NuVasive in $410m deal to acquire Ellipse Technologies

NuVasive Inc. (NSDQ:NUVA) and Ellipse Technologies said yesterday that they inked a deal worth up to $410 million for NuVasive to acquire Ellipse and its adjustable orthopedic implants.

Aliso Viejo, Calif.-based Ellipse, which registered a $75 million initial public offering last October, has a pair of orthopedic surgery devices already on the market: The Magec-Eos spinal bracing and distraction system for early-onset scoliosis, and the Precice limb-lenthening systemfor treating limb length discrepancies.

The deal, expected to close in February, calls for an up-front payment of $380 million and a $30 million revenue-based milestone payable in 2017, the companies said. NuVasive said it expects the deal, funded with cash on hand, to add slightly to its adjusted earnings per share this year and “significantly accretive” after that. Ellipse posted sales of $40 million last year.

“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. It is in 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,”  NuVasive chairman & CEO Gregory Lucier said in prepared remarks. “NuVasive remains committed to adult deformity through our Integrated Global Alignment platform, and the acquisition of Ellipse will aggressively insert NuVasive into early onset and idiopathic scoliosis, an important and attractive part of the spinal deformity market for NuVasive where we have tremendous opportunities for accelerated growth. Additionally, this investment expands NuVasive’s footprint into new niche markets with highly differentiated technology that – when coupled with our market-making expertise – will be strategically applied in other spine and orthopedic applications, including degenerative spine disease, trauma and knee osteoarthritis. Ellipse’s robust product pipeline also enhances internal development and licensing opportunities for NuVasive, including areas where we look to assemble with our iGA and neuromonitoring expertise. We are very excited to welcome Ellipse’s talented team to NuVasive and look forward to realizing the many operational and financial benefits this transaction creates.”

“Ellipse has made enormous strides since our founding 10 years ago. Joining forces with NuVasive not only validates the promise of our technology, but provides us with the scale and resources necessary to realize our full potential, to the benefit of our surgeon customers and their patients, faster than we could achieve on our own. Additionally, NuVasive’s longstanding commitment to developing market-leading, less invasive technological solutions represents a tremendous cultural fit. Innovation, a passion for excellence and improved clinical outcomes have all been hallmarks of Ellipse, and ones that I know will continue as part of NuVasive. We look forward to joining with NuVasive to continue to help improve patient lives,” added Ellipse president & CEO Edmund Roschak, who’s slated to join NuVasive’s management team, the companies said.

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