Wednesday, February 2, 2011

Inquiring Minds Want To Know

Since TSB is the People's Forum, a friend in need is a friend indeed. Recently, TSB received an inquiry from an investigator whose firm goes after corporations that engage in fraudulent or illegal conduct.  Firms like Cohen, Milstein, Sellers and Toll pick and choose cases carefully.  An example of the type of litigation that they are involved in would be their suit against BP in connection with its safety and environmental record in connection with the Deepwater Horizon explosion.  So how does this tie into the spine industry? CMST represents the lead plaintiff, a public employees retirement fund in a class action lawsuit against AlphaTec.  This class of shareholders owned AlphaTec, (the Company) stock prior to the stock crashing last August. Obviously, AlphaTec had a difficult time integrating Scient'x.  But inquiring minds always want to know how difficult can it really be considering that there was a limited product portfolio, a thin management team, and an independent distribution model that could be easily terminated.  But that's not what this post is about.

John Sifton is attempting to speak with former AlpaTech, Scient'x, or Healthpoint employees who might have pertinent information regarding the Company's admittingly strange reversal of fortune in 2010.  Considering that AlphaTec had presented such an optimistic forecast during the first half of the year, heralding the Scient'x merger.  On March 29th, 2010 AlphaTec anticipated pro forma revenues in the range of $220-$225 million, and pro forma full year 2010 adjusted EBITA to be in the range of $32-35 million.  In the 2010 press release, AlphaTec expected the acquisition to be positive to the Company's EPS, and accretive to the Company's 2011 EPS. So questions must be asked, what precipitated this sudden turn around in August 2010 which resulted in lowering their earlier "happy happy" forecast, and what could have potentially been the impetus for the delay in integrating Scient'x? Obviously something smells fishy.  Was the company "fluffing" things up in anticipation of its April stock offering? Was the Scient'x acquisition and merger simply a ruse to mitigate expected losses at Scient'x? Is this truly a House of Cards?  The inquiring minds at CMST want to know. It seems that those that invested in this dog of a stock are a bit perturbed about their losses.

So if you are interested, have the time and love for Mortimer and John Boy give Mr. Sifton a call at (202) 408-4617 or drop him an e-mail at jsifton@cohenmilstein.com.  You don't need to speak on the record, confidential documents or information are welcome.  TSB wants to know what inquiring minds have to offer?

60 comments:

  1. The digital age is really going to screw a lot of companies. I can only imagine the treasure trove of documents that sit in former employees gmail accounts.

    I wonder if google's mail content monitoring system shows these former employees links to defense attorneys and information on how to pull one over on wall street in their side-bars.

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  2. Really? You are pimping a public employee union lawsuit? Investing in individual securities is RISKY. Frivolously investing in securities like ATEC, with other peoples money is riskier, and borderline criminal. Maybe your shyster lawyer friend should be suing the idiots at the union that decided to invest in ATEC, with their memberships retirement. Was the decisionmaker even qualified to make that call? This crap (lawsuit) is exactly what is wrong with our culture/country. If you join a union, and you agree to let some bureaucrat/union boss decide how to invest your retirement, then you get exactly what you deserve. This is an all time low TSB.

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  3. So 9:29 as a casual observer of this website please explain why after such a positive forecast by Mr. Kuyper and the powers to be, did the stock tank? How difficult would it be to integrate a company that generated an estimated $7-10 million is US sales and probably another $10 in Europe ? Based on Healthpointe's reputation there are many unanswered questions. As for TSB, its their blog and they can post whatever they would like to post, whether you like it or not, considering this is such a squeaky clean industry to work in.

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  4. Seems like the UBS people in New York are defending Alphatec

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  5. start with a subpoena for all email and cell phone records of one Steve Lubisher and his sidekick Bill Delrusso. The shit they send via email is a treasure trove. They put together the sales forcasts and will fall like cards. Break them and then go up and down the chain. All distributors that are part of the circle of honor. tic toc

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  6. Actually 9:29 what is wrong with our country is that people can manipulate the market without being held accountable. Hopefully ATEC will have its day in court, that's what is great about this country. You are a typical American that quickly forgets about things like CDO and MBS. You quickly forget that the government then bails these people out with taxpayers dollars. I guess socialism is great when it pertains to bankers and sports owners. Go figure, TSB keep up the good work, we wouldn't expect otherwise.

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  7. maybe their sales managers predicted bigger numbers?
    when the facts roled in alphatec had to re- evaluate their number?

    when will tsb receive a subpoena?

