October 25, 2023

Alphatec (ATEC) Taps Equity Market to the Tune of $150 Million

Yesterday after the close Alphatec (ATEC) announced a proposed public offering of $150 million. To soften the blow, the company also reaffirmed preliminary Q3 revenue (well ahead of expectations, as pre-announced on October 16) and added that it expected adjusted EBITDA (a measure of earnings before interest, taxes, depreciation and amortization) to be in the range of $1.5 - $2.3 million, well ahead of consensus of $600,000. That’s nice, but late last night the company announced pricing for the offering at 10.5 (stock closed at 12.8 yesterday). That explains why shares are down double digits today, back to their intra-day low from 10/16. This is unfortunate since ATEC had been on a nice rally for the last two weeks. I suspect shares will trade higher once this offering closes, and we’ll learn about intended uses for the cash on the upcoming earnings call. HOLD

Tyler Laundon

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.