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What changed in Alphatec Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Alphatec Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+213 added−234 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-27)

Top changes in Alphatec Holdings, Inc.'s 2024 10-K

213 paragraphs added · 234 removed · 184 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

74 edited+13 added−28 removed115 unchanged
Biggest changeOver 500 new and existing surgeons participated in the ATEC Experience in 2023, driving 27% growth in our surgeon user base. Over time, we cultivate the relationships created, partnering with each surgeon in an increasing number of surgeries and fostering training to inspire partnership in increasingly complex surgeries.
Biggest changeOver time, we expect surgeon utilization to consistently increase as we cultivate relationships, partnering with our customers in an increasing number of surgeries and fostering training to inspire partnership in increasingly complex surgeries. 3 Table of Contents 3. Elevate Distribution We market and sell our products through a strategic network of independent sales agents and direct sales representatives.
Our products are subject to regulation under the Federal Food, Drug and Cosmetic Act (“FDCA”), and in the case of our tissue products, also under the Public Health Service Act (“PHSA”).
Our products are also subject to regulation under the Federal Food, Drug and Cosmetic Act (“FDCA”), and in the case of our tissue products, also under the Public Health Service Act (“PHSA”).
On March 26, 2013, the OIG issued a Special Fraud Alert entitled “Physician-Owned Entities, in which the OIG concluded, among other things, that PODs are “inherently suspect under the anti-kickback statute” and that PODs present “substantial fraud and abuse risk and pose dangers of patient safety.” Since 2013, the OIG has further increased its scrutiny of PODs and the Department of Justice has brought several high-profile cases against physician owners. 15 Table of Contents The federal False Claims Act prohibits persons from knowingly filing or causing to be filed a false or fraudulent claim to, or the knowing use of false statements to obtain payment from, the federal government.
On March 26, 2013, the OIG issued a Special Fraud Alert entitled “Physician-Owned Entities, in which the OIG concluded, among other things, that PODs are “inherently suspect under the anti-kickback statute” and that PODs present “substantial fraud and abuse risk and pose dangers of patient safety.” Since 2013, the OIG has further increased its scrutiny of PODs and the Department of Justice has brought several high-profile cases against physician owners. 14 Table of Contents The federal False Claims Act prohibits persons from knowingly filing or causing to be filed a false or fraudulent claim to, or the knowing use of false statements to obtain payment from, the federal government.
If any of our operations are found to have violated or be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, among them being civil and criminal penalties, damages, fines, exclusion from government healthcare programs, and the curtailment or restructuring of our operations. 16 Table of Contents Third-Party Reimbursement In the U.S., healthcare providers generally rely on third-party payors, principally private insurers, and governmental payors such as Medicare and Medicaid, to cover and pay for all or part of the cost of a spine surgery in which our medical devices are used.
If any of our operations are found to have violated or be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, among them being civil and criminal penalties, damages, fines, exclusion from government healthcare programs, and the curtailment or restructuring of our operations. 15 Table of Contents Third-Party Reimbursement In the U.S., healthcare providers generally rely on third-party payors, principally private insurers, and governmental payors such as Medicare and Medicaid, to cover and pay for all or part of the cost of a spine surgery in which our medical devices are used.
These include: • registration and listing requirements, which require manufacturers to register all manufacturing facilities and list all medical devices placed into commercial distribution; • the QSR, which requires manufacturers, including third-party contract manufacturers, to follow stringent design, testing, control, supplier/contractor selection, documentation, record maintenance and other quality assurance controls, during all aspects of the manufacturing process and to maintain and investigate complaints; • labeling regulations and unique device identification requirements; • advertising and promotion requirements; • restrictions on sale, distribution, or use of a device; 13 Table of Contents • FDA prohibitions against the promotion of products for uncleared or unapproved (“off-label”) uses; • medical device reporting obligations, which require that manufacturers submit reports to the FDA of device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to reoccur; • medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • device tracking requirements; and • other post-market surveillance requirements, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • registration and listing requirements, which require manufacturers to register all manufacturing facilities and list all medical devices placed into commercial distribution; • the QSR, which requires manufacturers, including third-party contract manufacturers, to follow stringent design, testing, control, supplier/contractor selection, documentation, record maintenance and other quality assurance controls, during all aspects of the manufacturing process and to maintain and investigate complaints; • labeling regulations and unique device identification requirements; • advertising and promotion requirements; 12 Table of Contents • restrictions on sale, distribution, or use of a device; • FDA prohibitions against the promotion of products for uncleared or unapproved (“off-label”) uses; • medical device reporting obligations, which require that manufacturers submit reports to the FDA of device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; • medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • device tracking requirements; and • other post-market surveillance requirements, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
The sophisticated approaches that we create from the ground up integrate with our expanding Alpha InformatiX ™ ("AIX") product platform to objectively inform surgery and achieve the goals of spine surgery more predictably and more reproducibly.
The sophisticated approaches that we create from the ground up integrate with our expanding Alpha InformatiX ™ ("AIX") platform to objectively inform surgery and achieve the goals of spine surgery more predictably and more reproducibly.
We cannot completely eliminate the risk of contamination or injury resulting from hazardous materials, and we may incur material liability as a result of any contamination or injury. 14 Table of Contents Compliance with Certain Applicable Statutes We are subject to various federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback laws, false claims laws, criminal health care fraud laws, physician payment transparency laws, data privacy and security laws, and foreign corrupt practice laws.
We cannot completely eliminate the risk of contamination or injury resulting from hazardous materials, and we may incur material liability as a result of any contamination or injury. 13 Table of Contents Compliance with Certain Applicable Statutes We are subject to various federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback laws, false claims laws, criminal health care fraud laws, physician payment transparency laws, data privacy and security laws, and foreign corrupt practice laws.
Our employee base is comprised of men, women, underrepresented individuals, individuals with disabilities, and protected veterans. 17 Table of Contents To attract and retain employees, we offer competitive, performance-based compensation and benefits, opportunities for discounted equity ownership, employee recognition programs, career development opportunities, and access to continual growth through in-house live trainings, as well as support and reimbursement for external trainings and educational programs.
Our employee base is comprised of men, women, underrepresented individuals, individuals with disabilities, and protected veterans. 16 Table of Contents To attract and retain employees, we offer competitive, performance-based compensation and benefits, opportunities for discounted equity ownership, employee recognition programs, career development opportunities, and access to continual growth through in-house live trainings, as well as support and reimbursement for external trainings and educational programs.
Government Regulation—Medical Devices FDA’s Premarket Clearance and Approval Requirements. Unless an exemption applies, each medical device we wish to commercially distribute in the U.S. will require either FDA clearance of a premarket notification requesting permission for commercial distribution under Section 510(k) of the FDCA, also referred to as a 510(k) clearance, or approval of a premarket approval application (“PMA”).
Government Regulation—Medical Devices FDA’s Premarket Clearance and Approval Requirements. Unless an exemption applies, each medical device we intend to commercially distribute in the U.S. will require either FDA clearance of a premarket notification requesting permission for commercial distribution under Section 510(k) of the FDCA, also referred to as a 510(k) clearance, or approval of a premarket approval application (“PMA”).
Item 1. B usiness We are a medical technology company, headquartered in Carlsbad, California, focused on the design, development, and advancement of technology for better surgical treatment of spine disorders. By applying our unique, 100% spine focus and deep, collective industry know-how, we aim to revolutionize the approach to spine surgery through clinical distinction.
Item 1. B usiness We are a medical technology company, headquartered in Carlsbad, California, focused on the design, development, and advancement of technology for better surgical treatment of spine disorders. By applying our unique, 100% spine focus and deep industry know-how, we aim to revolutionize spine surgery through clinical distinction.
We have transformed our development process by focusing our programs and leveraging integrated teams to reduce the time frame from product concept to market commercialization. We also collaborate with surgeon partners to design products that are intended to enhance the clinical experience, simplify surgical techniques, and reduce overall costs, while improving patient outcomes.
We have transformed our development process by focusing our programs and leveraging integrated teams to reduce the time-frame from product conceptualization to market commercialization. We also collaborate with surgeon partners to design products that are intended to enhance the clinical experience, simplify surgical techniques, and reduce overall costs, while improving patient outcomes.
Of our U.S. employees, 428 were based in our Carlsbad, California headquarters, covering all of the following functional areas: sales, customer service, marketing, clinical education, advanced manufacturing, quality assurance, regulatory affairs, research and development, human resources, finance, legal, information technology, and administration.
Of our U.S. employees, 408 were based in our Carlsbad, California headquarters, covering all of the following functional areas: sales, customer service, marketing, clinical education, advanced manufacturing, quality assurance, regulatory affairs, research and development, human resources, finance, legal, information technology, and administration.
ATEC’s procedural offerings are designed to treat the various spine pathologies by better achieving the three goals of surgery including: (1) decompression, (2) stabilization, and (3) alignment. We believe there is vast opportunity to create value by innovating to improve surgical outcomes in spine.
Our procedural offerings are designed to treat the various spine pathologies by better achieving the three goals of surgery including: (1) decompression, (2) stabilization, and (3) alignment. We believe there is vast opportunity to create value by innovating to improve surgical outcomes in spine.
Further, in December 2016, the 21st Century Cures Act (“Cures Act”) was signed into law. The Cures Act, among other things, is intended to modernize the regulation of devices and spur innovation but its ultimate implementation is unclear. 12 Table of Contents Premarket Approval Pathway.
Further, in December 2016, the 21st Century Cures Act (“Cures Act”) was signed into law. The Cures Act, among other things, is intended to modernize the regulation of devices and spur innovation but its ultimate implementation is unclear. 11 Table of Contents Premarket Approval Pathway.
We believe that the principal competitive factors in our market include: • improved outcomes for spine pathology procedures; • ease of use, quality, and reliability of product portfolio; • effective and efficient sales, marketing, and distribution; • quality service and an educated and knowledgeable sales network; • technical leadership and superiority; • surgeon services, such as training and education; • responsiveness to the needs of surgeons; • acceptance by spine surgeons; • product price and qualification for reimbursement; and • speed to market.
We believe that the principal competitive factors in our market include: • improved outcomes for spine pathology procedures; • ease of use, quality, and reliability of product portfolio; • effective and efficient sales, marketing, and distribution; • quality service and an educated and knowledgeable sales network; • technical leadership and superiority; • surgeon services, such as training and education; 8 Table of Contents • responsiveness to the needs of surgeons; • acceptance by spine surgeons; • product price and qualification for reimbursement; and • speed to market.
We have entered into various agreements with certain surgeons that perform services for us, including some who make clinical decisions to use our products. Some of our referring surgeons own our stock, which they may have received from us as consideration for services performed.
We have entered into various agreements with certain surgeons that perform services for us, including some who make clinical decisions to use our products. Some of our referring surgeons own our stock, which they may have received from us as consideration for product development services performed.
While these non-operative treatments are considered to be an alternative to surgery, surgery is typically performed in the event that non-operative treatments are unsuccessful. We believe that, to date, these non-operative treatments have not caused a material reduction in the demand for surgical treatment of spinal disorders.
While these non-operative treatments are considered to be an alternative to surgery, surgery is typically performed in the event that non-operative treatments are unsuccessful. We believe that, to date, these non-operative treatments have not caused a significant reduction in the demand for surgical treatment of spinal disorders.
Engineered to leverage the benefits achieved by lateral spinal fusion procedures, such as reduced blood loss, shorter hospital stays, and quicker recovery times, PTP safely treats a wide range of patient pathologies. 5 Table of Contents Compared to a standard lateral procedure, the PTP approach positions the patient in a prone (face down) position, allowing simultaneous access to the spine laterally (from the side) and posteriorly (from the back), all while in a position that is more familiar to surgeons and offering a more streamlined, more orthogonal approach.
PTP is designed to leverage the benefits achieved by lateral spinal fusion procedures, such as reduced blood loss, shorter hospital stays, and quicker recovery times and safely treats a wide range of patient pathologies. 4 Table of Contents Compared to a standard lateral procedure, the PTP approach positions the patient in a prone (face down) position, allowing simultaneous access to the spine laterally (from the side) and posteriorly (from the back), all while in a position that is more familiar to surgeons and offering a more streamlined, more orthogonal approach.
To ensure that our products are safe and effective for their intended use, the FDA regulates, among other things, the following activities that we or our partners perform and will continue to perform: • product design and development; • product testing; • non-clinical and clinical research; • product manufacturing; • product labeling; • product storage; • premarket clearance or approval; • advertising and promotion; • product marketing, sales and distribution; • import and export; and • post-market surveillance, including reporting deaths or serious injuries related to products and certain product malfunctions.
