$1.20 Billion
Prior Fiscal: $1.14 Billion
Percentage Change: +6%
R&D Expenditure: $98.5M
Best FY22 Quarter: Q2 $310.5M
Latest Quarter: Q1 $307.7M
No. of Employees: 3,000

NuVasive has been a resident of the ODT top 10 list for quite some time, creeping up the list to reach #6 before falling back to #7 in last year’s feature. However, this entry may represent the organization’s final report. About a month after the firm closed its books on the 2022 year, it was announced the company would be combining with Globus Medical in an all-stock transaction. Under the terms of the deal, NuVasive shareholders would receive 0.75 of a share of Globus Medical stock for each share of NuVasive, putting the deal value at approximately $3.1 billion.

“Our combination with Globus Medical is transformative, joining two companies with highly complementary capabilities, geographic footprints and customer bases,” said Chris Barry, CEO of NuVasive. “Together, we will be able to offer an exceptional portfolio of clinically proven solutions, supported by strong commercial and surgeon education teams. The new company will be well-positioned to deliver value creation for shareholders, further support our surgeon partners—and most importantly, change the lives of more patients.”

The combined company will have an eleven-member board—eight from Globus Medical and three from NuVasive. Chairman of the board at Globus Medical, David Paul, will remain in the same role at the combined company, while Globus CEO/President Dan Scavilla will stay as CEO. Globus CFO Keith Pfeil will continue in that role within the new firm and Barry will serve in a supporting role during the integration. In total, the new firm is expected to have about 5,000 employees.

Although both companies claim the product offerings are complementary, some analysts point to the possibility of a “messy” merger given similar transactions in the past. “To double-down on spine is somewhat surprising in our view and adds a lower growth organization,” BTIG analyst Ryan Zimmerman told Reuters.

Further, it was reported the deal caught the eye of the FTC, which as of the time of this writing, was said to be considering a lawsuit to challenge the deal.

Curiously, while the deal has Globus essentially purchasing NuVasive, the revenues for the firms in the ODT top company list has the latter ahead of the acquirer. NuVasive closed its 2022 fiscal with $1.20 billion in net sales, a 6% increase over the previous year. Spinal hardware for the firm contributed $910 million to that total, also equating to a 6% rise. The organization pointed to increased product volume due to ongoing elective surgery recovery as primarily responsible for the gains, with specific emphasis on the introduction of the Simplify Cervical Disc in 2021.

Surgical support added $292 million to the company’s coffers, inflating 3% over the previous fiscal. Similarly, the recovery of surgical procedures was a contributing factor, as well as the launch of the Pulse platform in 2021.

Recognizing the role new innovations play in revenue growth, NuVasive continued to support its product portfolio with a number of announcements regarding novel offerings during 2022.

Just days after the start of the new fiscal, the company gained an FDA clearance for expanded indications of use for its Attrax Putty. The agency’s go-ahead enabled the product to be used with NuVasive’s thoracolumbar interbody portfolio for spine surgery. The putty is a synthetic, bioactive, and osteoconductive bone void filler designed to drive bone fusion. It features a surface microarchitecture that provides an optimized environment for bone formation without added cells or growth factors.

At the end of NuVasive’s third quarter, the organization launched the Reline Cervical, a fixation system for posterior cervical fusion (PCF). With the Reline Cervical, surgeons can address complex PCF surgeries within one comprehensive fixation portfolio, as well as utilize the enabling technologies within Pulse. The compatibility of Reline Cervical with Pulse gives surgeons the benefits of navigation, imaging enhancement, intraoperative neuromonitoring, iGA, and patient-specific rod bending.

November saw the commercial launch of the NuVasive Tube System (NTS) and Excavation Micro, a minimally invasive surgery system that provides comprehensive solutions for both TLIF and decompression.

Engineered to elevate the surgical workflow through efficient, controlled positioning, and optimized access, NTS and Excavation Micro are made a complete procedural solution with Advanced Materials Science and expandable interbody implants, biologics, Reline fixation system, and enabling technologies within the Pulse platform.

As part of its efforts to get more of its products into the hands of surgeons around the world, NuVasive announced the grand opening of its Singapore Experience Center for the Asia-Pacific region in June. The center provides surgeons across the region the opportunity to train and learn from faculty surgeons in Singapore and provide office space for cross-functional support staff to drive business growth. As part of the company’s Clinical Professional Development program, it will complement the flagship Experience Centers located in San Diego and the New York metropolitan area.

The center features:

• • Dedicated Pulse demonstration site to provide hands-on experience with an enabling technology platform that has the ability to be utilized in 100% of spine procedures.

• • Educational training rooms with advanced cameras and streaming capabilities for effective virtual learning.

• • Technology rotunda with the ability for live and virtual demonstrations of the company’s comprehensive, procedurally integrated spinal solutions.

“The NuVasive Singapore Experience Center demonstrates our continued global commitment to scale our world-class business in markets like the Asia-Pacific region and support premier surgeon education,” said Barry. “This investment plays an integral role in expanding our global footprint while driving our technology strategy to advance less-invasive surgery and integrate enabling technology with the Pulse platform.”

$1.13 Billion
Prior Fiscal: $1.05 Billion
Percentage Change: +8.4%
R&D Expenditure: $92.6 Million
Best FY21 Quarter: Q4 $302M
Latest Quarter: Q1 $290.7M
No. of Employees: 2,900

Cheetahs are naturally built for speed.

Their slender, lightweight body, oversized heart, small head, and long legs enable the big cats to accelerate faster than most sports cars (0-60 mph in three seconds) and execute mid-air turns while running. The animal’s flexible spine curves with each stride, acting as a spring for its hind legs, while its pivoting hip and unattached shoulder joints provide the necessary rotation to induce remarkable sprinting prowess (strides up to 25 feet) and speed (50-80 mph).

The cheetah’s claws and tail are vital accelerants as well. They gain incredible ground traction from their blunt, semi-retractable claws, and maneuverability from their tail.

Speed, however, is not the cheetah’s only defining quality—the felines also possess prey-specific hunting tactics. Belfast researchers, for example, found that cheetahs temper their hunting speeds to match and outmaneuver their prey’s various escape strategies. The animals intentionally slow their stride to make sharp turns in concert with their intended victims; the result, scientists noted, is a “deadly tango between the hunter and the hunted, with one mirroring the escape tactics of the other.”

“…we now know that rather than a simple maximum speed chase, cheetahs first accelerate towards their quarry before slowing down to mirror prey-specific escaping tactics,” explained Dr. Michael Scantlebury, senior lecturer at Queen’s University Belfast School of Biological Sciences. “We suggest that cheetahs modulate their hunting speed to enable rapid turns in a predator-prey arms race, where pace is pitted against agility. Basically, cheetahs have clear different chase strategies depending on prey species…our previous concept of cheetah hunts being simple high-speed, straight-line dashes to catch prey is clearly wrong. They engage in a complex duel of speed, acceleration, braking, and rapid turns with ground rules that vary from prey to prey.”

Similar ground rules apply in the corporate world, where companies engage in endless duels for market supremacy.

Not surprisingly, organizations emulating the cheetah’s resiliency, speed, and agility have adopted the feline as their official mascot (the most famous being Frito-Lay with its Cheetos brand corn puffs).

Spinal technology firm NuVasive Inc. has been using the cheetah for nearly two decades to symbolize its approach to innovation, competition, and growth. Last year, the company launched a corporate cultural mindset called The Cheetah Way that aims to align its purpose, values, actions for success, and strategic priorities.

“The Cheetah Way really represents a holistic alignment to our organization. It includes starting first and foremost with our purpose,” CEO J. Christopher Barry said. “It also then includes our key values that we need to show up and exhibit every day. It defines the competencies that are required and ultimately, that then dictates and supports our strategy. The Cheetah Way is foundational to our next phase of growth…”

NuVasive kicked off that next growth phase last year through a steady stream of new products, partnerships, and M&A. The resulting flow raised total sales 8.4% to $1.13 billion and gross profit 12% to $816.7 million.

The company posted gains in its two product line offerings, with spinal hardware (implants and fixation devices) expanding 9% to $856.5 million and surgical support (surgical access instruments, intraoperative neuromonitoring systems) climbing 5.7% to $282.4 million. NuVasive attributed its product line sales gains to recovering elective surgery volume.

“2021 was a foundational year for NuVasive,” Barry told shareholders in the company’s latest annual report. “With a focus on near- and long-term growth, we continue to make progress on our strategy to grow our international business, deliver differentiated innovation in enabling technology, extend our position in less-invasive surgery, and take share in sub-segments where we historically had under-represented market share.”

Taking market share certainly was the motivating factor behind NuVasive’s $150 million acquisition of Simplify Medical last February (2021). The deal augmented NuVasive’s cervical spine lineup by adding a cervical disc designed for MRI compatibility, physiologic motion, and anatomical height-matching.

The Simplify Cervical Artificial Disc for cervical total disc replacement (cTDR) won U.S. Food and Drug Administration (FDA) premarket approval in late 2020. A premarket approval submission for a two-level Investigational Device Exemption followed shortly thereafter.

Simplify Medical’s cervical disc consists of PEEK on ceramic materials for better visualization (via post-operative MRI). Its design fosters a unique articulation that allows a variable center of rotation for each treated level and closely mimics the motion dynamics of a natural spine segment, according to NuVasive. The anatomically designed disc measures between 4mm and 6mm; the smallest size (4mm) reportedly boasts the lowest disc height on the market.

