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NuVasive to Strengthen Spine Service Line with Biotronic Buy

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In an effort to strengthen its position in the growing spine procedure solutions space, NuVasive, Inc. recently entered into a definitive agreement to acquire privately held Biotronic NeuroNetwork for a deal value of $88 million in cash. Biotronic is a patient-centric healthcare organization that provides intraoperative neurophysiological monitoring services.

According to NuVasive, this acquisition will not only enhance its spine service line partnership offerings, but also double the size of its service platform with complementary geographic footprint. Nuvasive expects the combined company’s service business to expand across the U.S. and grow coverage in major complementary markets.

Apart from this, the combined company’s expanded platform will enhance service offerings, leading to greater utilization and integration of NuVasive's procedurally-integrated portfolio.

NuVasive, post the closing of this transaction, will combine the service offerings of Biotronic with its subsidiary, Impulse Monitoring, Inc. (“IMI”), to create NuVasive Clinical Services. According to the company, with the combined support from Biotronic and IMI, NuVasive Clinical Services will support more than 75,000 cases annually in the U.S.

The transaction, expected to be completed in July, is likely to be immediately accretive to NuVasive's adjusted EPS in 2016 and significantly accretive in 2017, and beyond. Management also noted that this transaction will support its earlier provided 2016 adjusted operating margin guidance of 15.8% with longer-term targets for revenue growth. In addition, the acquisition is in sync with the company's goals for return on invested capital per its previously stated acquisition criteria.

NuVasive is leaving no stone unturned to capture the fast growing spine market. Last year, the company launched several new products in this space and we expect this trend to continue even in 2016 based on its very active pipeline updates, acquisition targets, strategic partnerships and innovative thinking.

Further, another important growth catalyst in this niche is the company’s recent acquisition and inclusion of Ellipse Technologies and its products, focused on developing procedural solutions for complex skeletal deformity. According to NuVasive, this will drive revenue growth at multiples to the market growth, targeting an approximately 14% improvement over 2015.

NuVasive currently carries a Zacks Rank #2 (Buy).

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