Alphatec Holdings, Inc. (ATEC) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to ATEC's webcast to announce the acquisition of navigation-enabled robotics technology. 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 company's last financial results press release, which identifies and quantifies all excluded items and provides management's view on 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'll turn the call over to Pat Miles.

Thanks much, Lisa, and I appreciate everybody showing up for the call, and we cannot be more excited about enhancing the ATEC portfolio with navigation-enabled robotics. Clearly, there will be some forward-looking statements. So if you could review that at your leisure, that would be great. I think, as much as anything, really, enhancing ATEC's procedural strategy by integrating interoperative navigation-enabled robotics is the news. It was a $55 million cash acquisition of the REMI robot. It was an asset purchase from Accelus, Inc. I think the thing that makes me most excited is it includes a familiar team with years of experience in image-guided surgery design and development. And I know these guys, I've known him for a long time and just absolutely thrilled about the team. And also what's hugely important is it preserves the financial commitments that we've made, including 2023 adjusted EBITDA breakeven and 2025 cash flow breakeven. And so we are revolutionizing the approach of spine surgery in pursuit of the perfect procedure. We design and develop technology to specifically fulfill the unique requirements of each procedure. We've always felt like navigation was a hole, and this fills it in a way that we are exceedingly excited about. And so again, super thrilled. One thing that you'll appreciate, I hope, about us is we're going to be consistent and creating clinical distinction is the business creator. And what that does is it compels surgeon adoption and ultimately brings us the best of the best sales force, and so just excited about that. We've always talked about our view of distinction being different. Our methodical walk to procedural predictability or precision includes allocating capital at the right time and at the right price. And we feel like this just adds to kind of the top ring of things that drive clinical predictability. And so we design everything from the ground up, and where we don't have competencies, we bring them in. And so I think at the heart of our clinical distinction is lateral sophistication and I think removing variables to create clinical predictability for every pathology and surgeon preference regardless of patient position has kind of been what's created the value of our company. And so we saw that the opportunity to integrate Fusion Robotics into the company was candidly much like our SafeOp effort. And at the heart of the clinical distinction at ATEC is really technological integration. And so as successful integration, SafeOp is already setting a new standard in lateral spine surgery. It is completely unique. The way that we do robotics and navigation will be completely unique and completely integrated into the procedural architecture. And so I think the one thing that you appreciate about us is that we're not guessing. There's a track record of successful technological integration is always grounded in identifying people with great know-how. And probably the thing that inspires me most is the team in Colorado that's coming along with the acquisition has what I would call monstrous know-how. And so I've known these guys since the middle '90s. These guys have been in image-guided surgery since then. Brad Clayton is the leader of Fusion Robotics and Kevin Foley was a co-founder. And to suggest that these guys aren't Mavens in the field of image-guided surgery would be a misstatement. These guys know it and have been around it for a long time. We're integrating into a clinical workflow that -- with a technology that is very versatile, both from an imaging perspective as well as a footprint perspective. And we love the small footprint of this thing and believe it to be very, very valuable. So next, the -- so, small footprint, very efficient workflow, very versatile imaging. We will integrate a freehand navigation element to it. It's suitable for the ASC. I love the fact that these aren't huge pieces of capital equipment. These are, ultimately, small pieces of technology that, ultimately, further surgery. And I've always been a little bit of a critic about robotics. And I think that people conflated robotics to mean surgery and surgery is much, much more. And so image-guided surgery has been around a long time and why is it not ubiquitous. In our view is it's not been elegantly integrated into the workflow of spine surgery. And so the opportunity here is to integrate it very effectively into spine surgery. And so we see this as, again, how do we start to assemble things like SafeOp, automated EMG in a REMI robotics, so you're navigating both neurologically and from a bony anatomy perspective. And so we think the assembly of these things are phenomenal. It's going to provide precision during dilator placement and retractor docking. And so we readily see the apparent insertion of this technology into the workflow of what we're doing. We feel like we'll be more thorough with regard to disc space preparation and interbody implant precision. The setup is super-efficient. I think part of the problem is people always complain about robotics increasing the time of surgery. This is not the case with the efficiency of how this is set up. There's minimal radiation exposure. I think about the ability to take 2 independent technologies and further something that it does, so 2 independently integrated technologies, EMG and image guidance to further pedicle screw replacement and accuracy and then just simplifying things from a multilevel surgery perspective. And so anyway, it will go far beyond lateral. And so we're just, again, excited about the technology. And we feel like that the assembly of the 2 groups really kind of further surgery. It'll clearly accelerate our market taking efforts, which have been good thus far. And so the initial integration priorities are to take -- really go path of least resistance and get some of the regulatory clearances with regard to our InVictus posterior fixation, love the thought of just having the freehand navigation, so that's going to be a priority. We'll clearly integrate it in terms of what we're doing from a lateral perspective, and then we'll extend the utilization into more long-construct type surgery. And so from a sales perspective, we think the landscape is ripe for us to have enabling technologies that ultimately not only convert surgeons, but also attract technologically astute reps. And so I think that there's, hopefully, many who are listening and then drive the placement with flexible financing because of the competitive pricing on the unit. And so -- the -- we think that this is a bit of an informatics arms race. And I don't know how you can't be inspired. And spine surgery outcomes are improved with enhanced information. I think there's no doubt about that. That mitigates the clinical variables, improves decision-making. And when you start to think holistically about what we're doing, you look at the preoperative elements in terms of our ability to preoperative plan to automate all of the measures and then to integrate that into the interoperative phase and now to add the navigation-driven robotics with SafeOp Neural navigation with all of the elements that EOS will add. And then to put predictive analytics on the back end of this thing in asking how we get better, I think -- if you're a spine fan at all, you're inspired by the opportunities that this presents. And so we always ask ourselves, does the technology investment reflect really our core tenets. And we feel like this absolutely creates clinical distinction. We believe it will compel adoption, and we believe we'll continue to attract people that share our view on spine. And so with that, let me hand it over to Todd, and -- who's candidly done the work on this, and he and some of the people internally and also want to thank Acellus' Alex Lukianov and Kevin McGann and some of the other guys who made this possible. And I think it's a deal that ultimately serves the interest of both companies.