The Simplify Disc is now part of NuVasive’s C360 portfolio, which the firm introduced last December.

“The acquisition of Simplify Medical advances our long-term growth strategy by both expanding, and further distinguishing, our portfolio with industry-leading innovation,” Barry said in announcing the deal.

“Combining the Simplify Disc with NuVasive’s C360 portfolio will enable us to provide surgeons with world-class cervical technology, regardless of their preferred procedural approach. We are excited about the opportunities this acquisition creates as we work to optimize the surgeon experience, advance the standard of care, and create value for shareholders.”

NuVasive indulged all three groups last year in different yet complementary ways. It optimized the surgeon experience by expanding professional training in the United States. In September, NuVasive opened an East Coast Experience Center in Englewood, N.J., supplementing the company’s flagship facility at its San Diego headquarters. The Englewood center features enhanced private R&D labs with video technology to support remote and in-person learning; educational training rooms with advanced cameras and streaming capabilities for digital instruction; a technology rotunda for live and virtual training simulations; a dedicated Pulse platform demonstration site; and lab space for training on the X360, XLIF, MAS TLIF, C360, and other procedural solutions.

A month after the new Experience Center opening, NuVasive released a virtual reality (VR) training module for the X360 system. Developed in collaboration with PrecisionOS, the module integrates the company’s lateral approach to single-position spine surgery: the XLIF, XALIF, and XFixation. The module provides a digital simulation of the X360 procedural workflow, helping “further the adoption of less invasive surgical procedures,” NuVasive chief commercial officer Massimo Calafiore noted in a news release publicizing the VR training module.

“The integration of VR learning with our CPD [Clinical Professional Development] and sales training programs,” he said, “enhance how we train our surgeon partners and sales teams as we work together to transform surgery, advance care, and change patient lives.”

NuVasive pursued the latter two ambitions via enhancements to its product portfolio, beginning with last April’s FDA approval of the Simplify Cervical Artificial Disc for two-level cTDR. The agency reputedly based its decision on a two-level IDE study that found the Simplify Disc’s overall success rate was 10% higher than anterior cervical discectomy and fusion. Research also has shown the Simplify device has the highest overall clinical success rate compared to any other approved cervical disc at both one- and two-levels.

The company followed up the Simplify Disc approval with summertime authorizations for its Pulse surgical platform in Europe and the United States. Pulse is an integrated multiple technologies platform, designed to enhance the safety, efficacy, and procedural reproducibility of spinal procedures. The solution fosters easy access to multiple technologies from a compact footprint and addresses some of the most common surgical challenges. According to NuVasive, Pulse is designed to integrate radiation reduction, imaging enhancement, rod bending, navigation, intraoperative neuromonitoring, and spinal alignment tools into one platform. It includes enhanced integration with Siemens Healthineers’ 3D mobile C-arm, the Cios Spin.

The road from approval to adoption was relatively short, as the Pulse platform’s first clinical use took place in late September. Surgeons in Ohio used the tool in an XLIF procedure with minimally invasive fixation and nerve root decompression; the doctors involved in the procedure said Pulse complemented the way OR staff operated and allowed clinicians to seamlessly transition between XLIF and posterior fixation.

Nuvasive’s two product launches occurred two months apart. In July 2021, the company introduced its 3D-printed porous titanium implant, Modulus ALIF, for anterior lumbar interbody fusion (ALIF) procedures. The low-profile device particularly is designed for supine and lateral ALIF (XALIF) procedures, and is made in various sizes and lordotic options to accommodate different patient anatomy.

Modulus ALIF features a proprietary design for enhanced osseointegration, biomechanical, and imaging properties. The porous surface architecture is engineered to participate in fusion and promote new bone on-growth and in-growth. The design also allows for enhanced visualization compared to solid titanium implants, according to the company.

The Modulus ALIF’s locking mechanism provides definitive tactile and visual confirmation, enabling confidence in a surgeon’s screw placement in the implant.

NuVasive’s Cohere TLIF-O implant debuted in mid-October as part of the firm’s Advanced Materials Science (AMS) portfolio. The product is a porous polyetheretherketone (PEEK) implant used for transforaminal lumbar interbody fusion procedures. Like its fellow AMS solutions, Cohere TLIF-O is designed with lordosis in the oblique plane and porous surface technology, a composition that allows clear radiographic imaging with different modalities.

Similar to the Modulus ALIF implant, the Cohere TLIF-O is manufactured in various implant sizes to fit different patient anatomies. Its design adheres to the company’s AMS principles of surface, structure, and imaging, featuring proprietary porous surface technology that generates stronger integration through bony in-growth and on-growth compared with smooth PEEK, which aids in fusion and overall clinical outcomes.

“Porous PEEK combines the stiffness and radiolucency of PEEK with the enhanced osseointegration of the porous technology—benefits not possible with prior devices,” Frank Phillips, M.D., professor of orthopedic surgery and director of the Division of Spine Surgery at Rush University Medical Center in Chicago, said upon the Cohere TLIF-O’s release. “The enhanced clinical outcomes possible with Cohere TLIF-O and the surface technology options for posterior spine surgery now available are helping advance the standard of patient care.”

$1.05 Billion
Prior Fiscal: $1.17 Billion
Percentage Change: –10.2%
No. of Employees:  2,700

In an ongoing legal battle with NuVasive, the court’s latest ruling on a motion to dismiss granted Alphatec a partial victory. The court skirmish began in 2017 when NuVasive sued Alphatec and CEO Patrick Miles, claiming he conspired during his 17-year tenure to “decamp to Alphatec, taking confidential information, employees and customers with him,” according to court documents.

In the latest decision, Delaware Chancery Court struck down NuVasive’s claim that Alphatec aided and abetted breach of fiduciary duty, among other allegations, on the grounds the case was pleaded improperly. According to Bloomberg Law, it was the third time the dispute has been narrowed. The court also denied Alphatec’s motion to dismiss NuVasive’s claims for tortious interference with contractual relations and deceptive and unfair trade practices.

Matthew K. Harbaugh succeeded Rajesh Asarpota as the company’s executive vice president and CFO at the beginning of last year. He was previously president of the specialty generics business at Mallinckrodt plc, and CFO of the company for more than five years before that. With over 25 years of experience, he held a variety of financial management positions at Covidien Pharmaceuticals and nearly 10 years at Monsanto in investor relations, finance, and two ex-patriate positions.

The COVID-19 pandemic stooped the spine technology company’s revenue. Net sales dropped 10.2 percent to $1.05 billion as a result of the steep decline in elective surgeries last year. Spinal hardware proceeds fell 8 percent to $783.5 million, with product volume dropping sales about 7 percent. Surgical support sales fell 16 percent to $267 million, with product and service volume curbing net sales about 15 percent as compared to the prior year.

The pandemic also caused the firm to push back the timeline for the Pulse robotic system for spine procedures a second time, according to an earnings call last August. NuVasive announced a delay in February after beta testing revealed the necessity for hardware and software changes. COVID-19 disruptions pushed FDA clearances to summer of this year, and first-in-human use to next year. The company also declared a 30.3 percent sales decline in the second quarter of 2021 due to the pandemic stifling elective procedures.

The Modulus XLIF dual sided plate launched last May, and the Modulus ALIF and Cohere TLIF-O implants earned 510(k) clearances around the same time:

• The Modulus XLIF dual sided plate is a low-profile, anti-migration plate that achieves two fixation points in XLIF surgeries.
• The Modulus ALIF porous titanium implant is used in both supine and lateral ALIF (XALIF) procedures, and the company’s first AMS offering for ALIF.
• Cohere TLIF-O is a porous PEEK implant for TLIF procedures, featuring a single-step insert and rotate technique and lordotic design feature in the oblique plane.

June saw U.S. and European launch of Reline 3D, a posterior fixation system for pediatric spinal deformities, optimized for adolescent idiopathic scoliosis (AIS) treatment. The system unifies typically multi-step, single plane deformity correction techniques into one procedure to boost OR efficiency. It was the latest addition to the Reline fixation portfolio, which also includes Reline Open, Reline MAS, Reline Trauma, and Reline Small Stature.

The company began limited roll out of its new Precice plate for pediatric limb lengthening and reconstruction last September. Mounted on the outside of the bone and leveraging locking plate technology, the Precice Plate avoids potential damage to the growth plate. A programmable external remote control magnetically couples with the plate to make micro adjustments. The patient follows a custom lengthening schedule over several months to gradually distract the plate and stretch newly formed bone to a target length. Full commercial launch took place in the U.S. and Europe early this year.

The firm’s porous PEEK portfolio was expanded with November’s launch of the Cohere XLIF interbody and Cohere XLIF AMS plate. Studies have showed that Cohere XLIF’s porous PEEK technology enhances osteogenic cell response and improves stability through bone in-growth. Porous PEEK maintains high porosity under conditions replicating clinical loading and resists abrasion damage and delamination under impacted insertion conditions. The implants also reduce stress shielding and subsidence risk.

