ATEC - Alphatec: The Descent Slows But We've Arrived At Negative Equity

2023-03-08 22:45:14 ET

Summary

• Analysts are bullish on Alphatec’s growth and stock price, but the firm faces a lot of macro headwinds and is not well positioned to weather the storm.
• The firm’s stockholder equity has turned negative as ATEC piles on more debt to finance operations, and I forecast further debts will need to be raised in the near future.
• We can see in the financials that the firm is beginning to see the positive effects of increased scale as revenue grows, with increasing margins and falling SG&A ratios.
• My estimations for terminal cash burn have been extended 4 months to August 2023 thanks to increasing margins, but it will be a race against time for ATEC to outgrow its burn rate.
• The CEO has been vocal about product development and surgeon adoption but had to be questioned by analysts to give details on sales force growth, one of his key drivers for the growth strategy.

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