Well, thank you, Pat, and good afternoon, everyone. Thanks for joining us on the call, and we're very excited about the news we're sharing today. Before I dive into the transaction's financial considerations, I'll walk through the preliminary first quarter 2023 revenue results and updated full year 2023 guidance that we also announced this afternoon. So we expect preliminary first quarter revenue to range between $108 million and $109.5 million, representing top-line growth of over 52% for the quarter. That revenue expectation is comprised of surgical revenue between $93.2 million and $94.3 million and EOS revenue of between $14.8 million and $15.2 million. Surgical revenue growth of 54% to 55% was driven by continued strong adoption of ATEC procedural solutions, which fueled surgical volume growth of over 38% year-over-year. EOS revenue of between $14.8 million and $15.2 million in the quarter was driven by solid execution on deliveries and installations in addition to an ordered-delivered in a nonstrategic international geographies. The strength of our first quarter results and the momentum with which we ended the quarter give us the confidence to increase full year revenue guidance. We now expect 2023 revenue to approximate $450 million, which we expect to be driven by 30% growth in surgical revenue to $393 million and EOS revenue of $57 million. Now let's turn to today's news. Our purchase of the REMI technology assets were $55 million in cash. Concurrent with the transaction, we priced a $60 million registered direct equity offering, which will fund the asset purchase and transaction-related expenses. We are fortunate to have great shareholder base that appreciates our strategy and track record of execution. While there was significant interest, we sized the offering purposely to meet the requirements of this transaction and have the support of existing holders as well as new shareholders. We are very pleased with where this financing landed. Over the past few years, ATEC has demonstrated that improving spine surgery creates value. This can be seen through the purchase of SafeOp where we acquired people, know-how and technology. We then integrated that technology into our lateral procedure approach, now the foundation of our lateral offerings, PTP and LTP. We view REMI similarly. We are acquiring great people and knowledge and know-how, and we expect our plans to integrate the technology into our procedural offering to improve surgical predictability, reduced radiation exposure and enhance intraoperative precision. Through this asset purchase, we will add approximately $5 million of annualized investment to our P&L. Solid execution across our business is fueling our ability to raise revenue guidance and absorb the incremental costs associated with REMI, enabling us to reaffirm our commitment to adjusted EBITDA breakeven in 2023. We are also reaffirming our expectation to be free cash flow breakeven in 2025. We are thrilled to be able to fund such an attractive investment while maintaining the near- and longer-term financial commitments we've communicated. Following integration and development of REMI into our lateral offering, we expect the investment to begin contributing to revenue in 2025 through increased procedural volume. Flexible selling terms will support placements at about $500,000 a system and REMI has a gross margin profile that is in line with our corporate average. We expect the most meaningful impact to long-term revenue to be a function of procedural pull-through from earning market share. I'll explain that by sharing a slide that most of you have seen before. The team that developed and introduced lateral surgery 2 decades ago is here at ATEC. That seems -- means we have unparalleled know-how in lateral surgery and a profound understanding of why adoption never exceeded the approximately 30% of true market opportunity. That is why when we set out to transform ATEC through clinical distinction, we started with the lateral surgery. We knew that lateral surgeons seek more predictable and reproducible outcomes. We knew they were concerned about complications that can arise if intraoperative neural health information is not real-time and objective. We knew that surgeons yearn for a more sophisticated approach that didn't entail taping patients to beds. We organically developed procedures like PTP and LTP, integrating SafeOp and elegant retractors, instrumentation and patient positioners to begin to address the barriers to broader lateral surgery adoption. With the REMI technology, we will continue to address those barriers. The integration of REMI into ATEC procedural solutions will provide for a more precise and efficient clinical experience with lower radiation exposure for surgeons and patients. With this small footprint, REMI's navigation-enabled robotics solution is the ideal platform to be integrated into Spine's clinical workflow and create value in the OR. In summary, acquiring the REMI assets further positions us to address the $2 billion market for traditional posterior approaches like GLIF and TLIF. We believe much of that market can be addressed through a lateral approach because ATEC isn't -- because ATEC lateral isn't just more predictable and reproducible, it's better surgery. And when you earn the trust of surgeons by improving more complex fine surgeries they do, such as lateral surgery, they are more likely to trust you with a bigger portion of their overall procedural volume. We've earned almost 4% share of the $10 billion U.S. spine opportunity today by integrating unique technologies to create unmatched clinical distinction. That leaves another 96% to go. The basis for our belief that we are just getting started. With that, I'd like to turn the call over to the operator for questions. Lisa?