November also saw release of the Anterior Cervical Plating (ACP) system and unveiling the C360 cervical spine portfolio. The ACP system features a 1.6 mm plate and its design helps reduce post-op complications like dysphagia, malalignment, and adjacent level ossification. It touts three plate profiles with optimized stiffness for each surgical level, with a wide array of length options to match patient anatomies. Its screws have integrated locking covers for better placement and locking accuracy.

In December, the firm released an update concerning a field safety notice that recalled its MAGEC System Model X spinal rods last February. According to the advisory notice, the implants can loosen, fracture, corrode, migrate, or cause pain. The issues can manifest in vivo as locking pin breakage, O-ring seal failure, metal wear debris generation, and failure of the rod to distract. Patients implanted with the rod may need to undergo removal or revision surgery.

$1.17 Billion
Prior Fiscal: $1.10 billion
Percentage Change: +6.3%
No. of Employees: 2,800

Known for his mental toughness and relentless playing style, Jerome “The Bus” Bettis, Super Bowl champion and NFL Pro Football Hall of Famer is considered one of the best NFL running backs of all time. But even The Bus isn’t immune to back pain.

When Bettis started suffering back pain, he noted in the early stages he felt he could push through any amount of pain, leveraging his “play through the pain” mentality. But as the pain progressed, The Bus found it was more than just a regular, everyday ache. About a year after his symptoms began, Bettis couldn’t enjoy normal activities foundational to his life like teaching his kids to play basketball and golf. It even began to affect his ability to walk long distances and stand up straight.

“I knew that this pain couldn’t go on because the daily things that as a father, you’re supposed to do, I wasn’t able to,” he said.

Bettis began conducting research on posterior and lateral surgeries, consulting with several surgeons. He eventually met Dr. Juan Uribe, chief of Spinal Disorders with Barrow Neurological Institute, and was introduced to the XLIF procedure. Bettis was delighted to hear the less invasive XLIF could reduce recovery time compared to traditional posterior surgery. He moved forward, and was able to play a full round of golf about three months post-op. Since the XLIF procedure, The Bus is back to an active lifestyle, playing golf two or three times a week.

“After experiencing the ease of surgery and quick recovery with NuVasive’s minimally invasive surgery, I want to share my story and encourage patients considering [surgery] to take the leap and get their life back,” Bettis said.

Emboldened by the success of the minimally invasive, lateral approach XLIF procedure, The Bus became NuVasive’s brand ambassador last August. 2019 also marked CEO Chris Barry’s first full fiscal year leading the company. The year proved to be successful—NuVasive grew revenue 6.3 percent, garnering $1.17 billion. The Spinal Hardware franchise, which contains implants and fixation products, climbed 8 percent to reach sales of $851 million. Product volume for the spinal hardware business boosted revenue by about 11 percent, offset by unfavorable pricing impacts of about 2 percent.

Last February the Precice Bone Transport System joined the NuVasive Specialized Orthopedics (NSO) collection thanks to both FDA clearance and CE mark approval. The system includes an implantable, magnetic intramedullary nail with a dual slot to support intercalary bone segment transport. After implantation, an external remote controller moves the bone segment up to 10 centimeters depending on each patient’s specific needs. The all-internal solution is contrary to traditional external fixation systems, which require wearing an external device for an extended time. (A milestone of 10,000 nail implants using the Precice system was achieved last August.)

The first uses of Cohere XLIF, a lateral porous PEEK implant for XLIF and lateral single-position spine surgery, took place last April. Cohere XLIF is part of the ongoing NuVasive prospective multicenter study that began in September 2018 to assess advanced implant technologies in XLIF procedures. Cohere XLIF was the first product launch for the XLIF and lateral single-position surgery applications using porous PEEK technology.

“The transition from smooth PEEK to Cohere XLIF has been seamless. In my experience, workflow and imaging properties are essentially the same, and neither impaction forces nor graft containment have been compromised,” said Dr. Anthony Kwon, board-certified orthopedic spine surgeon, Charlotte Orthopedic Hospital.

Last June, the firm expanded its Advanced Materials Science (AMS) portfolio by releasing Modulus TLIF-O, a porous titanium spine implant for transforaminal lumbar interbody fusion (TLIF). Its porous topography facilitates osseointegration, and a porous, roughened endplate design promotes new bone ongrowth at four weeks. A lattice structure balances strength and radiolucency while mimicking the stiffness of bone. Modulus TLIF-O’s lordosis is cut in the oblique plane, and has the ability to insert and rotate or impact the implant with the same instrumentation to restore sagittal alignment with introducing coronal misalignment.

The Modulus TLIF-A (A standing for anterior here) porous titanium spine implant hit the market last August. Modulus TLIF-A completed NuVasive’s AMS portfolio for all major posterior interbody fusion techniques used in TLIF. The new implant boosted the firm’s standing in the U.S. interbody device market—estimated to be over $1.2 billion.

“The Modulus TLIF-A system is the perfect synergy between optimized material properties and deliverability,” said Jeffrey L. Gum, M.D., orthopedic surgeon at the Norton Leatherman Spine Center. “The lattice design allows for improved imaging characteristics, a prime environment to promote fusion, and an ideal modulus of elasticity.”

The porous titanium Modulus Cervical interbody implant for cervical applications was released in September. This augmented the AMS portfolio by including both porous PEEK and porous titanium options for anterior cervical discectomy and fusion (ACDF) techniques, which are commonly performed to address cervical disc degeneration or spinal instability.

The firm earned FDA clearance to expand the CoRent Small Interlock system’s indication to use at multiple contiguous levels from C2-T1 for ACDF procedures. The CoRoent Small Interlock system is a no-profile interfixated device implant in the confines of the vertebral disc space to treat cervical disc degeneration and spinal instability. It features a zero-step locking mechanism, large fusion aperture, angled instrumentation, and a three-screw implant design.

The Surgical Support segment, which encompasses intraoperative monitoring services, disposables, and biologics, and capital equipment, earned $317 million last year and remained relatively flat. Product and service volume increased proceeds by 2 percent, but unfavorable pricing impacts tempered the growth by 1 percent.

The company revealed the X360 system integrated with the Pulse surgical automation platform at last April’s American Association of Neurological Surgeons annual meeting. Proprietary surgical procedures XLIF, XALIF, and XFixation are integrated with the Pulse platform so multiple procedures can be performed from the lateral position throughout the surgery. The X360 approach can reduce up to an hour of operating time, according to a study in BioMed Research International. According to NuVasive, integration with Pulse saves a hospital nearly $5,000 per patient on average.

The Pulse integrated technology platform officially launched last July. It combines neuromonitoring, surgical planning, rod bending, radiation reduction, imaging and navigation functions, robotics, and smart tools to boost OR efficiency during spine surgery. The integrated technologies help improve utilization of minimally invasive surgery techniques.

Pulse’s 2D and 3D imaging combine novel camera, array, and workflow technologies. Preoperative planning software incorporates alignment parameters, implant integrations, surgical modeling, and other tools to create a reliable pre-surgical plan. An automated nerve detection system help minimize variability and speed interpretation of neural information. LessRay smart imaging takes low-dose, low-quality images and improves them to look like full-dose images. Spinal rod-bending technology creates patient-specific rods bent precisely to implant locations.

“The advantages of an integrated ecosystem delivering an intuitive, automated workflow and future-proof expansion capability has the potential to revolutionize my spine practice more than any other new technology introduced over the past decade,” commented Stephen Ryu, M.D., a neurosurgeon at Palo Alto Medical Foundation.

AT A GLANCE
$1.10 Billion
Prior Fiscal: $1.03 Billion
Percentage Change: +7.3%
No. of Employees: 2,600
Global Headquarters: San Diego, Calif.

The SpineTRACK Registry, a NuVasive-sponsored prospective, multicenter, observational data collection quality improvement tool, was established in 2011. SpineTRACK lets surgeons use real-time reports to make better treatment decisions, and also allows patients to track progress to better understand treatment benefits. Hospitals can also use SpineTRACK to evaluate outcome variations to provide the highest value of care.

Last February, the Centers for Medicare and Medicaid Service (CMS) designated SpineTRACK as a Qualified Clinical Data Registry (QCDR) for the 2018 Merit-based Incentive Payment System reporting year. That meant the platform could be used to earn Medicare payment incentives.

“The QCDR designation helps our customers meet quality reporting criteria to deliver optimal results and earn incentives that can grow their practices,” NuVasive then-executive vice president of strategy, technology, and corporate development Matt Link told the press. “This is truly a value-add that aligns with our focus on systems-based spine solutions.”

Three months later, helped along by the significant adoption increase from QCDR designation, SpineTRACK enrolled its 10,000th patient. “SpineTRACK is foundational in our efforts to enhance the patient experience throughout the continuum of care with advanced data analytics,” Link said. “These elements will help fuel the future of Surgical Intelligence and continue to help revolutionize spine care.”

Half a year later, the company promoted Link to president. J. Christopher Barry was also welcomed as NuVasive’s new CEO then, replacing Gregory Lucier. He had previously served as senior vice president and president of Medtronic’s Surgical Innovations business, directing over 14,000 employees, diversifying the business, and overseeing Medtronic’s surgical robotics development initiative. Before that, he held commercial and leadership roles at Covidien.

“Chris has successfully led teams globally, managed complex R&D programs, driven commercial initiatives, and executed strategic acquisitions. He has built a reputation for driving employee engagement and operational excellence,” Lucier told the press at the time of Barry’s appointment.

