NuVasive acquired Ellipse Technologies, a medical device company focused on skeletal deformity.
Here are five key notes on the acquisition:
1. NuVasive will acquire Ellipse for $380 million upfront cash payments and the potential for $30 million more payable in 2017 for reaching specific revenue targets. NuVasive expects to fund the acquisition with existing cash-on-hand.
2. The acquisition will likely accelerate NuVasive's revenue growth toward the high single-digit range and be slightly accretive to the company's non-GAAP diluted earnings per share for the first 12 months after the transaction; it's expected to become significantly accretive thereafter.
3. NuVasive's goal is to reach double-digit return on invested capital goal over the next five years, and acquiring Ellipse fits into the company's strategic plan.
4. Surgeons are rapidly adopting Ellipse's magnetic growing rod technology for pediatric deformity cases, providing growth opportunities there for NuVasive. NuVasive currently focuses on adult degenerative and deformity spinal conditions. Ellipse also has a robust product pipeline to enhance NuVasive's internal development and licensing opportunities.
5. The boards of directors from both companies agreed to the acquisition. The transaction is expected to close by the end of February 2016.
6 When the transaction closes, NuVasive will maintain a Design Center of Excellence in Aliso Viejo, Calif., where Ellipse is headquartered. Ellipse's President and CEO Edmund J. Roschak will join NuVasive as a member of the executive leadership team.
7. Goldman, Sachs & Co., is the exclusive financial adviser to NuVasive and DLA Piper is the legal counsel. Piper Jaffray is exclusive financial advisor to Ellipse and Latham & Watkins is the legal counsel.
"Ellipse's revolutionary technology, which has been enthusiastically received by surgeons, has the potential to become the standard of care for spine and orthopedic patients," said NuVasive Chairman and CEO Gregory T. Lucier. "It is NuVasive's sweet-spot of game-changing innovation, bolstering our leadership in spine and providing new growth opportunities in the U.S. and around the world."