[Operator Instructions] The first question comes from Josh Jennings with TD Cowen.

Congratulations on the acquisition and the strong start to the year. I was hoping to ask one question with multi-parts, so I apologize. I wanted to just hone in on the potential to -- with REMI to accomplish a more thorough disc-based preparation interbody implant precision and also just the freehand navigation, those 2 elements where REMI will come in and provide some procedural advantages. Maybe just help us understand those elements a little bit better. And then just the second part of it is just are you optimistic that this acquisition will help you drive, penetrate further the latter opportunity quicker? Or that it's a crucial step to help ATEC penetrate the other segments of the spine industry where you're less represented?

Yes. Thanks, Josh. +I guess the thing that was very apparent to us is that especially it seems like the younger surgeons are really kind of gravitating toward navigation or image guidance. And when you have a real-time understanding as to where your instrument is in space, it just provides you a much more -- it's a higher opportunity to be comprehensive with regard to what you've done in the disk space. And so as it relates to, like, the precision elements, having this internal to us enables us to do things that we couldn't do if it wasn't. And so I think we've always appreciated the value of navigation. We've never felt like it's been integrated procedurally, like, we like to integrate things. And so again, we think that this is such a building block to who we're becoming. And so it's never really been thought of as purely a lateral tool. But on the other side, it's like we think that lateral, in the best reflection of the type of proceduralization that we've applied, it's candidly had given us the greatest tailwind. And so when we think of a proxy for proceduralization, we think lateral. And I think that when you start to think about integrating tools into identifying where the dilator goes to the side of the spine, understanding where the incision needs to be. And then literally, the only thing that would include any variable whatsoever would be the surgical reflection of the peritoneal cavity forward and then your ability to ultimately be on the disc base where you want it based upon navigation and know where the nerves are and what their health is through SafeOp. And so we've always felt like the integration becomes hugely valuable. And so we feel like it's not only an opportunity to integrate with something that we have significant know-how in but also, candidly, I would say that we weren't a company that had great internal know-how on navigation. And so to be able to get a team that's been around for 30 years into this place is reflective of kind of our approach to things. Gosh, if we don't know it, we're going to admit it, and we're going to get the best of the best in the industry, and we're going to bring in significant know-how. And I think that what you're seeing in this acquisition is candidly a group that understands procedures with a group that is foundationally versed in navigation and robotics. And then our ability to ultimately integrate those 2, I think, is very, very apparent. And so anyway, clearly, we're thrilled about the acquisition.

