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Small-Cap Confidential
Undiscovered stocks that can make you rich

May 5, 2023

Alphatec (ATEC) Reports. Si-Bone (SIBN) Secondary.

Alphatec (ATEC)

Alphatec reported preliminary Q1 results on April 19 when the company announced the acquisition of the REMI Robotic Navigation System. The official report came after the close yesterday, and it was slightly better than the pre-released figures. Reported revenue of $109 million ($1 million above the pre-release) represents 54% growth (vs. 52% in the pre-release). Surgical volume was up 40% and average revenue per procedure rose 11%. On the conference call management talked a lot about how everything it does is centered on doing things better than the competition and proving it through clinical distinction. It is also building out its portfolio of procedures, surgical tools and implants. And as surgeons turn to Alphatec for more complex procedures that require more devices revenue per procedure is creeping up. Management stuck with its guidance for revenue growth of 28% to $450 million in 2023, break-even adjusted EBITDA this year and cash flow break-even in 2025. There were no major surprises and the opportunity is as good, if not better, than it appeared when we jumped in about a month ago. BUY

Si-Bone (SIBN)

Si-Bone, which I just added to the portfolio with a half-sized position yesterday, is tapping the equity market for a capital raise. The timing of this, less than 24 hours after adding the stock, isn’t ideal (stock indicated to open about 6% lower). But it’s one of the risks of buying a “strong” stock, and also one of the reasons to average in. With a company at this stage of growth this type of capital raise makes sense and I suspect will work in our favor over time as the roughly $70 million raised should go to fund investments that will pay off. My guess is it’ll be directed to the sales team and R&D. SIBN closed at 24.5 yesterday and the pricing of the offering is at 22. It should close by next Tuesday so expect shares of SIBN to move around in the next few sessions. Often, these types of offerings give us insight into just how significant demand for a stock is. Continue to average in. BUY HALF

Tyler Laundon is chief analyst of the limited-subscription advisory, Cabot Small-Cap Confidential and grand slam advisory Cabot Early Opportunities. He has spent his entire career managing, consulting and analyzing start-up and small-cap companies. His hands-on experience has taught Tyler that the development of a superior business model is the biggest factor in determining a company’s long-term success. Accordingly, his research focuses on assessing the viability of management’s growth strategies, trends in addressable markets and achievement of major developmental milestones.