Artificial intelligence (AI) is enabling the biotech industry to venture into previously unexplored areas. The medical device industry, in particular, has benefited greatly from technological advances.
Alphatec Holdings (ATEC) is a medical technology company that focuses on innovative spine surgery solutions. The company uses AI to design, develop, and market spinal implants, surgical tools, and technology-driven solutions to enhance surgical precision and improve patient outcomes.
Valued at roughly $1.4 billion, Alphatec stock has gained 7.1% in the year to date, compared to the S&P 500 Index’s ($SPX) fall of 3.1%.
Alphatec Is a High-Growth Stock, But There Are Risks
Alphatec focuses on minimally invasive procedures that assist doctors in treating spine problems such as back pain, deformities, and injuries. The company aims to make spine surgeries safer and more effective. Alphatec's advanced technology-driven approaches include Lateral Transpsoas (LTP), Anterior Cervical Discectomy and Fusion, Posterior Cervical Fusion (PCF), Anterior Lumbar Interbody Fusion, and Posterior Lumbar Interbody Fusion (PLIF), among others.
Alphatec has experienced rapid growth, owing to new product innovations, strategic acquisitions, and increased market adoption. In 2024, total revenue increased 27% year-over-year to $612 million, with surgical revenue increasing by 28%. Alphatec continues to invest heavily in research and development (R&D), ensuring a robust pipeline of next-generation spinal technologies. In 2024, the company spent $80.7 million on R&D, a 15% increase from 2023. Higher R&D spending is currently weighing on profitability. However, it should prove rewarding in the long run. The net loss in 2024 stood at $162.1 million, compared to $186 million in 2023. Adjusted gross margin came in at 70% for the year. The company’s consistent revenue growth and improving gross margins signal a path to profitability.
At the end of 2024, Alphatec’s cash and cash equivalents totaled $138.8 million. The company also generated positive free cash flow of $9 million in the fourth quarter.
The global spinal surgery market is expected to continue expanding at a compounded annual growth rate of around 5% between 2019 and 2030, owing to factors such as an aging population, increased prevalence of spinal disorders, and technological advancements in surgery. With an early mover advantage and a singular focus on spinal surgery solutions. Alphatec is well-positioned to benefit from these trends.
CEO Pat Miles stated, “The coming years will be our best yet. We are expanding our influence in deformity through EOS-integrated, procedure-specific technologies.” Management expects a 20% increase in revenue to $732 million in 2025, as well as a $75 million increase in adjusted EBITDA, which should contribute to positive FCF.
What Does Wall Street Say About Alphatec Holdings Stock?
Overall, on Wall Street, Alphatec stock has earned a "Strong Buy” rating. Of the 12 analysts covering ATEC, 10 have rated it a “Strong Buy,” one recommends a “Moderate Buy,” and one says it is a “Hold.” Based on its mean price target of $17.96, Wall Street expects the stock to climb as high as 88.3% from current levels. Furthermore, its high target price of $22.50 implies potential upside of nearly 135.8% in the next 12 months.
The Bottom Line on ATEC Stock
Alphatec Holdings is a promising growth stock in the medical technology industry. However, the medical device industry faces stiff competition from larger players such as Intuitive Surgical (ISRG), which has a dominant share, as well as Globus Medical (GMED), Stryker (SYK), and Medtronic (MDT), which are advancing rapidly. Alphatec has a competitive advantage due to its sole focus on spinal care, but established firms with more resources may challenge Alphatec’s market expansion.
Furthermore, the company is still in a growth phase, so profitability is a long-term goal rather than an immediate reality. As a result, ATEC stock is better suited to aggressive investors with a long-term investment horizon and the willingness to accept the risk of this high-growth stock.
