Good afternoon, everyone. And welcome to the webcast of ATEC’s First 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, pro forma or adjusted measures. Reconciliations of non-GAAP measures to U.S. GAAP can be found in the supplemental financial tables included in today’s press release, which identify and quantify all excluded items and provide management’s view of why this information is useful to investors. Leading today’s call will be ATEC’s Chairman and CEO, Pat Miles; and CFO, Todd Koning. Now I will turn the call over to Pat Miles.

Thanks very much, Audra. And welcome, everybody, to the Q1 2023 financial results for ATEC. I am going to be providing some forward-looking statements, so please read at your leisure. The momentum for the company is exceedingly strong and very pleased to report Q1 2023 revenue at $109 million, which is 54% growth, 40% surgical volume growth and adjusted EBITDA margin improvement 1,080 bps and so some recent highlights, extended momentum of PTPs was the strongest contributor to Q1 growth. Fully launched LTP and we will go more into that, which is very exciting. Introduced Invictus direct Vitera rotation AIS system, which is -- I will go into that a little bit more as well, drove $15 million in EOS revenue and we acquired the navigational robotics platform to enhance precision of our procedural strategy and so a lot of good things going on and a lot of momentum. And I think if you look back at the momentum, you could look back to really kind of our established commitments all the way back to 2018 and that is to create clinical distinction. If we are not doing something better, we are not going to be able to compel surgeon adoption. If we are not compelling adoption, then it would be very difficult to garner the type of distribution that we are looking for. And so when we talk about clinical distinction. I think that the momentum would suggest that we are compelling adoption. And when you start to build procedures from the ground up and you are furthering procedural momentum, you could really look at PTP and LTP and look at things like the patient positioners and the retractors and information. And now the -- so excited to add the navigation-enabled robotics piece. And so this whole view of…

Thanks, Pat, and good afternoon, everyone. We appreciate you joining the call today. So I will begin with revenue. First quarter total revenue was $109 million, reflecting 54% growth over the prior year and a 3% increase compared to the previous quarter. The $109 million in revenue is comprised of $94 million in surgical revenue and $15 million of revenue. First quarter surgical revenue of $94 million increased 55% compared to the prior year period. Procedural volume grew 40% in the first quarter, with average revenue per case expanding 11% year-over-year as revenue mix continues to shift for its procedures with more products per case and greater complexity. And while lateral related revenue contribute the most to growth, revenue related to our recently launched posterior expandable cage and biologics also grew solidly in the quarter. EOS revenue in the first quarter was $15 million, up 46% compared to last year, with solid execution on deliveries and installations in addition to an order that was delivered in a nonstrategic international geography. For to the remainder of the P&L. First quarter non-GAAP gross margin was 72.4%, up 20 basis points compared to the prior year. First quarter non-GAAP R&D was $12 million and approximately 11% of sales, compared to $9 million and 12% of sales in the prior year. The increase on an absolute dollar basis was driven by continued investments to organically expand our product portfolio and advance the Alpha Informatix platform. Non-GAAP SG&A was $81 million and approximately 74% of sales in the first quarter, compared to $61 million and 85% of sales in the prior year period. We delivered over 1,100 basis points of improvement. Consistent with our long range plan, approximately 40% of the leverage came from variable selling rate improvement, while the balance was driven by leveraging…

Thank you very much, Todd. Really appreciate it. So our view is that spine’s future will be defined by information. Our foundation of the SafeOp platform, the EOS asset, as well as the Fusion Robotics asset that we have most recently added will be foundational to our success. And so only ATEC has the knowhow and technological foundation to set to find information standard and that’s where we are heading. So, with that, we will take questions.

Thank you. [Operator Instructions] We will go first to Matt Blackman at Stifel.

Hi. Good afternoon, everybody. Thank you for taking my questions. I have got two and maybe to start a question for Todd and I am sure you are going to love this one. But we are almost a year into the three-year LRP you laid out and as we run our numbers and even bake in some deceleration, it seems like you are tracking well ahead of plan particularly on the top line. And I appreciate this may not be the forum for you to update the LRP, but it does feel like you could do your 2025 revenue goalpost as early as 2024. So the question is, am I missing something, is there a reason beyond comps or a law of larger numbers like you might see a deceleration to sub-20% growth over the next 12 months that makes that sort of earlier than expected arrival on the $555 million revenue post more challenging than we are appreciating? And I have got one follow-up.

