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

Hello all, and welcome. My name is [indiscernible], and I'm an associate in the healthcare investment banking team at JPMorgan. It's my pleasure to introduce Pat Miles, Chairman and CEO of Alphatec.

Thank you very much, [indiscernible]. Appreciate it. And I appreciate everybody's interest in ATEC Spine and look forward to kind of giving you a reasonably deep look at what we're doing as an organization. And so spine needs revolutionizing and that's our intent to do. Clearly, there will be some forward-looking statements. So I will save you this -- the walk through this. And so if you get anything out of the discussion, we are in a great time in a great place. I would tell you, and I'll kind of walk through some of the issues, but we have been growing consistently over the last 5 years at about a 40% rate. It's a big market that needs revolutionizing. We've made a ton of investments. So our opportunity to profitably grow forward is very apparent, and there are a ton of catalysts in terms of what's going on. So I'll walk through a lot of them, but lateral expansion, there's a lot of market disruption that I'll speak to. We have invested in some enabling technology launches that are important. We're entering the international marketplace in a more meaningful way as well as we have some, I think, real opportunity to improve deformity spine surgery. And so this is really kind of a market share expansion story. We've gone from 1% to 6% over the last 5 years. The demographics of that growth is really reflected in our focus. And I love to talk about being a spine-focused company because if you think about the customers in this space, a lot of the surgeons commit their entire vocation, they're calling to spine and they like an aligned partner, and I would tell you that we're an aligned partner. And so you look over the years in terms of how we reflected the growth and it's been 17% adoption, new surgeon adoption, 24% volume, which continues to accelerate, which I'll go into, and 12% case expansion, and I'll talk a little bit about that as well. And really 2023 was no exception to the strong performance. And as I said, the fun part about this is that what we're seeing is we're growing at a significant rate, and we're seeing acceleration through 2022, but then more so in 2023. So we accelerated 25% in 2022 and 31% in 2023. So it really positions us well for 2024. It's like we talk about these things as well as a lot of these things reflect decisions made 12 months to 18 months ago at the very least. And so again, we're very enthusiastic with regard to what's going on in the business. Our surgical business grew 39%. Our EOS business grew 24%. We finished the year at $482 million, which is a 37% year-over-year growth. And to us, that just speaks -- there's demand out there for what we're doing. There is a yearning for better solutions in spine. I think that people -- I've been in the spine business for about 30 years, and I think it's one of those things, where I don't think people appreciate kind of the game within the game. So our guidance for 2024 is $595 million, which is about 24% growth. And so we feel great about that. And so whenever I think about a large opportunity, I think, is there a way to improve it. And clearly, I think what a virtue is when you have a value creation opportunity that is foundationally one, where you have a revision rate in spine surgery that's 10% to 15% in what would be called short-segment surgery, and it's 25% to 30% in long surgery. So to infer that spine surgery is good today, I would suggest that these demographics would suggest otherwise, especially in the hands of the masses. And so you see a very large market and one where there's a great opportunity to control variables. And the reason why spine surgery is so challenging is because of the multitude of variables that ultimately you have to address, as a spine surgeon. And so as many people think that this is a commoditized space, I would suggest that it's not and I think that the information like this would drive people to realize that there's a real innovation opportunity. We also think that the dynamics of the marketplace are very interesting as well. It's like when [ 1/3 ] of the market is somewhat disrupted and 2/3 are somewhat apathetic, I think it creates a great environment for a company that's completely focused in the field to grow in a very significant way. And so as we said, we've gone from 1% to probably closer to 6% and a big part of the disruption is in the Globus NuVasive interaction, Orthofix and SeaSpine and ZimVie peeled their spine business out to private equity. And so when you see that level of disruption, it does nothing, but create opportunity. And then the other really kind of [ 2/3 ] of the business would be like a Stryker and Medtronic and J&J, which are going to be less expedient than a focused company like ATEC. And so we clearly love the dynamics of the market space. So we believe that we have a winning strategy. We have a team in San Diego that candidly was foundational to the -- really the origin and the evolution of a previous company. So we're not new at this, and we're not guessing at what the requirements of the environment are. And so in 