Key insights
- Alphatec Holdings reported mixed Q1 2026 earnings, beating EPS estimates but missing on revenue due to underperformance in its EOS imaging segment. Surgical revenue grew 17% YoY, and adjusted EBITDA increased by 97%. Despite this, the stock plunged 32.33% after hours on revenue concerns, though it has since seen a slight recovery. The market reaction highlights the sensitivity to revenue misses, even with EPS beats and margin improvements. The stock is trading near its 52-week low.
Alphatec Holdings Inc. reported its Q1 2026 earnings with a mixed bag of results. The company posted an EPS of $0.00, surpassing the forecasted -$0.02, marking a 100% surprise. However, revenue fell short at $192.11 million against an expected $197.63 million, a miss by 2.79%. Following the announcement, the stock experienced a sharp decline of 32.33% in after-hours trading, closing at $6.99 from a pre-earnings price of $10.33. The stock has since seen a modest recovery, trading at $7.48 in premarket activity.
Alphatec Holdings demonstrated robust growth in its surgical business, achieving a 17% year-over-year increase in surgical revenue. However, the company’s EOS imaging segment underperformed, contributing to the overall revenue miss. Despite these challenges, Alphatec maintained strong operational efficiency and margin improvements, with adjusted EBITDA growing by 97% year-over-year. Over the last twelve months, the company generated $787 million in revenue, representing 23% annual growth, while analysts forecast full-year 2026 EPS of $0.33, supporting expectations that the company will turn profitable this year.
Alphatec’s EPS of $0.00 exceeded the forecast by 100%, while revenue of $192.11 million missed expectations by 2.79%. The EPS beat was significant, highlighting cost control and operational efficiency, but the revenue shortfall, particularly in the EOS segment, dampened investor sentiment.
The market reacted negatively to the earnings report, with the stock price plunging 32.33% in after-hours trading. This decline reflects investor concerns over the revenue miss and challenges in specific business segments. The stock has shown signs of recovery, trading at $7.48 in premarket, indicating some investor optimism. With a current price of $6.90 and a market cap of $1.06 billion, the stock is now trading near its 52-week low of $6.85, down 64% year-to-date. According to InvestingPro analysis, the stock appears undervalued at current levels, with a Fair Value estimate suggesting upside potential. Investors seeking deeper insights can explore ATEC’s position on the Most Undervalued stocks list, alongside access to 10+ additional ProTips and comprehensive financial metrics.
Alphatec has provided future EPS guidance, forecasting $0.1 for Q3 2026 and $0.16 for Q4 2026. Revenue projections for these quarters are set at $228.6 million and $250 million, respectively. The company plans to focus on enhancing its EOS platform and increasing biologics attachment rates to drive future growth.
CEO Patrick Miles highlighted, "Our Q1 results reflect strong underlying surgical momentum despite challenges in our EOS segment. We are committed to enhancing our product offerings and operational efficiency to deliver sustained growth."
During the earnings call, analysts questioned the company’s strategy to improve EOS performance and address the lower-than-expected biologics attachment rates. Executives emphasized ongoing product innovation and strategic investments in sales and marketing to enhance these areas. For investors seeking comprehensive analysis, ATEC is among the 1,400+ US equities covered by InvestingPro’s detailed Pro Research Reports, which transform complex Wall Street data into clear, actionable intelligence through intuitive visuals and expert analysis.
Paige, Moderator, ATEC: 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 or adjusted measures. Reconciliation of these 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. Sell-side analysts planning to ask a question must be registered through the dedicated analyst link included in today’s materials. If you have not yet registered, please do so now to be included in the Q&A queue.
Leading today’s call will be the ATEC Chairman and CEO, Pat Miles, and CFO, Todd Koning. Now, I will turn the call over to Pat Miles.
Pat Miles, Chairman and CEO, ATEC: Thanks, Paige. Appreciate it. Welcome to the Q1 2026 financial results call from ATEC. There will be some forward-looking statements. Please review at your leisure. With that, let me start simple. The business is working, and it’s scaling. We did $192 million in Q1. This was short of our internal expectation, primarily due to a shortfall in EOS sales performance. Surgical revenue was up 17%, mostly in line with consensus. What matters most is what is fueling that growth. Cases up 21%, surgeons up 23%. That’s not only a utilization story. It’s an adoption story. We are adding surgeons, and they’re doing more with us. We have created a durable growth model. EOS revenue was $14 million for the quarter.
