Alphatec Holdings, Inc.
Practice Area: Securities
Cohen Milstein Sellers & Toll PLLC filed an amended class action complaint on February 22, 2011 in the United States District Court for the Southern District of California on behalf of a proposed class of all persons who purchased the common stock of Alphatec Holdings, Inc. (“Alphatec” or the “Company”) (AMEX: ATEC) pursuant or traceable to the February 12, 2010 Registration Statement and April 16, 2010 Prospectus and on behalf of all those who purchased the common stock of Alphatec between April 16, 2010 and August 5, 2010, inclusive (the “Class Period”).
The complaint asserts claims against Defendants Alphatec, HealthpointCapital Partners, L.P. and HealthpointCapital Partners II, L.P. (“Healthpoint”), and certain of Alphatech’s officers and directors for violations of federal securities laws, including Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933.
On March 29, 2010 Alphatec completed its acquisition of Scient’x, S.A. (“Scient’x”), a spinal products company based in France, in an all-share exchange whereby Alphatec used 24 million newly-issued shares to purchase Scient’x. The acquisition of Scient’x by Alphatec was a merger of two companies largely owned by the same entity: Healthpoint. Two weeks after the acquisition, at the beginning of the Class Period, Alphatec and Healthpoint each sold 9.2 million shares of Alphatec stock at $5.00 per share, raising $92 million.
During the Class Period, Defendants reported that Alphatec’s integration with Scient’x was proceeding smoothly and that the acquisition would yield immediate and significant revenue synergies and that, as a result, “2010 pro forma full-year revenues to be in a range of $220 million to $225 million, and pro forma full-year 2010 adjusted [earnings before deduction of interest, taxes, and amortization (“EBITDA”)] to be in a range of $32 million to $35 million.” However, following the first complete quarter after the Scient’x acquisition and Offering, Alphatec reported far-worse than expected second quarter earnings and simultaneously cut its revenue guidance by 24%, slashing estimated 2010 revenue to $177 million.
During an earnings call after markets closed on August 5, 2010, Alphatec revealed that the integration of Scient’x had suffered setbacks. Moreover, Defendants first revealed that the hesitancy of certain of Scient’x’s distributors to place orders in the second quarter had materially impacted Alphatec’s revenues.
In response to this news, an analyst criticized Defendants for a reversal in guidance despite contrary assurances as late as mid-way through the second quarter. Additionally, the analyst noted, “[c]onfounding the result in Europe is indication that there may have been some stocking in Europe prior to Alphatec acquiring Scient’x, which could have overstated the run rate there and also created an air pocket of demand in Europe in Q2.”
These developments prompted a sharp sell-off of Alphatec shares, the price of which plunged 46% in value in a single day of trading, falling from $4.42 to $2.39.
If you have any questions about the action, or with regard to your rights, please contact either of the following:
Steven J. Toll, Esq.
Tyler Gaffney
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W.
West Tower, Suite 500
Washington, D.C. 20005
Telephone: (888) 240-0775 or (202) 408-4600
Email: stoll@cohenmilstein.com or tgaffney@cohenmilstein.com