“The combination of Chris and Matt at the helm of NuVasive creates the most dynamic leadership team in the industry,” he added.

Barry took the reins of a company that has continued to grow due to the strong demand for minimally invasive spinal procedures. NuVasive’s flagship eXtreme Lateral Interbody Fusion (XLIF) procedure, in which surgeons access the spine for fusion from the side of the patient’s body rather than the front or back, is in high demand due to decreased trauma and blood loss, as well as faster recovery times compared to open surgery. Last year’s $1.1 billion revenue continued the firm’s upward trajectory, vaulting 7.3 percent ($75 million) over the prior year.

The spinal hardware franchise, which consists of implants and fixation products, grew 7 percent ($51.1 million) last year to reach $788.6 million. Spinal hardware product volume increased the segment’s revenue by 9 percent, but unfavorable pricing impacts offset the gain by 2 percent. Foreign currency impact had no material impact on spinal hardware sales.

ANALYST INSIGHTS: NuVasive continues to be a thought leader, driving innovation in a spine segment doing its best to stagnate. Comprehensive, elegant solutions and strong leadership will continue to drive revenue and profits.

—Patrick West, Partner, Mirus Capital Advisors

Last January, NuVasive launched the COALESCE thoracolumbar interbody fusion device (TLIF) and was granted an FDA label expansion for its COHERE cervical interbody fusion device.

COALESCE and COHERE both provide a 3D porous polyetheretherketone (PEEK) architecture to promote bone ingrowth. The launch made MR-compatible COALESCE available for both TLIF and PLIF procedures. COHERE’s label expansion allows its use at multiple cervical spine levels (C2-S1) with both autograft and allograft. COHERE was also given a new ICD code from CMS at that time.

The firm introduced its Maximum Access Surgery (MAS) anterior lumbar interbody fusion (ALIF) retractor platform last April. The retractor system helps retain traditional ALIF characteristics while allowing surgeons either a lateral or supine approach to spine surgery—accessing L5/S1 laterally has historically had shortcomings because existing systems weren’t designed for those approaches. The Lateral ALIF Access System enables single-position surgery for multilevel cases during the company’s proprietary XLIF procedure.

MAGEC X for early-onset scoliosis treatment was launched in the U.S. last July. MAGEC X features updates for all rod diameters in the MAGEC portfolio to deliver 68 percent performance increase over the previous generation (according to NuVasive). Improvements were made to the internal rod mechanism as well, including a reinforced locking pin and robust actuator seal to further contain and reduce the release of titanium wear debris. An anti-jam feature simplifies intraoperative and post-op rod lengthening, and laser-marked sagittal bending lines enhance workflow efficiency and ease of use. MAGEC X was launched in the U.K. two months later.

The Reline MAS Midline (RMM) low-profile modular implants for posterior fixation were also released last July. The RMM implants and instrumentation address alignment and aim to reduce adjacent segment transition syndrome, providing a minimally invasive approach to bilateral decompression under complete visualization, interbody fusion, and stabilization with pedicle screws. The RMM solution supports both cortical and standard trajectory techniques.

The company unveiled the XLIF Lordotic Expandable (XLX) Interbody System at last July’s International Meeting on Advanced Spine Techniques. The XLIF anterior column realignment (ACR) technique, together with XLX ACR, addresses sagittal alignment from the anterior column while reducing blood loss and hospital stays. It’s used to treat symptomatic disc degeneration or degenerative spondylolisthesis at one or two adjacent levels—including thoracic disc herniation—from L1 to S1. It can be used as an adjunct to fusion in patients with multilevel degenerative scoliosis as well.

The TLX 20 degree expandable spinal interbody implant was introduced last September. It touts a first-of-its-kind oblique profile for transforaminal lumbar interbody fusion (TLIF) procedures. The TLX 20 expandable implant’s integrated auto-lock feature allows customizable expansion for up to 20 degrees of oblique lordosis and tailoring implant expansion based on clinical need. The system also includes a single, low-profile instrument to position, expand, and post-pack the implant with bone graft, and distal tip tapering to aid insertion in a collapsed disc space.

Last November saw the U.S. launch of Brigade Lateral, at the time the industry’s first interbody system optimized for ALIF spine surgery. Brigade Lateral features improved instrumentation, a new insertion method, and an expanded lordotic implant offering for NuVasive’s proprietary Lateral ALIF procedure, which enables access to L5-S1 from a lateral position. A threaded in-line inserter angled off the midline and positioned on the implant’s lateral edge also allows better L5-S1 access.

That same month the COHERE porous PEEK implant won FDA clearance for the firm’s proprietary XLIF surgical spine procedure. The porous structure supports bone ongrowth and ingrowth, and PEEK’s radiolucent properties increase clarity in post-op X-rays and imaging. The nod allows surgeons to use the implant with autograft and/or allograft in skeletally mature patients for thoracolumbar pathologies including degenerative disc disease, degenerative spondylolisthesis, and degenerative scoliosis.

The company obtained FDA clearance for expanded use of the Monolith Corpectomy System, a modular PEEK interbody implant for cervical corpectomy procedures, last December. The expansion includes procedures to treat C3-C7 vertebral bodies damaged by fracture, tumors, or osteomyelitis, or to support reconstruction after corpectomy is performed to achieve spinal cord and neural tissue decompression in cervical degenerative disorders.

The surgical support business, which is comprised of intraoperative monitoring services, disposables, and biologics, increased sales $23.9 million—8 percent—over the previous year. Most of the growth (7 percent) came as a result of the company’s purchase of intraoperative neurophysiological monitoring (IONM) services firm SafePassage in early 2018. SafePassage provided IONM and EEG services to surgeons and healthcare facilities across the eastern U.S., and NuVasive expects to support over 100,000 IONM cases annually in the U.S. thanks to the purchase.

The AttraX Scaffold biologic, an absorbent ceramic-collagen bone graft with an optimized surface, launched last June. AttraX’s surface touts carefully defined and tightly controlled features at the submicron scale, which drives differentiation of mesenchymal stem cells into bone-forming osteoblasts without added growth factors. It’s used in the posterolateral spine to promote fusions, having demonstrated equivalent or better fusion rates than autograft and faster than ceramic grafts, according to the company.

July certainly was a busy month for NuVasive—during its last week the firm gained FDA clearance for its Pulse surgical automation platform, billed as spine’s first integrated surgical automation platform. Pulse combines 2D and 3D navigation and smart imaging, neuromonitoring, surgical planning, radiation reduction, and patient-specific rod bending technologies in one platform.

Imaging and insights can be simultaneously viewed in real-time through Wi-Fi connectivity and independent device access. Multiple high-resolution cameras combined with a low-profile, 360-degree array drives uninterrupted line-of-sight and optimized procedural workflow.

• NuVasive launched three more biologics last September as well:
• Traditional Bone Allograft—cancellous chips, demineralized cancellous chips, cortical cancellous chips, and cancellous crushed as a scaffold for bone growth.
• Amniotic Membrane DS—a double-sided layer of human amniotic membrane as a biologic barrier to prevent adhesions and reduce scar tissue formation near adjacent muscle, nerve, and fascia layer tissue.
• Propel DBM—gel, gel plus, and putty plus as additional form factors to the product line (which launched in 2017.)

NuVasive began a collaboration with Siemens Healthineers last August to boost clinical outcomes in minimally invasive spine surgery. The first step in the “Spine Precision Partnership” will combine NuVasive’s Pulse surgical automation platform with Healthineers’ Cios Spine mobile 3D imaging for intraoperative quality assurance.

“Currently, a number of hospitals and healthcare systems treat patients undergoing spine surgery through often cost-intensive, intra-operative CT scans with a general navigation system with limited utilization in spine surgery cases. The combination of NuVasive’s Pulse system and the Siemens Healthineers’ next-generation advanced imaging technology provides a compelling offering for hospitals and surgeons who require a scalable, cost-efficient technology that maximizes OR workflow efficiency and significantly improves visualization for spine surgery,” then-CEO Lucier told the press. “We firmly believe this combined offering will enable advanced clinical benefits driving superior patient outcomes, delivered through greatly improved visualization of the anatomy promoting successful anatomical access and spinal implant placement.”

$1 Billion
NUMBER OF EMPLOYEES: 2,600

Bruce VanDam, M.D., caught a glimpse of the future 15 years ago.

The Southern California orthopedic surgeon was in Brazil at the time, observing a rather unconventional procedure by a most unconventional physician. Even with his limited knowledge of the surgery (and physician), VanDam knew he was witnessing something extraordinary that steamy July day.

“…it was very clear to me that—bingo, this is the way to do it,” he said.

The “it” in VanDam’s memory is spine surgery, or more precisely, lateral interbody fusion, a minimally invasive approach in which a physician accesses the intervertebral disc space from the side (lateral) rather than the front (anterior) or back (posterior). Such an approach spares major back muscles, bones, and ligaments, helping to reduce pain, blood loss, and swelling, as well as minimize hospitalization. Recovery is also quicker compared with conventional techniques.

The lateral approach was pioneered by Luiz Pimenta, M.D., Ph.D., a São Paulo neurosurgeon frustrated by the medical complications associated with invasive procedures. Determined to find a safer, more effective alternative to traditional spinal fusions, Pimenta first began considering “unconventional” surgical methods in the late 1990s after completing a thoracoscopy course in Germany.

