sales force is part of our our current effort. And so, I don't see there being unique outsized expense dynamics. That ultimately undermine our financial thesis. And we're just excited that more people don't don't know how to respond to the requirements of a field that we feel like we're experts in. And so with that disruption, what we want to do is continue to kind of expound on our our expertise, which is fine.

Great. It's a fertile environment. I'm excited for 2025. Thanks a lot for taking my question. [indiscernible] We'll move next to Vic Chopra at Wells Fargo. Good afternoon and thanks for taking the questions. Two for me. So first one, one of your large competitors announced the sale of its U. S. Spinal implants business you expect any benefit from this from either a market share perspective or a picking up additional sales reps? And then I had a follow-up Yes. I'll take the first one and Todd could pop on if I miss something.

Be smarter [indiscernible] I think wherever there is disruption, there is opportunity. And so, we're seeing it firsthand. And candidly, we want to lean into it. I got to tell you, those who think that this environment hasn't progressed beyond plates and screws are kidding themselves. It's also gone beyond precision only tools in the operating room.

And so why I think that we are so well positioned is I think that our informatics platform is so unique. And I think when guys from Stryker start to look around and see what opportunities they have to be part of companies that ultimately invested in the future, and in the requirements of the future, I think that they're going to look very favorably upon us. And so what I would say is, I think it's a tough place to be in a private equity world whereby investments are difficult and the need for unique technologies that go beyond the operating room are required. And so I love it. I think our chances are great.

Great. Thanks. And then my follow-up question was, Pat, we in your press release you said you entered Japan with your first surgery Yes. Thanks, Dick, for that question. It's one of those things that Todd and I always laugh about kind of our original common ground.

And previous place, it was purple. We overspent on the infrastructure associated with an international business It wasn't providing the growth or profitability that's necessary to self sustain. And here we committed to doing that. Japan is one of those markets that is candidly shares so much with The States and with Australia. And so we're thrilled about being in those markets. It's also a market that really is arms wide open to progressive techniques like lateral. And so we've really been disciplined and and we have a guy who runs that business Chris Lyons, that has been super disciplined, he's a super clinical guy about going in with regard to lateral surgery, establishing a relevant beachhead and then expanding from that. And so I think we're doing it the right way. We're going to play long in that mark [indiscernible] it's the second biggest market, we better be serious about it and we better play long on it, not try to go in and reap a bunch of near term victories but let's play long and create the same gross sustainability that we've done here. We'll go next to Josh Jennings at TD Cowen.

Hi. This is Eric on for Josh. Thank you for taking [indiscernible] I was looking to just discuss PTP and LTP. Does offerings have been great growth drivers for ATEC. The past several quarters. I was just curious to hear what inning you think we're in with those launches as Are we still in the early stage there of their full potential? And is there any way to size up the penetration that those procedures have garnered within your target surgeon basis? Thank you.

Yes. Thanks. And I'll do the first I'll give the numeric reflection to Todd because I'll screw it up. We're in the super early innings. And the reason I say that is, I would tell you from a lateral perspective, we still have so much growth in the four to one, meaning else to S1, meaning using the patient positioner to do a 5.1 ALIF and then 4.5 and above from lateral. It's like it's growing and it's doing great and But the market opportunity is much larger than what we're seeing reflected in the sales growth. And so I think that clearly we're growing at a super high rate, but I'm still not seeing the volume of that surgery reflect in the number. As it relates to PTP, We are in the super early innings. If the beauty of PTP is that you have access to the front of the spine and the back of the spine at the same time, And so often, people would pick procedures based upon where the pathology resides. Flexibility associated with having the access to the front and the back avail so many more opportunities to intervene with a procedure like PTP that has such a wide berth of of reflected clinical value in multiple types of pathology.

And so again, I think we're in the super early innings. Whenever I see people do T LIF or CLIFF or even ANLIF at four, five and above, it's it just speaks to the type of opportunity we have because the applicability of PTP is so relevant.

And Eric, to give you a sense for the the size of that market and how we see that, we have talked about the lateral being about $1,000,000,000 in The U. S. And us having about 15% market share here in 2024. And so tells you that we're not very penetrated in that market. And the opportunity here is we've talked about as well, there's $2,000,000,000 of traditional posterior approach surgery in FLF and T LIFT, that can ultimately be addressed through a lateral approach. And so we think that market today at 1,000,000,000 can ultimately be $3,000,000,000 as we of of lateral surgery. And so we're very excited about where we are but we're just getting started. Understood. Appreciate all the color and thank you for the question. [indiscernible] We'll go next to Matthew O'Brien at Piper Sandler.

