Alphatec Holdings Plunges 12.54% on Cash Burn Crisis

On April 17, 2025, Alphatec Holdings experienced a significant drop of 12.54% in pre-market trading, reflecting growing investor concerns over the company's financial health.

Alphatec Holdings is currently facing a severe cash burn crisis, with its cash reserves declining rapidly. The company's financial report for Q1 2024 shows that its cash reserves fell from $220.97 million at the end of 2023 to $144.09 million by March 31, 2024, a decline of $76.9 million in just three months. This translates to a monthly cash burn rate of approximately $25.6 million, with operating activities alone draining $12.8 million monthly. The company's Q1 2024 net loss of $48.5 million highlights the severity of its operational struggles, as revenue growth of 27% to $138.5 million was overshadowed by a $140.7 million surge in operating expenses.

The root causes of Alphatec's financial woes include high overhead costs, excessive inventory levels, and a significant debt burden. The company's sales, general, and administrative (SG&A) expenses skyrocketed 24.6% year-over-year to $113.7 million, driven by litigation costs and restructuring. Research and development spending also rose 36% to $18 million. Inventory levels climbed to $152.98 million by Q1 2024, with a $2.98 million write-down for excess/obsolete stock—a 42% increase from the prior year. Long-term debt remains stubbornly high at $511.89 million, with no meaningful repayments in Q1. With interest expenses hitting $5.3 million, the company is effectively paying to service debt while bleeding cash elsewhere.

At its current burn rate, Alphatec’s cash reserves of $144 million would last roughly 5.6 months—a timeframe that shrinks to 11 months if excluding non-operational cash uses. However, this assumes no further deterioration in operations, which is optimistic given the company's revenue growth limits and debt maturity risks. The $350 million in convertible notes due in 2026 loom as a potential refinancing challenge if cash reserves remain thin.

The company's upcoming Q1 2025 results, due May 1, 2025, will be critical. Investors will scrutinize whether the cash burn has slowed, if inventory write-downs stabilize or escalate, and progress on cost-cutting initiatives or new revenue streams. Without a turnaround, Alphatec may need to pursue dilutive equity raises or debt restructuring, both of which could further pressure shareholders. The data is damning, with net cash used in operations nearly doubling year-over-year to $38.4 million, SG&A expenses now consuming 82% of revenue, and inventory as a percentage of assets rising to 37.8%, signaling poor working capital management. For investors, Alphatec is a high-risk bet, with the company's survival hinging on drastic measures to slash costs, boost revenue meaningfully, or secure additional financing. The clock is ticking, and time is running out for Alphatec Holdings.