“The course sparked a significant interest in looking at the spine in unconventional ways. Therefore, after returning to Brazil, I started applying these new techniques with the aim of providing better results for patients,” Pimenta, now 71, told Spinal News International in a 2014 interview. “At that point, I started what has since become my life’s professional passion of device/procedural development—from that day, improving spinal surgery has been my core professional challenge.”

Pimento successfully met that clinical challenge through the lateral approach to spinal fusion, which at the turn of the millennium, was largely a foreign concept. Pimento admits he was considered crazy back then for straying from convention, but he ultimately found an equally mad (and willing) partner in NuVasive Inc., a fledgling firm (at the time) looking to differentiate itself in the global spinal market.

NuVasive worked with Pimento to bring the revolutionary technique to the United States, eventually debuting the unique approach via its XLIF technology in 2003. XLIF (eXtreme Lateral Interbody Fusion) incorporates two systems developed by the company: MaXcess and NVJJB/M5.

The MaXcess System customizes surgical access according to patient size and shape. It features a split three-blade design that can be positioned to maximize patient anatomy visualization, and fiber optic lighting for enhanced intraoperative imagery. MaXcess enables doctors to perform surgeries using instruments similar to those necessary for open procedures, but with a significantly smaller incision.

The NVM5 System is an intraoperative nerve monitoring platform that helps improve both surgical technique and safe implant placement. The system combines electrically stimulated EMG (eletromyography) and spontaneous EMG activity to assess possible nerve root irritation or injury in the operating room.

“In partnering with Dr. Pimenta, we were able to bring in technology—specifically, neurophysiology—that ultimately became part of this assembly of technology into a procedure that created a more predictable clinical experience for surgeons,” Matt Link, executive  VP of Strategy, Technology, and Corporate Development for NuVasive, said in an XLIF 15th anniversary tribute video on the company’s website. “What started off as a simple procedure for a minimally invasive approach for degenerative disc disease grew rapidly in its evolution and application across a wide range of indications.”

Those indications now span lumbar, thoracic, and cervical applications, with more than 80 Maximum Access Surgery (MAS) products available to treat degenerative spine conditions.

Last year, the company expanded its MAS portfolio with the release of 3D-printed fully porous titanium implants and solutions for single-position lateral surgery from T6 (thoracic) to S1 (sacral).

The Modulus XLIF titanium implants were developed with additive manufacturing technology to create a porous architecture that mimics bone porosity and stiffness for reduced stress shielding. The devices’ optimized architecture reportedly has better imaging characteristics than other titanium interbody products.

The new additions to NuVasive’s lateral solutions lineup, meanwhile, allow surgeons to perform lateral single-position operations. The company strategically launched the solutions—Lateral ALIF, XLIF Crestline, and Lateral MAS—shortly before the North American Spine Society’s annual meeting last fall in Orlando, Fla.

The Lateral ALIF approach features a new retractor system that gives surgeons direct access to L5-S1 in patients assuming a lateral decubitus position; the solution is intended to save procedural time and improve OR efficiency.

Similarly, XLIF Crestline is a supplemental solution that provides side access to challenging L4-L5 levels where XLIF procedures are virtually impossible (i.e., high crest, anterior psoas, or an anterior plexus). The off-angle technique allows access to disc space traditionally reached through a posterior approach, and uses NuVasive’s NVM5, MaXcess, and XLIF implants.

The Lateral MAS Fixation, on the other hand, is an adapted technique using Reline, a fixation system designed to preserve and restore spinal alignment.

“Using XLIF, XLIF Crestline, and Lateral ALIF provides the advantage of maintaining your patient in a single position. If you look, most of lumbar fusion surgery has really been done at L4 to S1, and so the ability to have these procedures available is tremendous,” Brian Kwon, M.D., orthopedic surgeon at New England Baptist Hospital in Boston, said when the solutions debuted. “NuVasive continues to take ownership of lateral surgery, making it better for us as surgeons and making it better for our patients.”

The financial benefits aren’t bad either: NuVasive’s inroads in the XLIF market have helped the company capture an 11 percent share in the global spinal sector, and cross the $1 billion sales threshold last year for the first time in its history. Its $1.03 billion haul represented a 7 percent increase over 2016’s total and a 27 percent spike compared to 2015’s sum. Executives attributed the solid gain to a 35.2 percent surge in international sales (to $176.2 million), strong U.S. demand for spinal hardware, and acquisitions.

The latter influence most likely stemmed from NuVasive’s 2016 purchases (Ellipse Technologies and Biotronic NeuroNetwork), as its 2017 investments occurred too late in the year (final quadrimester) to really impact sales. The 2016 purchases weren’t the company’s only growth dynamos, though they did play an integral role in raising Spinal Hardware revenue by 9 percent (to $723 million) and Surgical Support proceeds by 3 percent (to $297.4 million). The deals should continue to bear fruit this year as they meld with NuVasive’s more recent additions.

In purchasing Duke University/Georgia Institute of Technology startup Vertera Spine last September, NuVasive gainfully positioned itself as the only provider of porous interbody technology across both PEEK (polyether ether ketone) and titanium materials. Likewise, it became an instant leader in outsourced intraoperative neurophysiological monitoring services with the December pickup of SafePassage. The deal beefed up NuVasive’s neuromonitoring business line (formed after the Biotronic purchase), allowing it to reach key strategic U.S. markets and add significant new coverage, particularly on the East Coast.

“We invested further in building out our NuVasive Clinical Services business with the acquisition of SafePassage,” Chairman and CEO Gregory T. Lucier told investors in the company’s 2017 annual report. “As the only spine company in the world with dedicated neuromonitoring services, NuVasive is positioned to deliver greater value across our procedurally-integrated portfolio and expand our ability to transform how spine procedures are approached, measured, and valued from a clinical and economic perspective.”

That transformation also evolved last year through numerous FDA clearances and product launches. Many of those sanctions involved expanded or new indications for previously approved devices.

The CoRoent Small Interbody System, for example, received the FDA’s blessing in March 2017 for up to four contiguous cervical spine levels—just six months after the product was cleared for one level from C2-T1. The CoRoent system is an interbody cage made from PEEK-Optima that stabilizes the spine during fusion. The FDA’s clearance covered the CoRoent Small, CoRoent Small Lordotic, CoRoent Small Lordotic Plus, CoRoent Small Hyperlodotic, and CoRoent Small Contoured implants.

The same fate befell NuVasive’s PRECICE limb lengthening system and TLX interbody system. Inherited from Ellipse Technologies, the PRECICE product line was originally cleared for femur and tibia lengthening in patients with different limb lengths and deformities; the system now can be used in open and closed fracture fixation, pseudoarthrosis, malunions, nonunions, and bone transport.

The TLX system, meanwhile, received consent for a 20-degree expandable interbody as well as additional indications for use with allogeneic bone graft comprised of cancellous or corticocancellous bone graft to facilitate fusion. The FDA also cleared the TLX interbody system for use as an adjunct to fusion in patients diagnosed with multilevel degenerative scoliosis.

Besides the expanded indications for its CoRoent, PRECICE, and TLX systems, NuVasive also won FDA clearance for its redesigned Magec magnetically controlled growth modulation system. The product is used to treat early-onset scoliosis, and features the company’s Reline small stature platform.

Reline’s adult options grew more diversified last spring with the debut of the brand’s Trauma spinal posterior fixation portfolio, designed to help preserve and restore patient alignment. The product line supports multiple approaches to spinal fixation procedures, including open, maximum access surgery, or hybrid approaches. The platform allows for controlled, dialed-in fracture correction through a dual rack system, with or without a rod present in the construct.

NuVasive targeted operating room safety with the September release of its LessRay software platform for reducing radiation exposure in hospital ORs. The LessRay system comprises a proprietary software algorithm and hardware components, and is initially focused on minimally invasive spinal surgeries.

“Innovation is in our DNA—it not only drives us to do what we do, it defines and distinguishes us,” Lucier said in the annual report. “As we evolve from a company focused on doing one spine procedure really well to an enterprise driving the industry with technological solutions and thought leadership, our management team and Board are evolving in tandem.”

Management’s evolution involved the promotion of three executives and the resignation of NuVasive’s chief financial officer. Lucier promoted Matt Link to executive vice president of Strategy, Technology, and Corporate Development; Skip Kiil to executive vice president, Global Commercial; and Steve Rozow to executive vice president, Global Process Transformation (a position he will hold in addition to his current duties as vice president of Global Operations).

The company also filed a lawsuit in October against its former vice chairman, who is now executive chairman at Alphatec Holdings Inc. The lawsuit accused Patrick Miles of scheming for more than a year to take business from NuVasive, but Alphatec denounced the complaint as a “frivolous PR stunt” and an attempt to damage the reputations of both Miles and the company.

$962 Million
NO. OF EMPLOYEES: 2,200

Competing in the spine market is no easy task. Some of the world’s largest medical device companies—Medtronic plc, Johnson & Johnson (DePuy Synthes), Stryker Corp., and Zimmer Biomet to name a few—comprise a large chunk of the spine market. Companies looking to claim a slice of the spine pie therefore must have a new twist on traditional spinal technologies to stand a chance of competing with these long-established giants.