And Josh, I think in terms of where that plays out market-wise, I think our priority is to integrate this into our lateral procedures. So clearly, I think it enables us to penetrate more and more of that $2 billion of GLIF and TLIF business and, ultimately, can become lateral as more and more people adopt a lateral approach. And the past point, I think our ability to be precise, confident in retractor placement, disc rep, interbody placement to do that efficiently. And really, without all the kind of fluoroscopy shots you have to pay typically in a lateral experience. I think ultimately, that addresses a number of the hurdles that some people have in why they have not historically adopted the lateral procedure approach.

We'll take our next question from Matthew O'Brien with Piper Sandler.

I'm not sure, I may have missed it, I mean, I dialed in a little bit, but what's the timing for approval of REMI? Or is it already approved? And what kind of indications are you going to get right off the bat? And then how do we think about you selling it alongside EOS going forward? Can your sales rep sell both at the same time? Or is it different call points to really think about in terms of yields versus REMI?

Yes. I guess, from a regulatory perspective, it's cleared with Acellus' product. And so it's not clear. So we're going to have to get a clearance with our instruments and implants. And that will be the first thing that we do, and that was the intention by saying we're looking for a special 510(k) to get our instruments cleared is really the first thing that we do. And the great part is it has both 3D and 2D clearance as we speak. And so from an imaging perspective, the versatility is already there. And now what we just need to do is get our stuff assembled, do it and clear it, which should be a special 510(k), which means it should be expedient and should be predictable. The other question in terms of just kind of the selling of it. One of the pictures I love in the deck is Brad Clayton, the guy who runs the place in Colorado, is pulling a little bag, and that's the robot, and that's the entirety of the system, and the footprint is very small. And so it's not a traditional big piece of capital equipment. And the price points are such too that we feel like pull-through is going to be the driver of how we do these things. And so when you think historically of unique selling processes and capital sales, you start to think a big piece of equipment and capital sales forces and things of that nature. And that's required from a EOS perspective, but I don't think it's going to be required from a REMI perspective. We're going to have people out there that specialize in supporting REMI and it's kind of assembled technology. But I don't think it's going to take the same kind of capital effort that would be conventional as it relates to what you're seeing in million-dollar pieces of equipment being placed in hospitals and ORs.

And Matt, I think like we are with EOS, we'll also be flexible here in terms of, people want to do an outright purchase, we can do that. The typical robot model is one where you do an earnout. We're happy to do that as well. And so I think we're more than happy to be flexible in how we structure the commercial side of this. The upside is ultimately in increased adoption of the procedural approach.

We'll take our next question from Caitlin Cronin with Canaccord Genuity...

This is Caitlin on for Kyle Rose. And yes, congrats on the deal. Just wondering if you could provide some more color on the trend you saw in the Q1 and then kind of start the Q2 on the prelim results front. And then just , can we get your thoughts on maybe some more color on the commercial time lines and plans you have for REMI, that would be awesome.

Yes. I'll speak to trends in Q1 and happy to provide a little color on kind of selling. I think that clearly, there was robust demand for what we're doing. And I think that clearly, we have a great run in front of us. And I think that as you look at the demographics, I think, of the revenue, it's what we intend. And so when we start to acquire something like REMI and elevate our sophistication within procedures, I think it speaks to an interest of being a meaningful player in this space. And so this -- the intention of this -- it's kind of like -- it reminds me of EOS a little bit. You don't buy EOS because you want to be a small bit player. You want to -- you buy EOS because you want to change the field of spine surgery for the better -- and we felt like, gosh, when you have the type of attitude that the Colorado team asked to integrate in terms of what we're doing procedurally, you're not trying to be a bit player. And so our view is that this lays a foundation for a very long run. It gives us an aptitude internally that we didn't have before. So I would tell you, we're a better company today. The near term is going to be path of least resistant stuff from a selling standpoint of making sure that we're getting all the clearances done and expedite just the experience with the device. And then it just becomes the whole, how do we integrate this in procedurally, which is going to be a little bit longer term. And then the longest term is, like, how do we expand its utility more broadly. And so anyway, today, the walk begins to a heck of a lot of work. And so if you hear any enthusiasm in my voice, the work begins today. And so that's what we're excited about.

