NuVasive
(Nasdaq: NUVA)
officials still plan to close the spine tech company’s merger with Globus Medical in the present quarter, despite the FTC scrutiny.
Along with reporting mixed second-quarter results, NuVasive CEO Chris Barry yesterday evening stuck by plans to merge with Globus Medical in the third quarter and create what would be the second-largest spine tech company in the world behind Medtronic. Barry noted that shareholders of both companies overwhelmingly approved the deal in April. Globus shareholders would own about three-fourths of the new company created from the merger.
However, the Federal Trade Commission in May requested additional information about the deal as it scrutinized whether it would harmfully reduce competition in the spine technology space. Based on the progress Barry saw in NuVasive’s response to the FTC’s second request, he said there would be no backing off on the deal timing.
“Given the recent M&A headlines, I’ve heard a lot of commentary about the FTC approach to deals generally, as well as speculation about what action the FTC will take in the NuVasive-Globus merger. While there’s a range of potential outcomes when the FTC is reviewing our transaction, we remain optimistic on a Q3 close,” Barry said.
NUVA shares were down more than 3% to $39.92 apiece, and Globus Medical’s GMED shares were down more than 2% to $57.96 apiece by midday trading today. MassDevice‘s MedTech 100 Index was down about 0.6%.
Globus Medical reports its Q2 earnings this evening.
Under the Biden administration, the FTC has taken a more aggressive stance in enforcing U.S. antitrust regulations, including in the medical device industry. Just yesterday, there was news that Cooper Companies had terminated its planned $875 million acquisition of Cook Medical’s Reproductive Health business amid FTC scrutiny.
NuVasive results were mixed in Q2
NuVasive earned $7.4 million, or 14¢ per share, for the quarter ended June 30, 2023, swinging into the black after a loss of $900,000, or 2¢ per share, during Q2 2022. Revenue was up 2.4% year-over-year to $317.8 million.
Adjusted to exclude on-time items, NuVasive had EPS of 56¢. The result was a penny ahead of Wall Street analysts expectations of 55¢ EPS. However, revenue did not meet their $322.05 million projection.
Barry described Q2 as a solid quarter. “Our results reflect the strength of our differentiated product portfolios and continued commercial execution.”
NuVasive stuck by its guidance of 6–8% full-year revenue growth in 2023.
Ryan Zimmerman, Sam Durno, and Iseult McMahon at BTIG said: “We believe both parties remain fully committed to the transaction and are pushing the FTC hard to keep the timelines intact. We worry that could end up causing some delay, but we’ll see what GMED has to say on their quarterly call.”