To ensure that our products are safe and effective for their intended use, the FDA regulates, among other things, the following activities that we or our partners perform and will continue to perform: • product design and development; • product testing; • non-clinical and clinical research; 9 Table of Contents • product manufacturing; • product labeling; • product storage; • premarket clearance or approval; • advertising and promotion; • product marketing, sales and distribution; • import and export; and • post-market surveillance, including reporting deaths or serious injuries related to products and certain product malfunctions.
Single-position lateral surgery in the prone position minimizes unnecessary patient repositioning, enhances time efficiencies, provides surgeons with increased optionality, and achieves spinal alignment objectives more reproducibly. The PTP approach is enabled through a combination of purposefully developed technologies that address the unique challenges of approaching the spine laterally while prone.
Single-position lateral surgery in the prone position minimizes unnecessary patient repositioning, enhances time efficiencies, provides surgeons with increased optionality, and achieves spinal alignment objectives more reproducibly. The PTP approach is enabled through the integration of purposefully developed technologies that address the unique challenges of approaching the spine laterally while prone.
The FDA began to consider proposals to reform its 510(k) marketing clearance process in 2011, and such proposals could include increased requirements for clinical data and a longer review period.
The FDA began to consider proposals to reform its 510(k) premarketing clearance process in 2011, and such proposals could include increased requirements for clinical data and a longer review period.
We believe that our lateral franchise boasts unparalleled optionality, the capacity to address the clinical requirements for every pathology and surgeon preference regardless of patient position. The lateral sophistication that we have created is earning surgeons’ confidence and loyalty, and that is fueling portfolio-wide utilization of even our most conventional procedures.
We believe that our lateral franchise boasts unparalleled optionality and has the capacity to meet the clinical requirements for every pathology and surgeon preference regardless of patient position. The lateral sophistication that we have created is earning surgeons’ confidence and loyalty, and that is fueling portfolio-wide utilization of even our most conventional procedures.
We make these reports available to you free of charge through the Investor Relations section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the SEC. The public can also obtain any documents that we file with the SEC at http://www.sec.gov. 18 Table of Contents
We make these reports available to you free of charge through the Investor Relations section of our website as soon as reasonably practical after such materials have been electronically filed with, or furnished to, the SEC. The public can also obtain any documents that we file with the SEC at http://www.sec.gov. 17 Table of Contents
Our Technology Alpha InformatiX Designed to provide actionable information that controls clinical variables in spine care, our AIX ™ product platform comprises our EOS imaging system and VEA ™ alignment mobile application, our SafeOp Neural InformatiX System and Valence.
Our Technology Alpha InformatiX Designed to provide actionable information that controls clinical variables in spine care, our AIX™ product platform comprises our EOS imaging system and VEA™ alignment mobile application, our SafeOp Neural InformatiX System and our navigation-enabled robotics platform ("Valence™").
Our current products on the market in the U.S. include Class II spinal implants, instruments, neuromonitoring systems, robotic navigation systems, x-ray imaging systems and software as a medical device (SaMD) marketed under 510(k) premarket clearance, as well as Class I 510(k) exempt spinal instruments and devices. 510(k) Clearance Pathway .
Our current products on the market in the U.S. include Class II spinal implants, instruments, neuromonitoring systems, robotic navigation systems, x-ray imaging systems and software as a medical device (SaMD) marketed under 510(k) premarket clearance, as well as Class I 510(k) exempt spinal instruments and devices. 10 Table of Contents 510(k) Clearance Pathway .
Efforts that year founded the ATEC Organic Innovation Machine ™ , in-house product design, development and testing capabilities that harnessed the team’s collective spine expertise to create clinical distinction. From 2019 through 2021, we focused on building a foundation capable of supporting the organization as we scale.
Efforts that year founded the ATEC Organic Innovation Machine ™ , in-house product design, development and testing capabilities that harnessed the team’s collective spine expertise to create clinical distinction. From 2019 through 2021, we built a foundation capable of supporting the organization as we scale.
Both our currently marketed products and any future products we commercialize are subject to intense competition. We believe that our most significant competitors are Medtronic (Sofamor Danek), Johnson & Johnson (DePuy Spine), Stryker, Zimmer Biomet, Globus Medical, and others, many of which have substantially greater financial resources than we do.
Both our currently marketed products and any future products we commercialize are subject to fierce competition. We believe that our most significant competitors are Medtronic (Sofamor Danek), Johnson & Johnson (DePuy Spine), Stryker, Globus Medical, and others, many of which have substantially greater financial resources than we do.
If an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties of between $13,964 and $27,894 for each separate false claim and may be subject to exclusion from Medicare, Medicaid, and other federal healthcare programs.
If an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties of between $13,000 and $30,000 for each separate false claim and may be subject to exclusion from Medicare, Medicaid, and other federal healthcare programs.
The Alphatec Solution Our mission to improve outcomes by revolutionizing spine surgery affords a differentiated procedural investment thesis.
Our Procedural Solution Our mission to improve outcomes by revolutionizing spine surgery affords a differentiated procedural investment thesis.
Implants and Fixation Systems Our portfolio of specialized spinal implants and fixation systems are designed to specifically meet the requirements of each approach. Available in varying shapes, sizes, and lordosis options, our spinal implants include implants made from allograft, PEEK, and porous titanium.
Implants and Fixation Systems Our portfolio of specialized spinal implants and fixation systems are designed to specifically meet the requirements of each approach. Available in varying shapes, sizes, and lordosis options, our spinal implants are made from various materials, including allograft, PEEK, and porous titanium.
While some AIX applications are commercially available, significant development is underway to integrate and interconnect these technologies and bring unprecedented functionalities to market in 2024 and beyond. Our EOS imaging system is designed to provide unbiased, high-quality, and calibrated full-body imaging that enables a 3D model of patients’ skeletal systems and to provide valuable diagnostic and surgical planning capabilities.
While some AIX applications are commercially available, significant development is underway to integrate and interconnect these technologies and bring unprecedented functionalities to market in 2025 and beyond. Our EOS imaging system is designed to provide unbiased, high-quality, and calibrated full-body imaging that enables a 3D model of patients’ skeletal system for diagnostic and surgical planning applications.
We completed a survey in December 2023, in which over 88% of respondents indicated a willingness to recommend the Company to friends and family as a desirable place to work. High employee satisfaction is also reflected in our high employee engagement and low undesired turnover, which was approximately 3.7% for 2023.
We completed a survey in December 2024, in which over 92% of respondents indicated a willingness to recommend the Company to friends and family as a desirable place to work. High employee satisfaction is also reflected in our high employee engagement and low undesired turnover, which was approximately 5% for 2024.
Unlike most of our peers, we take a holistic approach to the approaches that we bring to market, investing not just in the highest dollar components of the approach, but in each of the technologies that integrate to enhance the clinical predictability and reproducibility of an approach.
Unlike most of our peers, we take a holistic approach to the procedures that we bring to market, investing not just in the highest dollar components of the procedure, but in each of the technologies that integrate to enhance clinical predictability and reproducibility of procedural-based approach.
We also acquired and integrated SafeOp ™ , technology that integrates uniquely with our approaches to provide information about both the location and the health of nerves intra-operatively. SafeOp became the informational foundation of the Prone TransPsoas (“PTP”) approach, which we developed and launched in 2020 to advance first-generation lateral spine surgery.
We also acquired and integrated SafeOp ™ , proprietary, know-how-backed technology that integrates with our approaches to provide real-time information about both the location and the health of nerves and motor pathways intra-operatively. SafeOp became the informational foundation of the Prone TransPsoas (“PTP”) approach, which we developed and launched in 2020 to advance first-generation lateral spine surgery.
If the FDA accepts the application for review, it has 180 days under the FDCA to complete its review of the PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years.
If the FDA accepts the application for review, it has 180 days under the FDCA to complete its review of the PMA, although in practice, the FDA’s review often takes significantly longer.
As of December 31, 2023, we and our affiliates owned 30 registered U.S. trademarks and 26 registered trademarks outside of the U.S. 10 Table of Contents Government Regulation Our products are subject to extensive regulation by the FDA and other U.S. federal and state regulatory bodies and comparable authorities in other countries.
As of December 31, 2024, we and our affiliates owned 33 registered U.S. trademarks and 27 registered trademarks outside of the U.S. Government Regulation Our products are subject to extensive regulation by the FDA and other U.S. federal and state regulatory bodies and comparable authorities in other countries.
An intra-operative system developed by spine experts with deep navigation and robotics know-how, Valence integrates navigation and robotics into spine procedures utilizing either a 3D imaging scan or 2D fluoroscopic images of the patient. Utilizing a small, table-mounted navigation system, a robotic arm guides instrumentation and implants to a pre-determined destination during surgery.
An intra-operative system created by spine experts with deep navigation and robotics know-how, Valence development is aimed at integrating navigation and robotics into spine procedural workflow employing either a 3D imaging scan or 2D fluoroscopic images of the patient. Utilizing a small, table-mounted navigation system, a robotic arm guides instrumentation and implants to a pre-determined destination during surgery.
As of December 31, 2023, we and our affiliates owned, or we exclusively owned 156 issued U.S. patents, 42 pending U.S. patent applications and 257 issued or pending foreign patents. We own multiple patents relating to unique aspects and improvements for several of our products.
As of December 31, 2024, we and our affiliates owned or exclusively licensed 180 issued U.S. patents, 45 pending U.S. patent applications and 250 issued or pending foreign patents. We own multiple patents relating to unique aspects and improvements for several of our products.
Both 510(k)s and PMAs are subject to the payment of user fees at the time of submission for FDA review. 11 Table of Contents If the FDA determines that the device is not “substantially equivalent” to a predicate device following submission and review of a 510(k) premarket notification, or if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk, the device sponsor may either pursue a PMA or seek reclassification of the device through the de novo process.
If the FDA determines that the device is not “substantially equivalent” to a predicate device following submission and review of a 510(k) premarket notification, or if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk, the device sponsor may either pursue a PMA or seek reclassification of the device through the de novo process.
We believe that one of the most effective ways to introduce and build market demand for our products is by training and educating spine surgeons, independent sales agents, and direct sales representatives on the benefits and use of our products.
We devote significant resources to training and education and are committed to a culture of scientific excellence and ethics. We believe that one of the most effective ways to introduce and build market demand for our products is by training and educating spine surgeons, independent sales agents, and direct sales representatives on the benefits and use of our products.
One such challenge, and probably the greatest limit to earlier adoption of lateral approaches overall, is the need to safely and predictably navigate across the lumbar plexus, an essential collection of nerves, to access the lumbar spine during surgery.
One such challenge, and probably the greatest limit to earlier adoption of lateral approaches overall, is the need to safely and predictably navigate across the lumbar plexus, an essential collection of nerves, to access the lumbar spine during surgery. To address that challenge, we integrated SafeOp Advanced Neuromonitoring information into the PTP procedure.
Spine Anatomy The spine is the core of the human skeleton, providing important structural support and alignment while remaining flexible to allow movement. A column of 33 vertebrae, it protects the spinal cord and provides the main support for the body. Each bony segment of the spine is referred to as a vertebra (two or more are called vertebrae).
Spine Anatomy and Treatment The spine is the core of the human skeleton, providing important structural support and alignment while remaining flexible to allow movement. A column of 33 vertebrae, it protects the spinal cord and provides the main support for the body.
We leverage our state-of-the-art, 7-station cadaveric lab to enable visiting surgeons to gain deep practical experience with our procedural solutions and educate participants on our role in shaping innovation. The surgeon relationships we are creating through that educational program continue to fuel strong growth.
We leverage our state-of-the-art, 7-station cadaveric lab to enable visiting surgeons to gain deep practical experience with our procedural solutions and educate participants on our role in shaping innovation. We believe that the surgeon relationships we create through our educational program support durable growth. The ATEC Experience drove 18% growth in our surgeon user base in 2024.
We offer NanoTec ™ surface modifications to our interbody systems to increase the surface area for cell adhesion and proliferation. Customization can be enhanced with our lordotic expandable intervertebral body fusion system, Calibrate ™ PSX, which was released in 2022. We also offer several standalone implants designed to provide for height restoration and stabilization in one integrated solution.
We offer NanoTec ™ surface enhancements to our interbody systems to increase the surface area for cell adhesion and proliferation. Spinal alignment can be further achieved with our lordotic expandable intervertebral body fusion systems. We also offer several standalone implants designed to provide for height restoration and stabilization in one integrated solution.
Human Capital As of December 31, 2023, we had 839 employees worldwide. Approximately 675 employees were located in the U.S. and 164 employees were located outside of the U.S.
