Two of the most successful CEOs in the history of spine surgery, Keith Valentine, former CEO SeaSpine and NuVasive, Inc, and David Demski, former CEO of Globus Medical, have both stepped up and bought more shares of Alphatec Holdings, Inc. (ATEC).
The Smartest Guys in Spine Are Buying ATEC Stock
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#keithvalentine#alphatec#patmiles#daviddemski
Both men are also members of the Board of Directors of ATEC. Indeed, Valentine plus Demski plus ATEC CEO Pat Miles represent the spine industry’s version of a Dream Team. Between the three of them, they have built organizations that, this year, will likely sell more than $2 billion of spinal implants, instruments and biologics.
Keith Valentine bought 39,000 ATEC shares and David Demski bought 40,000 ATEC shares.
Alphatec’s stock has been under severe pressure since July 31 when the company reported that $0.29 per share loss for the June 2024 quarter, which was 3 pennies less than the consensus Wall Street estimate of $0.26. The $0.29 loss per share was a substantial improvement from last year’s $0.43 per share loss for the same period.
Sales came in at $146 million, up an industry leading 27%. For the fifth year in a row, Alphatec is the #1 market share gainer in spine. Those sales figures beat Wall Street’s expectations and CEO Miles raised his sales guidance for the rest of 2024.
It’s been no secret that ATEC has been under pressure to report profit. And Wall Street punished the company by pushing ATEC’s price from $10.45 on July 31 to $6.10 as we write this article.
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No surprise to most people, I suppose, but Wall Street is emotional and volatile. The real investment pros love when Wall Street either over buys or over sells. The key to the greatest returns comes from understanding underlying economic trends and taking advantage of emotional selling or buying.
It is, therefore, instructive that two of the most savvy and, importantly, board members (and, therefore, insiders) at ATEC are buying more stock.
At current prices, Alphatec Spine is worth $858 million. In four years, ATEC’s sales have soared from $145 million to $540 million (trailing 12 months). ATEC has been gobbling up market share at a faster rate than any other spine company since Pat Miles and his team have taken over.
At the current valuation, ATEC is very cheap. How cheap? Price to sales is 1.62. The average for a spine or orthopedic company is 4.05x.
And the smartest guys in spine are buying more ATEC stock.
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Discussion
This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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