San Diego, Calif.-based NuVasive Inc.’s quirk for the spine market lies right in the firm’s name—a portfolio dedicated to minimally invasive (or in the company’s words, minimally disruptive) spine surgery technologies. The full-line spine company has established a niche in procedurally integrated spine solutions, capitalizing on the demand for surgical alternatives with less tissue disruption and patient trauma and an aging “baby boomer” population seeking a speedy return to daily living following surgery.

Because NuVasive’s strategy involves transforming traditional spinal offerings into less invasive versions, the firm can sometimes fall prey to patent litigation of technologies appearing a little too similar to existing products. In 2008, for example, Medtronic’s Spinal division filed a patent infringement lawsuit against NuVasive, claiming the company’s XLIF (lateral lumbar interbody fusion) surgical technique encroached on several patents Medtronic held. NuVasive responded in kind with counterclaims that Medtronic had infringed on its patents. The initial trial on the first phase of the case concluded in 2011, resulting in an unfavorable verdict against NuVasive regarding several Medtronic patents, and one favorable verdict. Monetary damages of $101.2 million were awarded to Medtronic (which both companies appealed), and the funds were put in escrow for a future verdict.

The second phase of the case, which involved a Medtronic cervical plate patent, was resolved in 2013. NuVasive received a license to practice various patent families collectively representing a majority of Medtronic’s patent rights to cervical plate technology. NuVasive made a one-time $7.5 million payment to Medtronic, which was also awarded a royalty on NuVasive’s Helix and Gradient cervical plate products. The final phase alleged NuVasive’s spinal implants, Osteocel Plus bone graft, and XLIF procedure using MaXcess IV retractor infringed several Medtronic patents.

In June 2016, the patent litigation was finally resolved. NuVasive ended up paying Medtronic $45 million, and all parties released each other from ongoing patent litigation. Each company was granted irrevocable, worldwide, non-exclusive, paid-up, royalty-free licenses on certain respective patents of their product lines. In addition, neither company will assert claims against the other related to spinal implants and related instruments, biologics and neuromonitoring for seven years.

“We are very pleased to have negotiated a mutually agreeable settlement that removes the ongoing burden of this litigation and provides for a framework for resolution of potential patent disputes in the future,” Chairman and CEO Gregory T. Lucier said in a news release announcing the settlement.

Lucier was installed as NuVasive’s CEO in mid-2015 after Alex Lukianov’s resignation due to lack of compliance with expense reimbursement and other personnel policies. At the time, there were some stirrings of a NuVasive sale because Lucier seemed more amiable than Lukianov to the strategy, according to comments made to Reuters by Leerink Swann analyst Richard Newetter.

NuVasive did not go up for sale in fiscal year 2016 (ended Dec. 31), but the company was certainly made a much more attractive target due to double digit sales growth. NuVasive garnered $962 million of revenue in 2016, up a compelling 19 percent from the year prior. The company has certainly found its niche in the spine market—NuVasive’s procedure volume expanded significantly in 2016 due to the continued adoption of minimally invasive procedures for spine, as well as elevated international market acceptance for these practices.

NuVasive acquired the MAGnetic External Control (MAGEC) system with its $380M purchase of Ellipse Technologies last year. Image courtesy of NuVasive.

The company’s Spinal Hardware division mirrored the company’s total FY16 gains, magnifying 20 percent to $674 million in sales. This generous hike was supported by NuVasive’s $380 million purchase of Ellipse Technologies—which develops procedural solutions for skeletal deformity—early in the year. By grabbing Ellipse, NuVasive added a platform of magnetically expandable growing rod implant systems able to be non-invasively lengthened with an external remote control via MAGnetic External Control (MAGEC) technology. MAGEC technology lets physicians customize patient therapy non-invasively, lowering the necessity for repeat surgical procedures and improving outcomes. The treatment is the only non-invasive growth modulation system for early onset scoliosis patients. NuVasive also obtained Precice, a technology for limb lengthening, in buying Ellipse.

“…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,”  Lucier said at the time of the announcement. “Additionally, this investment expands NuVasive’s footprint into new niche markets with highly differentiated technology that will be strategically applied in other spine and orthopedic applications, including degenerative spine disease, trauma, and knee osteoarthritis.”

Following the acquisition’s close in late February, former Ellipse CEO Ed Roschak was appointed CEO of NuVasive Specialized Orthopedics (NSO). The MAGEC system was granted U.S. Food and Drug Administration (FDA) clearance to be surgically implanted using NuVasive’s Reline posterior fixation system for severe spinal deformity patients in September, and FDA-cleared for 1.5T magnetic resonance imaging in October.

NuVasive’s iGA (Integrated Global Alignment) platform—a procedurally-integrated digital array of specialized products to help surgeons achieve more precise spinal column alignment—also continued to evolve in 2016. The company brought iGA to the U.K. market in April 2016’s BritSpine conference and provided educational workshops and exhibitions to those unfamiliar with the technology. Further, NuVasive showcased the iGA platform for cervical at 2016’s North American Spine Society (NASS) annual meeting. The expanded platform made the company a pioneer in spinal alignment for all spine procedures, and supported the launch of Bendini OCT, a computer-assisted rod bending system with the ability to bend spinal rods for occipito-cervico-thoracic cases. The Base Interfixated Titanium system for iGA was also introduced, which offers versatile fixation options with a distinctive locking mechanism and anatomic implant design to help rebuild spinal foundation.

Adding to the company’s implant distribution system, in March 2016 NuVasive acquired Mega Surgical, its exclusive Brazil distributor. Mega Surgical had partnered with NuVasive since 2008.

Though not quite as flashy as Spinal Hardware, the Surgical Support business—which offers intraoperative monitoring (IOM) services, disposables, and biologics still demonstrated double digit growth in 2016, swelling 14 percent to $288 million in revenue. Like the Spinal Hardware segment, this expansion was mainly fueled by key acquisitions NuVasive made during the year.

The first of these occurred in July 2016, when the company purchased BNN Holdings Corp. for $98 million. BNN Holdings owns Biotronic NeuroNetwork, an intraoperative neurophysical monitoring services firm. Biotronic NeuroNetwork caters to surgeons and healthcare facilities across the United States, and was combined with NuVasive’s existing IOM business to form the new division NuVasive Clinical Services (NCS). The firm also acquired the LessRay software technology suite from SafeRay Spine in September 2016, and showcased the newly obtained technology at NASS 2016. LessRay integrates into surgeon workflow and utilizes an algorithm to drive image registration and help surgeons and hospital staff manage radiation exposure using low-dose image quality enhancement. This technology is expected to become an integral component of NuVasive’s IOM service and Maximum Access Surgery (MAS) platform.

Enhancing the biologics portfolio, the company launched its AttraX Putty autograft extender for posterolateral spine surgery in May 2016. AttraX Putty’s biotextured surface helps to facilitate regeneration of the bone at the implanted site, outperforming competitive synthetic bone graft options in terms of bone formation and mechanically stronger fusions in clinical studies.

NuVasive also promoted Jason M. Hannon to president and chief operating officer in September 2016, succeeding Patrick S. Mikes, who was appointed vice chairman of the company. In over 11 years at NuVasive, Hannon lead key areas of the firm’s business, including strategy, corporate development, legal, and regulatory. Since July 2015, Hannon has served as executive vice president, International.

“Jason has extensive knowledge about our business operations and the markets we serve, as well as strong relationships with our customers,” Lucier said in a company release detailing Hannon’s promotion. “Jason has demonstrated operational acumen as the leader of our international business where he spearheaded a successful revitalization in our global markets with a return to double-digit revenue growth. I am proud of our efforts to develop a deep bench of executive talent, along with a clear succession plan aligned to our long-term strategic goals.”

$811 Million
NUMBER OF EMPLOYEES: 1,600

I’m sure some readers will roll their eyes at this, but CEOs are expected to comport themselves at the highest ethical level. A CEO is the face of a company, after all; a respectful and conscientious leader keeps a company in good standing both ethically and financially. Likewise, despite financial success, any executive’s ill repute casts a shadow onto his or her company’s reputation. It doesn’t necessarily take a scandal to bench a CEO, either. The tiniest infringement on company policy can warrant a pink slip because of the high standards to which a CEO must adhere.

On April 1, 2015, NuVasive’s founder and CEO of 16 years, Alex Lukianov, resigned following an investigation that revealed his lack of compliance with the company’s expense reimbursement and other personnel policies. Lukianov continues to serve the company as a consultant and special advisor to current CEO Gregory Lucier through Sept. 30.

Lukianov’s resignation brought an understandable amount of concern about NuVasive’s future. The firm has not seen a change of leadership of this magnitude in the 16 years since it became a public company. “We believe that he was a key factor in NuVasive’s success in the spine market…so we view his departure as a potential negative for NuVasive’s culture and growth prospects,” Needham & Co. analyst Mike Matson wrote in a note.

Gregory Lucier was appointed NuVasive’s CEO in May 2015. (Courtesy of NuVasive)

Some believed Lucier’s appointment as CEO may have NuVasive looking to sell. According to Leerink Swann analyst Richard Newitter, Lucier appears to be more amiable to selling the company at some point in the future. “NuVasive has been talked about as being a takeover target for a long time and I think the perception is that Alex was not as much of a willing seller,” Newitter commented to Reuters.