Human Capital As of December 31, 2024, we had 867 employees worldwide. Approximately 681 employees were located in the U.S. and 186 employees were located outside of the U.S.
Invictus is our next-generation comprehensive spinal fixation solution, designed to treat the range of pathologies, with intraoperative adaptability and surgical predictability through an open, minimally invasive, or hybrid approach. The sophistication of the Invictus Posterior Fixation System continues to expand.
Invictus is our next-generation comprehensive spinal fixation solution, designed to treat the range of pathologies, with intraoperative adaptability and surgical predictability through an open, minimally invasive, or hybrid approach. Biologics We have a variety of biologics designed to facilitate the process of spinal fusion.
We believe that surgeons, independent sales agents, and direct sales representatives will become exposed to the merits and distinguishing features of our products through our training and education programs, and that such exposure will increase the use and promotion of our products.
We believe that surgeons, independent sales agents, and direct sales representatives will learn of the merits and distinguishing features of our products through our training and education programs, and that such exposure will increase the use and promotion of our products. We expect our focus on the entire procedure to build awareness of the breadth of our product offering.
Key to our PTP approach is the integration of SafeOp Advanced Neuromonitoring, a proprietary technology that couples automated electromyographic (“EMG”) and somatosensory evoked potential (“SSEP”) monitoring. SafeOp technology, as a result, is designed to uniquely beget real-time, surgeon-directed intra-operative information about both the location and the health of the patient’s nerves, enhancing the predictability and reproducibility of lateral approach outcomes.
SafeOp is a proprietary technology that enables automated ElectroMyoGraphic (“EMG”), SomatoSensory Evoked Potential (“SSEP”), and Motor Evoked Potential (“MEP”) monitoring. The technology is designed to uniquely provide real-time, surgeon-directed intra-operative information about the location and the health of the patient’s nerves, spinal cord and motor pathways, enhancing the predictability and reproducibility of lateral approach outcomes.
We evaluate and select our independent sales agent partners and sales employees based upon their expertise in selling spinal devices, reputation within the surgeon community, geographical coverage, and established sales network.
We evaluate and select our independent sales agent partners and sales employees based upon their expertise in selling spinal devices, reputation within the surgeon community, geographical coverage, and established sales network. We market our products at various industry conferences, organized surgical training courses, and in industry trade journals and periodicals.
Our training and education programs are designed to support new product introductions to the market as well as ongoing portfolio advancement. Our resources are nimble and responsive and include field-based engagements to supplement our core curriculum. We believe this is an effective way to increase overall surgeon adoption of our new products.
Our resources are nimble and responsive and include field-based engagements to supplement our core curriculum. We believe this is an effective way to increase overall surgeon adoption of our new products.
Create Clinical Distinction Clinical distinction is paramount to our value creation strategy. We are committed to continuing to invest in the development, launch, and promotion of approaches and technologies intended to revolutionize spine surgery.
To achieve our vision and unlock long-term value, we have, and will continue to prioritize the following three strategic initiatives: 1. Create Clinical Distinction Clinical distinction is paramount to our value creation strategy. We are committed to continuing to invest in the development and launch of approaches and technologies intended to revolutionize spine surgery.
We select our suppliers to ensure that all of our products are safe, effective, adhere to all applicable regulations, are of the highest quality, and meet our supply needs.
Additionally, outsourcing provides expertise and capacity necessary to scale up or down based on demand. We select our suppliers to ensure that all of our products are safe, effective, adhere to all applicable regulations, are of the highest quality, and meet our supply needs.
We also acquired EOS ® , technology that enables full-body, calibrated, 3D images that integrate throughout the span of patient spine care to influence procedure planning and improve and quantify the understanding of global alignment.
We also acquired EOS ® imaging, technology that enables full-body, calibrated, 3D-images that integrate throughout the span of spine patient care to influence procedure planning and improve and quantify the understanding of global alignment. From 2022 to 2024, the momentum of PTP ™ was robust, as both lateral-experienced surgeons and surgeons new to lateral surgery adopted the approach.
The safety and effectiveness of Class III devices cannot be reasonably assured solely by compliance with the General Controls and Special Controls described above. Therefore, these devices must be the subject of an approved PMA.
The safety and effectiveness of Class III devices cannot be reasonably assured solely by compliance with the General Controls and Special Controls described above. Therefore, these devices must be the subject of an approved PMA. Both 510(k)s and PMAs are subject to the payment of user fees at the time of submission for FDA review.
Sales and Marketing We market and sell our products through a sales force consisting of dedicated and non-dedicated independent sales agents and dedicated employee direct sales representatives. We employ a team of area vice presidents, sales directors, and regional business managers, who are responsible for overseeing the sales channel process in their territories.
We employ a team of area vice presidents, sales directors, and regional business managers, who are responsible for overseeing the sales channel process in their territories.
Designed to maximize the positional effects of having the patient in a prone position while streamlining operating room setup, PTP enables a single-position surgery. Key features include bi-lateral structural support to minimize patient movement, adjustable side paddle position to accommodate varying patient habitus, an integrated bed-rail system and compatibility with the Jackson frame.
Key features include bi-lateral structural support to minimize patient movement, adjustable side paddle position to accommodate varying patient habitus, an integrated bed-rail system and compatibility with the Jackson frame.
By creating clinically distinct solutions that improve surgical outcomes, we believe that we are positioned to continue to earn share of the U.S. spine market, becoming the partner of choice for spine surgeons, hospitals, healthcare systems, and payors. To achieve our vision and unlock long-term value, we have, and will continue to prioritize the following three key strategic initiatives: 1.
By creating clinically distinct procedures that improve surgical outcomes, we believe that we are well positioned to continue to earn increasing share of the U.S. spine market, becoming the partner of choice for spine surgeons, hospitals, healthcare systems, and payors.
We have not experienced significant difficulty in locating and obtaining the materials necessary to fulfill our production requirements and we have not experienced a meaningful disruption to sales orders. 9 Table of Contents Competition Although we believe that our current broad product portfolio and development pipeline is differentiated and has numerous competitive advantages, the spinal implant industry is highly competitive, subject to rapid technological change, and significantly affected by new product introductions.
Competition Although we believe that our current broad product portfolio and development pipeline is differentiated and has numerous competitive advantages, the spinal implant industry is highly competitive, subject to rapid technological change, and significantly affected by new product introductions.
We have developed, and continue to seek to develop, next-generation surgical approaches that advance spine care with seamlessly integrated access systems, implants, positioners, biologics and enabling technologies, each specifically designed to beget objective decision-making and to more successfully address the core spine pathologies.
We have developed, and continue to seek to develop, next-generation surgical approaches that advance spine care with seamlessly integrated access systems, implants, positioners, biologics and informatics that are designed to power objective decision-making and improve surgeons’ ability to meet surgical requirements.
We feel that ATEC is well-positioned to continue to capitalize on spine market dynamics. Background The year 2018 marked the beginning of a business transformation that replaced 100% of our executive team, 92% of our Board of Directors, and 96% of the remaining team with experienced professionals, infusing industry-leading spine know-how throughout our organization.
We believe our future success will continue to be fueled by increasing surgeon adoption of our approach-specific procedures. Background The year 2018 marked the beginning of a business transformation that replaced 100% of our executive team, 92% of our Board of Directors, and 96% of the remaining team with experienced professionals, infusing spine know-how throughout our organization.
Sales training programs are a platform for learning and organizational development, ensuring the sales force is clinically competitive and considered an essential resource to all stakeholders. We focus on cross-functional collaboration and alignment to deliver timely and relevant programs to meet surgeon and representative needs and positively impact the business.
Sales training programs are a platform for learning and organizational development, ensuring the sales force is clinically competitive and considered an essential resource to all stakeholders.
Most of our product development efforts are fully integrated in a singular location, our Carlsbad headquarters, which allows us to bring products from concept to market rapidly responding to surgeon and patient needs. Our resources include a technology advancement cell for rapid prototyping, a cadaveric lab, and mechanical testing laboratory.
Most of our product development efforts are fully integrated in our Carlsbad headquarters. Our resources include a technology advancement cell for rapid prototyping, a cadaveric lab, and mechanical testing laboratory. Sales and Marketing We market and sell our products through a sales force consisting of dedicated and non-dedicated independent sales agents and dedicated employee direct sales representatives.
We have a comprehensive product portfolio designed to address the spine’s various pathologies, and are perpetually innovating to accomplish our ultimate vision, which is to be the standard bearer in spine.
We have a comprehensive product portfolio designed to address the spine’s various pathologies and we are perpetually innovating to accomplish our vision to be the standard bearer in spine. Total revenue was $611.6 million for the year ended December 31, 2024, representing an increase of $129.3 million, or 27% compared to $482.3 million for the year ended December 31, 2023.
We market our products at various industry conferences, organized surgical training courses, and in industry trade journals and periodicals. 8 Table of Contents Surgeon Training and Education We focus our surgeon training efforts on delivering critical technical skills needed to perform the entire spinal fusion procedure through a peer-to-peer approach for qualified surgeon customers.
Surgeon Training and Education We focus our surgeon training efforts on delivering critical technical skills needed to perform the entire spinal fusion procedure through a peer-to-peer approach for qualified surgeon customers. Well-timed surgeon education programs drive customer conversion and loyalty by focusing on delivering value through improved clinical outcomes.
Development is expected to allow surgeons to more effectively and efficiently assess patients’ full-body alignment, assess level-specific bone quality, establish surgical objectives, bend patient-specific rods pre-operatively, reconcile to surgical objectives intra-operatively, and determine whether surgical objectives were met post-operatively.
Insight, an organically developed end-to-end spine care software platform, built around the foundation of EOS Edge™ imaging, was released in 2024. Insight allows surgeons to more effectively and efficiently assess patients’ full-body alignment, establish surgical objectives, bend patient-specific rods pre-operatively, reconcile to surgical objectives intra-operatively, and determine whether surgical objectives were met post-operatively.
Products and Technologies Under Development Internally Developed Products and Technologies We are expanding our portfolio of products and technologies to enhance clinical outcomes across multiple pathologies, regardless of a surgeon’s preferred surgical approach. We expect to launch 8-10 new products during 2024.
The composite amniotic membrane is intended to act as a biological barrier and provide an excellent dissection plane. 6 Table of Contents Products and Technologies Under Development Internally Developed Products and Technologies We are continuously expanding our portfolio of products and technologies to enhance clinical outcomes across multiple pathologies, applicable to any surgeon’s preferred surgical approach.
Our Amnioshield ® Amniotic Tissue Barrier is an allograft for spinal surgical barrier applications. The composite amniotic membrane is intended to act as a biological barrier and provide an excellent dissection plane.
Our Amnioshield ® Amniotic Tissue Barrier is an allograft for spinal surgical barrier applications.
We believe the opportunity to expand our strategic sales network is vast, with approximately one third of U.S. territories, including many of the U.S.' most significant spine markets, still under- or completely unrepresented. 4 Table of Contents With our acquisition of EOS, we aligned EOS’ U.S.-based capital sales team with our regional sales teams and leadership.
We believe the opportunity to expand our strategic sales network is vast and expect to continue to compel sales professionals to sell through the clinical distinction and surgeon adoption that power our growth leadership. With our acquisition of EOS, we aligned EOS’ U.S.-based capital sales team with our regional sales teams and leadership.
Manufacture and Supply We rely on third-party suppliers for the manufacture of all our implants and instruments. Outsourcing implant manufacturing reduces our need for capital investment and reduces operational expense. Additionally, outsourcing provides expertise and capacity necessary to scale up or down based on demand for our products.
Our goal is to create a sustainable competitive advantage for our organization by providing surgeon education programs along with a comprehensive and growing sales training platform. Manufacture and Supply We rely on third-party suppliers for the manufacture of all our implants and instruments. Outsourcing implant manufacturing reduces our need for capital investment and reduces operational expense.
The application of our team’s deep spine know-how, coupled with a willingness to invest holistically in each of the technologies integrated into all of ATEC’s procedural approaches continues to increasingly compel surgeons and sales talent to partner with us.
Applying our unique, holistic view of procedural innovation, we integrated the approach-specific technologies with EOS and are beginning to introduce the comprehensive approaches to EOS’ AIS and deformity-centric installed base. The application of our team’s deep spine know-how, coupled with our commitment to advancing the field of spine continues to compel surgeons and sales talent to partner with us.
We are also in the nascent stages of building an international footprint. Beginning in 2022, we partnered with surgeons to treat our first patients in Australia and New Zealand.
In 2022, we partnered with surgeons to treat our first patients in Australia and New Zealand, and late in 2024, the first LTP surgery was completed in Japan. Looking forward, we intend to gradually expand our footprint in the select geographies.
