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NuVasive Buys Skeletal Specialist in First Deal under New CEO

Xconomy San Diego — 

San Diego’s NuVasive (NASDAQ: NUVA), a medical device maker that specializes in spinal procedures, said today it is acquiring privately held Ellipse Technologies for $380 million in cash, with an additional $30 million in potential milestone payments.

Ellipse, an Aliso Viejo, CA-based medical technology company founded in 2005, specializes in implantable rods that can be lengthened magnetically to help correct spinal and complex skeletal deformities in children. The non-invasive technology enables children with early onset scoliosis or shortened leg bones avoid repeated surgeries as they grow.

Ellipse has about 120 employees, and CEO Edmund Roschak will join NuVasive’s executive team. Ellipse’s  commercialized products are currently marketed and sold in the U.S. and 29 other countries.

“This is our first major transaction as the new NuVasive executive team,” said NuVasive CEO Greg Lucier during a conference call with analysts and investors.

NuVasive expects to pay for the deal with available cash. The acquisition expands NuVasive’s core expertise in spinal surgical products with highly differentiated technology that NuVasive plans to extend into new areas, such as degenerative spine disease. Lucier said the deal also represents “a very beneficial financial fit.”

Lucier stepped in as chairman and interim CEO at NuVasive last April, following the sudden resignation of longtime chairman and CEO Alex Lukianov over violations of the company’s personnel and expense reimbursement policies.

Lucier, who was previously the CEO of Carlsbad, CA-based Life Technologies (acquired almost two years ago by Thermo Fisher Scientific), was officially named as NuVasive CEO almost two months later.

NuVasive pioneered a suite of specialized surgical products used in an alternative approach to spinal surgery. Lucier and other NuVasive executives said the Ellipse deal represents new opportunities for accelerated growth by global expansion and by adding to the company’s line of orthopedic devices. NuVasive said the complementary products from Ellipse will diversify the company’s revenue mix and open new markets.

Integrating the two companies is expected to take much of 2016. NuVasive said the acquisition is expected to be only slightly accretive to NuVasive earnings over the next 12 months, but would contribute substantially more to the bottom line in 2017.

Ellipse had revenues of approximately $40 million in 2015, a 54 percent gain over 2014, when the company reported sales of $26 million.

NuVasive said the transaction is expected to close by the end of February, and is subject to customary closing conditions and regulatory approvals.