And I just might add on Q1. Certainly, our surgical revenue volume, as I said in my prepared remarks, volume was up 39%. So procedural volume was very strong in the quarter. I think that is consistent with how we exited the year. Last year, we added 20% more surgeons to the base of people who've adopted our technologies. Their continued growth and influence, from a volume procedure standpoint, I think, has been felt here. We obviously felt confident enough to not just drop our beat in the Q1, which was $7 million in total; $5 million, surgical; $2 million of deals, but to raise the remainder of the year by another $5 million in surgical revenue. And so clearly, I think that underlies a level of confidence in the volume that's running through the business as well.

We'll take our next question from Brooks O'Neil with Lake Street Capital Markets.

I think I have a recollection that the guys from SafeOp were based in Colorado. And I'm just curious if you see integrating this operation with anything associated with SafeOp? Or are they essentially 2 components of the entire ATEC offering that'll more or less be stand-alone on their own.

Yes. Thanks, Brooks. And I guess the way I see this thing is we're creating an unbelievable informatics system. And when you start to think of the sophistication that we have with SafeOp, it is fantastic. And then you see the sophistication with regard to the navigation-enabled robotics. It is awesome. And so the ability to take those 2 things and have everything talk to each other. I would tell you a mistake that we made in the previous experience was that we didn't have a clear enough vision with regard to how all these things work together, can I pull an EOS image down through SafeOp to work in the REMI. Like, it's like all of those things require a lot of product development and a lot of integration. And so one of the enthusiasms that we had when we realized that this asset was available was how do we get this thing in-house so that we could start the design and development and walk for the long term, such that all of these things speak to each other. And so our enthusiasm is just that. And so I think that kind of our informatics team is growing and -- but it's growing in ways that we know that we can meaningfully improve the surgical experience. And so -- we're going to leave the Colorado office as is. It's a great team there. They're well positioned there. There's a great opportunity to continue to attract talent there. And so I think those guys will stay there. It's close enough to where getting over here is not a problem. So we don't think that, that's an issue. We already have the infrastructure in Memphis to ultimately house kind of a lot of the distribution efforts and service efforts. And so I think it just kind of -- it really kind of fit in well on that front.

That makes sense. Let me just ask one more quick one. Did you think -- or was there any opportunity to acquire all of Accelus? Or was this the part that was out there in the marketplace right now?

Yes. We thought that the best opportunity for Acellus was for them to be focused in a way that they intended, which is on the implant realm. We totally wanted the navigation-enabled robotic element. And so I think, candidly, I genuinely believe that this transaction serves the interest of both companies. And I loathe the, "Win-win," but the reality of it is, I think this serves our interest in the best possible way. It mitigates the noise of us trying to figure out, gosh, what do we keep, what are we not, how do we overlap the things. There's zero overlap. And so just the opportunity for us to do something as clean as this is awesome, for them to have a route to some money is awesome. And so we wish them well, and we think that this is a transaction that serves both interest.

We'll take our next question from Yang Li with Jefferies.

Great. Congrats on the acquisition. Apologies if this was asked, I hopped on a little bit late, but what are your thoughts on integrating REMI into your procedures such as for PTP? I mean it seems like there's a lot of clinical value prop, predictability, radiation reduction, more interop precision . Maybe it's too early to ask this, but how much efficiencies or time savings you can potentially get from REMI once it's integrated with PTP or some of your other procedures?

