Intrinsic value of Alphatec Holdings - ATEC

Previous Close

$2.37

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.37

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ATEC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -10.45
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  120
  122
  125
  128
  132
  136
  140
  145
  150
  156
  162
  168
  175
  182
  190
  198
  207
  216
  226
  236
  247
  259
  271
  283
  297
  311
  326
  342
  358
  375
  394
Variable operating expenses, $m
 
  284
  290
  298
  306
  315
  325
  336
  348
  361
  375
  390
  406
  423
  441
  460
  480
  501
  524
  548
  573
  599
  627
  657
  688
  721
  755
  791
  830
  870
  912
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  145
  284
  290
  298
  306
  315
  325
  336
  348
  361
  375
  390
  406
  423
  441
  460
  480
  501
  524
  548
  573
  599
  627
  657
  688
  721
  755
  791
  830
  870
  912
Operating income, $m
  -25
  -161
  -165
  -169
  -174
  -179
  -185
  -191
  -198
  -205
  -213
  -222
  -231
  -240
  -251
  -261
  -273
  -285
  -298
  -311
  -326
  -341
  -357
  -373
  -391
  -410
  -429
  -450
  -472
  -494
  -518
EBITDA, $m
  -13
  -157
  -160
  -164
  -169
  -174
  -180
  -186
  -192
  -199
  -207
  -215
  -224
  -233
  -243
  -254
  -265
  -277
  -289
  -302
  -316
  -331
  -346
  -362
  -380
  -398
  -417
  -437
  -458
  -480
  -503
Interest expense (income), $m
  7
  5
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
Earnings before tax, $m
  -31
  -166
  -165
  -170
  -174
  -180
  -186
  -193
  -200
  -207
  -216
  -224
  -234
  -244
  -254
  -266
  -278
  -290
  -304
  -318
  -333
  -349
  -365
  -383
  -401
  -421
  -441
  -463
  -485
  -509
  -534
Tax expense, $m
  -5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -30
  -166
  -165
  -170
  -174
  -180
  -186
  -193
  -200
  -207
  -216
  -224
  -234
  -244
  -254
  -266
  -278
  -290
  -304
  -318
  -333
  -349
  -365
  -383
  -401
  -421
  -441
  -463
  -485
  -509
  -534

