NuVasive said it will acquire SafePassage, a provider of intraoperative neurophysiological monitoring (IONM) services, for an undisclosed amount. The acquisition will solidify NuVasive's position as the largest provider of outsourced IONM services, the San Diego-based spine company said.
The deal comes at the end of a challenging year for NuVasive. The company has experienced significant management turnover this year, and the company is currently engaged in an ugly legal battle with competitor Alphatec. NuVasive says former exec Patrick Miles schemed for more than a year to disparage the company before jumping ship, but Alphatec defended Miles and called the lawsuit a "frivolous PR stunt."
The abrupt departure of former chief operating officer Jason Hannon and chief financial officer Quentin Blackford prompted a 42-page report from short-seller GlassHouse Research. The report suggested that the turnover was no coincidence and accused NuVasive of using an "acquire-at-all-cost" strategy to achieve its $1 billion revenue goal for the year.
“Based on our own calculations, we believe that the core business is suffering greatly at [NuVasive] and is being masked by recent acquisitions,” the authors noted.
Whether that is the case or not, NuVasive's proposed acquisition of SafePassage is expected to strengthen the company's intraoperative neuromonitoring business line, which was formed in July 2016 when NuVasive acquired Biotronic NeuroNetwork and combined its service offerings with that of the company's subsidiary, Impulse Monitoring. Following the acquisition of SafePassage, NuVasive is expected to support more than 100,000 IONM cases a year in the United States.
The company said there is limited overlap between existing healthcare accounts, making the acquisition complementary to its current geographical footprint.
"The acquisition of SafePassage advances the NuVasive services strategy and expands our ability to transform how spine procedures are approached, measured and valued from a clinical and economic perspective," said Skip Kiil, executive vice president of global commercial of NuVasive. "As the only spine company in the world with dedicated neuromonitoring services operating at this elevated scale, and now with increased case coverage, we are uniquely positioned to deliver greater value across our procedurally-integrated portfolio."
NuVasive expects the transaction to be accretive to the company's non-GAAP earnings per share in 2018 and beyond. The deal is slated to close in January.