According to NuVasive director Jack R. Blair, the amounts involved in Lukianov’s indiscretion didn’t significantly impact the company’s financial results. But as mentioned before, the money itself wasn’t the issue, but rather the character hit the company took. Blair put it bluntly, saying Lukianov’s choices “in this regard were not representative of the high standards by which NuVasive operates” in an interview with The Wall Street Journal. And although the infringement might not have directly impacted NuVasive’s operations, a poor reputation definitely hurts business—Nuvasive’s shares fell 5.4 percent to $43.52 near the time of Lukianov’s exit.

With such a gloomy beginning to the second quarter of the company’s 2015 fiscal year (ended Dec. 31), you’d expect an equally as gloomy result for its full year revenue tally. NuVasive most certainly appears to have bounced back from the mini-scandal; 2015 sales grew 6.4 percent from the previous year to $811.1 million. The majority of the company’s operations take place in the United States, and likewise, the majority of sales also take place in the United States. Both the launches of the Integrated Global Alignment (iGA) spine surgery platform and Reline comprehensive posterior fixation system helped stimulate 10 percent U.S. sales growth in the fourth quarter of 2015—nearly the best U.S. results in years. On the international front, per the company report, NuVasive is “continuing to invest in [its] expansion of international efforts with the focus on European, Asia-Pacific, and Latin American markets.”

NuVasive’s Spine Surgery business, which produces thoracolumbar and cervical offerings, IOM services, and disposables, garnered $678 million in revenue in FY 2015. This 7 percent bump over the year prior stemmed from the continued adoption of minimally invasive procedures for spine, which expanded the company’s procedure volume. In addition, increased international market acceptance continued to drive revenue growth.

“Proper alignment is the most correlative element of successful, long-term surgical outcomes,” NuVasive’s President and Chief Operating Officer Pat Miles commented regarding the launch of the company’s iGA system product line, introduced during the 83rd American Association of Neurological Surgeons annual meeting in May 2015. The iGA system portends to transform spine surgery and address alignment, with the integration of procedural technology and tools into one platform. The iGA platform’s product arsenal consists of posterior fixation, anterior and posterior implants, updated neuromonitoring, and computer-assisted surgical planning technology. Newly launched products for the iGA system include ReLine (posterior fixation); NuvaMap and NuvaLine (pre- and post-op fixation tools); NuvaMap O.R. (real-time intraoperative assessment); and Bendini (computer-assisted spinal rod bending).

In October, the company’s X-Core Mini Cervical Corpectomy System, an expandable titanium vertebral body replacement device for improved stability following a corpectomy, was granted U.S. Food and Drug Administration (FDA) 510(k) clearance. The FDA nod gave NuVasive a small page in the history books; X-Core represented the first ever 510(k) clearance of a cervical corpectomy cage. “The X-Core Mini system allows the surgeon a choice of endcaps and core diameters, ensuring each construct is optimized to best address each patient’s individual surgical needs,” Dr. Neill Wright, a neurosurgeon practicing at Barnes Jewish Hospital in St. Louis, Mo., said in a company release. “I have used X-Core Mini in degenerative, neoplastic, traumatic, and infectious cases. With so many options of size and endcap, in each case, from the more common single level to the rare five-level corpectomy, the X-Core Mini has fit perfectly and simply.” X-Core Mini must be used with FDA-cleared supplemental fixation, which includes the newly released Archon Reconstruction Corpectomy plate.

In December 2015, in order to expand manufacturing of spinal implants and instruments, the company announced its new medical device facility would be located in West Carrollton, Ohio, a stone’s throw from its existing Dayton, Ohio plant. The new facility expects to employ about 300 full-time positions, including engineers, skilled machinists, process development specialists, and validation specialists. The approximately 130,000-square-foot facility will house 100 CNC machine tools, CMM inspection equipment, and cleanroom operations.

The Biologics business, which includes an array of grafts designed to supplement the spinal fusion or bone healing process, did not quite live up to the impressive 12 percent growth it had achieved in the 2014 fiscal year. The segment’s $132.2 million in sales represented a mere 2 percent bump from the year prior. Additionally, in February 2016, NuVasive completed its $380 million acquisition of Ellipse Technologies. It now operates under the newly-created NuVasive Specialized Orthopedics division The segment’s main product line is the MAGEC (MAGnetic External Control) platform, an expandable growing rod that is noninvasively distracted after implantation, via an external magnetic remote controller.

Back in 2008, Medtronic plc filed suit against NuVasive, asserting that some of the company’s products infringed upon Medtronic’s U.S. patents. In 2011, the first verdict awarded about $102 million in damages—which comprised of lost profits, the sale of ancillary or “convoyed” products, and royalties—to be paid to Medtronic. NuVasive successfully appealed this decision in March 2015, retaining the ruling but overturning the damage award. At the time, the company expected a retrial to occur. However, in June 2016 Medtronic and NuVasive reached a settlement, for which NuVasive will make a one-time payment of $45 million to Medtronic, then release each other from liabilities arising from the litigation. The companies also agreed to certain licenses and other rights, such as a patent litigation standstill and dispute resolution process to address future patent infringement accusations.

“We are very pleased to have negotiated a mutually agreeable settlement that removes the ongoing burden of this litigation and provides for a framework for resolution of potential patent disputes in the future,” Lucier said in a company statement.

$762 Million
NO. of EMPLOYEES: 1,500

Talk about a shakeup. The current executive team at NuVasive looks distinctly different than the leadership team that finished up fiscal 2014. The changes came in 2015 when an independent investigation uncovered still-unclear below-the-board practices in relation to expense reimbursement and personnel practices by ex-CEO Alex Lukianov. He resigned on April 1 (not, unfortunately, a joke) without comment, leaving it to Independent Board Director Jack R. Blair to make a diplomatic statement in his wake.

“The results of an independent investigation overseen by the board of directors revealed that Alex had not complied with certain of the company’s expense reimbursement and personnel policies,” Blair said. “Although the amounts involved appear to be immaterial to the company’s financial results, his actions in this regard were not representative of the high standards by which NuVasive operates.”

At the time, Greg Lucier, a member of the company’s board of directors since 2013, was appointed interim CEO; he has since been instated permanently in the office.

But the executive changes didn’t begin and end with Lukianov. His departure came three months after Chief Operating Officer (COO) Keith C. Valentine unexpectedly left the company after a 14 year career with NuVasive. He left, according to Lukianov, to “explore different career options” and “fulfill long-held professional aspirations.” At this time, then-president of Global Products and Services Pat Miles took over the role of COO.

In July, the company announced a major restructuring of the executive team. Six positions were filled and a new one—chief information officer—was created (as of publication, the position has not been filled). Notably, Quentin Blackford took over the chief financial officer role from Michael J. Lambert, who retired in 2014.

But enough about 2015. Full-year revenue for FY14 (ended Dec. 31), at $762.4 million, bested 2013 by 11.3 percent. On a non-GAAP basis, the company reported net income of $57.5 million, or $1.16 per share, for the full year 2014 compared to net income of $57.4 million, or $1.23 per share, for the full year 2013. Cash, cash equivalents and short and long-term marketable securities were approximately $405.8 million on Dec. 31. The company generated $19.1 million in cash flows from operations and invested $12.7 million in capital expenditures, yielding $6.3 million for the fourth quarter 2014 in free cash flow, defined as operating cash flow less capital expenditures. The company generated $115.5 million in cash flows from operations and invested $58.2 million in capital expenditures, yielding $57.4 million for the full year 2014 in free cash flow. Total revenues increased $77.2 million in 2014 compared to 2013 and $64.9 million in 2013 compared to 2012, representing total revenue growth of 11 percent and 10 percent, respectively.

Spine Surgery products remain NuVasive’s bread and butter (it claims to be the third largest spine company in the world), bringing in $590.4 million in revenue for 2014, an 11 percent increase over 2013. The company’s Biologics portfolio brought in $129.6 million in revenue, a 10.8 percent increase; and Monitoring Service products increased revenues by 8 percent over 2013, bringing in $42.4 million.

Growth in Monitoring Services was a big improvement over the 1 percent growth between 2012 and 2013; the increase in revenue in 2014 was primarily from increased medical billing collections and volume. The increase between 2012 to 2013 was offset by unfavorable changes in reimbursement rates, the company reported. The growth spurt was undoubtedly also boosted by the June release of the NVM5 V2.0, a next generation monitoring platform with computer-assisted surgery applications. The platform hosts a comprehensive set of intraoperative technologies specifically designed for spine surgery, including the sensory monitoring modality for multimodality monitoring of the spinal cord and peripheral nerves, as well as refinements to the spinal rod-bending technology called Bendini (released in 2013).

The NVM5 system, intended for intraoperative neurophysiologic monitoring during spinal surgery, provides information directly to the surgeon to help assess a patient’s neurophysiologic status. It does so by electrically stimulating nerves via electrodes located on surgical accessories and monitoring electromyography, transcranial motor evoked potential, or somatosensory evoked potential responses of nerves. The system also integrates Bendini software used to locate spinal implant instrumentation for the placement of spinal rods.

NuVasive’s Spine Surgery product line offerings, which include thoracolumbar products, cervical product offerings and disposables, are primarily used to enable access to the spine and to perform restorative and fusion procedures in a minimally disruptive fashion. The Biologic product line offerings include allograft (donated human tissue), Formagraft (a collagen synthetic product), Osteocel Plus and Osteocel Pro (each an allograft cellular matrix containing viable mesenchymal stem cells, or MSCs), and Attrax (a synthetic bone graft material), all of which are used to aid the spinal fusion or bone healing process. The Monitoring Service line offering includes hospital-based revenues and net patient service revenues related to intraoperative neurophysiological monitoring services performed.