Positioners We have developed approach-specific patient positioning systems that integrate with our other access systems, providing for a more rigid construct and enhanced reproducibility. The PTP Patient Positioning System ™ , for example, was developed specifically for the PTP procedure as an adjunct to the Sigma ™ -PTP Access System.
Further development is aimed at integrating the technology into our lateral procedures for improved surgical predictability, reduced radiation exposure and enhanced intra-operative precision. 5 Table of Contents Positioners We have developed approach-specific patient positioning systems that integrate with our other access systems, providing for a more rigid construct and enhanced reproducibility.
Aggregate product categories used per surgery expanded to 2.4 for the full-year 2023, compared to 2.2 in the prior year. For the full year 2023, surgical volume grew 31% and average revenue per surgery expanded 7% compared to 2022. Looking to 2024 and beyond, we intend to continue to pioneer spine innovation that improves surgical outcomes.
With the expansion and adoption of our product portfolio, we continue to drive growth in surgical volume and average revenue per surgery. For the full year 2024, surgical volume grew 19% and average revenue per surgery expanded 8.0% compared to 2023.
As such, we expect continued growth in the number of products sold into each surgery, surgical volume and revenue per surgery. 2. Compel Surgeon Adoption An integral part of our strategy is to compel surgeon adoption with the clinical distinction that we have, and will continue to introduce.
Looking forward, we intend to continue to pioneer spine innovation that improves surgical outcomes, fueling continued growth in surgical volume and revenue per surgery. 2. Compel Surgeon Adoption By creating clinical distinction, we seek to compel surgeon adoption, another of our strategic initiatives.
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Total revenue was $482.3 million for the year ended December 31, 2023, representing an increase of $131.4 million, or 37% compared to $350.9 million for the year ended December 31, 2022. We believe our future success will continue to be fueled by increasing adoption of the new and existing integrated technologies that distinguish our approach-specific procedures.
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In 2024, we launched EOS Insight ™ ("Insight"), a ground-breaking software platform powered by EOS imaging, designed to elevate spine patient care from pre-operative planning to post-operative assessment. Shortly after an EOS scan, Insight automates the calculation of alignment measures, the aspect of surgical planning most crucial to 2 Table of Contents successful long-term outcomes.
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As we execute our vision for EOS, we believe it will set new standards for spine care. 2 Table of Contents From 2022 to 2023, the momentum of PTP ™ was robust, as both lateral-experienced and surgeons new to lateral surgery adopted the approach.
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Insight incorporates those measures into a surgical plan that integrates a 3D model of the patient’s spine with our interbodies, including, if necessary, patient-specific contoured rods. In the operating room, Insight measures key parameters and enables direct comparison to the pre-operative plan. Post-operatively, the standardized images that Insight generates facilitate individual case reviews and comprehensive practice assessments.
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That adoption-driven validation has been the source of industry-leading market share expansion, which has delivered an approximately 40% revenue compound annual growth rate since our transformation commenced in 2018. Recent Developments Public Offering On October 27, 2023, we completed an underwritten public offering (the “Public Offering”) of 14,300,000 shares of our common stock at a price of $10.50 per share.
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Ultimately, the images and data that Insight is accumulating can inform the first predictive care in spine. Even before we acquired EOS, the technology was highly influential among prestigious academic and deformity treatment centers worldwide.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to successfully integrate Valence into our existing business in an efficient, effective and timely manner, anticipated benefits, including the opportunities for expected growth from the Valence Transaction, may not be realized fully, if at all, or may take longer to realize than expected, and our cash flow and financial condition may be negatively affected. 22 Table of Contents Consolidation in the healthcare industry could lead to price concessions or exclusion of some suppliers from some markets, which could have an adverse effect on our business, financial condition or results of operations.
Biggest changeFailure to comply with the laws and regulations that affect our global operations could have an adverse effect on our business, financial condition, or results of operations. 20 Table of Contents Consolidation in the healthcare industry could lead to price concessions or exclusion of some suppliers from some markets, which could have an adverse effect on our business, financial condition or results of operations.
The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including those described elsewhere in this “Risk Factors” section and the following: • volume and timing of orders for our products; • quarterly variations in our or our competitors’ results of operations; • our announcement or our competitors’ announcements regarding new or enhanced products, product enhancements, significant contracts, number of sales agents, number of hospitals and spine surgeons using products, acquisitions, and collaborative or strategic investments; • announcements of technological or medical innovations for the treatment of spine pathology; • changes in earnings estimates or recommendations by securities analysts; 31 Table of Contents • our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis; • changes in healthcare policy in the U.S., including changes in governmental regulations or in the status of our regulatory approvals, clearances or applications, and changes in the availability of third-party reimbursement in the U.S.; • product liability claims or other litigation involving us, including disputes or other developments with respect to intellectual property rights; • sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders; • changes in accounting principles; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including those described elsewhere in this “Risk Factors” section and the following: • volume and timing of orders for our products; • quarterly variations in our or our competitors’ results of operations; • our announcement or our competitors’ announcements regarding new or enhanced products, product enhancements, significant contracts, number of sales agents, number of hospitals and spine surgeons using products, acquisitions, and collaborative or strategic investments; • announcements of technological or medical innovations for the treatment of spine pathology; • changes in earnings estimates or recommendations by securities analysts; • our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis; • changes in healthcare policy in the U.S., including changes in governmental regulations or in the status of our regulatory approvals, clearances or applications, and changes in the availability of third-party reimbursement in the U.S.; • product liability claims or other litigation involving us, including disputes or other developments with respect to intellectual property rights; • sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders; • changes in accounting principles; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
The level of our revenues and results of operations at any given time will be based primarily on the following factors: • acceptance of our products by spine surgeons, patients, hospitals and third-party payers; • demand and pricing of our products, and the mix of our products sold, because profit margins differ among our products; • timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; • our ability to grow and maintain a productive sales and marketing organization and independent sales agent network; • regulatory approvals and legislative changes affecting the products we may offer or those of our competitors; • successful integration of newly acquired businesses, technology and personnel into our business operations; • the effect of competing technological and market developments; • levels of third-party reimbursement for our products; • interruption in the manufacturing or distribution of our products or our ability to produce or obtain products of satisfactory quality or in sufficient quantities to meet demand; and • changes in our ability to obtain FDA, state and international approval or clearance for our products.
The level of our revenues and results of operations at any given time will be based primarily on the following factors: • acceptance of our products by spine surgeons, patients, hospitals and third-party payers; • demand and pricing of our products, and the mix of our products sold, because profit margins differ among our products; • timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; • our ability to grow and maintain a productive sales and marketing organization and independent sales agent network; • regulatory approvals and legislative changes affecting the products we may offer or those of our competitors; • successful integration of newly acquired businesses, technology and personnel into our business operations; • the effect of competing technological and market developments; • levels of third-party reimbursement for our products; 26 Table of Contents • interruption in the manufacturing or distribution of our products or our ability to produce or obtain products of satisfactory quality or in sufficient quantities to meet demand; and • changes in our ability to obtain FDA, state and international approval or clearance for our products.
Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. 23 Table of Contents Sales and marketing practices in the healthcare industry have been the subject of increased scrutiny from governmental agencies, and we believe that this trend will continue.
Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. 21 Table of Contents Sales and marketing practices in the healthcare industry have been the subject of increased scrutiny from governmental agencies, and we believe that this trend will continue.
Our quarterly financial results are difficult to predict and may fluctuate significantly from period to period, particularly because our sales prospects are uncertain.
Our quarterly financial results could fluctuate significantly. Our quarterly financial results are difficult to predict and may fluctuate significantly from period to period, particularly because our sales prospects are uncertain.
In the future other types of crises, may create an environment of business uncertainty around the world, which may hinder sales and/or supplies of our products nationally and internationally. 26 Table of Contents Alphatec Holdings is a holding company with no operations, and unless it receives dividends or other payments from its subsidiaries, it will be unable to fulfill its cash obligations.
In the future other types of crises, may create an environment of business uncertainty around the world, which may hinder sales and/or supplies of our products nationally and internationally. Alphatec Holdings is a holding company with no operations, and unless it receives dividends or other payments from its subsidiaries, it will be unable to fulfill its cash obligations.
Any such claim, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation. 30 Table of Contents If we become subject to product liability claims, we may be required to pay damages that exceed our insurance coverage.
Any such claim, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation. If we become subject to product liability claims, we may be required to pay damages that exceed our insurance coverage.
Further, our insurance may not cover all claims made against us and could have high deductibles in any event, and defending a suit, regardless of its merit, could be costly and divert management attention. Nearly all of our operations are currently conducted in locations that may be at risk of damage from fire, earthquakes or other natural disasters.
Further, our insurance may not cover all claims made against us and could have high deductibles in any event, and defending a suit, regardless of its merit, could be costly and divert management attention. 23 Table of Contents Nearly all of our operations are currently conducted in locations that may be at risk of damage from fire, earthquakes or other natural disasters.
Even a meritless or unsuccessful product liability claim could harm our reputation in the industry, lead to significant legal fees and result in the diversion of management’s attention from managing our business. Any claims relating to our improper handling, storage or disposal of biological, hazardous and radioactive materials could be time consuming and costly.
Even a meritless or unsuccessful product liability claim could harm our reputation in the industry, lead to significant legal fees and result in the diversion of management’s attention from managing our business. 28 Table of Contents Any claims relating to our improper handling, storage or disposal of biological, hazardous and radioactive materials could be time consuming and costly.
Based on shares outstanding at February 19, 2024, our executive officers, directors and stockholders holding more than 5% of our outstanding common stock and their affiliates, in the aggregate, beneficially own approximately 30% of our outstanding common stock.
Based on shares outstanding at February 19, 2025, our executive officers, directors and stockholders holding more than 5% of our outstanding common stock and their affiliates, in the aggregate, beneficially own approximately 30% of our outstanding common stock.
In addition, similar rules may also apply at the state level, and there may be periods during which the use of NOLs is suspended or limited, which could accelerate or permanently increase state taxes owed. 33 Table of Contents We could be subject to changes in our tax rates, new tax legislation or additional tax liabilities.
In addition, similar rules may also apply at the state level, and there may be periods during which the use of NOLs is suspended or limited, which could accelerate or permanently increase state taxes owed. We could be subject to changes in our tax rates, new tax legislation or additional tax liabilities.
Because patent applications can take many years to issue, there may be applications now pending of which we are unaware, which may later result in issued patents that our products may infringe. There could also be existing patents that one or more components of our products may be inadvertently infringing, of which we are unaware.
Because patent applications can take many years to issue, there may be applications now pending of which we are unaware, which may later result in issued patents that our products may infringe. There could 27 Table of Contents also be existing patents that one or more components of our products may be inadvertently infringing, of which we are unaware.
We have a history of net losses, we expect to continue to incur net losses in the near future, and we may not achieve or maintain profitability. We have typically incurred net losses since our inception. As of December 31, 2023, we had an accumulated deficit of $1.1 billion.
We have a history of net losses, we expect to continue to incur net losses in the near future, and we may not achieve or maintain profitability. We have typically incurred net losses since our inception. As of December 31, 2024, we had an accumulated deficit of $1.3 billion.
Our dependence on a single third-party PEEK supplier and the challenges we may face in obtaining adequate supplies of biologics products involve several risks, including limited control over pricing, availability, quality and delivery schedules.
Our dependence on a single third-party PEEK supplier and the challenges we may face in obtaining adequate supplies of biologics products involve several risks, including limited control over pricing, availability, quality and delivery 19 Table of Contents schedules.
These covenants could adversely affect our ability to operate our business, our liquidity or our results of operations, and our inability to comply with any of these covenants could result in a default under the applicable loan agreement or indenture, which could result in an increase the applicable interest rate or all amounts borrowed under the applicable debt instrument, together with accrued interest and other fees, to become due and payable or, with respect to our Revolving Credit Facility, could result in MidCap refusing to make further extensions of credit to it.
These covenants could adversely affect our ability to operate our business, our liquidity or our results of operations, and our inability to comply with any of these covenants could result in a default under the applicable loan agreement or indenture, which could result in an increase the applicable interest rate or all amounts borrowed under the applicable debt instrument, together with accrued interest and other fees, to become due and payable or, with respect to our Revolving Credit Facility, could result in MidCap 25 Table of Contents refusing to make further extensions of credit to us.
The trading market for our common stock may be affected in part by the research and reports that analysts publish about our business. If one or more of the analysts who elects to cover us downgrades our stock, our stock price could likely decline rapidly.
