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NuVasive (NUVA) Boosts Cervical Portfolio With New Buyout

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NuVasive, Inc. recently announced the acquisition of Simplify Medical to strengthen its cervical portfolio and provide a complete solution for cervical total disc replacement procedures. NuVasive will add Simplify Medical’s Simplify Cervical Artificial Disc (Simplify Disc) to its C360 portfolio.

Notably, Simplify Medical is a developer of the Simplify Cervical Artificial Disc for cervicaltotal disc replacement (cTDR).

This acquisition is part of NuVasive’s plan to tap the growing market of cervical spine surgery.

Financial Terms of the Deal

Per terms of the agreement, NuVasive acquired Simplify Medical for an upfront payment of $150.0 million, subject to customary purchase price adjustments, and agreed to make additional future payments dependent upon achieving certain milestones related to sales from products incorporating the Simplify Cervical Artificial Disc technology and certain regulatory approvals.

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The Simplify Disc was found evident to be clinically superior to anterior cervical discectomy and fusion (ACDF) in the randomized clinical trial. Backed by its commercial and distribution channels, NuVasive will drive deployment of the Simplify Disc in the United States and international markets.

Significance of the Buyout

Per NuVasive management, by adding Simplify Disc to C360 portfolio, NuVasive claims to provide best-in-class technology to support surgeons’ preferred procedural approach. Moreover, the acquisition will help NuVasive optimize the surgeon and patient’s experience and create strong shareholder value.

With the buyout of Simplify Medical, NuVasive is now able to focus on all key segments of the cervical spine by offering completely-integrated solutions across ACDF, posterior cervical fusion (PCF) and cTDR trials.

Notably, NuVasive's scale and global commercial channels will significantly step up the ability to bring the Simplify Disc to more surgeons and patients around the world.

Per NuVasive, the acquisition is expected to accelerate sales growth and prove accretive to non-GAAP diluted earnings per share in 2022.

Notable Developments

In January 2021, NuVasive X360 procedural approach was validated in a clinical study published in “The Spine Journal”. The study highlights that single-position spine surgery improves operative efficiency while reducing complications and length of hospital stay.

In November 2020, NuVasive unveiled the C360 cervical spine portfolio along with the commercial launch of the Anterior Cervical Plating (ACP) system that features the thinnest plate available in the market (1.6 mm).

Industry Prospects

Per a report by Global Market Insights, the global artificial disc market size crossed $1.6 billion in 2019 and is projected to achieve more than 18.6% CAGR by 2026. Growing awareness among people regarding benefits of disc replacement procedure over spinal fusion surgeries will further expand the market.

Price Performance

Over the past six months, shares of the company have gained 15.6% compared to the industry’s growth of 6.7%.

Zacks Rank and Key Picks

Currently, NuVasive carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the broader medical space are Meridian Biosciences Inc. , Owens & Minor, Inc. (OMI - Free Report) and Envista Holdings Corporation (NVST - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of Zacks #1 Rank stocks here.

Meridian Biosciences has a projected long-term earnings growth rate of 61%.

Owens & Minor has a projected long-term earnings growth rate of 45%.

Envista has an expected long-term earnings growth rate of 24%.

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