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  8. All-time low? Someone must provide us with a forum to police one of the most corrupt industry in all of medical devices. I thought the stent market reeked of illicit business dealing, but spine is the creme de la creme. Oh where oh where is the DOJ when you need them. Throw a few CEO's, Surgeons and Distributors in jail and things will cool down quickly. Until then, the show goes on

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  9. Anonymous 9:29

    It is in really big letters: The people's blog site where news, ideas, job opportunities and what's been heard on the street can be discussed in a professional manner

    It's what has been heard on the street, I don't understand your negative comment towards TSB

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  10. I'm going to chime in on the side of 9:29. Investing in any business is risky, let alone a pure play single field medical device company. They wouldn't be suing if they got high returns. If ATEC execs knew something that they should have disclosed, and didn't, that's criminal and they should be held accountable. But you can't sue for misplaced, misguided, or even ignorant optimism. That's up to the investor to determine. Just because someone says they can make you money doesn't mean that you get to sue them when they don't. Unless someone suggests that info was withheld, books were cooked, or malicious decisions were made, then I'm siding with 9:29 that these goose chases to drum up a bunch of hearsay from disgruntled employees and competitors is a waste of everyone's time and money.

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  11. No offense to 12:22 but how shallow can your view be? Was creating mortgage backed securities and breaking them up into tranches and selling them to investors not criminal, while you are betting for them to fail? What about Bernie Madoff? I assume it was okay as long as you were receiving some unrealistic return on your investment. These are pension funds that are being sold a crock of bullshit from those selling the stock on behalf of ATEC. Let's face it Berkowitz and Foster have never had the best of reputations, so let the courts decide, OTHERWISE, my advice to investors is stay away from this crap of a company and stock. How is it that surgeons are held accountable for their actions, yet, investment bankers and stock brokers continue to get a free pass? It's the American dream.

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  12. 9:29!! Amen! Perfectly well stated. However, I think that the TSB post if fine, and certainly not "an all time low". Is ATEC somewhat incompetent? You bet. Do they have a gawd awful, terrible, environment and culture? About the worst I've ever heard of. Terrible. But, the simple truth is that the spine market took a sh@t Q3 and 4 and ALL publicly traded spine companies failed to meet expectations. We all know the reasons. They include reduce procedure volume due to the economy and payer policy changes as well as capitation. But, any investment in ATEC was stupid given the atmosphere and attitudes of the management team. A**holes? Yup. Pricks? Yup. Buying business? Yup. Rip off shareholders intentionally? I don't think so.

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  13. I find it hard to believe that any company would intentionally inflate their numbers because the consequences are well known. Vulture class action plaintiff attorneys sue companies everyday for "misrepresenting" their estimates. The vast majority of the time it amounts to a settlement where the stockholders get a fraction of a cent per share and don't participate in the class. The lawyers end up with millions. I don't own a large number of stocks, but I have gotten at least 10 such invitations to join a class over stock performance. I have participated in none, but some lawyer made a bundle on each one.

    I think Alphatecs numbers were a simple estimate. They grew about 28% the prior year and predicted similar growth (erroneously) for the following year. Then you add the Scient'X number, plus a bit of growth (presumably from European sales through distributor that now would have access to all ATEC and Scient'X products) and the number came out to about $225M. I don't know what kind of integration issues they had, but I am certain it is more complicated than the Einsteins that post on this blog can fathom.

    And I agree with 9:29 that it is inappropriate for TSB to use his podium here to solicit for people to participate in what might well be a witch hunt. This is not the first time. Everybody has bias in this industry and bias plus ignorance equals a lot of useless vitriol that is mostly inaccurate. No company is perfect,and some are less ethical than others, but none of them are as bad as you people want to believe.

    Back to ATEC stock, what did the analysts predict? Was it closer to ATECs estimate or the actual numbers that came in? Also, how much did they miss their number by and how much did the shareholders overreact? The value of the company didn't drop by 50% because they missed their number by a few points. ATEC doesn't control stock price, the shareholders do. If companies could predict the numbers with absolute accuracy, investing in stocks wouldn't be a risk. That would be great, but it ain't the real world.

    So all of you armchair CEO's, get off your high horse and do something worthwhile so the idiots on this blog will know your name and will have somebody to trash.

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  14. 3:06

    It's quite obvious that the shareholder's have different feelings than you do regarding what transpired at ATEC. Whenever a stock plummets like ATEC did, and Board Members cash out an inordinate amount of shares red flags always go up. You must be one of those people that believes in free markets as long as it doesn't effect your personal finances. But that's not the point. As was written in a previous blog by TSB, we have become a shameless and greedy society, mercenary in our approach to business with no consideration for how it affects others. As for TSB, at least someone has the gumption to provide the industry a forum for discourse whether you like it or not. It is reiterated over and over on this website, if you don't like what is written you may opine, if you do you may opine, until someone comes up with a better platform,m it is what it is.

