Critical Survey: Alphatec (NASDAQ:ATEC) & IRIDEX (NASDAQ:IRIX)

Alphatec (NASDAQ:ATEC) and IRIDEX (NASDAQ:IRIX) are both small-cap healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, valuation, analyst recommendations, institutional ownership, profitability and earnings.

Institutional and Insider Ownership

66.3% of Alphatec shares are held by institutional investors. Comparatively, 20.1% of IRIDEX shares are held by institutional investors. 13.5% of Alphatec shares are held by insiders. Comparatively, 8.6% of IRIDEX shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Alphatec and IRIDEX, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alphatec	1	1	13	0	2.80
IRIDEX	1	0	1	0	2.00

Alphatec presently has a consensus target price of $17.40, indicating a potential upside of 60.15%. IRIDEX has a consensus target price of $3.00, indicating a potential upside of 247.62%. Given IRIDEX’s higher probable upside, analysts plainly believe IRIDEX is more favorable than Alphatec.

Risk & Volatility

Alphatec has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, IRIDEX has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Earnings & Valuation

This table compares Alphatec and IRIDEX”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alphatec	$764.16 million	2.20	-$143.36 million	($0.71)	-15.30
IRIDEX	$52.67 million	0.29	-$4.44 million	($0.20)	-4.31

IRIDEX has lower revenue, but higher earnings than Alphatec. Alphatec is trading at a lower price-to-earnings ratio than IRIDEX, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Alphatec and IRIDEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alphatec	-13.49%	-6,752.24%	-13.88%
IRIDEX	-6.88%	N/A	-12.55%

About Alphatec

Alphatec Holdings, Inc., a medical technology company, designs, develops, and advances technologies for the surgical treatment of spinal disorders in the United States and internationally. It manufactures and sells implants and instruments through third-party suppliers. The company offers Alpha InformatiX product platform, including EOS imaging system that provides full-body imaging; VEA alignment mobile application, which leverages EOS technology to more quickly quantify alignment parameters on a mobile device; SafeOp Neural InformatiX System that automates electromyographic and somatosensory evoked potential monitoring; and Valence, an intra-operative system that integrates navigation and robotics into spine procedures, as well as Sigma Prone TransPsoas (PTP) Access and PTP Patient Positioning Systems. It also provides split-blade retractors; Sigma-ALIF Access System, a procedure-specific access system; spinal implants and fixation systems comprising NanoTec surface modifications, Calibrate PSX, and Invictus, as well as various standalone implants for height restoration and stabilization. In addition, the company provides biologics comprising 3D ProFuse Osteoconductive Bioscaffold for ease of handling and better endplate-to-endplate contact; AlphaGRAFT Demineralized Bone Matrix (DBM) comprising demineralized human tissues; AlphaGRAFT DBM Fibers comprising demineralized fibers; AlphaGRAFT Cellular Bone Matrix (CBM), a growth factor-enriched cellular bone matrix; AlphaGRAFT CBM that is delivered in granular, fiber, or structural form; BioCORE Moldable Bioactive Graft, a synthetic mineral-collagen composite matrix that can be molded to fit the bone defect; and Amnioshield Amniotic Tissue Barrier, an allograft for spinal surgical barrier applications. The company sells its products through a network of independent sales agents and direct sales representatives. Alphatec Holdings, Inc. was founded in 1990 and is headquartered in Carlsbad, California.

About IRIDEX

IRIDEX Corporation, an ophthalmic medical technology company, provides therapeutic based laser systems, delivery devices, and consumable instrumentation to treat sight-threatening eye diseases in ophthalmology. It offers laser consoles, such as Cyclo G6 laser system for use in the treatment of glaucoma; IQ 532 and IQ 577 laser systems, which are used for the treatment of retinal disorders; and OcuLight TX, OcuLight SL, OcuLight SLx, OcuLight GL, and OcuLight GLx laser photocoagulation systems that are used to treat proliferative diabetic retinopathy, macular holes, retinal tears, and detachments. The company also provides delivery devices, including TxCell scanning laser delivery system that allows the physician to perform multi-spot pattern scanning; slit lamp adapter, which allows the physician to utilize a standard slit lamp in diagnosis and treatment procedures; and laser indirect ophthalmoscope for use in procedures to treat peripheral retinal disorders. It offers MicroPulse P3 Probe, which is used with its Cylco G6 laser system to perform MicroPulse transscleral laser therapy; G-Probe, which is used in procedures to treat uncontrolled glaucoma; G-Probe and G-Probe Illuminate, which are used in procedures to treat refractory glaucoma; and EndoProbe family of products for use in vitrectomy procedures. The company serves ophthalmologists, research and teaching hospitals, government installations, surgical centers, hospitals, veterinary practices, and office clinics. It markets its products through direct and independent sales force in the United States, as well as through independent distributors internationally. The company was formerly known as IRIS Medical Instruments, Inc. and changed its name to IRIDEX Corporation in November 1995. IRIDEX Corporation was incorporated in 1989 and is headquartered in Mountain View, California.