2018, we acquired a company called SafeOp Surgical, which is a neurophysiology tool. That's a fancy word for saying, "Hey, I know where a nerve is, and I know what the health of the nerve is. I'll go into that in a little bit, but it was important to lay the foundation for what we are doing in lateral surgery. Lateral surgery is really kind of a great growth market within lateral. We took that technology, and we designed a lateral franchise. What you're seeing today is a reflection of what we did back in 2019, 2020, 2021, and you're seeing that now reflected. And so when you see the opportunity to build a procedure like we've done before, -- and then you start to see the expansion of how it's utilized in terms of indications for surgery, you like to think that it has a long run, and I'd tell you that we're early in the phase of that. When you do something new, and you get to make the rules, oftentimes you get to dictate what's included in there, and that would be considered a procedure. And so our ability to create procedures, create confidence with the surgeons because the surgery goes well, it ultimately reflects in a halo and that halo ultimately gives us access to more business. And so if you think about the company over the last 5 years, what we have done is foundation -- foundationally built a procedural company that ultimately has grown at least twice that of any other company in this space. The great part, though, is -- not only is the great run continuing with regard to the procedures, but there's a foundation in the acquisition of a company called EOS. We did the acquisition about 2 years ago and what it is, is an imaging system. And we believe it really gives us a nice foray into what we would call informatics and just the ability to start to, again, mitigate some of the variables that undermine the -- some of the challenging dynamics within the spine business. And so again, great momentum in the business. We feel like we've built the pieces. We clearly built a lot of the pieces upfront from a building, from a team, from an infrastructure perspective, we are loaded. And so I think that the run forward with regard to profitable growth is very, very apparent. And so really what makes us different is that, as I said, we are spine evangelicals. We are 100% spine focused. Spine is a monster market. It's a very technical market. And when you don't know how to do something, you call it commoditized. When you have bad outcomes, it's kind of silly that cause something commoditizes, that candidly doesn't have the outcomes that you intend. So there's great know-how in the company. When we started the build, we probably had 200 come up from a previous company, so there's a lot of experience in the building. I would tell you from a mechanical engineering perspective, from a neurophysiology engineering perspective, from an imaging perspective, from a navigation perspective, I would tell you, it's an unbelievable team. We have north of 200 engineers and really an absolute machine. We have compelled through creating clinical distinction. You don't grow like we're growing unless there is some improvement in terms of what you're delivering to the customer. We believe that spine can be improved through the assembly of technology. When a spine surgeon sees a patient and diagnoses the patient with a specific pathology, they don't think about individual components. They think of the assembly of a procedure that they could intervene in a way that provides a predictable outcome. And so we think that, that's hugely important. That's how we built the business. We think the next foray into that becomes improved informatics, and I'll go into a little bit about that. But the beauty is that we are great students of the environment and being focused in spine really provides the opportunity to innovate. We realize that innovation comes from the operating room and not the boardroom. And we're not a division of a division. Our existence is dependent upon spine. And candidly, we love that. We're not trying to be the leaders in musculoskeletal. What we're trying to be is great spine guys. And so I can't voice enough what the importance is of being focused in a very large market. I think the team is outstanding. I can't be more proud of what we've assembled as a group of people. Companies are assemblies of people. We have an unbelievable assembly of people. And the beauty is there's a real culture. And what you'll find is across the board clearly, there's a historical NuVasive influence with regard to a number of the people on the page. And so everybody from the Chief Operating Officer; candidly, our Chief Medical Officer, our Chief Medical Officer is the guy, who pioneered lateral surgery at NuVasive. He is our Chief Medical Officer and clearly highly influential with regard to what we do procedurally. There's also kind of a neat spin in terms of -- there's a -- I think, a lot of Stryker's discipline, especially from a selling perspective. And I think from a sales management perspective, there's a historical Stryker culture that has been very, very strong and very, very predictable. And so I'm very proud of that. But I would tell you, since 2017, we've turned over 100% of the executive management team, 96% of the employees and 