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Alphatec Holdings Idea Proposal (ATEC)

Alphatec Holdings Idea Proposal (ATEC)
 

Can Alphatec’s product development program and strategic distributor sales channel initiatives deliver sustained double-digit growth?

Report Available: January 7, 2021

 

Blueshift’s initial research found ATEC transformed by a new leadership team, shedding its past legacy of lacking distinction to one providing innovative spine surgery solutions. The company is now promoting clinical excellence by introducing eight to 10 new products a year (12 new products in 2019) that are compelling surgeon adoption and revitalizing the salesforce and distributor channel. Backing this up are eight consecutive quarters of double-digit growth driven by these new products. In the highly competitive spine surgery device space with over 100 companies competing for share, sustained growth can be elusive. ATEC has less than 1% market share.

 

Observations

  1. ATEC is a medical technology company founded in 1990, having gone through numerous transformations over the years. The company designs, develops, and advances technologies for the surgical treatment of spinal disorders. The company offers the SafeOp Neural InformatiX System, LLICO access system, Invictus MIS SingleStep, and numerous other products designed to improve surgical efficiency and outcomes.
  2. In 2017, with the hiring of CEO Patrick Miles, the company began a transformation to revolutionize spine surgery through clinical distinction. The company began by leveraging what it calls an Organic Innovation Machine which uses in-house capabilities and collaboration with spine surgeons to plan, design, and test new products and surgical techniques. It also addressed its underperforming sales channel by shifting from about 100 legacy distributors to 50 strategic ATEC distributors focused on surgeons and hospital access.
  3. The transformation of ATEC appears to be paying dividends. The company’s Q3 performance produced revenue growth of 43% YY and represented the 8th consecutive quarter of double-digit growth. Sales were driven by ATEC’s strategic distributor channel which accounted for 90% of total sales. ATEC also launched two new products during the quarter and new product revenue was up 70% YY. Full year guidance for 2021 calls for sales growth of 25%, accounting for the potential of a slow start to the year because of COVID-19.
  4. For ATEC to maintain its growth momentum, it has to distinguish itself in a highly competitive space with hundreds of competitors. According to a September Orthoworld posting, the top companies in the space include MDT (27% share), DePuy Synthes (15%), SYK (11%), NUVA (10%) and GMED (8%). The question for ATEC is whether its Organic Innovation Machine and strategic distributor channel are up to the task of competing against these heavyweights.

 

Is ATEC gaining share? Are ATEC products truly innovative? Is ATEC sales channel making inroads with surgeons, hospitals and GPOs? Is ATEC gaining new surgeons using its products? Are surgeons increasing the use of ATEC products in each procedure and overall? Will ATEC’s new product development and sales channel continue to grow sales? Is ATEC’s 25% sales growth in 2021 attainable? What are the headwinds and roadblocks ATEC faces? What companies in the spine surgery space are innovating and gaining share? How do they compare to ATEC? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Spine surgeons and their teams, Spine device sales channel, Competitors, and Industry specialists. 

 

Companies: Alphatech Holding Inc. (ATEC), Globus Medical Inc. (GMED), NuVasive Inc. (NUVA), Medtronic plc (MDT), SeaSpine Holdings Corporation (SPNE), Stryker Corporation (SYK), Zimmer Biomet Holdings Inc. (ZBH)

 

Research Begins: December 14, 2020

 

To see other ideas Blueshift Research is currently working on, please click here.

 

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