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The new leader at NuVasive discusses the company's interest in potential M&A transactions, particularly outside the United States.
Marie Thibault
July 29, 2015
2 Min Read
The new leader at NuVasive discusses the company's interest in potential M&A transactions, particularly outside the United States.
Marie Thibault
NuVasive's headquarters in San Diego, CA.
NuVasive's new CEO, Gregory Lucier, made no bones about the spine company's interest in acquisitions and the possibility of entering new countries through "inorganic growth."
On a July 28 earnings call with analysts, Lucier was asked a few times about the company's M&A outlook. According to a SeekingAlpha transcript, Lucier said, "I am indicating to investors that we will begin to be more acquisitive . . . the focus would be to continue to build on our strength and international markets and so further expanding where we can open up new geographies potentially by using our balance sheet."
When asked to elaborate on criteria for potential acquisitions, Lucier listed a few points:
"it has to support and enhance the strategy and it has to do it in a way that we couldn't do it on our own"
"we would have expectation to get a return on our invested capital on a smaller deal within three years, [if] it was a larger deal certainly with[in] five"
"the capacity of the organization to absorb the particular acquisition at that moment and time"
The focus on NuVasive as an acquirer is a shift from prior speculation about whether the company might be an acquisition target. Lucier was appointed to the CEO position in May after stepping into the interim role in April following the sudden departure of longtime CEO Alex Lukianov.
Joanne Wuensch, analyst at BMO Capital Markets, pointed out in a July 29 research note that NuVasive has $279 million in cash on the books and that while "we are used to hearing long question and answer sessions regarding M&A on many of our earnings call; this is new for NUVA."
Wells Fargo analyst Larry Biegelsen wrote in a July 29 research note, "NUVA's new CEO Lucier was clear that NUVA will be acquisitive moving forward which we believe is a change of tone compared to previous management . . . NUVA would potentially add new technologies if the acquisition expanded its product portfolio. NUVA may also use acquisitions to gain entry into some international markets such as China."
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Marie Thibault is the associate editor at MD+DI. Reach her at [email protected] and on Twitter @medtechmarie.
[Image courtesy of NUVASIVE, INC.]
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