The company went through more significant management changes last year when former chief operating officer Jason Hannon left the company after 12 years to “pursue other interests.” Hannon’s departure was announced the same day as that of former CFO Quentin Blackford, who left to pursue an opportunity outside of the spine industry.
Also, in conjunction with Hannon’s departure, NuVasive reorganized its operating structure in an effort to improve product development and commercialization, integrate its U.S. and international sales, and drive operational efficiencies.
In addition to announcing Barry’s move to NuVasive, the company also announced that Matt Link, currently executive vice president, Strategy, Technology and Corporate Development, is being promoted to president. Link joined NuVasive in 2006. There was also the announcement of the resignation of Skip Kiil, Executive Vice President, Global Commercial.
Whew.
The State of NuVasive
Last year, NuVasive posted sales of $1.03 billion, up 7% from the prior year and its profit more than doubled to $83 million.
With those revenues and a presence in more than 40 countries, NuVasive is one of the largest spine companies not attached to one of the five orthopedic giants (Medtronic, Zimmer Biomet, DePuy Synthes, Stryker or Smith & Nephew.) While there has been a lot of consolidation among spine companies, speculation has never abated over who will try to acquire or merge with NuVasive.
“While the announcement likely reduces the likelihood that the company is an acquisition target in the near term,” wrote Wuensch on the day of the announcement, she added that it is “beneficial for NuVasive to bring in an outsider to improve its execution.”
Barry and Robots
Specifically, Wuensch noted that Barry led the development of Medtronic’s minimally invasive surgical robot, which is expected to be launched sometime in the next year. She said his work in surgical robotics should be valuable to the spine market, where surgical intelligence, navigation, and spine robotics are becoming increasingly popular.
She also pointed out that NuVasive launched its own surgical intelligence platform Pulse in September at North American Spine Society’s (NASS) 2018 annual meeting, and is developing internally its own robotic arm.
Wall Street’s Analysis
Wuensch was not surprised by the announcement because while the company’s stock price grew quickly, the company’s execution, “was uneven, as the company went through stages of commercial and manufacturing issues while struggling at times to portray its message to the Street. Bringing in an outsider should provide fresh eyes on the company’s development.”
But the news came as a surprise to Cantor Fitzgerald analyst, Craig Bijou. He wrote that the company was beginning to execute on Lucier’s strategic plan, following a strong 2018 second quarter and the showcasing of the company’s surgical intelligence platform at NASS.
In a report to institutional investors, Bijou wrote that he sees long-term benefit of “new blood” but thinks the timing of the change “raises questions” about the company’s business in the short-term.