Well, thanks, Matt. Good to talk to you, too. That’s a good question and happy to answer and give some context. I think our view is the business continues to be strong and we have been abundantly clear about our commitment to creating clinical distinction to drive surgeon adoption and the level of adoption that we have had seen, which is driving the procedural volume has been strong. The leading indicators of surgeon adoption, surgeon training, I think, are all trending north of our long range plan kind of milestones, if you will. And so I certainly like where we are relative to the revenue, strong growth this year, guidance around 30% year-over-year growth. Our long range plan assumptions, as you remember, we are just kind of low 20s percentage growth. So I think we entered the last two years of our LRP with really ahead of the game and with some tail to -- so we do our tails, if you will and so feel good about where we are going. Probably kind sort of answering specifically what 2025 revenue is going to be, but that shouldn’t be a surprise. And then relative to the adjusted EBITDA component of that, much of our walk, as you talk -- as you know is time phased and so I think on an absolute dollar basis, we would view $80 million of adjusted EBITDA as being the floor. And I think we have often talked about incremental revenue over our guide dropping through at kind of $0.10 on the dollar. And so I think more or less, I think you can kind of begin to think about how adjusted EBITDA might be different from the $80 million on a higher revenue number doing some of that math.

Great. I really appreciate that. And I think there’s a lot of stuff to pick from here. But one of the things I haven’t heard you talk about recently and I suspect progress is being made. Just on international, just remind us where you are on the international rollout, Australia, Japan, what’s left to do? And I guess, really what’s a reasonable way to think about when we start seeing visible revenue contribution, could it be in 2024, I mean, I think, we have got it baked into 2025. I am just wondering if it’s evolving a little bit faster?

Yeah. Matt, I appreciate the question. I was over SpineWeek earlier this week in Australia. And so much, I think, of these things become, are the right people around it and so the foundation that we are building with the Australian team is outstanding. And we are starting to do business literally. I think March was the kind of the initiation of that business and the great thing is I think that there’s a shared surgical kind of thesis of -- one, they have adopted lateral surgery very quickly and favorably and they still utilize lateral surgery. So I think from a competitive perspective and from an opportunity standpoint, it’s readily apparent. And I think that we have the team there to ultimately do very well. And so I would say we are just literally getting out of the gate on the Australian front. We probably have another year on the -- at least on the Japan business front. Again, I think that if I were to just speak subjectively about the right people around things, there is a lot of enthusiasm to for us to get into Japan. So I guess, again, very vague, but I would say, New Zealand, Australia, a great team getting off in a robust manner. Hopefully, we will see a contribution just -- it will be a small one toward the end of the year. But Japan -- the whole Japanese market will be probably a year, year and a half 25% is what we are thinking to. But we love the foundation we are building.

Great. Thank you so much. Appreciate it.

Yeah. Thanks, Matt.

Thanks, Matt.

We will move next to Brooks O'Neil at Lake Street Capital Markets.

Good afternoon, guys. So I am just curious if you could comment how significant an ongoing industry consolidation impacts your ability to grow and hit those long-term growth targets?

Yeah. Look, I would say, so much of it becomes, us just kind of working the business as we know it and I am not trying to be coy at all. And I think I read somewhere recently somebody just talked about, not a lot happens until the integration takes place. And so, candidly, it’s been somewhat quiet out there. We love what we are doing. I got to tell you, I love the addition of the navigation robotics piece. And I think there’s a lot of people -- this is a small talent in terms of spine and I think a lot of people understand the prolific nature of how we integrate technology to create better procedures. And so I think that’s been demonstrated through our run to our guidance from $83 million in whatever it was 2018 to $450 million in terms of our guidance this year and so the -- I don’t think that you could take that. And I think people understand that. And I think that as you look at SafeOp as being a proxy for how we integrate navigation, I like our chances and with the navigation team that’s over in Colorado, the level of know-how is kind of outlandish. And so, again, I guess, I pay less attention to the dynamics of all the frenetic in this space and just continue to say how do we create the distinction, how do we compel adoption and how do we get the right people in each of the different territories. And I think our excitement is how we incent and compel and inspire great sales guys to come over and join the same, because A lot of great stuff that’s going on here, we have a heck of a long run and we want them on our team.

Great. Let me just ask one more. So, obviously, you had PTP before you had REMI. Could you just talk a little bit about whether you see REMI-enhancing the PTP procedure or are you thinking about it more with LTP and deformity and some of this other stuff that’s coming down the line?

Yeah. It’s a great question, Brooks. The dynamics are that PTP adoption is profoundly robust, and then you ask, why do you need more technology. And one of the requirements associated with PTP is really is, like, how do I get that first dilator orthogonal to the spine? And the challenge is it takes some radiation that is generated by the fluoroscope or the X-ray machine? And so our desire is to continue to protect not only the surgeons, but increase the precision by limiting the volume of radiation, having people be able to place something more precise and then also give them a heads up. Like one of the things I love about our SSCP is it tells the surgeon, hey, maybe there’s something wrong, there’s a degradation in SSEP signal. We would love to integrate the same type of dynamic here where what you can know as a surgeon is, hey, maybe the retractor slightly moved and you love some type of an alert. And so when you start to think about all the opportunities to mitigate variables in surgery, our view was this was a great investment, because ultimately, what we can do is integrate these technologies in a way that continues to limit the technological kind of surging the scarf and can we provide technology to augment their efforts. And so we feel like PTP and LCP are great opportunities to do that and then we just think that integrating these with the whole ecosystem of EOS and SafeOp and the others, just again provides great value and mitigates variables in surgery.