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  15. 3:06

    Interestingly it seems that you know as much as others do about what went on at Alphatec, which would be nothing unless you work for the company and attempt to provide this forum with your rationale. Talk about an armchair quarterback.

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  16. If the spine market took a dump in Q3 and Q4 why didn't Alphawreck anticipate a swing in revenue? How much was their revenue expectations inflated because of the anticipated stock offering in April? Everyone one pumps up their annual forecast, it is prognostication at its best. Who is accountable when the stock takes a sudden nose dive? The underwriters? The management team? Aren't the shareholders entitled to their day in court if they believe something is askew? Surgery is a risk, yet the patient has every right to sue the surgeon if they screw the pooch during the surgery. Don't be so harsh on lawyers, just like you, they are just trying to do their job.

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  17. Alphatec management talked up their stock with bogus revenue predictions to obtain the best possible price and cash out.


    The argument that stocks are inherently risky may be true - but corporate executives have the responsbility to disclose all accurate information- not to preach a load of bullshit so they could profit on the misfortune of others.

    Blaming the victims for the crimes of the guilty party is outrageous!!

    Let the lawsuit continue!

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  18. When atec announced guidance of 200-225 million in late 09, anyone with a brain knew they were on crack. Nearly doubling sales in a flat market? Where the heck were those sales supposed to come from?

    Their product was mediocre so there was no product play. Any available rep with a pulse already had atec banging around the bottom their bag so there was no market expansion play. They bet the farm on scient'x and rolled snake eyes.

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  19. go go jason waterfall

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  20. I heard Alex tell us all how great NUVA was doing at NASS, where is the lawsuit from that lie?

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  21. I personally don't condone lawsuits so I guess I have to agree with 9:29, anyone investing in a "spine" company is making a very risky investment, based on selling commodities for a premium.

    If such a person gambles and loses, I just can't support their lawsuit.

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  22. anonymous 9:48am is doing his best to make sure this blog stays below the "professional" radar...... what a tool... pathethic...

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  23. Duty, honor, country! Mr. Sifton please do the necessary work. DOJ look into the management and the distributors such as 5:43. If you need help you will get it...

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  24. Alphatec had trouble with integration? What integration? How many of the US Scient'x management team were still with the company in the US at the close, at 3 month, at 6 months. That's not integration, that's obliteration. You would think folks would pay attention to other companies as they tried to integrate purchased companies, how you don't cut the heart out of the business, that relationships matter. No matter how much air freshener is used, shit still stinks. Did Alphatec over estimate projection? Yes. Did they do it on purpose. Don't think so. Someone would actually have to be smart enough to figure out how to do it. If the integration plan is any indication ... likely, someone was asleep at the wheel. For those investors investigating whether they were hoodwinked, if you owned Alphatec, not the best of decisions. Take responsibility for making a dumb mistake and move on, and get smarter in making investments and remember, your broker makes money when you buy and sell. It don't matter to them if you make money.

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  25. Alphatec counsel, the spine blogger is John Nieradka. You should pursue slander and defamation, personally, against this prick. Let's see how long this post survives before it is deleted.

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  26. Yeah, I've seen that too. Perhaps everyone that has had interaction with him should comment. Didn't one post say there was a sexual harassment charge? How does Gloria feel about that? Seems his holier than thou approach is a little shallow if he was chased out of the business for sexual harassment.

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  27. 7:34, 8:11, AND 8:24 You guys are complete a$$holes.

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  28. So was he fired from custom spine for harassment? Mahmoud?

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  29. Whoa whoa whoa... 8:11 is not saying anything that is not mentioned here ALL the time. I did not chime in on the nature of this post, just that his identity has been brought up many times. Geez the name calling in this joint!

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  30. Sexual harassment law suit against JN, LOL if there ever was a guy that played it by the book it was JN. I know JN let's hear where the sexual harassment occurred, besides he's not even in the industry.

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  31. If TSB is JN I can assure you he was never fired for sexual harassment, if he was ever fired for anything it was for standing up to executive management.

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  32. Perhaps a self serving post from John Nieradka himself. It would be very hard to pontificate from the moral high ground if you were fired for sexual harassment.

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  33. WOW,, just can't figure out a way to rip Globus on this post??