We should have asked you to describe the deal, in all candor, like we see the world as you just described. And the opportunity to create precision was kind of the driver and not that there's a problem with the precision of PTP today, but you're doing it with a lot of radiation exposure. And so if we can mitigate the radiation exposure or minimize it in a significant way, that's better for the surgeon and better for the patient. And for us, to have kind of a real-time understanding all the time of where everything is, is fantastic. Our hope is we get to a place to where we can alert people when things change in surgery. We do it neurologically. We want to do it from a bony anatomy perspective. And so the whole opportunity for us to do these things in a way that, again, just continues to provide the surgeon the information for them to make the best decision they possibly can, is our intention. And how do we minimize the learning curve, and how do we make sure that the bell curve isn't wider for everybody to do procedures such that the skill set can be enhanced by technology. And so I think the very ways that you just described what we're trying to do is really the value proposition that we saw in the acquisition.

We'll take our next question from Drew Ranieri with Morgan Stanley.

Todd, congratulations on the deal. Maybe 2, and I'll just squeeze these together. But Pat, you highlighted really kind of throughout the deck, the size and the price point of the REMI system in context of the ASC setting. So can you talk more about how you're seeing this opportunity or how you're seeing it playing out in the ASC, and eventually maybe even pulling through Alphatec portfolio or Alphatec procedures through the ASC and maybe remind us of where you are today. And then second, and this might be more for Todd. But on the profitability side, and it's nice to see you reaffirming the commitments today, but how are you thinking about maybe building out a sales organization around this product? And maybe just talk about the incremental investments you have to make ahead of 2025 pull-through.

I guess I'll jump on first and then turn it over to Todd in terms of some of the financial reflections. But there'd been -- I mean, we've been talking about the ASCs forever. And the great part is PTP is being done in an ASC today. I think the more variables that we can control, i.e., more precision, I think with a smaller footprint that isn't overtly costly. Again, I think that all these things become indicators of the opportunity to push surgery outside of the hospital. There's a bunch of tools today that enable surgeons to control pain better. And so when you start to think about pain control, limited mobility, better site of service, not overly expensive to get in the game, versatile imaging elements. I think that what you're talking about is a side of service that's less important, if you will, which means you can do it in an outpatient surgery center or do it in-house. And so I would tell you that when you start to make patient positioners, retractors in neurophysiology what happens is those are pull-through opportunities or machines. And so when we architect a procedure that ultimately enables a surgeon to execute what they're trying to do to serve the interest of a patient, and we do it through technological means, it pulls through implants. And I think we've demonstrated that with our growth rate, and it's in the very areas of where we've done these things. And so I'm super confident in our ability to add this in a way that ultimately, one not only enables site-of-service opportunities, but also more pull-through. And so one quick comment on this and then I'll let Todd jump on is, again, I think that what we're going to do is provide more of a market development type of a service group that matches our sales director group, so 8-ish. And then -- but I don't think that we need a capital [ horse stroke ] and so, like, I remain very confident and bullish on our current distribution and hopefully expanded distribution to continue to sell this.

And through kind of the way you're thinking about it is the $5 million of incremental operating expense that we'll have this year on an annualized basis. That kind of baseline we're recommitting to adjusted EBITDA breakeven this year. So as we walk to 2025 free cash flow breakeven, you obviously will continue to see adjusted EBITDA margin expansions to support the free cash flow walk, and that's how we ultimately get to free cash flow. And so the margin expansion from 2023 to '24 and '25 that you would have expected from us pre-transaction is consistent with what you would expect from a post transaction. The incremental $5 million now in the baseline, even if we grow that, say, 10% on an absolute basis from year-to-year, you still have dollars to kind of build out a clinical footprint. I think as Pat described, to support the commercialization effort, the utilization and everything. But fundamentally, I think the demand will be identified and generated through our hardware sales reps.

All right. And we will take our next question. The question comes from Matthew Blackman with Stifel.

My question, it's a multipart, 2-parter. Maybe Pat, I just want to better understand why this is the right time to do this deal. Obviously, you've got a ton of momentum in the surgical business. You've got a nice cadence of EOS innovation coming out. You've got international potentially on your plate, just a lot of moving parts here. Just why is now the right time to do this deal? Is it striking while the iron is hot, so to speak? And then the follow-up for Todd. You obviously reiterated the cash flow breakeven in 2025, but you had also given other metrics in 2025 like raw EBITDA, I think, was something like $80 million. Should we expect those sort of goal posts to also still be intact? Just any commentary on some of the other stuff you may have given during the Analyst Day as you thought about 2025.

