The Man Who Built the Team That Turned ATEC Around

Once upon a time (specifically 2004) there were two spine companies in the greater San Diego area: one, NuVasive, Inc., had just gone public and was north and slightly east of downtown San Diego; the second, Alphatec Spine, Inc., was privately owned and headquartered in a charming seaside community north of San Diego named Carlsbad.

Two companies, roughly the same size and geography, but about to have very different journeys.

Alphatec could rightly be termed a “meat and potatoes” supplier of spinal implants and instruments. NuVasive, by contrast, was driving innovative technologies such as nerve monitoring and the assembly of a lateral approach to spine surgery and fusion.

In fact, NuVasive’s senior leadership—Alex Lukianov, Keith Valentine and Pat Miles—selected the Cheetah to represent NuVasive’s commitment to innovation and customer responsiveness.

By 2006, NuVasive’s annual revenue was $98 million, with $48 million in annual losses. Alphatec reported revenue of $74 million, with a $29 million loss.

By 2013, NuVasive’s sales had cleared $685 million, and CEO Lukianov told Wall Street that the company would soon hit $1 billion in annual revenue (which it did in 2017). By contrast, Alphatec reported $204 million.

The following year, 2014, would prove to be Alphatec’s high-water mark. By 2016 the company was nearly insolvent, necessitating the sale of its international operations to Globus Medical, Inc.

But the world of spine and business is nothing if not dynamic. Beginning in 2015, the NuVasive senior leadership team migrated to other opportunities. Lukianov is now mentoring and investing in a series of exciting young companies and serving on the board of Orthofix Medical. Valentine is CEO of SeaSpine, Inc., another San Diego area spine company.

And Miles? He left NuVasive in October 2017 to become Chairman and CEO of…Alphatec.

Turnarounds: The Gift and The Curse

Miles took a huge…and calculated risk.

As he explained to OTW, the three primary attributes possessed by high-performance companies: deep know how, a commitment to innovation, and a unifying, engaging culture, were in short supply at Alphatec when he arrived. Having been part of developing those attributes at NuVasive, Miles understood that he was, in effect, being tasked with a “restart” and wholesale change, top-to-bottom.

On the positive side, Alphatec had good “bones” around which to build a successful company, most notably significant hospital access (a struggle for most companies Alphatec’s size) and an annual revenue run rate of about $100 million (although that number had been declining). To be sure, said Miles, “the company was not doing anything unique that would compel someone to adopt its technology. It was a ‘me-too’ company, that wasn’t doing anything that well.” As a result, the company “was getting killed, losing market share and was bereft of any great prospects.”

The restart began in earnest in late 2016 and early 2017. “Alphatec eradicated many jobs” during that period, said Miles, “because there was so little confidence in the company’s performance and prospects that it couldn’t raise money.” By early 2017, Alphatec had retreated to barely 100 employees; by the end of 2017, the company’s entire executive leadership team had been replaced, as well as 90% of its Board of Directors.

The historical missteps and the resulting existential threat that compelled these wholesale changes had also affected the Alphatec culture, creating serious doubts among the employees (not to mention the customers and marketplace) about leadership’s ability to shepherd the company to success.

“This was a fearful culture,” said Miles. “The employees had lived through a number of leaders who tried their hand at steering the company. When I came in, many expressed skepticism, telling me ‘we’ve seen a lot of you come and go.’ My response? It didn’t bother me. As I told them, ‘realize we are all in this together; if we don’t do well, then I won’t last—likely none of us will.’ Being completely frank with them helped foster a more authentic dynamic than they were used to, which began to form the basis for a highly transparent, unifying culture.”

Find and Fill Product Gaps

Miles, who served in multiple leadership roles during his 17 years with NuVasive, including President and Chief Operating Officer, and Vice Chairman of the Board of Directors, knew what had to be done: find and fill product gaps while ALSO building a team around the primary attributes that drive high performance—know how, innovation and an all-in, engaging culture.