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  34. 8:46

    The little that you know is quite obvious by your post. I worked at him at custom. There was no sexual harassment lawsuit, there was only a dysfunctional board and ceo, and as an fyi he went on to work for choice. As TSB says in this blog, just the facts

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  35. Who cares... Thanks for the forum TSB. Its awesome!

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  36. I always enjoy reading TSB and am disappointed by the lack of professionalism by so many of my spine colleagues. Who cares who TSB is? If you don't like what he writes, don't read it.

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  37. Alphatec has bigger problems than TSB. How about the agreement to pay a 7% royalty to a doc in west Texas on the Zodiac pedical screw even though he never saw it until it had been produced and was ready to be used the next day. Yea, that was in the Yoshimi days, but the agreement was in still in place for years after he walked away with his money. What about all of the other sham comsulting agreements, pay for play. How many patients have Alphatec implants because the doc was being paid to use their implants not because it was the best implant for that patient. What about Lubisher and Del Russo?

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  38. Maybe they were banking on the dynamic rods...

    http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/ucm239848.htm

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  39. Personally I think Lube is a stand up guy especially compared to some of the clowns we have interacted with along the way as a spine distributor. As someone who carries the line I do remember Dirk giving Lube about a $44 million number to grow in 2010. I mean think about that for a second knowing what we all know in this market. I believe that is just in the US too. Sometimes we all piss and moan and blame the faces we see on the streets for crazy behavior. A lot of times that comes from incompetent venture capitalists like Health Point Capital putting ridiculous expectations on management. I'm not saying I'm just saying...

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  40. And for those who lost money betting on risky stocks maybe u should stop betting and go to GA. Brokers included. Your probably the same folks who are walking away from homes because "it's legal" that u lost your ass on. Alsways blaming someone else for ur bad bet. Bet u would have kept the profits had the stock or home price ran up even if it was because of shady numbers!

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  41. Being accused of sexual harassment (Quid pro quo) is nothing compared to getting busted for coke. How about being ordered to torture and kill live chickens!!!!

    Rick: Look, Chip Douglas, I don't know what your story is, but I'm going to find out!
    Chip Douglas: Well, don't dig to deep or you might get burnt by the molten lava!

    TSB- Keep it up!

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  42. Connecting the dots, the bitterness from the poster (8:24) that accused John N. of sexual harassment while working for custom spine, and this was originally a post for ATEC. Let's see who has both companies under their distribution. We may be reading the rants and ravings of someone who has done their best to make this business the worst when it comes to ethics.

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  43. I'm a distributor for ATEC also, I have no surgeons on a consulting agreement or any other agreement with the company. I have a lot of respect for Lubisher, he has always done what he can to help me. There has never been any suggestion to bring on docs as consultants. I have no idea what this "horrible culture" talk comes from. I don't see it. I have been successful converting business the old fashioned way. I think there are a lot of sour grapes and false bravado floating around out there along with a lot of opinion and very little factual info. ATEC is still growing while the legacy companies are shrinking so they must be doing something right. There may be some bad distributors, but every company has them. A a company, I have seen nothing that worried me about their ethics. I do wish they wouldn't sell to surgeon owned entities, not because I think it's illegal, I just don't want them to support that movement.

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  44. "I have no idea what this "horrible culture" talk comes from."

    What rock have you been hiding under? People are going to jail for doing business "the old fashioned way." Hope you look good in orange.

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  45. "F" Scient'x. Look at that management group prior to the buy out.... Huggins? where is he now? Has he been sentenced yet for the NORIAN fubar? and his "dream team"? One came with nothing more than a failed attempt at private practice, a lay over with the Vbros, and a scarlet letter of being a listed registered sex offender; lucky for him synthes didn't hold that against him for his next position. Gotta love this industry!

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  46. for all of you that have "respect" for this so called VP of sales at Alphawreck. Any truth to him walking away from his commitment on his house in Florida? If he did hum...

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  47. AlphaWreck is and always will be a HORRIBLE company - top to bottom. We started doing business with them when they were in Palm Dessert - many, many years ago. They haven't changed and they probably won't.

    We stopped doing business with them when they asked us for drawings and models for the instruments that WE designed and manufacture for them.

    They than took those prints and models and sent them to China for quote and manufacturing. It gets better - they then had the "balls" to ask us if we would purchase the same instrument (lower materials and quality of course) from China and mark it "Made in the United States".

    We design and manufacture instruments - but we don't work with TOOLS!!!

    BTW - they still owe us $$$ from 2009, same old same old - next check run we promise!!!!