Securities analysts may not provide research coverage of our common stock. The trading market for our common stock may be affected in part by the research and reports that analysts publish about our business. If one or more of the analysts who elects to cover us downgrades our stock, our stock price could likely decline rapidly.
Some of our agreements provide for accelerated vesting of benefits, including full vesting of restricted stock and options, upon a change of control, or extends the term of the agreement upon a change in control and make it more difficult for us or our successor to terminate the agreement. These provisions may discourage or prevent a change of control.
Some of our agreements provide for accelerated vesting of benefits, including full vesting of restricted stock and options, upon a change of control, or extends the term of the agreement upon a change in control and make it more difficult for us or our successor to terminate the agreement.
At December 31, 2023, our principal sources of liquidity consisted of cash and cash equivalents of $221.0 million, accounts receivable, net, cash from operations and available borrowings under our revolving credit facility with entities affiliated with MidCap Financial Trust ("Revolving Credit Facility").
At December 31, 2024, our principal sources of liquidity consisted of cash and cash equivalents of $138.8 million, accounts receivable, net, cash from operations and available borrowings under our revolving credit facility with entities affiliated with MidCap Financial Trust ("Revolving Credit Facility").
Additionally, if surgeons are not properly trained, they may misuse or ineffectively use our products, which may result in unsatisfactory patient outcomes, patient injury, negative publicity or lawsuits against us, any of which could have a significant adverse effect on our business, financial condition and results of operations. 20 Table of Contents We rely on a limited number of third parties to manufacture and supply our products.
Additionally, if surgeons are not properly trained, they may misuse or ineffectively use our products, which may result in unsatisfactory patient outcomes, patient injury, negative publicity or lawsuits against us, any of which could have a significant adverse effect on our business, financial condition and results of operations.
Net sales of our systems that include polyaxial pedicle screws represented approximately 41% and 42% our net sales for the years ended December 31, 2023 and 2022, respectively, and are expected to continue to be significant in the future.
A significant percentage of our revenues are derived from sales of our systems that include polyaxial pedicle screws. Net sales of our systems that include polyaxial pedicle screws represented approximately 40% and 41% our net sales for the years ended December 31, 2024 and 2023, respectively, and are expected to continue to be significant in the future.
Any problems experienced by these manufacturers could result in a delay or interruption in the supply of our products until such manufacturer cures the problem or until we locate and qualify an alternative source of supply. We rely on third party manufacturers of our implants, instruments, imaging equipment and spare parts.
We rely on a limited number of third parties to manufacture and supply our products. Any problems experienced by these manufacturers could result in a delay or interruption in the supply of our products until such manufacturer cures the problem or until we locate and qualify an alternative source of supply.
The failure of our information systems or software or those of our business partners or third-party service providers to perform properly could disrupt our business and harm our reputation, which may result in decreased sales, increased overhead costs, excess or obsolete inventory, and product shortages, causing our business, reputation, financial condition, and operating results to suffer. 25 Table of Contents The secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business strategy, and we devote significant resources to protecting such information.
The failure of our information systems or software or those of our business partners or third-party service providers to perform properly could disrupt our business and harm our reputation, which may result in decreased sales, increased overhead costs, excess or obsolete inventory, and product shortages, causing our business, reputation, financial condition, and operating results to suffer.
Competitors may design around our patents or develop products that provide outcomes that are comparable to our products but fall outside of the scope of our patent protection.
Both the patent application process and the process of managing patent disputes can be time consuming and expensive. Competitors may design around our patents or develop products that provide outcomes that are comparable to our products but fall outside of the scope of our patent protection.
Our success depends in part on our ability to continually enhance and broaden our product offering. Accordingly, we have pursued and intend to pursue the acquisition of complementary businesses, products or technologies. We do not know if we will be able to successfully complete any acquisitions or successfully integrate any acquired business.
Accordingly, we have pursued and intend to pursue the acquisition of complementary businesses, products or technologies. We do not know if we will be able to successfully complete any acquisitions or successfully integrate any acquired business. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable acquisition targets.
Other events beyond our control could also disrupt our product development and commercialization efforts until such events can be resolved or we can put in place third-party contract manufacturers to assume this manufacturing role.
We may suffer losses as a result of business interruptions that exceed coverage under our manufacturer’s insurance policies. Other events beyond our control could also disrupt our product development and commercialization efforts until such events can be resolved or we can put in place third-party contract manufacturers to assume this manufacturing role.
Any recall or additional regulatory approval or clearance requirements could result in delays, costs associated with modification of a product, loss of revenue and potential operating restrictions imposed by the regulatory body, all of which could have a material adverse effect on our business, financial condition and results of operations. 21 Table of Contents Demand for our products, and prices at which customers and patients are willing to pay for our products depend upon the ability of our customers to obtain adequate third-party coverage and reimbursement product purchases.
Any recall or additional regulatory approval or clearance requirements could result in delays, costs associated with modification of a product, loss of revenue and potential operating restrictions imposed by the regulatory body, all of which could have a material adverse effect on our business, financial condition and results of operations.
Issued patents could subsequently be successfully challenged by others and invalidated or rendered unenforceable, which could limit our ability to prevent competitors from marketing and selling related products.
Issued patents could subsequently be successfully challenged by others and invalidated or rendered unenforceable, which could limit our ability to prevent competitors from marketing and selling related products. In addition, our pending patent applications include claims to aspects of our products and procedures that are not currently protected by issued patents.
In addition, in the event of a change of control, we would be required to redeem all outstanding shares of our redeemable preferred stock for an aggregate of $29.9 million, at the price of $9.00 per share. Further, our amended and restated certificate of incorporation permits us to issue additional shares of preferred stock.
These provisions may discourage or prevent a change of control. 30 Table of Contents In addition, in the event of a change of control, we would be required to redeem all outstanding shares of our redeemable preferred stock for an aggregate of $29.9 million, at the price of $9.00 per share.
Delays in obtaining regulatory clearances and approvals may delay or prevent commercialization of products we develop, require us to perform costly tests or studies, diminish any competitive advantages that we might otherwise have obtained and reduce our ability to generate revenues. 24 Table of Contents If we choose to acquire new and complementary businesses, products or technologies, we may be unable to complete these acquisitions or successfully integrate them in a cost-effective and non-disruptive manner.
Delays in obtaining regulatory clearances and approvals may delay or prevent commercialization of products we develop, require us to perform costly tests or studies, diminish any competitive advantages that we might otherwise have obtained and reduce our ability to generate revenues.
This concentration of ownership may harm the market price of our common stock by delaying, deferring or preventing our change in control, causing us to enter into transactions or agreements that are not in the best interests of all of our stockholders, or reducing our public float held by non-affiliates. 32 Table of Contents Anti-takeover provisions in our organizational documents and change of control provisions in some of our employment agreements and agreements with sales agents, and in some of our outstanding debt agreements, as well as the terms of our redeemable preferred stock, may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely.
Anti-takeover provisions in our organizational documents and change of control provisions in some of our employment agreements and agreements with sales agents, and in some of our outstanding debt agreements, as well as the terms of our redeemable preferred stock, may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely.
Because of the complexity of our product and the patents we have licensed, determining the scope of the license and related obligations can be difficult and can lead to disputes between us and the licensor. An unfavorable resolution of such a dispute could lead to an increase in the royalties payable pursuant to the license or termination of the license.
Because of the complexity of our product and the patents we have licensed, determining the scope of the license and 18 Table of Contents related obligations can be difficult and can lead to disputes between us and the licensor.
In the past, following periods of volatility in the market price of a particular company’s securities, the company becomes subject to securities class action litigation. We may become involved in this type of litigation. Litigation is often expensive and diverts management’s attention and resources, which could materially harm our financial condition, results of operations and business.
In the past, following periods of volatility in the market price of a particular company’s securities, the company becomes subject to securities class action litigation. We may become involved in this type of litigation.
We currently rely on a limited number of third parties and any prolonged disruption in the operations of our third-party suppliers could have a negative impact on our ability to supply products to customers. We may suffer losses as a result of business interruptions that exceed coverage under our manufacturer’s insurance policies.
We rely on third party manufacturers of our implants, instruments, imaging equipment and spare parts. We currently rely on a limited number of third parties and any prolonged disruption in the operations of our third-party suppliers could have a negative impact on our ability to supply products to customers.
If we are not able to timely and appropriately adapt to changes resulting from a weak or uncertain economic environment, our business, financial condition, results of operations and cash flows could be adversely impacted. 28 Table of Contents Our quarterly financial results could fluctuate significantly.
Furthermore, a high percentage of our expenses, including those related to inventory, capital investments, and operating costs are generally fixed in nature in the short term. If we are not able to timely and appropriately adapt to changes resulting from a weak or uncertain economic environment, our business, financial condition, results of operations and cash flows could be adversely impacted.
In addition, rules and regulations of the SEC may restrict our ability to conduct certain types of financing activities or may affect the timing of and the amounts we can raise by undertaking such activities. 27 Table of Contents Furthermore, if we issue additional equity or debt securities to raise additional funds, our existing stockholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.
In addition, rules and regulations of the SEC may restrict our ability to conduct certain types of financing activities or may affect the timing of and the amounts we can raise by undertaking such activities.
If we are unable to integrate any future or recently acquired businesses, products or technologies effectively, our business, financial condition and results of operations will be materially adversely affected. We are dependent on our senior management team, sales and marketing team, engineering team and key surgeon advisors, and the loss of any of them could harm our business.
These efforts could be expensive and time consuming, disrupt our ongoing business and distract management. If we are unable to integrate any future or recently acquired 22 Table of Contents businesses, products or technologies effectively, our business, financial condition and results of operations will be materially adversely affected.
The terms of our redeemable preferred stock or any new preferred stock we may issue could have the effect of delaying, deterring or preventing a change in control. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
Further, our amended and restated certificate of incorporation permits us to issue additional shares of preferred stock. The terms of our redeemable preferred stock or any new preferred stock we may issue could have the effect of delaying, deterring or preventing a change in control.
Risks Related to Our Financial Results, Credit and Certain Financial Obligations and Need for Financing We may need to raise additional funds in the future and such funds may not be available on acceptable terms, if at all.
Further, the cost to comply with such laws or regulations, or decisions and/or guidance interpreting existing laws, could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. 24 Table of Contents Risks Related to Our Financial Results, Credit and Certain Financial Obligations and Need for Financing We may need to raise additional funds in the future and such funds may not be available on acceptable terms, if at all.
Further, changes in exchange rates may affect our net earnings, the book value of our assets outside the U.S. and our stockholders’ equity. Failure to comply with the laws and regulations that affect our global operations could have an adverse effect on our business, financial condition, or results of operations.
Further, changes in exchange rates may affect our net earnings, the book value of our assets outside the U.S. and our stockholders’ equity.
Securities analysts may not provide coverage of our common stock or may issue negative reports, which may have a negative impact on the market price of our common stock. Securities analysts may not provide research coverage of our common stock.
Litigation is often expensive and diverts management’s attention and resources, which could materially harm our financial condition, results of operations and business. 29 Table of Contents Securities analysts may not provide coverage of our common stock or may issue negative reports, which may have a negative impact on the market price of our common stock.
Any such failure could lead us to further modify our strategy, lower our prices, increase our sales commissions and could have a significant adverse effect on our business, financial condition and results of operations. 19 Table of Contents A significant percentage of our revenues are derived from sales of our systems that include polyaxial pedicle screws.
For these reasons, we may not be able to compete successfully against our existing or potential competitors. Any such failure could lead us to further modify our strategy, lower our prices, increase our sales commissions and could have a significant adverse effect on our business, financial condition and results of operations.
Removed
For these reasons, we may not be able to compete successfully against our existing or potential competitors.
Added
An unfavorable resolution of such a dispute could lead to an increase in the royalties payable pursuant to the license or termination of the license.
Removed
We may fail to realize the anticipated benefits of the Valence Transaction, as defined below. The success of our acquisition of Valence (the "Valence Transaction") will depend on, among other things, our ability to incorporate Valence into our business in a manner that enhances our value proposition to clients and facilitates other growth opportunities.
Added
Demand for our products, and prices at which customers and patients are willing to pay for our products depend upon the ability of our customers to obtain adequate third-party coverage and reimbursement product purchases.
Removed
If we are unable to successfully achieve these objectives, the anticipated benefits of the Valence Transaction may not be realized fully, if at all, or may take longer to realize than expected. Additionally, management may face challenges in incorporating certain elements and functions of Valence with our business, and this process may result in additional and unforeseen expenses.