92% of the board. And so I think a lot of times people are like Alphatec's been around a long time. Well, not the Alphatec as it is today based upon the demographics that I just shared. And so I think there's times we talk about things, and we use words that may not be as reflective of what people understand. And so when we talk about proceduralization, really, it means the assembly of technology to ultimately address a specific pathologic state. And so the opportunity that we have to design and develop these things to work together we believe to be very, very valuable. And so -- when you think of spine surgery, here is your spine surgery lesson for today, the goals of spine surgery are decompression, stabilization and alignment. Alignment is the greatest correlative, and this is not the world according to Pat Miles. This is bound in the literature. But the greatest correlative to a long-term outcome is alignment. And so our opportunity to create these procedures in a way that ultimately reflects the requirements of the intended pathology is apparent to us. And where you'll see some of the larger companies commit to big capital positions in hospitals, where they'll sell in robots or they'll sell in interoperative CT scans, we feel like the opportunity for us to improve the process or the predictability associated with the experience is to control the variables within the context of a procedure. And so -- we love technology, but we love technology within the context of what it means to a procedure. And so we believe that ultimately is clinical distinction. And what we have found is when -- and this sounds so stupid. When you create distinction, or you do something better, imagine this, you compel surgeon adoption. It will never work. And then the sales guys will want to come because what they ultimately want to do is sell something better. And so our opportunity to improve surgery is very apparent to us, and we think that foundationally, good surgery is good business and our opportunity to continue to further the clinical experience, as a route to a financial performance that's big. So there is a ton of experience in this. In a past life, we created what was called XLIF, which was a lateral approach to the spine. It didn't exist before we created -- created it at the previous place. The literature that supports its utility is significant. And so whenever you can minimize the morbidity of a surgery, meaning you're going to minimize the exposure related to the surgery, you're able to reconstruct the spine, you're able to decompress, stabilize and align, but do it through a less morbid approach, less blood loss. What happens is, you start to open a market space up to older patients, sicker patients. And so it just ultimately expands the space. But I think it's been very clear in terms of what lateral has meant. And the guy down in the -- what would be the lower right corner is Luiz Pimenta. And again, he's a Maven, as it relates to lateral surgeries from Sao Paulo, Brazil and back in early 2000, I had the great pleasure of working with him to develop the procedure. The problem with the original lateral procedure that we laid the patient on their side, and it was not a very familiar position to surgeons. And ultimately, where the outcomes were very strong and the literature was very supportive, the uptake of the procedure really never surpassed 30% of the surgeons out there. Surgeons get trained with a patient on their belly or the patient on their back. And so when you change the position of the patient, it creates a lack of familiarity that ultimately impedes the comfort or the confidence that a surgeon has in terms of doing the procedure. And so through the process, we also had some neural complication, as I said, lack of familiarity with the position. You were also -- like if we said that spine surgery is decompression, stabilization, alignment to directly decompress a nerve, meaning create an opening in the back and directly go after the nerves from the post area or the back was very, very difficult. And so oftentimes, what you do is you put the patient in one position, you do the lateral part, you would, in essence, take all of the [ drapes off ] and tear the whole room down and reposition the patient, put them on their stomach and then put screws in. And so that was an arduous task, and it took a long time and the hospital turnover was very arduous. So it wasn't perfect. And also, if you're lying on your side, what you want is you want a curvature called [ lower doses ] in your spine. It's very hard to create lower doses with the patient laying on their side. And so anyway, there were relative impediments. And so we always felt like there was a compromise. And forever in spine surgery, people would say, minimally invasive, minimally effective, and there are always -- there is always compromises associated with the first-generation lateral procedure. And so as we looked at it, we said, gosh, wouldn't it be great if you could do something, where you didn't have to compromise from a decompression standpoint, you didn't have to try to do a place pedicle screws in a very odd position and you can do a better job from an alignment perspective, and that was really the impetus for what we call PTP, which is Prone