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  20
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  94
  75
  77
  79
  81
  84
  87
  90
  93
  96
  100
  104
  108
  113
  117
  122
  128
  133
  139
  146
  152
  159
  167
  175
  183
  192
  201
  211
  221
  231
  243
Adjusted assets (=assets-cash), $m
  74
  75
  77
  79
  81
  84
  87
  90
  93
  96
  100
  104
  108
  113
  117
  122
  128
  133
  139
  146
  152
  159
  167
  175
  183
  192
  201
  211
  221
  231
  243
Revenue / Adjusted assets
  1.622
  1.627
  1.623
  1.620
  1.630
  1.619
  1.609
  1.611
  1.613
  1.625
  1.620
  1.615
  1.620
  1.611
  1.624
  1.623
  1.617
  1.624
  1.626
  1.616
  1.625
  1.629
  1.623
  1.617
  1.623
  1.620
  1.622
  1.621
  1.620
  1.623
  1.621
Average production assets, $m
  23
  24
  24
  25
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  43
  45
  47
  50
  52
  54
  57
  60
  63
  66
  69
  72
  76
Working capital, $m
  33
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  48
  50
  52
Total debt, $m
  46
  2
  3
  5
  7
  9
  12
  15
  17
  21
  24
  27
  31
  35
  40
  44
  49
  54
  59
  65
  71
  78
  84
  91
  99
  107
  115
  124
  133
  142
  152
Total liabilities, $m
  112
  68
  69
  71
  73
  75
  78
  81
  83
  87
  90
  93
  97
  101
  106
  110
  115
  120
  125
  131
  137
  144
  150
  157
  165
  173
  181
  190
  199
  208
  218
Total equity, $m
  -18
  8
  8
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
Total liabilities and equity, $m
  94
  76
  77
  79
  81
  83
  87
  90
  92
  97
  100
  103
  108
  112
  118
  122
  128
  133
  139
  146
  152
  160
  167
  174
  183
  192
  201
  211
  221
  231
  242
Debt-to-equity ratio
  -2.556
  0.250
  0.450
  0.660
  0.890
  1.130
  1.380
  1.630
  1.880
  2.140
  2.390
  2.640
  2.890
  3.130
  3.370
  3.600
  3.830
  4.050
  4.260
  4.470
  4.670
  4.860
  5.050
  5.220
  5.390
  5.560
  5.720
  5.870
  6.010
  6.150
  6.280
Adjusted equity ratio
  -0.514
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -30
  -166
  -165
  -170
  -174
  -180
  -186
  -193
  -200
  -207
  -216
  -224
  -234
  -244
  -254
  -266
  -278
  -290
  -304
  -318
  -333
  -349
  -365
  -383
  -401
  -421
  -441
  -463
  -485
  -509
  -534
Depreciation, amort., depletion, $m
  12
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
Funds from operations, $m
  -12
  -161
  -160
  -165
  -169
  -175
  -181
  -187
  -194
  -201
  -209
  -218
  -227
  -237
  -247
  -258
  -270
  -282
  -295
  -309
  -323
  -339
  -355
  -372
  -390
  -409
  -429
  -449
  -472
  -495
  -519
Change in working capital, $m
  -2
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  -10
  -162
  -161
  -165
  -170
  -175
  -181
  -188
  -195
  -202
  -210
  -219
  -228
  -238
  -248
  -259
  -271
  -283
  -296
  -310
  -325
  -340
  -356
  -373
  -392
  -411
  -431
  -452
  -474
  -497
  -522
Maintenance CAPEX, $m
  0
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
New CAPEX, $m
  -9
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
Cash from investing activities, $m
  62
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -14
  -14
  -15
  -16
  -16
  -17
  -18
Free cash flow, $m
  52
  -167
  -166
  -170
  -176
  -181
  -187
  -194
  -201
  -209
  -217
  -226
  -236
  -246
  -257
  -268
  -280
  -293
  -306
  -321
  -336
  -352
  -369
  -386
  -405
  -425
  -445
  -467
  -490
  -514
  -539
Issuance/(repayment) of debt, $m
  -44
  -41
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
Issuance/(repurchase) of shares, $m
  0
  209
  165
  170
  175
  180
  186
  193
  200
  208
  216
  225
  234
  244
  255
  266
  278
  291
  304
  318
  333
  349
  366
  383
  402
  421
  442
  464
  486
  510
  535
Cash from financing (excl. dividends), $m  
  -43
  168
  167
  172
  177
  182
  188
  196
  203
  211
  219
  229
  238
  248
  259
  271
  283
  296
  309
  324
  339
  355
  373
  390
  409
  429
  450
  473
  495
  520
  545
Total cash flow (excl. dividends), $m
  9
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Retained Cash Flow (-), $m
  5
  -209
  -165
  -170
  -175
  -180
  -186
  -193
  -200
  -208
  -216
  -225
  -234
  -244
  -255
  -266
  -278
  -291
  -304
  -318
  -333
  -349
  -366
  -383
  -402
  -421
  -442
  -464
  -486
  -510
  -535
Prev. year cash balance distribution, $m
 
  17
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -191
  -164
  -169
  -174
  -179
  -185
  -191
  -198
  -206
  -214
  -223
  -232
  -242
  -252
  -264
  -275
  -288
  -301
  -315
  -330
  -345
  -362
  -379
  -398
  -417
  -437
  -458
  -481
  -504
  -529
Discount rate, %
 
  15.10
  15.86
  16.65
  17.48
  18.35
  19.27
  20.24
  21.25
  22.31
  23.43
  24.60
  25.83
  27.12
  28.47
  29.90
  31.39
  32.96
  34.61
  36.34
  38.16
  40.06
  42.07
  44.17
  46.38
  48.70
  51.13
  53.69
  56.38
  59.19
  62.15
PV of cash for distribution, $m
 
  -166
  -122
  -106
  -91
  -77
  -64
  -53
  -42
  -34
  -26
  -20
  -15
  -11
  -8
  -5
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  2.2
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Alphatec Holdings, Inc. is a medical technology company. The Company through its subsidiary, Alphatec Spine, Inc. and its subsidiaries, designs, develops, manufactures and markets products for the surgical treatment of spine disorders. Its product portfolio and pipeline addresses the cervical, thoracolumbar and intervertebral regions of the spine and covers a range of spinal disorders and surgical procedures. Its products include Cervical and Cervico-Thoracic Products, which include Trestle Luxe Anterior Cervical Plate System and Pegasus Anchored Cervical Interbody; Thoracolumbar Fixation Products, which include Arsenal Degenerative System and OsseoScrew Spinal Fixation System; Spinal Spacers, which include Battalion Universal Spacer System and Alphatec Solus Locking ALIF Spinal Spacer; minimally invasive surgery Products, which include Illico Minimally Invasive Surgery System and BridgePoint Spinous Process Fixation System, and Biologics, which include Neocore Osteoconductive Matrix.