“The first thing I did when I arrived at Alphatec in late-2017, was to get a handle on what the company was trying to accomplish from an innovation perspective, and whether those goals were the right ones,” said Miles. “What became apparent was the need to elevate the standard we were committed to delivering. In order to drive that, we had to ensure that our company possessed unbelievable skills and know-how from an engineering perspective.”

Among the gaps in Alphatec’s offerings in 2017 was neuromonitoring—the company had neither the technology nor the know how to create it. Immediately, Miles went to work addressing that issue. “We studied—then acquired—SafeOp Surgical, a company with an advanced neurophysiology offering that uniquely performs automated Somatosensory Evoked Potential (SSEP) monitoring. Then we assembled a group that was very familiar with the neurophysiology business and understood the intraoperative value that the SafeOp technology provides—specifically, giving surgeons the ability to determine nerve health, real-time during surgery, would ultimately improve the quality of care in the operating room.”

Find and Fill Talent Gaps

One of the areas Miles was particularly attuned to was Alphatec’s marketing and clinical capabilities. “Kelli Howell (Alphatec’s EVP, Clinical Strategies) and I go back nearly 20 years. She’s co-written over 400 articles on lateral surgery. She also has an extraordinary capacity to teach and write and has no peer in educating on the clinical value of what we do.”

“Kelli runs our ‘Spine Ace Program,’ a curriculum that every new hire must take (and pass an exam by scoring 90% or better), in which they learn company history, spinal anatomy, pathologies of the spine, procedures to address those pathologies, and the products and innovative technologies we provide to serve our market. Not only does the program ensure our people are the most knowledgeable in the industry, but it creates a ‘language of inclusion’ for everyone in the company—from our front desk receptionist to our senior-most engineers—thus contributing to a fully aligned culture.”

One Alphatec alum that Miles enthusiastically retained was Brian Snider (who preceded Miles at Alphatec, joining in early 2017). Then Miles called in Mark Ojeda and Eric Dasso. “Brian, Mark and Eric are responsible for developing our portfolio strategy,” said Miles. “Brian handles everything in the thoracolumbar region; Mark heads up cervical spine and biologics; and Eric manages our adjunctive technologies (SafeOp, AlphaInformatiX and related products).”

“The DNA of our Marketing and Development team is that we examine the whole spine approach and ask, ‘what part or parts can we make better?’ versus only looking at implants that can be immediately monetized. We will do and invest in anything that will ultimately improve spine outcomes—regardless of whether each discrete investment generates its own positive ROI.”

“This separates us from the ‘business school’ mentality of most of our competitors—the ‘immediate financial return’ mentality can completely miss opportunities to create better surgery, and thereby build a much better long-term business. In a nutshell, this is the conflict that drove me to leave NuVasive.”

Enter the Culture Warrior

Pat knew, before joining Alphatec, that the key to building and driving a high performance culture, is to have the right leader. Fortunately, that piece was already in place at Alphatec when Pat joined. “Craig Hunsaker is our Executive Vice President of People and Culture. He is our ‘culture warrior.’”

Miles had worked with Hunsaker for more than 15 years, beginning in 2001, when Hunsaker served as Miles’ and NuVasive’s outside employment law counsel, and later for nearly 5 years while Hunsaker led NuVasive’s Global HR function. “If you’re going to instill an ‘all-in’ commitment, it better be driven by someone who exemplifies the ‘all-in’ mentality. Few are as entirely ‘in’ as Craig. He affects our business in a profound manner. His ability to navigate both legal issues (as General Counsel) and cultural dynamics is unparalleled. He has a real talent for ensuring we have the right people, in the right roles, at the right time. Add to that a borderline-unhealthy tenacity and superb ability to build trust with anyone in the organization, so he can approach them when appropriate and provide straight talk about team performance, and you have the makings of a great cultural lead.”

Best of all, Hunsaker is a fighter (or a “junkyard dog” as Miles likes to say)—which, given Alphatec’s legal posture (primarily opposite NuVasive) since Miles joined, has been an absolute necessity. “ATEC’s success story has been built around staring down adversity and fighting through it—whether that adversity comes in the form of economic headwinds, or multiple frivolous legal actions. You do not turn around a dying company without infusing a fighter’s mentality into its DNA. We have a saying at ATEC, borrowed from Marcus Aurelius: ‘What stands in the way, becomes the way.’ Craig is all about crisply addressing what stands in our way and helping me lead the company through it.”

