Alphatec Pops 21% On 3Q Sales Guidance Beat; Street Says Buy

Shares in Alphatec Holdings are spiking 21% in Thursday’s pre-market market session after the medical device company surprised investors with preliminary third-quarter sales that exceeded analysts’ expectations.

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Alphatec (ATEC) expects third-quarter revenues of $40.7 million to $41.1 million, above the Street consensus of $30.98 million, according to preliminary results. The quarterly results ended Sept. 30 are projected to reflect US revenue growth of 41% to 43% compared to the same period last year. Alphatec forecasts 3Q non-GAAP adjusted EBITDA loss of between $1.7 million to $2.2 million.

The company, which focuses on spine surgery, said that growth was driven primarily by the continuing rapid adoption of recently released ATEC technologies and strong pull-through from the SafeOp Neural InformatiX neuromonotoring system. New product sales represented over 70% of estimated US sales for the quarter. Alphatec is scheduled to report third quarter financial results after the market close on Nov. 5.

“In a year of considerable uncertainty, ATEC is bringing predictability to both the clinical experience and financial performance,” said Alphatec CEO Pat Miles. “We continue to deliver against the priorities that we committed to early this year: creating clinical distinction, revitalizing the sales force, and compelling surgeon adoption.”

As of September 30, the company had approximately $41 million in cash and available borrowings under its senior secured credit facility.

Following the company’s revenue guidance, Piper Sandler analyst Matthew O’Brien reiterated a Buy rating on the stock with a $9 price target saying that its “standout” Q3 performance looks “extraordinary”.

O’Brien noted that Alphatec’s efforts to “introduce new products, enhance its strategic distribution network, and go deeper with existing surgeons” are all beginning to show “considerable” dividends. (See Alphatec stock analysis on TipRanks)

The rest of the Street is in line with O’Brien’s bullish outlook. The Strong Buy analyst consensus boasts 5 unanimous Buy ratings. With shares down 3.3%, the $9.60 the average price target indicates shares could appreciate by 40% in the year ahead.