NuVasive, a provider of minimally invasive spine surgery devices, beat consensus analyst sales expectations of $298.3 million in the first quarter. The results partly allayed analyst concerns that the company’s pending merger with Globus Medical will slow growth.
Shares in Globus fell 20% after it announced the $3.1 billion deal earlier this year. The decline was, in part, a reflection of the track record of other mergers of spine companies, which have been associated with the departures of sales reps and loss of market share. However, the early signs for NuVasive are positive.
Talking to investors on a first quarter results conference call, CEO Chris Barry said the growth reflects “increased procedure volumes” and a “continued surge in demand” for NuVasive devices. Barry posed the question of whether the changes are a return to pre-COVID volumes or a new trend that will drive levels higher still, but said he has yet to reach a conclusion.
“We've ... returned to pre-COVID volumes. We'll have to wait and see what transpires here over the next several weeks in the quarter. I feel like the volumes have strengthened over the course of the last few quarters,” Barry said on the call.
Shares in NuVasive were flat in Thursday morning trading, at $41.98.
FTC delay creates risk
Globus and NuVasive shareholders have now approved the merger, but the U.S. Federal Trade Commission is yet to sign off. The FTC recently asked for more information, delaying the closing of the deal to the third quarter. Analysts at BTIG discussed how the delay could affect NuVasive in light of its latest financial results.
“While the change in timing may pose some additional risk to [NuVasive]'s top-line performance, the strong 1Q23 result suggests there has been minimal disruption so far, allaying fears from investors and bucking a trend seen in other Spine transactions,” the analysts wrote in a note to investors.
Forecast:
NuVasive reiterated its net sales growth target of 6% to 8% for the year.