Hey, this is Phil on for Matt. Thanks for taking our questions and congrats on really nice quarter and cash flow positivity.

Just wanted to discuss the efficiencies that you targeted. You mentioned in your prepared remarks efficiencies in SG and A that you found this quarter, Where were the savings found? Are these cuts fully realized at this point? And how might this program lead to maybe potential upside on the bottom line here in 2025?

Yes. Thanks, Phil. I mean, we clearly took a very delivered approach to reducing the size of the organization as well as taking a very thorough look at where all of our discretionary spend is and what our investments are and where they're going. And really aligning them with our most highest priorities. And so I would tell you that clearly we benefited from some of that in the fourth quarter and that will continue throughout 2025 as we took some expense out of the organization or out of the cost profile. But the ongoing improvements in operational efficiency, as we look at operating better with the assets that we have, you think about all the instruments and the inventory that we've invested in over the last eighteen months. We're getting better and more professional at effectively utilizing those assets to maximize their return. And so it's beyond just kind of the P and L, it's also on the balance sheet as well. And in my view is as we continue to exercise this muscle, we'll get stronger and better at it. And so I'm looking forward to seeing us to continue to improve in this area and believe that that's part of the reason why we've got confidence in our ability to meet our financial commitments here in 2025.

And beyond.

Great. Thanks so much. We'll take our next question from Matt Miksic at Barclays. Great. Thanks so much for taking the question and congrats on a really strong strong finish. Maybe if you could talk a little bit about It's sort of an update as to how the strategy that you put in place last year in terms of share capture and sort of [indiscernible] upgrading some of the regional regional field teams has kind of contributed to some of the strength exiting the year and and sort of maybe some sense of what inning we're in in terms of that pull through into 2025? And I had one follow-up. Yes. Matt, I'll take the first one.

I think that we continue to get better. It's like I think everybody appreciates it. I think building a large and Salesforce is especially clinically, that Salesforce is kind of the hard thing. And so but it's like you better build a portfolio that inspires people and then when it inspires surgeons, then better have a sales force that ultimately reflects in the capability to drive the confidence of the surgeon to implement that And so I think that we're a good ways into like that effort The problem is, is we still have big that weren't somewhat irrelevant in.

And so as an 8% market shareholder, we have such a long way to go. And but the great part is, is we're so validated in the same store sales, you start to see the 25% growth in the same store sales. Think the thesis is working clinically. I think the buy in has been great. We just need more great people on the team from a sales perspective. And so that's why we love the disruption in the space. And we love the ecosystem that's been built because we think that that's reflective of the requirements of a long run So I think the pieces are really kind of becoming in place. Now we just need a larger influence in the academic world. We need a larger influence in certain geographies. But we're getting there and it's kind of the step by step by step. And so not that that gives you precise numeric reflection, but I think it gives you a little bit of color as it relates to where we And if I could just add maybe two points to that. One, the investments we made in instruments and inventory again over the last eighteen months, I think positions us very well to continue to grow and take advantage of that disruption.

So I think that that is opportune. And then if you look at the rate at which we exited 2024, I think we grew $34,000,000 in surgical revenue growth year over year in the fourth quarter. That's the strongest absolute dollar growth that we've ever demonstrated. And I think the amount of momentum in the business is strong.

That's super helpful. Thanks for the color. And then maybe just one of the questions we get sometimes is you've got a robot coming this year, don't have a robot right now in the lineup.

But you at least I'm not in broad circulation, but But still growing and taking share at a pretty pretty great pace. And so maybe got a pretty broad portfolio of what we call enabling technology. Maybe talk a little bit about how you feel like you're lining up competitively with the other players out there with robots, with imaging, and sort of like how a robot this year and into next year could kind of enhance or sustain the growth rate that you're putting up there. Thanks so much. [indiscernible] Matt, I think that your commentary is such a great one. And [indiscernible] I really tried to describe our view of the world as it relates to the controlling of interoperatives variables and then the controlling of systemic variables. And when you start to think about, why people have revisions in We said it's ten percent to fifteen percent in short segment surgery within three years and it's north twenty percent or twenty five percent in deformity. And you start to say, is that because of guys missing screw placement? And it's not. And so if it was all about screw placement, then the robot would have absolutely solve that issue.