Fantastic. Thanks a lot and keep up all the great work.

Thanks, Brooks. Appreciate it.

We will go next to Josh Jennings at TD Cowen.

Hi. This is Eric on for Josh. Thanks for taking the question. I wanted to talk about REMI for a second. I was just curious to hear feedback from surgeons that you are hearing on that acquisition. What are their thoughts on the combination of REMI with the ATEC portfolio?

Yeah. It’s not unexpected and it’s been very, very favorable. And I was over at -- as I said earlier, I was over at SpineWeek in Australia. And there were several U.S. surgeons and several Australian surgeons who approached me and we are exceedingly pleased. And candidly, they readily see the opportunity to integrate these technologies. And we have always talked about having two independent technologies like a neurophysiology and a navigation system that tells you in two different ways that, hey, you are safe. And I mean, that through pedicle screw placement, as well as things like transpsoas approach and so these guys readily understand what our kind of thinking is around this acquisition. And I can’t -- I have yet to hear of anybody who hasn’t been supported. I am sure somebody will approach me. But in our view is, we will demonstrate like we are in this for the long haul. We will demonstrate over the long term, the value that we envisioned with regard to the integration of this technology to look forward.

And Eric, I think the opportunity is to really integrate it into the full procedural approach. I mean, to-date, robotics and navigation have largely been all about pedicles replacement, which certainly has some value, but we think the real value is being able to innovate it into a procedural approach to mitigate variables of surgery.

Understood. That makes a lot of sense. And then I can totally appreciate that it takes some time to integrate that sort of technology into the portfolio. But when would it be appropriate for us to start seeing contributions from that REMI acquisition and revenue?

Yeah. I think the short-term in terms of the six months to 12 months effort is going to be how do we get all of our implants through the regulatory clearance and make sure that all of it is -- they are used together in a relatively conventional manner. I would say probably 25-ish when you will start to see the integration of procedurally of how these things all fit together and we have great confidence in the elegance of this integration.

Understood. Thanks for the questions.

Thanks, Eric.

I will take our next question from Sean Lee at H.C. Wainwright.

Good afternoon, guys, and thanks for taking my question. I just ask one, probably, a little high level one on the robotic surgery front. So in terms of the lateral surgeries with Alphatec is focusing on, what portion of surgeries currently are using robotic assistance? And with the right devices and technologies, where do you think that number can get to over the next, say, four year to five years?

Yeah. I think it’s a great question, Sean. The -- I would tell you, if I were to be a betting man, because I am. I guess, yes, I would say, 3% or less today, 1% or less, really people are not utilizing it for the anterior column. As much as it’s being promoted as such. I think that it has been sketchy at best robotics in the lateral transpsoas approach. Guys have talked a lot about it. They -- I think they have been inspired about it, but little to none is done. I think that there’s a great capability and I guess I am more inspired by the navigation portion, maybe once we navigate something, we will hold it with an arm and if that’s robotics, but I am inspired about that, too. But it’s -- I think that there’s a real opportunity, like, when you start to think about predictability, orthogonality is a big driver of that. And so for us to create orthogonal exposure in the spine and hold it in a place and tell somebody if it moves, I think, that’s very valuable. And so my hope is what we would do is, again, demonstrate another requirement for lateral surgery through these means, like, I can’t imagine a stronger position that we have in lateral surgery with automated SSEPs. Like how somebody does it utilize automated SSEP and appreciate the discerning element of the degradation of a signal as a precursor to a potential motor deficit, like, why would you not use that? And so I think that as we continue to apply these technologies to a procedure, again, I think that, as Todd commented in terms of variable mitigation, that’s the uses of what we are trying to accomplish. And so more probably longwinded than you hope, but it’s -- I think it’s less than 1% today. I think it has a potential to be very, very valuable and I think that we are going to be the standard barrier as it relates to making the rules of a procedure that we know best.

Okay. That’s very helpful.

That does conclude our question-and-answer session. At this time, I would like to turn the call back to Pat Miles for closing remarks.

Thanks very much, Audra. I appreciate everybody’s interest and excitement about ATEC. We are literally just getting started. We have a heck of a long run and excited about the potential. So, anyway, thanks very much.

And that does conclude today’s conference. Again, thank you for your participation. You may now disconnect.