As stated, this was short of our quarterly goal, and we have taken steps to bolster the team in sales, downstream marketing, and EOS support. However, the important thing we are seeing is EOSinsight is evolving into more than a product, but a platform. Growth and adoption of our EOSinsight platform is creating significant momentum. EOS has enabled us to gain access to prestigious institutions and a hunting license within those institutions, which is increasingly paying off for us. We generated $21 million of EBITDA, and yes, we used $11 million of cash, but that was a function of timing and intent. We are leaning into and investing in what’s working. When you step back, ATEC has become a compounding engine. More surgeons, more cases, and more platform pull-through, and we’re still just at the beginning of what we know we can do.
With that, I will turn it over to Todd.
Anna Andreeva, Analyst, Piper Sandler2: Well, thank you, Pat, and good afternoon, everyone. I’ll start with the first quarter 2026 revenue. Total revenue was $192 million, up 14% year-over-year, with surgical revenue of $178 million growing 17%. Sequentially, surgical revenue declined 6%, which was more pronounced than we have historically seen, primarily due to lower revenue per procedure contribution. Our strong year-over-year growth continues to be driven by the core elements of our model, which are 21% procedural volume growth, driven by 23% growth in new surgeon users and continued revenue per procedure expansion within our individual procedures. The consistent trends in net new surgeon additions and strong case volume, both above 20% again this quarter, speak to the ongoing momentum and durability in our surgical business.
Revenue per case declined approximately 3% year-over-year, driven primarily by mix impacts. In the U.S., we saw a higher mix of cervical procedures, which have a lower average revenue per case. In addition, our strong OUS performance reduced reported revenue per case by approximately 130 basis points. Finally, our overall biologics attachment rate was lower than expected. Importantly, and consistent with the prior periods, we are seeing strength in core individual procedural ASPs for lateral, ALIF, and cervical, which were up 2%, 4%, and 8% respectively year-over-year. Turning to EOS, revenue was $14 million, down $3 million year-over-year, as the number of system deliveries were lower than the prior year period, resulting in lower revenue recognition for the quarter.
These results were below our expectations for the quarter, and we have taken steps to address this by strengthening our sales team and downstream marketing function. The installed base of global EOSunits increased by 7% year-over-year. In the U.S., the EOSedge installed base, which is a prerequisite for EOSinsight, grew by 39% year-over-year, and the amount of EOSinsight accounts more than doubled. We continue to see strong utilization trends in these EOSedge accounts and increasing evidence of implant pull-through following EOSinsight adoption. Implant volumes at EOSinsight accounts are increasing meaningfully post-go-live, reinforcing the long-term strategic and financial value of the platform. Turning to the P&L, gross margin for the quarter was 71.6%, representing over 120 basis points of improvement year-over-year.
This expansion was driven by continued asset efficiency improvements, temporary mix benefit from lower than expected EOS and biologics sales, and ongoing cost improvements in operational discipline. Non-GAAP operating expenses grew approximately 6% year-over-year, well below the revenue growth, reflecting continued operating leverage in the business and disciplined management of expenses. First quarter non-GAAP R&D was $14 million, or 7% of revenue, up slightly year-over-year as we continue to invest in innovation and launch new procedural solutions.
Non-GAAP SG&A was $118 million, which grew 6% and was 62% of revenue, improving by 420 basis points year-over-year, which is primarily driven by improvements in our variable selling costs and slower depreciation growth. As a result of the continued top-line revenue growth and disciplined management of expenses, we continued to see margin expansion and profitability improvements. Adjusted EBITDA was $21 million in the first quarter, representing 11% of revenue and growing 97% year-over-year. Importantly, we delivered 45% drop through on incremental revenue, demonstrating the scalability of the business model. Overall, we continued to see meaningful operating leverage, consistent margin expansion, and improving profitability aligned with our long-term plan. Turning now to the balance sheet. We ended the quarter with approximately $140 million in cash.
Free cash used for the quarter was approximatel