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Surgalign Holdings: Strong Potential Still Abound

Apr. 05, 2021 3:04 PM ETSurgalign Holdings, Inc. (SRGAQ)7 Comments
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  • Gross margins in 2020 remain elevated despite pandemic headwinds.
  • Management maintains Holo platform will revolutionize how doctors perform surgeries.
  • Potential in this space is very high. We expect the market to reward any improvements very well.
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El trabajador de la medicina trata la columna vertebral humana.
Photo by Natali_Mis/iStock via Getty Images

We wrote about Surgalign Holdings (NASDAQ:SRGA) back in January of this year and stated that we believed shares had strong upside potential. The reasons for our bullishness were the clear potential in the spine space with respect to digital


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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in SRGA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (7)

Investing For The Future profile picture
This company is most likely a shorter term (<1 year) play, focused on Holo Surgical submission and eventual FDA announcement (regardless of disapproval or approval).


Pages 32, 38, 39.
ZL1 profile picture
05 Apr. 2021
I am also long SRGA. I think this is a $10 stock in the 10-14 months.
Individual Trader profile picture
@ZL1 what risks do you see?
Investing For The Future profile picture
@Individual Trader

1) FDA disapproval of Holo Surgical or conditional approval that stipulates more clinical studies, which may be costly and not necessarily lead to indication expansion.
2) Regulatory approval pathways globally may be challenging.
3) The competitiveness of the digital surgery market, as SRGA management wants to expand beyond spine.
4) Existing lack of physician excitement in the platform or in its capabilities.
5) Slow and costly R&D efforts to streamline its product portfolio offering centered on Holo Surgical.
6) An initial uptick in cases and sales following a successful FDA approval only to encounter stagnating growth - physicians are fickle - thus demanding increased marketing spend or a shift in strategy.
7) Lack of synergy between management and employees of Surgalign vs. Holo Surgical leading to operational and execution inefficiencies, and thus to increased costs.
8) Inability to reach sustained break-even due to all of the above until ~2024 to 2025 (by my calculations based on financial assumptions provided by management in latest quarterly call).
Investing For The Future profile picture
9) A stagnating stock price over a 4-5 year period and thus a high opportunity cost and missed investment earnings from invested assets in SRGA.
10) Running out of cash due to regulatory delays or increased costs from above risks and thus filing for bankruptcy or substantially weakening the balance sheet or diluting existing shareholders.
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