TransPsoas surgery. And so what we realized it is, if you control the patient's position, what you could do is lay them on their belly and laying them on their belly is a much more familiar position to surgeons. And so a surgeon that hasn't adopted lateral surgery before now may be compelled based upon the optionality associated with doing a decompressive type of maneuver, being able to place screws in a position that you're familiar with, being able to align based upon the belly hanging and making sure it's a more anatomic position. And so the opportunity to no longer compromise really kind was the impetus for PTP. So when you hear us talk about growth rates and everything else, what you're hearing us talk about is lateral. And when we're talking about lateral, what we're talking about is PTP is really the flagship. We launched LTP last year. So we also have a lateral element that I'll show you, but as well as things, where it's like our view is the way that we get at clinical sophistication or distinction is the assembly of technology. And so we feel like that a patient positioner is an absolute requirement. And the crazy part is, it's not as though we knew that beforehand. We found out based upon the intended perfecting of a procedure in the hands of the masses. This is not a business unless the masses can do it. So the key is to simplify it. And so we create a patient position. We design and develop a specific retractor. We recently acquired a navigation and robotic tool, which again will be integrated into the workflow of exactly what we're doing. I think the key to the kingdom is back in 2018 when we acquired a automated neuromonitoring tool. And then what we did is we got all of the talent from the previous company that had a unique understanding of neuromonitoring and candidly made it better. If you look at lateral surgery, lateral surgery is your side. And if you think about the anatomy from your side to the spine, there's a muscle called the psoas. And what's in the psoas is a bunch of nerves. And so, if you're going to need a technology, it's going to be neuro related. And so the great part about SafeOp is not only does it tell you where the nerve plexus is, which is vitally important, and it's what we had previously done. But the virtue of this technology is that in a very noisy room, so the operating room from an electrical noise perspective is unbelievably noisy. And so a Somatosensory Evoked Potential and SSEP is a very, very small signal. And so for us to make garnering understanding of signal to noise in a very, very challenging environment is hugely important. So just the [ ability ] to have a canary in the coal mine to say, hey, there's a degradation in the signal of the neuro plexus. If I'm trying to operate as a surgeon and try to decompress nerves, the last thing I want to do is have a nerve palsy. And so the challenge with a lateral approach is, if you didn't know that you were retracting a nerve too long, that is a complication that could happen. And so we feel like this becomes a great moat around a procedure that has clearly captured a lot of enthusiasm and a lot of momentum. And so one of the things that I would tell you that our company does extraordinarily well is we apply our learnings. And I was down in Brazil in 2001, taping patients to beds. And it's one of [ those ] things, where it's like, could you imagine being in an environment and say, "Gosh, we just can't make this stuff better, but we're still taping people to bed, like it's kind of nonsensical. And so when we started to understand the value of a patient positioner in the PTP procedure, we redesigned a patient position for lateral. And the optionality about controlling the patient in essence, avails a more supine type of what's called an ALIF or a fun procedure at L5-S1. So what we do is we expand the utility of what we call LTP, Lateral TransPsoas surgery in a lateral position. And so again, when we start talking about lateral, we talk about PTP and LTP and it just speaks to the level of sophistication. If sophistication is designed -- is defined by the number of distinctions you draw to a subject, I would tell you that we're -- what I would call lateral mavens. And this is just an example of kind of the orthogonal approach from the lateral, your ability to garner midline when you're [ at 51 ] doing an ALIF and then your ability to place pedicle screws as well. And so when we think of the procedure, if you wanted to make it super simple, if somebody has pathology that doesn't need significant realignment from L3 to S1, we think LTP is a great solution. If you need to reconstructive decompressive work, where there's an alignment requirement, we think PTP is a great solution. And so what the beauty of this becomes in -- what's the marketplace avail to us. And if you were to say that the lateral TAM was about $1 billion, we probably have 12% share. To us, it would be a little bit of a bore if that was all there was. And so when you start to look at what the opportunity is, really, the opportunity is anything at [ 4, 5 ] and above from a lateral perspective. So PTP at [ 4, 5 ] and above to obviate some of that was currently done as a CLIF or a TLIF. And so the TAM goes to at least $3 billion. And so the opportunity