FINANCIAL RATIOS  of  Alphatec Holdings (ATEC)

Valuation Ratios
P/E Ratio -0.7
Price to Sales 0.2
Price to Book -1.2
Price to Tangible Book
Price to Cash Flow -2.1
Price to Free Cash Flow -1.1
Growth Rates
Sales Growth Rate -10.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate -9.7%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity -238.9%
Total Debt to Equity -255.6%
Interest Coverage -3
Management Effectiveness
Return On Assets -20.1%
Ret/ On Assets - 3 Yr. Avg. -30.6%
Return On Total Capital -63.2%
Ret/ On T. Cap. - 3 Yr. Avg. -59.7%
Return On Equity 193.5%
Return On Equity - 3 Yr. Avg. -12.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 63.3%
Gross Margin - 3 Yr. Avg. 66.7%
EBITDA Margin -10%
EBITDA Margin - 3 Yr. Avg. -34.2%
Operating Margin -20.8%
Oper. Margin - 3 Yr. Avg. -50.3%
Pre-Tax Margin -25.8%
Pre-Tax Margin - 3 Yr. Avg. -51.4%
Net Profit Margin -25%
Net Profit Margin - 3 Yr. Avg. -55.7%
Effective Tax Rate 16.1%
Eff/ Tax Rate - 3 Yr. Avg. 5.6%
Payout Ratio 0%

ATEC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATEC stock intrinsic value calculation we used $120 million for the last fiscal year's total revenue generated by Alphatec Holdings. The default revenue input number comes from 2016 income statement of Alphatec Holdings. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ATEC stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 15.1%, whose default value for ATEC is calculated based on our internal credit rating of Alphatec Holdings, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Alphatec Holdings.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ATEC stock the variable cost ratio is equal to 231.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ATEC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 11.1% for Alphatec Holdings.

Corporate tax rate of 27% is the nominal tax rate for Alphatec Holdings. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ATEC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ATEC are equal to 19.2%.

Life of production assets of 1.9 years is the average useful life of capital assets used in Alphatec Holdings operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ATEC is equal to 13.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-18 million for Alphatec Holdings - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 10.858 million for Alphatec Holdings is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Alphatec Holdings at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating
NUVA NuVasive 59.58 52.32  hold
GMED Globus Medical 38.53 18.38  sell
OFIX Orthofix Inter 51.71 45.92  hold
ZBH Zimmer Biomet 112.82 46.02  str.sell
SPNE SeaSpine Holdi 10.01 2.21  str.sell
KTWO K2M Group Hold 17.38 0.81  str.sell
RTIX RTI Surgical 4.20 1.09  str.sell
SYK Stryker 151.34 99.83  sell
EXAC Exactech 50.10 5.65  str.sell

COMPANY NEWS

▶ Alphatec reports 3Q loss   [Nov-09-17 04:59PM  Associated Press]
▶ Alphatec Denounces Baseless NuVasive Complaint   [Oct-11-17 09:00AM  GlobeNewswire]
▶ Should You Buy Alphatec Holdings Inc (ATEC)?   [Sep-15-17 06:25PM  Simply Wall St.]
▶ Alphatec reports 2Q loss   [Aug-10-17 10:37PM  Associated Press]
▶ Alphatec reports 1Q loss   [05:50PM  Associated Press]
▶ Alphatec Holdings Announces $18.9 Million Private Placement   [Mar-23-17 09:13AM  GlobeNewswire]
▶ Alphatec reports 4Q loss   [Mar-15-17 05:52PM  Associated Press]
▶ Alphatec Slides on Management Changes   [Dec-12-16 04:07PM  24/7 Wall St.]
▶ Alphatec Holdings Announces Company Updates   [05:04PM  GlobeNewswire]
▶ Alphatec Holdings Announces Company Updates   [04:30PM  GlobeNewswire]
Financial statements of ATEC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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