Alphatec Holdings Inc. (NASDAQ–ATEC)


Price August 29, 2014-$1.56

ATEC has had some troubles lately. We personally bought ATEC earlier this year, but then sold it when it lost a $50 million lawsuit they inherited from an acquisition in March. We now own ATEC again based on recent performance.

Latest earnings were for the second quarter ended 6/30/2014. ATEC posted record sales and adjusted EBITDA. Revenues were up 4% to $53.2 million from $51 million and they lost $2.9 million versus a $4.7 million loss last year. They are projecting around $210 million of sales for 2014 and adjusted EBITDA of $30-$33 million. Our valuation based on the latest quarter is $3.00 a share.

Back in March when they lost the lawsuit they entered into a loan facility with Deerfield entities  (which own about 4% of ATEC) to be able to fund the lawsuit settlement. They currently have about $21 million in cash and $100 million in debt. They still have $31.5 million to pay on the settlement but are only required to pay this in $1.1 million quarterly installments.

Healthpoint Capital is a longtime holder of about 20% of ATEC.

Trading at only 52% of our valuation we think this is a BUY.

There are about 97 million shares outstanding and it trades about 180,000 shares a day.

About ATEC:  Continue reading