And I think another kind of interesting proxy is you see strikers spend their spine division out, but they keep their robot. And so if the robot was the answer to all ills, Stryker would have never rolled out their spine group because they would have seen cash register ring every time that they could utilize the robot in one of these [indiscernible] I think what's like all things, I think the robot and navigation are part of the solution. And so when we talk about mitigating interoperative variables, I think that that's part of it. And And I love that part. And ours is in evaluation, it's going as expected. We're excited to have navigation robotics in the back half of this year. But the reality of it is that I think there's also systemic element. And when you hear the guys talk about surgical planning, meaning should we intervene at all, And if we are going to intervene, what procedure should we do? This is an environment that's so ripe for predictive analytics. And so we think that the foundation of EOS provides us that opportunity where there is this constant feedback loop that accommodates the need for mitigating the systemic variables.

The other thing I think people don't contemplate is the operational that go into support surgery. If we know exactly what the surgical plan is, our ability to send less stuff, spend less on freight, spend less on instruments and inventory that go in to support these. We feel like our lineup of technologies is reflective of a level of know how in this business that's candidly unique to us. And so that's not to be jerkish about our growth, but think that's why you're seeing the type of impact that ATEC is having on this space. So anyway, sorry for the diatribe, but I just No, that's super helpful color. And then just one follow-up if I could on on sort of the opportunity that maybe the striker K2M transition could open up. You've got a pretty great position in academic centers around Eos and Sure. That's we're not talking about necessarily picking up reps and and like for like kind of replacement. But the idea that There's a team that's important to the pediatric Schoology and academic centers that's in transition. Maybe talk a little bit about any opportunity that you see there to to kind of lean in in that situation, that'd be super helpful.

Thanks.

Yes. Matt, again, I think you're exactly right. It's like we're an abject nobody in pediatric surgery at this point. And so we have some great people around the company with regard to doing idiopathic and and we have a small stature system But it's like kind of the interesting part of the EOS adventure has been that's been a tool that has been foundationally placed in pediatric hospitals.

And [indiscernible] what we had is we had a bunch of EOs in pediatric hospitals and we really had nothing to support them. I think that what we've done is over the last few years is committed to making sure that our product portfolio from a surgical perspective is reflective of the output because what happens is Eos informs what to do surgically, want to make sure that we can fulfill that surgically. And so I would tell you you that we're in the very, very early innings of any reflected prowess in that space. But there's, again, huge interest. I think there's huge opportunity based upon having that foundational tool in EOS. And so it's just another place where I would say that we're woefully under penetrated and we have great opportunity to adjunct that to what the EOS value proposition has been. I think it's a great point. We'll take our next question from Caitlin Cronin at Canaccord Genuity. Hi, congrats on a great quarter and thanks for taking the question. Just on EOS, so the guidance implies a pretty similar growth rate to 2024, but under what you guys did for the year. Do you expect at some point to see somewhat of a increase or inflection in the growth rate given Eos Insight or maybe the other enabling tech that you're bringing on and then hopefully getting pulled through from?

Let me start, I'm going to turn over to Todd, is The ultimate answer is yes.

And the challenge is one of timing.

I think the reception of Eos Insight has been outstanding. It is the tip of the proverbial iceberg. The team here and in France that is most responsible for EOS Insight We are in such the early phase of this. And so I think that what's going to happen is it's going to be reflected in the kind of academic environment. More groups are providing us access to their data. You'll see it from the podium more. And so I think that there's an undercurrent of momentum that's very, very exciting. The problem is, is when you start to shut out expectations for next year, it's like how do you value that? And so that's where And I think to patch point, I think we feel comfortable with our $75,000,000 guide. To put that in context, our long range plan assumes about $100,000,000 of contribution from Eos in 2027.

And so if you kind of said, hey, straight line that between there and then you got $12,500,000 of growth, which is a little bit north of what we we've delivered. But I think to Pat's point, as Eos Insight it's more adoption, people start talking about it, people start seeing the value of it. Our expectation is that we'll continue to grow the interest and we'll see more placements over time. And also begin to see the monetization of that really through more implant pull through.

Awesome. Thanks so much.

We'll move next to Jason Witts at Roth.

Hi, thanks for taking the question and congrats on a solid quarter and especially the cash flow, which looks very positive here. So maybe if I could ask, you mentioned deformity, your hosted your first summit. In terms of what the product line is, what's a love to know what's available what you're presenting right now in these first summits? And kind of maybe if you could give the game plan for the next year in terms of what you might add to the portfolio, specifically addressing deformity, that would be very helpful. Thank you.

Yes, Jason.

