Shares of Alphatec Holdings (ATEC 1.63%) plunged 21.2% on Wednesday after the spine surgery solutions company priced a public offering of common stock well below yesterday's closing price.
Alphatech raises cash (at a discount)
Early Tuesday Alphatec issued a press release announcing plans to raise $150 million through a public offering of common stock, while also granting the underwriters of the offering a 30-day option to purchase up to an additional $22.5 million of shares. All shares were to be sold by the company itself (and not by selling stakeholders), and the shares were to be offered pursuant to a shelf registration statement previously filed by the company.
In a subsequent press release late yesterday, however, Alphatec announced it had priced the offering of 14.3 million shares of common stock at a public offering price of $10.50 per share -- a more than 18% discount to yesterday's closing price of $12.82 per share. Alphatec also granted that 30-day option to the underwriters to purchase up to an additional 2.145 million shares at the offering price.
Sure enough, the company expects to raise gross proceeds of roughly $150 million, assuming the underwriters don't exercise their option to purchase additional shares. The offering is expected to close by Oct. 27, 2023.
Why the pricing of Alphatech's offering isn't all that unusual
To be clear, it's not uncommon for companies in need of cash to price public offerings substantially lower than the stock's current market price -- particularly as pricing the offering too high could stifle investor demand and prevent the successful completion of the deal. And it certainly could have been worse; recall Vicarious Surgical stock plummeted more than 40% in a single day back in August 2023, for example, after the robotic surgery company priced its own offering at a roughly 39% discount to its previous day's closing price.
Meanwhile, today's move brings Alphatech stock back only slightly below where it traded prior to the company announcing strong preliminary results and raising its full-year guidance early last week. With around $101 million in cash remaining at the halfway point of 2023 after incurring a $50 million operating loss under generally accepted accounting principles (GAAP) last quarter, it's hard to blame Alphatec for taking advantage of the past week's brief bump to bolster its balance sheet as it works toward sustained profitability. As a result, this might well prove to be a buying opportunity for patient, long-term investors willing to continue watching Alphatech's growth story play out.