Thanks, Matt. I think this is a great time, honestly. It's -- the asset availed itself and it's one that I'm really familiar with, honestly. Like, Brad Clayton was my engineering counterpart back in 1995. And so it's not as though this is not a small town. And so I think part of it is that. I think the other part of it is it takes time to design and develop these things to be hugely elegantly integrated. And so as we start to look out over what the demand profile is for future procedures, what we want to do is make sure that when we're a larger company, we have the best offering in navigation and robotics. And so I think you'll find that we're a group that commits -- and that's why, like, for us, it's like the work starts today. It's like, as much as we will celebrate and be happy about this, the long hard work of integrating this into an elegant procedure such that spine surgery has done better and we're moving the field forward, is when do you start that? And I think you started yesterday. And so we think that the timing is right. We think that there's a lot of momentum in our business. We're so excited with what's going on with regard to EOS. We feel like this is going to be just another reflection of an opportunity for us to grow faster and bigger and better. And so I guess that's my color. I'll let Todd speak to the...

Yes, man. Your question ultimately is, and maybe more specifically, I think we identified not just free cash flow breakeven in 2025. I think, about $80 million of adjusted EBITDA breakeven 2025 as well. And I think as we've kind of always looked at how we continue to grow the business, we've seen that $80 million as being an absolute dollar commitment. And quite frankly, I think you have to kind of get to that level of adjusted EBITDA contribution to get to your free cash flow breakeven anyways in 2025. So I think ultimately, that's kind of how we look at it in terms of it's a minimum required requirement in terms of absolute dollars. And clearly, we continue to grow the business on the top line in a very nice and strong fashion. And to the extent that we can continue to invest in our business that drive outsized growth past the 2025 horizon while still meeting our adjusted EBITDA commitments along the way, I think is ultimately what is best for investors so that we can kind of continue the level of momentum of growth and margin expansion that the business has.

We'll take our next question from David Saxon with Needham & Company.

Congrats on the deal. I think you said that the REMI systems cleared with other implants, so I wanted to ask, is there a current installed base that you can kind of interact with? And then maybe for Todd, at $500,000 price point, how should we think about the gross margin profile?

Yes. There's a few systems out in the field. It's a nominal number. And so it's candidly -- we're going to start to bring everything back and try to control the inventory as best we can. We want our product out there. Our collective Fusion Robotics/ATEC product out there. And so the great part is when you start to think about confidence, we know that it works. We have exceedingly good friends of the family that have used it in surgery. And so, like, having had the experience with the device and understanding, candidly, what it does and what the opportunities to continue to expand it is, is fantastic. And so we love the fact that it's been on the market. But it's been a very small footprint. And so we just appreciate the experience with it. And so we'll bring it really back and start over, if you will.

And I think to reinforce Pat's point, the fact that there is some experience out there, we're not particularly guessing on what it's capable of doing. So our level of confidence that we're getting what we expect is high, and our level of confidence that we can do what we want to do with it is high. So I think that , very much -- I think we pointed in the prepared remarks and the presentation to our SafeOp experience being very similar. And so we think that's a good analog in terms of what we can do with this thing clinically and procedurally. Relative to your question on price, ultimately, the price and cost profile or the gross margin profile rather, is very consistent with our overall corporate margins. So more or less the cost of the system is less than $100,000. So at a $500,000 price point, or even a $400,000 price point, you'd still get a very good supportive margin profile relative to the overall corporate [ lift ]

I would say I was inspired about the footprint, the physical, the lack of physical footprint as I am, the COGS and some of the other elements.

Yes. Certainly. Well, it's the physical footprint that I think enables us to integrate it procedurally in a way that the existing robotic experience out there has not been.

And there are no further questions. I would like to turn the call back over to Pat Miles for any additional or closing comments.

Yes. I think, like all things that we do, the work begins today. And so our effort to integrate navigation-enabled robotics into our pursuit for the perfect procedure is upon us and just appreciate everybody's interest in ATEC, so thanks very much.

And that concludes today's presentation. Thank you for your participation, and you may now disconnect.