Sushree Mohanty
5 min read
In This Article:
In the volatile biotech industry, it is easy to overlook small-cap medical device companies, particularly those that are not yet profitable. But every now and then, a company slips under the radar despite having the ideal combination of innovation, market opportunity, and long-term strategic execution. One such company is Alphatec Holdings (ATEC), a medical technology firm specializing in advanced spine surgery solutions.
Alphatec uses artificial intelligence (AI) technologies to improve surgical precision, automate signal monitoring, and provide intraoperative analytics. While it is not a pure-play AI company, AI is becoming more integrated into its platform, helping to shape the future of spine surgery.
With consistent revenue growth, ATEC is gradually gaining traction. Valued at a market capitalization of $1.6 billion, Alphatec stock has risen 21% year to date (YTD), outperforming the S&P 500 Index's ($SPX) gain of 2.2% YTD. Long-term investors who are willing to dig deeper may find this beaten-down growth stock to be a hidden gem.
Founded in 1990, Alphatec initially focused on spinal implants and surgical instrumentation. However, it is now reimagining spine surgery as a fully integrated experience, with cutting-edge implants, navigation systems, and surgical software. The company's platform is intended to assist spine surgeons in operating with greater precision, reducing complications, shortening patient recovery times, and collecting intraoperative data for better long-term outcomes.
Alphatec has achieved double-digit revenue growth lately, owing to increased surgeon adoption and new product launches. In the first quarter of 2025, total revenue increased 22% year on year to $169 million, with surgical revenue up 24%. Procedure volume is increasing as more surgeons use Alphatec's approaches. The company is quickly becoming a preferred partner for spine surgeons because of its technological capabilities. In Q1, Alphatec experienced an 18% increase in new surgeon adoption.
Like most growth companies, Alphatec has yet to turn a profit despite increasing revenues. These losses are largely the result of aggressive reinvestment in growth, research and development (R&D), and surgeon support. During the quarter, the company spent $16.58 million on R&D. Adjusted gross margin reached 70.4% in the quarter. Looking at the firm's consistent revenue growth and margins, profitability may not be far away, especially if the company continues to increase procedure volumes and expand its ecosystem.
