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Alphatec Holdings , Inc. (NASDAQ:ATEC), a medical device company with a market capitalization of $1.51 billion, has entered into a material definitive agreement by issuing $405 million in 0.75% Convertible Senior Notes due 2030, as reported on Friday. The notes were issued under an indenture with U.S. Bank Trust Company, National Association as trustee. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 2.73, indicating robust ability to meet short-term obligations.
The notes are senior, unsecured obligations of Alphatec, ranking equally with other senior unsecured debts and senior to subordinated debts. They are structurally subordinated to liabilities of Alphatec’s subsidiaries. Interest on the notes is payable semi-annually, with the first payment due on September 15, 2025.
Noteholders may convert their notes into cash, shares of Alphatec’s common stock, or a combination thereof, with conversions subject to a cap of 29,488,946 shares of common stock. The initial conversion rate is 64.3407 shares per $1,000 principal amount, equivalent to an initial conversion price of approximately $15.54 per share. This conversion price represents significant upside potential from the current trading price of $10.46. InvestingPro analysis shows the stock has demonstrated strong momentum with a 68.36% gain over the past six months, despite a recent 13.81% pullback last week.
Additionally, Alphatec repurchased $253 million of its 0.75% convertible senior notes due 2026, with the common stock reserved for these notes becoming available for the new issuance. The repurchase settled on March 7, 2025, and is included in the cap figure for the new notes.
Alphatec has the option to redeem the notes after March 20, 2028, under certain conditions. In the event of specific corporate changes, noteholders can require Alphatec to repurchase their notes at the principal amount plus accrued interest.
The company also entered into capped call transactions with several banks to reduce potential dilution from the conversion of the notes and/or offset cash payments required upon conversion. The capped call transactions have an initial cap price of $23.46 per share, representing a 100% premium over Alphatec’s common stock’s last reported sale price before the transactions. Notably, InvestingPro reveals analyst price targets ranging from $11.00 to $22.50, with revenue growing impressively at 26.81% over the last twelve months. For deeper insights into ATEC’s growth prospects and comprehensive analysis, subscribers can access the detailed Pro Research Report, available exclusively on InvestingPro.
The notes, initially offered to qualified institutional buyers under Rule 144A, may result in the issuance of a maximum of 34,526,817 shares of Alphatec’s common stock upon conversion, subject to anti-dilution adjustments.
This financial activity is based on a press release statement and is intended for informational purposes only, without any endorsement of claims.
In other recent news, Alphatec Holdings announced its Q4 2024 earnings, revealing a revenue of $177 million, which exceeded analyst expectations of $170.35 million. However, the company reported an earnings per share (EPS) of -$0.23, significantly missing the forecasted -$0.05. Despite this EPS miss, Alphatec’s revenue grew by 28% year-over-year, marking its first quarter of positive cash flow since its transformation. The company has projected a revenue of $732 million for 2025, indicating an anticipated growth of 20%. In a strategic move, Alphatec also announced a $300 million convertible notes offering due in 2030, with an option for an additional $50 million, aimed at qualified institutional buyers. This offering includes capped call transactions to mitigate potential stock dilution. Meanwhile, TD Cowen maintained its Buy rating for Alphatec, with a price target of $22.50, highlighting the company’s solid cash management strategies and market share expansion.
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