Added
If we choose to acquire new and complementary businesses, products or technologies, we may be unable to complete these acquisitions or successfully integrate them in a cost-effective and non-disruptive manner. Our success depends in part on our ability to continually enhance and broaden our product offering.
Removed
The integration of Valence Transaction may also disrupt our ongoing business or cause inconsistencies in standards, controls, procedures and policies that adversely affect our relationships with third party partners, employees, suppliers, customers and others with whom we or the business related to Valence have business or other dealings or limit our ability to achieve the anticipated benefits of the Valance Transaction.
Added
We are dependent on our senior management team, sales and marketing team, engineering team and key surgeon advisors, and the loss of any of them could harm our business.
Removed
Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable acquisition targets. These efforts could be expensive and time consuming, disrupt our ongoing business and distract management.
Added
The secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business strategy, and we devote significant resources to protecting such information.
Removed
Furthermore, a high percentage of our expenses, including those related to inventory, capital investments, and operating costs are generally fixed in nature in the short term.
Added
The use of artificial intelligence ("AI") technology by our employees or business partners could result in misuse or loss of proprietary information, violation of laws and regulations, or damage to our reputation and credibility. Our employees and business partners may use AI technology to perform their work.
Removed
In addition, our pending patent applications include claims to aspects of our products and procedures that are not currently protected by issued patents. 29 Table of Contents Both the patent application process and the process of managing patent disputes can be time consuming and expensive.
Added
Our sensitive information could be leaked, disclosed, or revealed as a result of or in connection with use of AI technology. Additionally, the use and disclosure of personal data in AI technology is subject to various data privacy laws and other data privacy obligations. Governments have passed and are likely to pass additional laws regulating AI.
Added
Our use of this technology could result in additional compliance costs, regulatory investigations and actions and lawsuits.
Added
Furthermore, if we issue additional equity or debt securities to raise additional funds, our existing stockholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.
Added
This concentration of ownership may harm the market price of our common stock by delaying, deferring or preventing our change in control, causing us to enter into transactions or agreements that are not in the best interests of all of our stockholders, or reducing our public float held by non-affiliates.
Added
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have not identified any risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. 34 Table of Contents Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight over our information security and technology risks, including our information security, cybersecurity and related risk management programs.
Biggest changeWe have not identified any risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the information technology environment.
Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the information technology environment. 32 Table of Contents
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
We design and assess our program based on various cybersecurity frameworks, most prominently the Health Information Trust Alliance (“HITRUST”) Common Security Framework, and Service Organization Controls (“SOC”) 2, developed by the American Institute of CPAs. In 2023, our cybersecurity systems and services issued a SOC 2 Type 1 report for the design of our security processes.
Our cybersecurity risk management program includes a cybersecurity incident response plan. 31 Table of Contents We design and assess our program based on various cybersecurity frameworks, most prominently the Health Information Trust Alliance (“HITRUST”) Common Security Framework, and Service Organization Controls (“SOC”) 2, developed by the American Institute of CPAs.
As part of our enterprise risk management process, we assess the various cybersecurity risks that may impact our business and implement plans and initiatives that are intended to mitigate those risks.
Our cybersecurity program includes annual review and assessment by external, independent third parties, who certify and report on these programs. As part of our enterprise risk management process, we assess the various cybersecurity risks that may impact our business and implement plans and initiatives that are intended to mitigate those risks.
We use this cybersecurity framework and information security controls as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. Our cybersecurity program includes annual review and assessment by external, independent third parties, who certify and report on these programs.
In 2024, our cybersecurity systems, supporting infrastructure and EOS products received HITRUST e1 certification as they met the HITRUST CSF v11.20 certification criteria. We use this cybersecurity framework and information security controls as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Added
Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight over our information security and technology risks, including our information security, cybersecurity and related risk management programs.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. P roperties Our corporate office is located in Carlsbad, California. The table below provides selected information regarding the leased principal properties used in our operations. Location Use Approximate Square Footage Carlsbad, California Corporate headquarters 121,541 Memphis, Tennessee Distribution facility 75,643 Paris, France Office facilities 15,156
Biggest changeItem 2. P roperties Our corporate office is located in Carlsbad, California. The table below provides selected information regarding the leased principal properties used in our operations. Location Use Approximate Square Footage Carlsbad, California Corporate headquarters 121,541 Memphis, Tennessee Distribution facility 75,643 Paris, France Office facilities 19,913

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings For a description of our material legal proceedings, refer to Note 7 of our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, which is incorporated herein by reference. Item 4. Mine Saf ety Disclosures Not applicable. 35 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings For a description of our material legal proceedings, refer to Note 7 of our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, which is incorporated herein by reference. Item 4. Mine Saf ety Disclosures Not applicable. 33 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 35 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 36 Item 6. Reserved 37 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 48 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 33 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. Reserved 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnregistered Sales of Equity Securities and Use of Proceeds During the three months ended December 31, 2023, the Company issued unregistered equity securities as described below: On October 2, 2023 and November 14, 2023, the Company issued 625 and 1,250 restricted shares of the Company’s common stock with a grant date fair values of $12.58 and $9.94, respectively, based on the market price of common stock on the respective grant dates, to an independent sales agent for distribution and related services rendered to the Company.
Biggest changeUnregistered Sales of Equity Securities and Use of Proceeds During the three months ended December 31, 2024, the Company issued unregistered equity securities as described below: Date Issued Number of Shares Grant Date Fair Value per Share (4) October 1, 2024 129,333 (1) $ 5.27 October 1, 2024 2,753 (2) $ 5.27 October 1, 2024 625 (3) $ 5.27 October 15, 2024 1,887 (2) $ 5.30 November 12, 2024 1,250 (3) $ 9.28 December 2, 2024 11,667 (1) $ 10.21 (1) Pursuant to Development Service Agreements for the development of products and intellectual property.
The graph assumes that $100 was invested on December 31, 2018 in our common stock and in each of the comparative indices, and the reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
The graph assumes that $100 was invested on December 31, 2019 in our common stock and in each of the comparative indices, and the reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* AMONG ALPHATEC HOLDINGS, INC., THE NASDAQ COMPOSITE INDEX AND THE NASDAQ MEDICAL EQUIPMENT INDEX *$100 invested on December 31, 2018 in stock or index, including reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* AMONG ALPHATEC HOLDINGS, INC., THE NASDAQ COMPOSITE INDEX AND THE NASDAQ MEDICAL EQUIPMENT INDEX *$100 invested on December 31, 2019 in stock or index, including reinvestment of dividends.
There were no repurchases of common stock during the year ended December 31, 2023. 36 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return data on our common stock with the cumulative return of two indices: (i) The Nasdaq Stock Market Composite Index, and (ii) The Nasdaq Medical Equipment Index over the five-year period ending December 31, 2023.
There were no repurchases of common stock during the year ended December 31, 2024. 34 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return data on our common stock with the cumulative return of two indices: (i) The Nasdaq Stock Market Composite Index, and (ii) The Nasdaq Medical Equipment Index over the five-year period ending December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on The NASDAQ Global Select Market under the symbol “ATEC.” Stockholders As of February 19, 2024, there were approximately 381 holders of record of an aggregate 137,979,126 outstanding shares of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on The NASDAQ Global Select Market under the symbol “ATEC.” Stockholders As of February 19, 2025, there were approximately 425 holders of record of an aggregate 144,149,232 outstanding shares of our common stock.
On October 2, 2023, the Company issued 795 restricted shares of the Company’s common stock with a grant date fair values of $12.58 based on the market price of common stock on the grant date, to an independent sales agent for distribution and related services rendered to the Company.
(2) Consulting services rendered to the Company. (3) Independent sales agent services rendered to the Company. (4) Based on the market price of common stock on the issuance date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe believe that our existing funds, cash generated from our operations and our existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure, debt service requirements and other business initiatives we plan to strategically pursue. 42 Table of Contents Summary of Cash Flows The following is a summary of cash (used in) provided by operating, investing, and financing activities, the effect of exchange rate changes on cash and cash equivalents, and the net change in cash and cash equivalents: Year Ended December 31, 2023 2022 2021 Cash (used in) provided by: Operating activities $ (78,485 ) $ (75,134 ) $ (73,317 ) Investing activities (141,975 ) (58,280 ) (157,762 ) Financing activities 356,919 31,228 311,966 Effect of exchange rate changes on cash (185 ) (366 ) (1,404 ) Net change in cash and cash equivalents $ 136,274 $ (102,552 ) $ 79,483 Operating Activities We used net cash of $78.5 million from operating activities for the year ended December 31, 2023.
Biggest changeSummary of Cash Flows The following is a summary of cash (used in) provided by operating, investing, and financing activities, the effect of exchange rate changes on cash and cash equivalents, and the net change in cash and cash equivalents: Year Ended December 31, 2024 2023 2022 Cash (used in) provided by: Operating activities $ (44,651 ) $ (78,485 ) $ (75,134 ) Investing activities (93,136 ) (141,975 ) (58,280 ) Financing activities 56,208 356,919 31,228 Effect of exchange rate changes on cash (551 ) (185 ) (366 ) Net change in cash and cash equivalents $ (82,130 ) $ 136,274 $ (102,552 ) 40 Table of Contents Operating Activities We used net cash of $44.7 million from operating activities for the year ended December 31, 2024.
We derive our revenue primarily from the sale of spinal surgery implants used in the treatment of spine disorders as well as the sale of medical imaging equipment which is used for surgical planning and post-operative assessment. Spinal implant products include pedicle screws and complementary implants, interbody devices, plates, and tissue-based materials.
We derive our revenue primarily from the sale of spinal surgery implants used in the treatment of spine disorders, as well as from the sale of medical imaging equipment which is used for surgical planning and post-operative assessment. Spinal implant products include pedicle screws and complementary implants, interbody devices, plates, and tissue-based materials.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an on-going basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowances for accounts receivable, inventories and intangible assets, stock-based compensation and income taxes.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an on-going basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowances for accounts receivable, inventories, intangible assets, stock-based compensation, and income taxes.
Costs incurred by us associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, except for contracts that complete within one year or less, in which case the associated costs are expensed as incurred.
Costs incurred by us associated directly with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, except for contracts that complete within one year or less, in which case the associated costs are expensed as incurred.
The application of our team’s deep spine know-how, coupled with a willingness to invest holistically in each of the technologies integrated into all of ATEC’s procedural approaches continues to increasingly compel surgeons and sales talent to partner with us.
The application of our team’s deep spine know-how, coupled with a willingness to invest holistically in each of the technologies integrated into all of our procedural approaches continues to increasingly compel surgeons and sales talent to partner with us.
If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges. 46 Table of Contents In-process research and development ("IPR&D") and software in development have indefinite lives and are not amortized until the related products reach full commercial launch or when the projects are complete and their assets are ready for their intended use.
If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges. 44 Table of Contents In-process research and development ("IPR&D") and software in development have indefinite lives and are not amortized until the related products reach full commercial launch or when the projects are complete and their assets are ready for their intended use.
Revenue from the sale of imaging equipment is recognized as each distinct performance obligation is fulfilled and control transfers to the customer, beginning with shipment or delivery, depending on the terms.
Revenue from the sale of imaging equipment is recognized as each distinct performance obligation is fulfilled and control transfers to the customer, beginning with shipment or delivery, depending on the contract terms.
Sales, general and administrative expenses consist primarily of salaries and related employee benefits, sales commissions and other variable costs, depreciation of our surgical instruments, regulatory affairs, quality assurance costs, professional service fees, travel, medical education, trade show and marketing costs, and insurance expenses. Litigation-related expenses. Litigation-related expenses are costs incurred for our ongoing and settled litigation.
Sales, general and administrative expenses consist primarily of salaries and related employee benefits, sales commissions and other variable costs, depreciation of our surgical instruments, regulatory affairs, quality assurance costs, professional service fees, travel, medical education, trade show and marketing costs, and insurance expenses. Litigation-related expenses. Litigation-related expenses are costs incurred for our ongoing and settled litigation. Amortization expense.
The Revolving Credit Facility matures on the earlier of September 29, 2027, or 90 days prior to the final maturity date of any of our outstanding 0.75% Convertible Senior Notes due 2026 (the "2026 Notes"). As of December 31, 2023, we had $316.3 million outstanding under the 2026 Notes.
The Revolving Credit Facility matures on the earlier of September 29, 2027, or 90 days prior to the final maturity date of any of our outstanding 0.75% Convertible Senior Notes due 2026 (the "2026 Notes"). As of December 31, 2024, we had $316.3 million outstanding under the 2026 Notes.
Specialized implants, fixation products, and biologics are determined by utilizing a standard cost method, which includes capitalized variances, which approximates the weighted average cost. Imaging equipment and related parts are valued at weighted average cost. Inventories are stated at the lower of cost or net realizable value.
