NuVasive reported $1.03 billion in 2017 net revenue, a 7 percent increase over 2016. Over the next year, NuVasive expects to report $1.095 billion and $1.105 billion in 2018 revenue based on continued innovation and development.
Chairman and CEO Gregory T. Lucier discusses the vision for NuVasive over the next five years and how the company will add value to the spine surgery OR of the future.
Q: What new innovations are coming for NuVasive over the next two to five years? What direction do you expect the company to go?
Gregory Lucier: Over the next two to five years, NuVasive will remain laser-focused on developing innovative, disruptive spine solutions that empower surgeons to improve their patients' quality of life. Rather than look at standalone niche products, our focus is shifting to integrated spine systems to provide a continuum of care in the operating room from pre-op to post-op. This will deliver a better experience for both surgeons and patients.
Key areas of focus as we build out these systems include pediatric deformity, Lateral Single-Position Surgery™, Surgical Intelligence™, Advanced Materials Science™, radiation reduction and expanding our TLIF portfolio. Surgical Intelligence aligns with our systems approach to spine surgery — comprehensive, end-to-end solutions rather than a one-time products — and it encompasses things such as neuromonitoring, surgical planning, imaging (both 2D and 3D), navigation and automation.
Q: Where are the biggest opportunities for NuVasive's growth? How does the new tax rate for the company affect its ability to grow?
GL: The savings resulting from the recent federal tax reform will be a key lever for NuVasive as we continue to grow the company. While we have made solid headway in reducing our tax rate over the last several years as we expanded our global footprint, the new law accelerates this opportunity. When the U.S. Congress approved the change in late 2017, the U.S. corporate tax rate dropped from 35 percent to about 21 percent. This tax overhaul will significantly reduce the future corporate tax rate for NuVasive, which was previously expected to be around 33 percent in 2018 and is now estimated to be approximately 23 percent. As you know, innovation requires fuel, and this surplus will support increased investments in R&D, from the 5 percent of revenue we are investing today to 7 percent of revenue in the future, further investments in our operations and infrastructure in the U.S., and of course, expanding our skilled workforce.
To experience and sustain long-term success, we need to be nimble, agile and innovative while avoiding the pitfalls of pigeonholing ourselves as a niche spine company. This goes back to the notion of providing a solutions-based continuum of care. To do otherwise runs the risk of being commoditized, minimized and even pushed out.
Q: What are the biggest challenges facing spine innovation right now?
GL: There is too much focus on “me too” products that address one-time, standalone issues. This is a disservice to both the surgeon and the patient. The future lies in not just innovative and disruptive products, but systems-based solutions. Then of course, as a large medical device company, we are constantly battling the uncertainty of the ever-changing healthcare landscape, which includes reimbursement challenges and rising insurance costs, complicated regulations and red-tape, as well as the possibility of the reinstatement of the medical device tax.
Another pedicle screw is not the answer; we need solutions that move the needle — like what our evolving MAGEC® system can do for pediatric deformity; what Single-Position Surgery can do for Lateral; and what LessRay® can do for O.R. radiation reduction and safety.
Q: How will you approach value-based care in spine?
GL: NuVasive will provide value to customers by offering end-to-end spine solutions that empower surgeons to treat a variety of cases using the latest technology available.
Our differentiated offerings ensure the surgeon has the right technology and solutions at their fingertips to best address the individual needs of their patients. Ease-of-use, efficiency, predictability, cost-competitiveness, innovation, quality and support are all facets that combine to optimize value.
For 15 years NuVasive has created, defined and led the way in lateral procedural solutions. Lateral is the foundation on which so much of our success is built and it has changed spine surgery through improved patient outcomes, decreased hospital stays, reduced infection rates and less blood loss in comparison to conventional procedures.
Our commitment to continue delivering unrivaled value in spine care is evident in our latest NuVasive solutions like Lateral Single-Positon Surgery, MAGEC growing rods, LessRay and our lifelong education and training platform for surgeons.
Q: What do your surgeon customers see as the most valuable offering or aspect of working with NuVasive?
GL: What we offer surgeons and hospitals is more than just a collection of products; we take it to the next level and become their partners. We are heavily invested in their success and the healthy outcomes they strive to give their patients.
When a surgeon becomes a NuVasive customer, they receive 360-degree support — from online and in-person trainings and personalized education offerings to real-time surgical consultations. Our Clinical Professional Development (CPD) global platform integrates surgical training with professional development to help ensure the best clinical outcomes.
To best serve the spine surgeon community, NuVasive created and delivered a new standard in surgeon training through XLIF, now the world's leading procedure for the lateral approach. We are again taking the lead and enhancing our education platform to better match the lifelong training needs and challenges facing today's and tomorrow's spine surgeons.
The NuVasive CPD team will support our surgeon partners for the duration of their careers. The new training programs will facilitate the development of a diverse set of competencies through challenging programs that are surgeon-oriented, personalized and fit within a systematic pathway.
We will also be creating an education and training center of excellence at our global headquarters in San Diego, breaking ground later this year. This state-of the-art "surgeon experience center" will allow NuVasive CPD to truly showcase our education and surgical solution differentiators and the all-around value and innovation we bring to our customers.