for us to continue to create distinction in this field and move it forward is very, very apparent. And so what happens is -- I think it's always interesting is like is it -- is that the chicken or the egg with regard to the sales force and who brings the business? And the surgeon always has to serve the interest of the patient. So that oftentimes, the surgeon will find a distinction with regard to the technological element, and they will move -- and oftentimes, the salesperson will follow, and it may appear that the salesperson is driving the surgeon, but it's really the surgeon driven the salesperson. But when you create confidence based upon doing something well, what happens is, is you garner more of their business. And so we think that the lateral franchise has created enough confidence, where to what we coined it as really a little bit of a halo effect, as it relates to the more conventional procedures. And so there are places to distinguish yourself in spine, and we delved into that, but there's also an opportunity from a halo effect perspective. And so we feel like if we just did the lateral thing and we were a procedural company, we have moved the ball forward, and we would continue our growth rate. But with having been at this for a long time and really with the challenge of minimizing the potential for the great revision rates, we think that there is a heck of a big opportunity to provide better informatics. And so a good company would have been what we're doing procedurally and doing all the mechanical and some of the neurophysiology stuff, that would have been a great company. To revolutionize the space, we feel like that informatics is key. And so 2 years ago, we bought a company called EOS. And EOS is a French company. And really, what you want is you want predictability in spine. If the nemesis of spine has been variable control, what you ultimately want is informatics that drive better decision-making. And so what EOS is a tool for ultimately us to have a standard, and there's very few standards in spine. Spine is driven by [ gestalt ]. It's driven by experience. What we want to do is provide an objective reflection of these things, such as what we're doing is driving behavior. And so when we start to think about enabling technology, we think about the spine procedural things like SafeOp and the navigation robotic element, but we also think about much greater control over the overall informatic on the imaging front. And so if you were to describe EOS today, it would be a full body scan. Like it is so crazy in this business, many of the x-rays taken for spine are very focal. And if they're long, oftentimes, they're stitched together. And it's very, very underwhelming. Imagine this, your hips and your knees have something to do with your spine imagine that. But you start to think about how unsophisticated we could be at times. And so the ability to have a full body 2 -- biplanar image that you can -- 3D reconstruct becomes very, very valuable. If you're going to speak to anybody within the field of deformity, they would tell you that the most coveted asset in all of deformity is EOS. There's a ton of study groups that don't want to join unless you have an EOS. And so I think as it relates to the questions about is the technology valuable, it clearly is. The question for us is, can we do the same thing? Remember how we bought SafeOp, we evolved it, and we use that information to drive better surgery. We're doing the same thing with regard to EOS. And so there's no stitching errors, there's no magnification errors. These things are very important when you start to think about predictive analytics or you start to think about image recognition, when you don't have any magnification or any stitching errors, what it does is it enables automation. One of the things that's highly difficult with regard to this environment is spine surgery [ remembers ] is decompression, stabilization, alignment. If you want to realign the spine and understanding the required alignment, what you don't want to do is have magnification errors or stitching errors. Also, there's a 5x less radiation. The throughput is highly expedient, and your ability to 3D reconstruct the anatomy is very apparent. So really, what it does is it creates objectivity around the environment. And so it will tell you how out of align the patient is, it will ultimately drive you at what intervention that you should apply where and did the intervention achieve its goals. And so again, I think that so much of surgery and so much of the revision dynamic is around this whole, hey, it's an art. And what we'd like to do is drive a greater science toward it. And so the ability to start to rely on a full body image that provides automation in the pelvic parameters that ultimately gives the surgeon the direction in terms of understanding what to, what and how to operate and how long of a construct to do, we believe to be very important. It also makes -- enables you to understand what the compensation when some patient comes in, and they start bending their knees, there becomes a compensation. And so today, without EOS, surgery relies on segmental imaging, and there's a limited view of the problem, there's a lack of global understanding and it leads to