The New SEPTEMBER 2018 MARCH

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1 The New SEPTEMBER 2018 MARCH

2 Forward-Looking Statements This communication contains forward-looking statements within the meaning of the federal securities laws. In this context, forwardlooking statements often address expected future business and financial performance and financial condition, and often contain words such as expect, anticipate, intend, plan, believe, seek, see, will, would, target, similar expressions and variations or negatives of these words, but the absence of such a terms does not mean that a statement is not a forward-looking statement. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Forwardlooking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements include the references to the Company s strategy in significantly repositioning the ATEC brand and turning the Company into a growth organization. The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to: the uncertainties regarding the Company s ability to recognize the expected synergies and other benefits of the SafeOp acquisition; the uncertainty of success in developing new products or products currently in the Company s pipeline; the uncertainties in the Company s ability to execute upon its strategic operating plan; the uncertainties regarding the ability to successfully license or acquire new products, and the commercial success of such products; failure to achieve acceptance of the Company s products by the surgeon community; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged delays in the process; continuation of favorable fourth party reimbursement for procedures performed using the Company s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company s ability to successfully control its costs or achieve profitability; uncertainty of additional funding; the Company s ability to compete with other competing products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any litigation in which the Company is a defendant; patent infringement claims; claims related to the Company s intellectual property and the Company s ability to meet its financial obligations under its credit agreements and the Orthotec settlement agreement. A further list and description of these and other factors, risks and uncertainties can be found in the Company s most recent annual report, and any subsequent quarterly and current reports, filed with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. 2 September 2018 MARCH

3 The New Building Long-Term Value CREATING CLINICAL DISTINCTION REVITALIZING THE SALES CHANNEL COMPELLING SURGEON ADOPTION A MISSION TO IMPROVE THE CLINICAL EXPERIENCE IN SPINE MARCH

4 Our Story Reconstructing a legacy spine business SPINE FOCUS AND GLOBAL EXPANSION DECLINE Founded as contract manufacturer of orthopedic devices Focused on spine implants IPO Broadened portfolio to drive growth International expansion Investments unrealized Products not effectively commercialized Scient X acquisition Orthotec settlement Undifferentiated portfolio PODs Sale of international business New leadership with track records of success in spine Strengthening sales channel Investing in innovation, expanding IP 8 products cleared by FDA Acquired SafeOp technology Raised ~$80M to support growth Overhauling culture 4 September 2018 MARCH

5 SALES PRODUCTS LEADER- SHIP Evolving Into A Long-Term Value Creator The New - Limited spine experience - Lack of consistent direction and follow-through - Spine-experienced leadership and BOD - Track records of market success - Broad, indistinguishable portfolio - Insufficient value proposition - Proven, organic innovation machine new product launches per year - Network of disengaged distributors - Committed to PODs - Building network of dedicated, clinical experts - Elimination of PODs 5 September 2018 MARCH

6 Q218 Leading Indicators Validate Our Efforts Strong sequential improvement with legacy portfolio DEDICATED AGENTS REVENUE REVENUE GROWTH FROM DEDICATED SURGEON EDUCATION EVENTS NEW SURGEON REVENUE GROWTH REVENUE GROWTH 57% 23% 2x 6% Compared to ~5% at FYE 16 Outpaced revenue growth overall Record number of surgeons hosted Significantly outpaced revenue growth overall Highest rate of sequential growth since September 2018 MARCH

7 2018 Outlook Building a foundation to support SIGNIFICANT LONG-TERM VALUE CREATION INVESTMENT IN SALES CHANNEL INVESTMENT IN PRODUCT DEVELOPMENT FY18 TOTAL REVENUE ~$95M Dedicated distribution Geographic expansion Instrument sets to support launches SafeOp integration 12 new product alpha launches U.S. commercial revenue expected to ramp in 2H September 2018 MARCH

8 A Proven Track Record New to ATEC: Execs 100%, BOD 90%, Company 65% 250+ Terry Rich Pat Miles Luiz Pimenta, MD Chief Medical Officer EVP, CFO Kelli Howell Jon Allen EVP, Clinical Strategies VP, Gov t Affairs & National Contracts David Sponsel Emory Rooney AVP, South Central U.S. VP, Sales Channel Development Richard O Brien, MD CMO, SafeOp 8 Jeff Black President, COO Director Chairman & CEO September 2018 Brian Snider Craig Hunsaker EVP, Marketing & Development EVP, People & Culture, GC Mike Dendinger Scott Lish VP, Operations VP Development Robert Judd Greg Rhinehart VP, Finance & Controller AVP, East U.S. Robert Snow Jim Gharib Chief Marketing Officer, SafeOp Technical Lead, SafeOp YEARS OF PERSPECTIVE CREATING CLINICAL DISTINCTION Highly-incented leadership with $14M+ personally invested MARCH