Curious Pat Miles

What is your “super-power” Pat? When we asked that question, he didn’t hesitate: “constant curiosity.” It is his most-prized trait. “What I was able to bring to ATEC was a deep sense of curiosity about the steps we needed to take in order to quickly begin to make things better. I know what it takes to create a company that distinguishes itself from the pack. Spine companies need to be in the business of stewarding spine surgery; if done right, value chases those companies.”

Who better to join Miles in his constant curiosity than his long-time friend and partner, Luiz Pimenta, M.S., Ph.D., past president of the International Society for the Advancement of Spine Surgery, and the pioneer of lateral-approach spine surgery. Dr. Pimenta now advises Alphatec as its Chief Medical Officer.

“Without Luiz” says Miles, “there would have been no NuVasive. We all worked together to build that company and now continue that pursuit, striving for excellence in the service of ATEC’s patients. Luiz has always been a model of curiosity to me. Few people have more to point at, in terms of past accomplishments, and while others might rest on their laurels, Luiz remains one of the most perpetually curious people I know. He remains relentless in finding ways to improve what we do.”

OTW asked Miles to compare and contrast today’s “ATEC” with the Alphatec of old. “There is no comparison,” he said. “ATEC has shifted 180 degrees. What was before a company seeking to monetize individual products without the curiosity to serve the market. We have turned that upside down; now ATEC serves the requirements of spine surgery—both known and unknown unmet needs.”

Getting Product to Market

The last step in Alphatec’s transformation—and perhaps the most challenging one—has been converting the historically chaotic independent network of non-dedicated sales agents into a cohesive force. To do so, required a complete transformation of the sales leadership team. To lead the effort, Miles tapped David Sponsel, who brought to the role more than 15 years of sales leadership experience with Stryker Spine and as General Manager of the spine division of Medacta, USA. According to Miles, it has been one of the most important additions to the Alphatec leadership team.

“Dave stepped into the EVP, Sales role, and immediately established an unwavering standard: quota matters. What had historically been implicit at best, became crystal clear: those who will be long-term partners with ATEC will commit to becoming exclusive and will meet our high performance standards. Dave delivered exactly the message the sales force needed, at exactly the right time.”

Alphatec’s revenues, once plummeting, have shown industry leading growth over the past five quarters.

Long-term: It’s a Culture of Innovation and Information

“We are building an innovation machine in spine, and our people are in it for the long haul. We have positioned ourselves to be the fastest-growing company in the industry, despite being still a U.S.-only entity.”

To do that, Miles and his team are betting on an information-based approach to innovating within the spine market. “Looking forward, I believe like predictive analytics will be the responsibility of the device companies. That process takes time. It seems some executives are too busy trying to monetize whatever they can to impact the next quarter. I think ATEC’s advantage is that we are re-creating ourselves. We can look long-term at underserved markets and create critical elements to serve those customers. Big companies who plan quarter-to-quarter will not accrue great value, particularly in this time of crisis.”

Of the COVID-19 situation, Miles says, “We still have a market and patients to serve. Yes, it’s challenging. We know numbers will contract in the short-term. That’s okay. We have spent the past three years building a company of people with tremendous experience, commitment and GRIT. I have faith in our team and what we are doing together.”

“When I was at NuVasive, we took that company from zero revenue to over $1 billion per year. I actually feel better at ATEC than I did at this same point at NuVasive.”

“I am exceedingly bullish on what we are doing, and I have confidence that when the financial markets open up once again, we will be as well-positioned as any company to benefit. Many will panic, but the steady, gritty operators that proceed in a dogged, thoughtful manner will be fine.”

Miles reminds us of Chester Puller, one of the most decorated Marine Officers in history. Here is a famous ‘Chesty’ quote which, to us, could just as well have come from Pat Miles when we asked him about the current COVID-19 crisis: “Tell ’em there’s no secret weapon for our country but to get hard, to get in there and fight.”