NuVasive Doubles Down on Service BusinessNuVasive Doubles Down on Service Business

NuVasive continued its buying spree this week, adding a $98 million purchase of Biotronic NeuroNetwork to its acquisitions earlier this year of Brazilian distributor Mega Surgical and Ellipse Technologies. The purchase of Biotronic, which offers monitoring services of patients' nervous systems during surgical procedures, will double the size of NuVasive's service business, according to a press release.

After this purchase, NuVasive will formalize its sevice business under a division called NuVasive Clinical Services. This will combine the Biotronic services with the intraoperative monitoring services already offered by NuVasive through its 2011 acquisition of Impulse Monitoring, Inc. (IMI). Biotronic, which had more than $50 million in sales last year, is involved in more than 45,000 surgeries each year at more than 650 hospitals. Together, NuVasive expects its intraoperative monitoring services to be used in more than 75,000 U.S. surgical cases each year.

Joanne Wuensch, analyst at BMO Capital Markets, wrote in a June 7 research note that the Biotronic acquisition fits well with the IMI deal. She explained that "IMI has a stronger presence in the northeast and eastern seaboard while Biotronic has a stronger presence on the west coast."

"We are extremely excited about this combination, as it more than doubles NuVasive's neurophysiology footprint, creating an at-scale services business with improved growth and operational benefits. The addition of Biotronic enhances our service offerings and provides enormous potential to deliver greater integration across our procedurally-integrated portfolio, which uniquely differentiates NuVasive in the markets we serve," said Gregory Lucier, NuVasive chairman and CEO, in a press release.

The deal is expected to close in about a month and NuVasive is using cash on hand for the transaction. 

William Gecsey, president and CEO of Biotronic, said in the release, "We look forward to joining forces with NuVasive to further build out service offerings that drive improvements in patient care."

On the company's latest quarterly earnings call in April, Lucier hinted at the company's interest in technologies related to all aspects of the spinal procedure, according to a Seeking Alpha call transcript. "We intend to extend and own each aspect of the spine care continuum, from diagnostics on the front-end to measuring clinical value on the back-end and everything in between," he said.

Lucier added, "We have a very active pipeline that includes acquisition targets, strategic partnerships and truly out-of-the-box thinking. Top priorities include opportunity that complement our technology leadership position in spine, targeted geographic expansion, technology that makes procedures even safer as well as possibilities to further enhance our unique service offerings, just to name a few."

In a Mad Money interview with CNBC's Jim Cramer last week, Lucier gave more insight into NuVasive's future. He told Cramer, "We're becoming much more of a procedurally-oriented company, and ultimately a systems company. You're going to see the company launch navigation technologies, ultimately robotics technologies, where we can bring a lot more predictability to the outcome for patients."

The Biotronic deal is expected to be accretive to the company's non-GAAP earnings per share this year and "significantly accretive" in future years. 

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