9 CAGR^ Pure-Play Spine Outpaces the Market 7% CAGR 6% CAGR 13% CAGR 13% CAGR 16% A decade of results confirms SPINE-FOCUS DRIVES SUPERIOR GROWTH 4% CAGR (3%) CAGR Degree of Spine Focus* Current (1%) CAGR 9 September 2018 ^ SpineMarket Research. U.S. Spine Revenue from 2008 through * Management estimates; ATEC positioning intended to be representative MARCH

10 Why Has ATEC s Growth Lagged Spine-Focused Peers? PEDICLE SCREWS CERVICAL PLATES ~95% OF REVENUE undifferentiated products sold by a non-dedicated sales channel 10 September 2018 MARCH

11 Building Long - Term Value 1 Creating clinical distinction 2 Revitalizing the sales channel 3 Compelling surgeon adoption 11 September 2018 MARCH

12 Defining Clinical Distinction APPROACHES PATHOLOGIES ACDF PCF Tumor Instability SURGICAL GOALS Decompression Stabilization Alignment Trauma Deformity LIF Posterior Fixation PLIF Spondylolisthesis ALIF TLIF 12 September 2018 MARCH

13 PLIF ACDF Tumor Instability APPROACHES PATHOLOGIES SURGICAL GOALS Decompression Stabilization Alignment PCF Trauma TLIF Deformity ALIF Building technologies that ACHIEVE THE TENETS OF CLINICAL SUCCESS LIF Spondylolisthesis Posterior Fixation 13 September 2018 MARCH

14 Compounding Revenue Increased approaches and increased revenue per approach Access systems Interbody implants Fixation implants Biologics, post-op mgt = CLINICAL DISTINCTION Seamlessly integrating technologies, built on a foundation of better information Evolving from implant manufacturer to spine solutions architect 14 September 2018 MARCH

15 2019 = Advanced Neuromonitoring Future The FIRST, patent-protected, automated technology capable of reducing complexity in the operating room BOTH objective nerve location (EMG) and nerve health information (SSEP) to reduce risk of nerve injury UNMATCHED REPRODUCIBILITY Neuro-monitoring Alignment Data Collection Navigation 15 September 2018 MARCH

16 Reflection of an Organic Machine 12 new product alpha launches in 2H 2018 >80% of current revenue from commoditized products developed in or before September 2018 MARCH

17 Building Long - Term Value 1 Creating clinical distinction 2 Revitalizing the sales channel 3 Compelling surgeon adoption September 2018 MARCH

18 Revitalizing the Sales Channel Driving focus with DEDICATED, geographically-based distribution Exceptionally well-established hospital access Extensive spine connections attracting clinically astute salespeople Measurable progress before innovation initiatives have launched 60% 40% 20% 0% $50 $40 $30 $20 $10 $- % REVENUE GENERATED BY DEDICATED DISTRIBUTORS 5% 57% Q416 Q117 Q217 Q317 Q417 Q118 Q218 3X INCREASE IN DEDICATED REVENUE YoY ($M) Non- Dedicated Dedicated 3x Non- Dedicated Dedicated 1H H September 2018 MARCH

19 Incentivizing the Sales Channel = Leverage LEGACY Undifferentiated portfolio FUTURE Uniquely differentiated portfolio Shared representation Clinically focused, dedicated representation Limited incentive to perform 150+ non-dedicated distributors Leveraging for scalability Expanded territories to drive exclusive distribution 19 September 2018 MARCH

20 Building Long - Term Value 1 Creating clinical distinction 2 Revitalizing the sales channel 3 Compelling surgeon adoption 20 September 2018 MARCH

21 Compelling Surgeon Adoption SIGNIFICANT surgeon interest Hosting more ATEC Experience Events, our educational program for visiting surgeons Growth in new surgeon revenue significantly outpacing overall revenue growth Early adopters recognize the potential of an experienced, spine-focused team Measurable progress before innovation initiatives have launched ATEC EXPERIENCE EVENTS Q117 Q217 Q317 Q417 Q118 Q218 STRONG CONVERSION $ REVENUE GENERATED BY NEW SURGEONS Q117 Q217 Q317 Q417 Q118 Q September 2018 MARCH

22 Clinical Distinction Compounds Growth 1 CLINICAL DISTINCTION More - SURGERIES - PRODUCTS SOLD into each surgery - REVENUE SURGEON ADOPTION 3 Increased focus 2 DEDICATED SALES CHANNEL 22 September 2018 MARCH

23 The Future of Clinical Distinction Intra-operative information is a proven determinant of spine market value creation The New is pioneering the NEXT GENERATION of neuromonitoring and informatics 23 September 2018

24 The New CREATING CLINICAL DISTINCTION Applying experienced perspective, agility, and a driven culture to create an organic innovation machine REVITALIZING THE SALES CHANNEL Partnering with a dedicated network of spine experts to execute our clinical strategy COMPELLING SURGEON ADOPTION Expanding interest and conversion with a shared vision A MISSION TO IMPROVE THE CLINICAL EXPERIENCE IN SPINE MARCH

25 The New SEPTEMBER 2018 MARCH