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  48. "Alphatec management talked up their stock with bogus revenue predictions to obtain the best possible price and cash out."

    Who in the management team "cashed out?" I looked at the filings and didn't see anyone who had cashed out. The above quote is bullshit, in case anybody cares.

    Anytime stock goes down it draws the pirate lawfirms out of the woodwork. They ain't seeking justice, they're seeking benjamins. Try running a major public company sometime, and then throw your cheese at ATEC's management team. Are they good at their jobs? I don't know. Are they working their asses off to try to generate returns for their shareholders, stay compliant with the SEC and keep their jobs and feed their families? Absolutely.

    Since this is a rep board, I'll put it in terms you can understand: Running a public company like Alphatec is 100X harder than paying docs to let you run their sets.

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  49. Herein lies the problem, if you were as concerned about the quality of your products, exhibited some integrity about how you ran your business and weren't so caught up in what your stock was opening and closing at everyday everything would take care of itself. The trouble with publicly traded companies is that the CEO and executive management team spend more time worrying about their personal portfolios than how they are running the company. Ahem, as for that last comment, look at who is calling the kettle black.

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  50. Philosophers that need a venue, Right-Fighters who want to show the world just how damn right they are, Execs who can't drag a bag anymore but gosh damn just want to act like they can, Reps that drink kool aid at every aid station, and even docs that fuse patients that don't need it (did I just say that? does that even go on? shhhhh, no effing way.)

    ........ we got em all here. I commend you TSB, whomever you may be. Did I just rhyme like a mofo or what? I don't reeeeed nunnn too guud, so I'll just ask my broinlaw, I mean spine surgeon brother in law for a job. This site has become a mecca / medina (sorry I didn't capitalize for any of you Muslim folk) for all those that love to pontificate and bitch. Very interesting to say the least but 80% garbage and 20% funny and insightful. This shit is worthy of a night time spot on a big channel......... writers for "House" could find a lot of material here.

    Keep the posts coming...... Its a close second to watching a "busy" surgeon tell a patient with a black disc they need surgery after "failing" conservative care.......

    "Yes Ms Smith.... i can take care of that. I have you scheduled for a C5-6 acdf. Your whiplash, Ummmmmmmm I mean cervical herniation and neck pain with slight radiating pain into the arm, will get better and you will feel better and be back to work in no time." (thank god for work comp especially in Cali!!! That sheeyat pays dogggg!

    oh wait....Ms Smith.... you have a black L5-S1 on T2 MRI........ more to follow.

    Oh, back to the subject..... Alphatec. Me too shit is, well, ..........ok. Management...... ok. They don't quite stink as bad as they used to, but they still smell a funny flavor of POD mixed with consulting agreement and royalties with no IP. Mortimer "aka Tim" as he likes to call himself to appear like he's really not an elitist and his boy Johnny have a long flog in front of them. Good luck boys.

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  51. Didn't Mortimer also own Scient'x? Looks like they may have raised money from one unprofitable company (ATEC) to pay themselves an overvalued sum of cash for the sale of another unprofitable company.

    They cash out of Scient'x paid for by those that were buying the story on ATEC stock.

    Just a thought.

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  52. Alphatec is involved in a lot of shady business...not the least of which is PDP Spine. PDP is a "National Distribution Network" as the surgeons involved call it, aka a surgeon owned distributorship that is attempting to take down the industry. If you work in the industry and dont know about PDP or any other networks like it, you should because they are growing exponentially. The worst is, crappy companies like Alphatec link up with these distributors because they have no other route to entering a competitive marketplace.

    PDP Spine, check it out, coming to a city near you...

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  53. Heard Arkansas Surgical Hospital (physician owned) just cut a deal w/Alphatec--low price, no rep, but here is the kicker, they want all orders to go through an Alphatec distributor in California. Curious.

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  54. 1:24--don't you have a non-disclosure agreement in your contract with them?

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  55. So is this how aliphatic has made their way into Louisville. POD?

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  56. Dale Allison is the king!

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  57. 8:31

    No POD, the Medtronic rep flipped.

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  58. Can anybody shed some light on WHY my husband was charged $8,000 per AlphaTec 6.5mm spine screw (32K total) plus 6,900K for the set screws? And...$19,478K for the AlphaTec spine cage? Surgery performed in Santa Barbara, CA. Is there any recourse on these costs? PLEASE Help with suggestions.

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  59. If you look at ATEC SEC 10Q - ATEC now faces numerous lawsuits: class action in San Diego which will tell you the story on how the folks at Healthpoint got the best from ATEC..

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