Specialized implants, fixation products, biologics, and imaging equipment are determined by utilizing a standard cost method, which includes capitalized variances, which approximates the weighted average cost. Component parts related to the imaging equipment are valued at weighted average cost. Inventories are stated at the lower of cost or net realizable value.
The use of alternative estimates could result in a different amount of revenue deferral. 45 Table of Contents Excess and Obsolete Inventory Most of our inventory is comprised of finished goods, and we primarily utilize third-party suppliers to produce our products.
The use of alternative estimates could result in a different amount of revenue deferral. 43 Table of Contents Excess and Obsolete Inventory Most of our inventory is comprised of finished goods, and we primarily utilize third-party suppliers to produce our products.
For discussion regarding our financial condition and the results of operations for 2022 compared to 2021, refer to Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.
For discussion regarding our financial condition and the results of operations for 2023 compared to 2022, refer to Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023.
See “ Notes to Financial Statements - Note 1 - Recently Adopted and Issued Accounting Pronouncements ” included elsewhere in this Annual Report on Form 10-K. 47 Table of Contents
See “ Notes to Financial Statements - Note 1 - Recently Adopted and Issued Accounting Pronouncements ” included elsewhere in this Annual Report on Form 10-K. 45 Table of Contents
We believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements. 44 Table of Contents Revenue Recognition We recognize revenue from product sales in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Revenue from Contracts with Customers (“Topic 606”).
We believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements. 42 Table of Contents Revenue Recognition We recognize revenue from product sales in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Revenue from Contracts with Customers (“Topic 606”).
A discussion regarding our financial condition and results of operations for 2023 compared to 2022 is presented under “Results of Operations” further below in this Item 7.
A discussion regarding our financial condition and results of operations for 2024 compared to 2023 is presented under “Results of Operations” further below in this Item 7.
We incur royalties related to the technologies that we license from others and the products that are developed in part by surgeons with whom we collaborate in the product development process. Research and development expenses . Research and development expenses consist of costs associated with the design, development, testing, and enhancement of our products.
We incur royalties related to the technologies that we license from others and the products that are developed in part by surgeons with whom we collaborate in the product development process. 36 Table of Contents Research and development expenses . Research and development expenses consist of costs associated with the design, development, testing, and enhancement of our products.
Valuation of Intangible Assets Our intangible assets are comprised primarily of purchased technology, customer relationships, trade name, trademarks, and in-process research and development. We make significant judgments in relation to the valuation of intangible assets resulting from business combinations and asset acquisitions.
Valuation of Intangible Assets Our intangible assets are comprised primarily of purchased technology, internally developed software, customer relationships, trade name, trademarks, and in-process research and development. We make significant judgments in relation to the valuation of intangible assets resulting from business combinations and asset acquisitions.
By applying our unique, 100% spine focus and deep, collective industry know-how, we aim to revolutionize the approach to spine surgery through clinical distinction. The sophisticated approaches that we create from the ground up integrate with our expanding Alpha InformatiX™ product platform to objectively inform surgery and achieve the goals of spine surgery more predictably and more reproducibly.
By applying our unique, 100% spine focus and deep industry know-how, we aim to revolutionize spine surgery through clinical distinction. The sophisticated approaches that we create from the ground up integrate with our expanding Alpha InformatiX™ ("AIX") platform to objectively inform surgery and achieve the goals of spine surgery more predictably and more reproducibly.
The increase was primarily due to an increase in product volume and an increase in stock-based compensation. We have entered into Development Service Agreements for the development of a wide variety of potential products and intellectual property.
The increase was primarily due to an increase in product volume offset by a decrease in stock-based compensation. We have entered into Development Service Agreements for the development of a wide variety of potential products and intellectual property.
Under these agreements, future payments for product and/or intellectual property rights may be paid in either cash or restricted shares of our common stock at the election of the developer, depending on the terms of the agreement. Certain of these agreements have been amended to remove the cash option and require settlement in restricted shares of our common stock.
Under these agreements, future royalty payments for product and/or intellectual property rights may be paid in either cash or restricted shares of our common stock at the election of the developer, depending on the terms of the agreement. Certain of these agreements were amended to remove the cash royalty option and require settlement in restricted shares of our common stock.
The decrease was primarily related to a decrease in legal fees associated with our previously settled litigation matters. Refer to Note 7 of our Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further information regarding litigation matters. Amortization of acquired intangible assets.
The decrease was primarily related to a decrease in legal fees associated with our previously settled litigation matters. Refer to Note 7 of our Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further information regarding litigation matters. Amortization expense.
We have a comprehensive product portfolio designed to address the spine’s various pathologies, and are perpetually innovating to accomplish our ultimate vision, which is to be the standard bearer in spine.
We have a comprehensive product portfolio designed to address the spine’s various pathologies and we are perpetually innovating to accomplish our vision to be the standard bearer in spine.
Based on the terms, we have the option to pay or deliver cash, shares of our common stock, or a combination thereof, when a conversion notice is received. As of December 31, 2023, we had $4.5 million in other debts that are due in monthly and quarterly installments through maturity in 2027.
Based on the terms, we have the option to pay or deliver cash, shares of our common stock, or a combination thereof, when a conversion notice is received. As of December 31, 2024, we had $3.0 million in other debts that are due in monthly and quarterly installments through maturity in 2027.
Sales, general and administrative expenses. Sales, general and administrative expenses increased by $74.1 million, or 25%, during the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase was primarily due to higher compensation-related costs and variable selling expenses associated with the increase in revenue, and our continued investment in building our strategic sales channel.
Sales, general and administrative expenses. Sales, general and administrative expenses increased by $76.1 million, or 20%, during the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily due to higher compensation-related costs and variable selling expenses associated with the increase in revenue, and our continued investment in building our strategic sales channel.
Additionally, we have increased our investment in our sales and marketing functions by increasing headcount to support the growth of our business. Litigation-related expenses. Litigation-related expenses decreased by $1.7 million, or 7%, during the year ended December 31, 2023, compared to the year ended December 31, 2022.
Additionally, we have increased our investment in our sales and marketing functions by increasing headcount to support the growth of our business. Litigation-related expenses. Litigation-related expenses decreased by $12.5 million, or 56%, during the year ended December 31, 2024, compared to the year ended December 31, 2023.
Investing Activities We used cash of $142.0 million in investing activities for the year ended December 31, 2023, which is primarily related to the acquisition of Valence and purchase of surgical instruments to support the commercial launch of new products and growth of our business.
Investing Activities We used cash of $93.1 million in investing activities for the year ended December 31, 2024, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products.
Cash and cash equivalents were $221.0 million and $84.7 million at December 31, 2023 and December 31, 2022, respectively. We have available borrowings under the Revolving Credit Facility discussed above.
Cash and cash equivalents were $138.8 million and $221.0 million at December 31, 2024 and December 31, 2023, respectively. We have available borrowings under the Revolving Credit Facility discussed above.
Debt and Commitments As of December 31, 2023, we had $150.0 million outstanding under the Braidwell Term Loan. The outstanding loans under the Braidwell Term Loan bear interest at the sum of SOFR plus 5.75% per annum. The Braidwell Term Loan matures on January 6, 2028.
The outstanding loans under the Braidwell Term Loan bear interest at the sum of SOFR plus 5.75% per annum. The Braidwell Term Loan matures on January 6, 2028. As of December 31, 2024, we had $63.3 million outstanding under the Revolving Credit Facility. The outstanding loans bear interest at the sum of SOFR plus 3.5% per annum.
To deliver consistent, predictable growth, we have added, and intend to continue to add, clinically astute and exclusive sales team members to reach untapped surgeons, hospitals, and national accounts and better penetrate existing accounts and territories.
To deliver consistent, predictable growth, we have added, and intend to continue to add, clinically astute and exclusive sales team members to reach untapped surgeons, hospitals, and national accounts and better penetrate existing accounts and territories. Revenue and Expense Components The following is a description of the primary components of our revenue and expenses: Revenue.
As part of our liquidity strategy, we will continue to monitor our current level of spending and cash use as well as our ability to secure additional credit facilities, term loans, or other similar arrangements in light of our spending levels and general financial market conditions.
As part of our liquidity strategy, we will continue to monitor our current level of spending and cash use as well as our ability to secure additional credit facilities, term loans, or other similar arrangements in light of our spending levels and general financial market conditions. 39 Table of Contents A substantial portion of our operations are in the U.S., and most of our net sales have been made in the U.S.
Our liquidity and capital structure are evaluated regularly within the context of our annual operating and strategic planning process. We consider the liquidity necessary to fund our operations, which includes working capital needs, investments in research and development, investments in inventory and instrument sets to support our customers, as well as other operating costs.
We consider the liquidity necessary to fund our operations, which includes working capital needs, investments in research and development, investments in our sales channel and expansion, investments in inventory and instrument sets to support our customers, as well as other operating costs.
Amortization of acquired intangible assets. Amortization of acquired intangible assets consists of intangible assets acquired in business combinations and asset purchases. Transaction-related expenses. Transaction-related expenses consist of certain costs incurred related primarily to the acquisition and integration of Valence. 39 Table of Contents Restructuring expenses .
Amortization expense includes amortization of acquired intangible assets and amortization of internally-developed software that has been placed in service. Amortization of acquired intangible assets consists of intangible assets acquired in business combinations and asset purchases. Transaction-related expenses. Transaction-related expenses consist of certain costs incurred related primarily to the acquisition and integration of Valence. Restructuring expenses .
Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.
This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.
We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services that we transfer to the customer.
We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services that we transfer to the customer. Sales are derived primarily from the sale of spinal implant products, imaging equipment, and related services to hospitals and medical centers.
However, as our business in markets outside of the U.S. continues to increase, we will be exposed to foreign currency exchange risk related to our foreign operations. We do not have any material financial exposure to one customer or one country that would significantly hinder our liquidity.
Accordingly, we do not have material exposures to foreign currency rate fluctuations from operations. However, as our business in markets outside of the U.S. continues to increase, we will be exposed to foreign currency exchange risk related to our foreign operations.
The change in other income, net, compared to the same in 2022, was primarily due to an employee retention credit received during the year ended December 31, 2023.
The increase in other (expense) income, net, was primarily due to foreign currency rates and recognition of an employee retention credit during the year ended December 31, 2023.
Results of Operations Total revenue Year Ended December 31, Change (in thousands, except %) 2023 2022 $ % Revenue: Revenue from products and services $ 482,262 $ 350,852 $ 131,410 37 % Revenue from international supply agreement — 15 (15 ) (100 )% Total revenue $ 482,262 $ 350,867 $ 131,395 37 % Revenue from products and services increased by $131.4 million, or 37%, during the year ended December 31, 2023, compared to the year ended December 31, 2022.
Results of Operations Total revenue Year Ended December 31, Change (in thousands, except %) 2024 2023 $ % Revenue from products and services $ 611,562 $ 482,262 $ 129,300 27 % Revenue from products and services increased by $129.3 million, or 27%, during the year ended December 31, 2024, compared to the year ended December 31, 2023.
During the year ended December 31, 2023, the vesting conditions of certain of these amended awards were deemed probable, resulting in an increase in stock-based compensation for the year.
Stock-based compensation associated with these awards was higher during the year ended December 31, 2023 as the vesting conditions of certain of these amended awards that met the requirements for presentation within cost of sales were deemed probable at that time.
As of December 31, 2023, the remaining minimum purchase commitment under the agreement was $13.9 million. 43 Table of Contents Contractual obligations and commercial commitments Total contractual obligations and commercial commitments as of December 31, 2023 are summarized in the following table (in thousands): Payments Due by Period Total 1 Year or Less More than 1 Year 2026 Notes $ 316,250 $ — $ 316,250 Braidwell Term Loan, including final payment fee of $4,875 154,875 — 154,875 Interest expense (1) 76,577 19,760 56,817 Revolving Credit Facility 49,720 — 49,720 Facility lease obligations (2) 34,209 5,505 28,704 Purchase commitments (3) 13,887 4,529 9,358 Other (4) 4,811 1,584 3,227 Development services plans 1,248 — 1,248 Total $ 651,577 $ 31,378 $ 620,199 (1) Represents interest expense from our debt that we expect to pay in the future.