I think the deformity is always reflective of And the opportunity that we have in this space, I think, is tremendous. And so when you start to look at what we have today, from an adult to fully, we have everything that you need. And so kind of the on the early onset scoliosis and the idiopathic. And so when our first deformity summit was really mostly focused on a [indiscernible] I think Eos is such a foundational tool. And when you see the revision rates that you're talking about in adult deformity, I think that there's so much gestalt in adult deformity, the opportunity to ultimately garner analytics that ultimately say, hey, in this type of patient, this type of [indiscernible] All that is gestalt today and there's no kind of clearly predictable algorithm that to suggest as to what you do. And so but from a product perspective, the product portfolio we have we have Eos, we have Invictus, All of the anterior columns, the PTP is applied to adult deformity. We have osteotomy sets. We have things like SAFOP. SAFOP in deformity. When you start talking about rotational which is mostly more of an idiopathic disease, they use what's called NEPs, motor book potentials.

We've gone to the distance of of facilitated MEPs in a way that ultimately doesn't require the same volume of voltage, which means the patient doesn't jump. And so the sophistication of assembling technologies to reflect specific types of pathologies has really served itself not just in PTP and LTP, but it'll serve us in deformity as well. And so we see these things as procedures And what we do is love enveloping technology in a way that ultimately reflects in greater predictability. And so we think that the number of things that we can do within that space is significant. So hopefully that hit what you're asking for, but No, I think that was a lot of that gave a lot of insight and did answer it. And maybe if I could just add to that, terms of the doctors attending this summit that you're targeting, are these current ACHEK users or is this a new set of doctors or how do you see see that targeting or progressing?

Yes, that's a great question. It's both. And one of the really things that we're seeing come forth is is the academic guys.

And what makes that fun is these guys have big big groups of residents and fellows. And so literally on Friday and Saturday, we have a Fellows Deformity course.

And so we have like a who's who in deformity surgery that is facultying our course this weekend. And so you'll see a ton of fellows come forth and get very familiar with EOS get very familiar with Invictus, our screw system, get very familiar with our neurophysiology system. And so just the opportunity to reach into some of these academic institutions and start to demonstrate the value of things we have, we think is very, very valuable. And so, it's been kind of a great time to be relevant in a more academic environment such that what we're doing is seeing these guys come forth and become familiar with what we're doing.

Got it. Thanks. I'll jump back in queue. Thanks very much.

Thanks. Next, we'll go to David Saxon at Needham.

Great. Good afternoon. Thanks for taking my questions and congrats on the quarter.

I wanted to ask on international and apologies if this has already been asked, but Japan, my understanding is you're working with the major society over there, I think it's JSSR, And I think once you kind of get in there, you can see fairly rapid adoption. So I wanted to kind of hear where you are in terms of getting buy in from that group under kind of just done the first cases there, kind of how you're engaging them? We should think about the ramp there? And then the second part to the question is, it looks like international is is about 8% of sales in the quarter. I wanted to just understand how much of that was EOs versus what you're seeing in I think it's Australia and New Zealand are your two major international markets at this point. Thanks so much.

Yes. I'll pipe in on the color and I'll let Todd answer the numeric things. Japan is a great market. I would tell you that JSSR has been very well facilitation of of our local guys in Japan. We have a great team in Japan And literally, we are in the [indiscernible] We've done a bunch of surgery there, but but nothing of short that would reflect any type of meaningful momentum as of yet. But again, it's a market that is so substantial and so important to us that we want to play along in it. And so I would say that we're in there. We have the right people around the business. The right surgeons are engaged. There's great enthusiasm.

That communicated directly from the surgeons who are kicking the business off for us. But yes, we're bullish.

And David, just to put some brackets around the surgical revenue contribution for international it's at between 12% of total revenues.

Okay, great. Thanks so much.

Thank you. We'll go next to Callum Tichmarch at Morgan Stanley.

Thanks, guys, for taking the question. I'll ask the less exciting modeling one. But we'll just appreciate any color you can give us nearer term. Through Jan and Feb on how the business and broader spine market has been tracking, I guess, in light of those headlines that have been touched on already? Whether you're just comfortable with where the Street sits today for Q1? I think that's about $168,000,000 in revenue. I guess to that any revenue cadence assumptions we need to be factoring into our models that kind of differ from prior years? [indiscernible] Think we refrained from giving any intra quarter commentary, but I would tell you that we exited with a very strong level of momentum. I think the commentary on where the street sat in the first quarter, we feel reasonably comfortable with I think you definitely do have some seasonality kind of going from Q4 to Q1, which would be historical. And I think models have kind of captured that at that stage. So we're reasonably comfortable with where The consensus is sitting today in terms of Q1 timing.

Thanks a lot.

And that concludes the question and answer session. I will now turn the call back over to Pat Miles for closing remarks. Yes. Thanks very much, Audra, and thanks everybody for your interest in ATEC.

We are just getting started and excited about the spine market.

This concludes today's webcast. Thank you for your participation. You may now disconnect. [indiscernible]