misleading findings. And the great part is that your ability to create an automated view of a patient and then create an automated plan becomes very, very valuable and do it expediently. So the surgeons are not going to change their behavior very easily. And so our ability to ultimately change it through the automation of a preoperative film, a preoperative plan, and then integrating that into the operative experience. And so we are releasing in Q2 of '24. On Monday, we got the 510(k) clearance for automation. And so what you'll see in Q2 of '24 out of EOS is you will see an automated alignment report. So when a patient gets scan, it will automatically show all of the angles of every meaningful measure in the spine. That will drive an automated surgical plan. It's going to be ironic that it's going to have our implants. That would be great. It will also inform a pre-bent patient-specific rod. So our ability to go ahead and click a box and send a rod. We will have an interoperative reconciliation tool to say, "Hey, listen, here was what the plan is, here's what you're doing interoperative and then the ability to assess postoperatively. And so to be able to have that level of objectivity on every patient, we're already in the 40,000 data points in terms of all of these things feed a cloud computing foundation. So our ability to collect this data and ultimately utilize this data is very, very apparent. And so what our desire is, is to make sure that what we're doing is we're assembling the EOS and informatic to ultimately the surgical experience. And so just the ability to utilize automation and artificial intelligence to identify exactly where everything is in space, what the angle is, and then ultimately integrate that into the surgical experience is very apparent. If you're not -- if you're not reconciling it from an operative perspective, it doesn't -- it becomes quite harder. So our ability to ultimately have a tool, where what you can say is, here is my intended realignment, here is respective angles that I need in the operative experience is very, very important. So that will be part of the Q2 '24 launch as well as a customized pre-bent rod, which ultimately assembles the technology to the surgical experience. So this year will be -- Q2 '24 will be all of the alignment measures. Another thing that we find to be vitally important is the underlying tissue. And so if you don't understand what the density of the bone is, it becomes somewhat problematic from a stabilization perspective. In the same scan that you're getting all the alignment measures, in the future, you will be able to get an understanding of the bone quality. So right now, again, back to the [ gestating ] an unanswered question, surgeons go to the operating room without understanding exactly what the quality of the bone of each patient is. We will be able to tell from a segmental perspective exactly what the bone quality is. So we're very bullish in terms of ultimately demand matching the stabilization elements, the screws and whatnot to what the bone quality is, and we feel like that's an opportunity. And so the ability to facilitate an end-to-end measure and you start to think, gosh, why is spine surgery challenging? It has a ton of variables. Mitigating variables is a big part of what we believe will ultimately continue to evolve it. And then what we want to do is continue to fuel the predictive analytic part, so there's a continued encirclement, if you will, of information that continues to serve the surgeon in terms of decision-making. And so everything from controlling a surgeon's clinic, like we think it'd be unbelievable to say, "hey, based upon this criteria, the likelihood of this being a surgical intervention patient is very high. And so if you're going to ultimately sort your patients on a 30-patient clinic day and the top 10 are a very high likelihood for surgical intervention and your PA does the bottom 20, we believe that to be value creation. And so I think a lot of people talk about esoteric ways to use AI. I got to tell you, we have very pragmatic ways to ultimately integrate these things. We recently acquired a navigation robotic system. We think that robotics is somewhat underwhelming at this point in terms of what the utility is clinically. If you want to move a field forward, if you want to do more -- if you want to place screws currently done today more precisely, it's not going to minimize the volume of revision rates that I talked about earlier. We have a wholesale opportunity to make spine surgery better, and it requires more than just a greater precision of screw placement. That is not the overriding problem in spine surgery. However, we think that there's an opportunity to create precision, and we think the opportunity to design and develop that into the workflow becomes very, very valuable. And so our interest is from a lateral perspective or a PTP perspective is to integrate neurophysiology technology, so you understand exactly what -- where the nerves are and then what the health of the nerve is as well as a precision tool to get you at the place and the anatomy that you want immediately. The beauty of that is we could also be able to tell in space if the retractor moves. If you want to minimize complication, you [ want to ] provide surgeons information, these things are nice opportunities. And so I would tell you that I think that we're very, very early on in these things, even though they've been out for a long period of time. We think that there's an opportunity. We love things that don't take up a ton of space. And we feel like the opportunity to sell these in different sites of services is very, very important. And so our ability to ultimately, as I said, integrate these things in, where what you'll do is be able to navigate orthogonality. When you think about the reason, lateral surgery is reproducible, it's because it is orthogonal to understand that you absolutely delivered something orthogonally and have an adjunctive piece of technology, [ a firm ] that you did, we believe to be very, very important. And so what we want to do is ultimately continue to leverage the ecosystem. As I said, as SafeOp was to lateral, we think that EOS is to at least deformity, it will also be used in degenerative. There's a ton of different technologies that we can apply to make these things better, and we think that we can proceduralize different types of deformity surgery. We've already started with regard to some of the patient positioning and some of the other opportunities within the deformity realm. If you think about being relevant in spinal deformity, spinal deformity is early onset. It's adolescent idiopathic and it's adult. There's very -- there's a number of ways through the technology suite that we've developed, you can improve this care. And so we think that the ecosystem is huge. We think mitigating variables associated with the utility of information provides better outcomes and we have great confidence. If you think about ATEC as a company, we are still, from a footprint perspective, very underpenetrated. As I said, we were about 5% market share. In those areas that we have meaningly -- meaningfully tenured salespeople, we have significant market share. There's a number of areas, where we have 25% market share. And so the opportunity for us to replicate those is significant. One of the things we're most proud of is if you start to think, gosh, this guy is talking about clinical distinction, what makes it real and what makes it real is same-store sales. And when you start to think about our growth profile, 36% of our long tenured -- our long tenured distribution is growing at a significant rate. And so we're driving expansion, which clearly fuels growth at the 40% range. That's a volume growth, as I said, of 24% from 2018 to 2023 in a revenue per surgery growth. From a surgeon adoption perspective, that continues to grow. We also see more utilization. So if somebody use -- started using a few products in 2018, what we're seeing is the continued expansion of the product utility year after year after year. And so there's also a mix shift. What we're seeing is greater confidence in terms of the volume of lateral cases, love when you create a thesis, and it gets utilized. The things that we covet is if we create a surgical thesis and we say these products should be part of the surgical thesis, it's valuable to have a convoyed reflection in the number of products per procedure. And so we continue to see that rise as well. And so that, in essence, suggests to us acceptance. And so when you start to think about -- here's a company that in the surgical space grew 39% and you say, "Geez, that's reasonably good. It's at least twice that of anybody else. And it's not on a tremendously small number, you say, "Gosh, do you continue to have a lot of catalysts to grow more. And I think in the dynamics of this space, we still have a ton of running room in lateral. We literally just started in Australia. We'll be in Japan later this year. We're going to go narrow and deep in the international space. We continue to get more and more hospital access. Providence was a hospital system that we got on just recently. From a market dynamic, as I said, [ 1/3 ] of the market is profoundly disrupted, and there's an apathy, I would tell you in the other [ 2/3 ]. We feel like that we can improve the workflow with regard to some of the technologies that we recently acquired in [ Valence ], and we think that EOS really provides a monster. And so it's great to see the momentum of the company continue and ultimately still have a good way to go. We feel like we laid a great foundation of work. Our route forward is one of profitability. And so we're totally excited about that. We're well capitalized, and we're all about self-funding. And so we expect that to be a 2025 phenomenon. So long-range financial plan update is March 19th at the New York Palace. So we're excited to update that. We'll add another a couple of years, 2 years to the long-range plan. And so we would invite you to that. But really, I think the thesis is a 40% CAGR in a big market that is candidly the stuff is not very good yet. And now we're in the process of profitable sales growth with a bunch of catalysts. So with that, I will leave the next 53 seconds for questions.

Well, thanks very much, Pat. I think we can end on that note given timing, but really appreciate you, and thanks for coming.

Absolutely. Thanks very much. Appreciate your interest in ATEC. Thanks.

Thanks.