As of December 31, 2024, the remaining minimum purchase commitment under the agreement was $8.8 million. 41 Table of Contents Contractual obligations and commercial commitments Total contractual obligations and commercial commitments as of December 31, 2024 are summarized in the following table (in thousands): Payments Due by Period Total 1 Year or Less More than 1 Year 2026 Notes $ 316,250 $ — $ 316,250 Braidwell Term Loan, including final payment fee of $6,500 206,500 — 206,500 Interest expense (1) 65,759 22,807 42,952 Revolving Credit Facility 63,284 — 63,284 Facility lease obligations 42,329 7,112 35,217 Purchase commitments (2) 8,810 4,405 4,405 Other (3) 3,052 1,226 1,826 Development services plans 1,532 — 1,532 Total $ 707,516 $ 35,550 $ 671,966 (1) Represents interest expense from our debt that we expect to pay in the future.
Research and development expenses increased by $26.1 million, or 59%, during the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase was primarily due to an increase in personnel to support the expansion of our new product portfolio and an increase in stock-based compensation associated with Development Service Agreements described above.
The increase was primarily due to an increase in personnel to support the expansion of our new product portfolio and an increase in stock-based compensation associated with Development Service Agreements (as described above), as the vesting conditions of certain of these amended awards, that met the requirements for presentation within research and development, were deemed probable during the year.
Generally, we do not have observable evidence of the standalone selling price related to our future service obligations; therefore, we estimate the selling price using an expected cost plus a margin approach. The transaction price is allocated using the relative standalone selling price method.
Generally, we estimate the selling price of promised services included in the equipment sales price using an expected cost plus a margin approach and/or the separately observable price of such service, if available. The transaction price for a contract’s various performance obligations is allocated using the relative standalone selling price method.
The increase of amortization of acquired intangible assets is primarily due to the amortization of intangible assets acquired in the Valence acquisition. Transaction-related expenses. The increase in transaction-related expenses for the year ended December 31, 2023 is primarily due to the closing of the Valence acquisition. Restructuring expenses .
Amortization expense increased $2.0 million, or 14%, during the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in amortization expense is primarily due to amortization of intangible assets acquired in the acquisition of Valence in April 2023 and internally-developed software placed in service during 2024. 38 Table of Contents Transaction-related expenses.
Financing Activities Financing activities provided net cash of $356.9 million for the year ended December 31, 2023, which is primarily related to net proceeds from the Braidwell Term Loan, the Revolving Credit Facility, and the equity offerings described above, offset by payment of outstanding OCEANEs, defined below.
Financing Activities Financing activities provided net cash of $56.2 million for the year ended December 31, 2024, which is primarily related to proceeds from our term loan and net draws on our revolving line of credit. Debt and Commitments As of December 31, 2024, we had $200.0 million outstanding under the Braidwell Term Loan.
The increase was primarily due to an increase in product volume that was due to the increase in our surgeon user base, continued expansion of our product portfolio, and increasing adoption of our technology.
The increase was primarily due to an increase in product volume that was due to the increase in our surgeon user base, continued expansion of our product portfolio, and increasing adoption of our technology. 37 Table of Contents Cost of sales Year Ended December 31, Change (in thousands, except %) 2024 2023 $ % Cost of sales $ 187,300 $ 172,059 $ 15,241 9 % Cost of sales increased by $15.2 million, or 9%, during the year ended December 31, 2024, compared to the year ended December 31, 2023.
(2) Includes our headquarters building lease that commenced in February 2021. (3) Includes inventory purchase commitments of $13.9 million. (4) Represents cash repayments of government sponsored COVID relief initiatives at EOS. Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements.
(2) Includes inventory purchase commitments of $8.8 million. (3) Represents other debt. Off-Balance Sheet Arrangements As of December 31, 2024, we did not have any off-balance sheet arrangements.
Income tax provision Year Ended December 31, Change (in thousands, except %) 2023 2022 $ % Income tax provision $ (277 ) $ (716 ) $ 439 (61 )% Income tax provision for the year ended December 31, 2023 was negligible and remained consistent compared to the year ended December 31, 2022. 41 Table of Contents Liquidity and Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, our Revolving Credit Facility, and cash from operations.
Income tax provision Year Ended December 31, Change (in thousands, except %) 2024 2023 $ % Income tax provision (benefit) $ 50 $ (277 ) $ 327 (118 )% Income tax provision for the year ended December 31, 2024 was negligible and remained consistent compared to the year ended December 31, 2023.
We are and may become involved in various legal proceedings arising from our business activities.
We do not have any material financial exposure to one customer or one country, outside the U.S., that would significantly hinder our liquidity. We are and may become involved in various legal proceedings arising from our business activities.
Operating expenses Year Ended December 31, Change (in thousands, except %) 2023 2022 $ % Operating expenses: Research and development $ 70,115 $ 44,033 $ 26,082 59 % Sales, general and administrative 374,080 300,013 74,067 25 % Litigation-related expenses 22,287 23,943 (1,656 ) (7 )% Amortization of acquired intangible assets 14,284 10,115 4,169 41 % Transaction-related expenses 2,113 120 1,993 1,661 % Restructuring expenses 719 1,810 (1,091 ) (60 )% Total operating expenses $ 483,598 $ 380,034 $ 103,564 27 % 40 Table of Contents Research and development expenses .
Operating expenses Year Ended December 31, Change (in thousands, except %) 2024 2023 $ % Operating expenses: Research and development $ 80,718 $ 70,115 $ 10,603 15 % Sales, general and administrative 450,199 374,080 76,119 20 % Litigation-related expenses 9,799 22,287 (12,488 ) (56 )% Amortization expense 16,258 14,284 1,974 14 % Transaction-related expenses 210 2,113 (1,903 ) (90 )% Restructuring expenses 3,247 719 2,528 352 % Total operating expenses $ 560,431 $ 483,598 $ 76,833 16 % Research and development expenses .
Total interest and other expense, net Year Ended December 31, Change (in thousands, except %) 2023 2022 $ % Interest and other income, net: Interest expense, net $ (16,641 ) $ (5,505 ) $ (11,136 ) 202 % Other income, net 3,121 471 2,650 563 % Total interest and other income, net $ (13,520 ) $ (5,034 ) $ (8,486 ) 169 % The increase in interest expense, net, during the year ended December 31, 2023, compared to the year ended December 30, 2022, was primarily due to interest on our revolving credit facility and Braidwell Term Loan which were executed in September 2022 and January 2023, respectively.
Total interest and other expense, net Year Ended December 31, Change (in thousands, except %) 2024 2023 $ % Other expense, net: Interest expense, net $ (24,879 ) $ (16,641 ) $ (8,238 ) 50 % Other (expense) income, net (1,025 ) 3,121 (4,146 ) (133 )% Total other expense, net $ (25,904 ) $ (13,520 ) $ (12,384 ) 92 % Interest expense, net, increased $8.2 million, or 50%, during the year ended December 31, 2024, compared to the year ended December 31, 2023.
The decrease in restructuring costs for the year ended December 31, 2023 is due to cost rationalization efforts that were completed during the year ended December 31, 2022.
Transaction-related expenses decreased $1.9 million, or 90%, during the year ended December 31, 2024, compared to the year ended December 31, 2023. The decrease in transaction-related expenses is due to the Valence acquisition in April 2023. Restructuring expenses .
Cost of sales Year Ended December 31, Change (in thousands, except %) 2023 2022 $ % Cost of sales $ 172,059 $ 117,808 $ 54,251 46 % Cost of sales increased by $54.3 million, or 46%, during the year ended December 31, 2023, compared to the year ended December 31, 2022.
Research and development expenses increased by $10.6 million, or 15%, during the year ended December 31, 2024, compared to the year ended December 31, 2023.
Removed
Recent Developments Public Offering On October 27, 2023, we completed an underwritten public offering (the “Public Offering”) of 14,300,000 shares of our common stock at a price of $10.50 per share.
Added
Restructuring expenses increased $2.5 million, or 352%, during the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in restructuring expenses is primarily due to costs associated with the relocation of office facilities in Paris, France, and severance and related tax costs incurred in connection with cost rationalization efforts.
Removed
In connection with the Public Offering, we granted the underwriters a 30-day option (the "Green-Shoe") to purchase additional shares of common stock in the offering at the public offering price, less underwriting discounts and commissions. The net proceeds from the Public Offering and Green-Shoe, were approximately $145.8 million, including the underwriting discounts and commissions and offering expenses paid by us.
Added
The increase in interest expense, net, was primarily due to drawing an additional $50.0 million on the Braidwell Term Loan in both September 2023 and October 2024. Other (expense) income, net, increased $4.1 million, or 133%, during the year ended December 31, 2024, compared to the year ended December 31, 2023.
Removed
We expect to use the net proceeds from the Public Offering to fund general corporate purposes, including working capital, capital expenditures, acquisitions, or research and development.
Added
Liquidity and Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, our Revolving Credit Facility, and cash from operations. Our liquidity and capital structure are evaluated regularly within the context of our annual operating and strategic planning process.
Removed
Asset Purchase Agreement On April 19, 2023, we entered into an Asset Purchase Agreement with Integrity Implants Inc. and Fusion Robotics, LLC (collectively, the “Sellers”), whereby we acquired certain assets, liabilities, employees, and contracts in connection with the Sellers’ navigation-enabled robotics platform (“Valence”).
Added
We believe that our existing funds, cash generated from our operations and our existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure, debt service requirements and other business initiatives we plan to strategically pursue.
Removed
We paid the Sellers cash consideration of $55.0 million for the purchase of Valence. 38 Table of Contents Underwritten Offering On April 19, 2023, we completed a registered securities offering (the “Offering”) of 4,285,715 shares of our common stock at a price of $14.00 per share.
Removed
The net proceeds from the Offering were approximately $57.5 million, including the underwriting discounts and commissions and offering expenses paid by us. We used a portion of the net proceeds of the offering to fund the purchase of Valence.
Removed
We expect to use the remaining proceeds to fund the costs related to the post-closing integration and research and development activities related to Valence, as well as to fund general corporate purposes, including working capital, capital expenditures, acquisitions, or research and development.
Removed
Term Loan On January 6, 2023, we entered into a $150.0 million term loan credit facility with Braidwell Transaction Holdings, LLC (the “Braidwell Term Loan”). The Braidwell Term Loan provided for an initial term loan of $100.0 million which was funded on the closing date.
Removed
On September 28, 2023, we drew the additional $50.0 million (the “delayed draw term loan(s)” or the “DDTL”). The Braidwell Term Loan matures on January 6, 2028.
Removed
Borrowings under the Braidwell Term Loan bear interest at a rate per annum equal to the Term Secured Overnight Financing Rate for such SOFR business day ("SOFR") subject to a 3% floor, plus 5.75%. Revenue and Expense Components The following is a description of the primary components of our revenue and expenses: Revenue.
Removed
A substantial portion of our operations are in the U.S., and most of our net sales have been made in the U.S. Accordingly, we do not have material exposures to foreign currency rate fluctuations from operations.
Removed
As of December 31, 2023, we had $49.7 million outstanding under the Revolving Credit Facility. The outstanding loans bear interest at the sum of SOFR plus 3.5% per annum.
Removed
This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements, and financial instruments.
Removed
Sales are derived primarily from the sale of spinal implant products, imaging equipment, and related services to hospitals and medical centers through direct sales representatives and independent sales agents.
Removed
Revenue is measured based on the amount of consideration expected to be received in exchange for the transfer of the goods or services specified in the contract with each customer.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed4 unchanged
Biggest changeAs of December 31, 2023, the outstanding balance under the Braidwell Term Loan and Revolving Credit Facility was $150.0 million and $49.7 million, respectively. The interest rates for the Braidwell Term Loan and Revolving Credit Facility as of December 31, 2023 were 11.2% and 9.0%, respectively.
Biggest changeAs of December 31, 2024, the outstanding balance under the Braidwell Term Loan and Revolving Credit Facility was $200.0 million and $63.3 million, respectively. The interest rates for the Braidwell Term Loan and Revolving Credit Facility as of December 31, 2024 were 10.4% and 8.2%, respectively.
Item 7A. Quantitative and Qualita tive Disclosures About Market Risk Interest Rate Risk We are exposed to interest rate risks related to our cash, cash equivalents and borrowings. We had cash and cash equivalents of 221.0 million as of December 31, 2023, which consist of cash and money market funds.
Item 7A. Quantitative and Qualita tive Disclosures About Market Risk Interest Rate Risk We are exposed to interest rate risks related to our cash, cash equivalents and borrowings. We had cash and cash equivalents of 138.8 million as of December 31, 2024, which consist of cash and money market funds.
A 10% change in commodity prices would not have had a material impact on our results of operations for the year ended December 31, 2023.
A 10% change in commodity prices would not have had a material impact on our results of operations for the year ended December 31, 2024. 46 Table of Contents

Other ATEC 10-K year-over-year comparisons