According to NuVasive, the continued adoption of minimally invasive procedures for spine has led to the expansion of its procedure volume. Increased market acceptance in the company’s international markets reportedly contributed to the increase in revenues for FY14 (although the company did not report revenues broken down by geographical region). At the end of last year, the company reported that it expected continued adoption of its minimally invasive procedures and deeper penetration into existing accounts and international markets. However, the continued consolidation and increased purchasing power of NuVasive’s hospital customers and group purchasing organizations; physician-owned distributorships; recent changes in the public and private insurance markets regarding reimbursement; and ongoing U.S. policy and legislative changes made the lumbar portion of the spine market less predictable and have limited the domestic spine market’s procedural growth rate. Based on these factors, NuVasive’s outlook for 2015 was that its growth in would come primarily from share gains in the shift toward less invasive spinal surgery and international growth.

Notable Milestones

April 2014 marked the one-year anniversary of NuVasive’s Japan office in Tokyo. The location was opened when the company earned Japanese regulatory Shonin approval for several products supportive of the Extreme lateral interbody fusion (XLIF) surgical procedure in 2013. Since then the center has trained surgeons on the minimally invasive procedure and treated thousands of patients as well.

Also in 2014, NuVasive’s charitable foundation, the NuVasive Spine Foundation, reached a cumulative milestone of more than $13 million contributed since the Foundation’s inception in 2009. As of September last year, NuVasive had donated approximately $10.5 million in surgical products through its non-profit arm. The Foundation’s philanthropy started by providing surgical services to a village in Nairobi and grew over five years to support 65 surgical mission trips to patients in 23 countries including Ethiopia, Syria, Turkey, Romania, Belize, India, Zimbabwe and Kenya. In addition to organizing the surgeons who volunteer their time and expertise to further the NSF mission, the Foundation also emphasizes “expertise transfer” to ensure that surgeons in disadvantaged communities are able to create self-sustaining spinal surgery programs once a mission trip concludes. Last year’s annual golf tournament fundraiser raised more than $370,000, exceeding the target amount of $300,000 and the foundation’s previous record of $230,000 for the same event in 2013. The number of yearly missions has more than doubled since 2011 and the Foundation is on track to expand its program development, NuVasive reported.

Finally, NuVasive also received a favorable settlement in one of its ongoing lawsuits in 2014. The company filed a lawsuit against Kennewick, Wash.-based Cadwell Laboratories Inc. in 2012 regarding one of NuVasive’s neuromonitoring technology patents. It asserted that Cadwell infringed on certain parts of the patent, including the integration of nerve monitoring technology during lateral approach spine surgery. As part of the settlement reached between the parties, Cadwell agreed to exit the lateral spine surgery market, and to no longer provide products, services, or support for lateral approach spine fusion surgeries. In addition, certain of Cadwell’s future products that rely on NuVasive patented technology may be required to openly attribute intellectual property ownership to NuVasive and may require a 5 percent fee paid to NuVasive.

The neuromonitoring technology in question was previously validated in litigation between NuVasive and Medtronic plc. In 2011 a jury awarded monetary damages and back royalty payments to NuVasive in favor of the company’s claim that Medtronic’s NIM-Eclipse System infringed upon NuVasive’s neuromonitoring technology patent.

$685 Million
NO. OF EMPLOYEES: 1,358

The words still echo in Bill Walton’s head, replaying like a broken record: “…And future waits for all who stay, With some success made yesterday…Tomorrow you must try once more, And even harder than before.” Or, “It’s not so important who starts the game but who finishes it.”

Such was the wisdom UCLA Bruins legendary coach John Wooden regularly imparted on his team in the early 1970s to teach players the dedication, discipline and focus they would need to forge successful careers. He had dozens of sayings—“Do not mistake activity for achievement,” “When you are through learning, you are through,” and “Happiness begins where selfishness ends,” to cite just a few—each designed to help prepare his student athletes for the post-academic world.

At 61, Walton can no longer remember all of Wooden’s aphorisms—too much time has passed since his last on-court lecture. Besides, his mind only rehashes those pertaining to faith and perseverance, a testament perhaps, to the principles he holds most dear. Walton has often employed Wooden’s counsel in both areas over the last 40 years to overcome the darkest periods of his life.

Indeed, it was Wooden’s words that helped Walton play through his fear of never again playing basketball (the “perfect game,” in his eyes), and overcoming a stutter to become an Emmy-winning color commentator for the National Basketball Association (NBA)—his speech impediment was reportedly so severe that Walton refrained from saying “hello” or “thank you” until he was 28 years old.

Wooden’s tutelage also inspired Walton to battle through 37 surgeries to fix the congenital foot and spinal defects that forced him to retire from the sport and nearly drove him to suicide in recent years.

“When my life became overwhelmed with chronic pain, Coach Wooden’s life lessons became even more important to me and ultimately helped me push through the toughest times I have ever had to face,” Walton noted in a 16-page brochure outlining his recovery from life-altering back pain, aptly titled “Back in the Game.”

Walton’s physical deterioration began in his senior year of college, during a game against the Washington State Cougars in which he was “low-bridged” and flipped over in mid-air by an opponent. The 6-foot, 11-inch center landed flat on his back, fracturing two vertebrae on the hard gymnasium floor—a devastating injury that sparked his long-term relationship with pain.

“Things were never the same again,” Walton recalled in his brochure.

Not by a longshot. In fact, life gradually grew worse: Walton’s faltering frame—once a source of national pride—began failing him regularly, causing him to miss more games (680) than he played (488) during his 14-year tenure with the NBA. He spent 17 years as an NBA commentator for ABC, ESPN, NBC, CBS, Fox, MSNBC, Turner Sports and KCAL before his bad back finally got the best of him.

“One day in early 2007 I was getting off another endless flight to San Diego and I literally couldn’t move anymore. I couldn’t walk. I couldn’t sit, stand, lie down, sleep, roll over, or get up or down, much less even think. My joyous life was quickly reduced to nothing,” the Naismith Memorial Basketball Hall of Famer wrote. “I tried everything to stop the unrelenting, debilitating, excruciating pain. Nothing worked…my life was so limited, so painful, so endlessly empty, I thought about ending it. I found myself thinking about bridges. I was looking for the highest ones, with the longest of falls and the hardest of bottoms.”

Being confined to the floor, of course, ruled out suicide by bridge. Faced with no other options, Walton reluctantly agreed to undergo a minimally invasive surgical procedure pioneered by spinal device manufacturer NuVasive Inc. The eXtreme Lateral Interbody Fusion technique, or XLIF for short, accesses the spine from the side rather than the front or back, mitigating injury or trauma to nerves, muscles and blood vessels, and facilitating faster healing (six weeks vs. six months for traditional approaches). XLIF procedures also take considerably less time to complete—as little as one hour compared with five for conventional methods—thereby reducing hospital costs.

XLIF incorporates two systems developed by NuVasive: the MaXcess and NVJJB/M5 systems, the former providing better visualization as well as increased angulation and instrument positioning compared to non-MIS approaches, while the latter monitors the patient’s nerve activity throughout the procedure to ensure safe implant placement.

The novelty of NuVasive’s XLIF technique as well as demand for risk-reducing procedures and devices has propelled the San Diego, Calif.-based firm to fourth runner-up in the $8.2 billion global spine market race. Executives, however, believe the crown is within reach based on their estimates of 55 percent growth in minimally invasive spinal surgeries by 2021—a number disputed by Research and Markets, which forecasts a 4 percent compound annual growth rate ($8.7 billion) by 2018.

Regardless, the opportunity to move up the pecking order is prompting NuVasive to chase its dream of becoming a $1 billion “spine powerhouse” with operating margins of 20 percent or better over the next several years.

That dream shouldn’t be too hard to achieve, considering the company is more than halfway to its goal. In 2013, total revenue grew 10.5 percent to $685.1 million and gross profit jumped 8.1 percent to $504.6 million, according to the company’s 2013 annual report. Net income more than doubled to $7.9 million, with per share income swelling from 7 cents in 2012 to 18 cents last year.

Solid gains in each of NuVasive’s three product lines likely drove the growth. Spine Surgery device sales swelled 12.5 percent to $530.3 million, while Biologics proceeds climbed 5 percent to $115.6 million and Monitoring Service revenues rose 0.72 percent to $39.1 million.

“Financial results in 2013 exceeded our expectations,” Chairman/CEO Alexis V. Lukianov told investors in the annual report. “Every one of our major product groups outperformed their targets. We generated a non-GAAP operating margin of almost 15 percent, which was ahead of our expectations in spite of numerous cost headwinds that surfaced over the course of the year. We also generated cash from operations of close to $100 million and non-GAAP earnings of $57.4 million, or $1.23 per share. [Our] 2013 results demonstrate that our market share-taking strategy is thriving. Importantly, we are cultivating the drivers that will support top and bottom-line growth for many years to come.”

One of those drivers is globalization. NuVasive steadily has grown its international presence, with foreign sales surging 44 percent last year to $64.8 million. The company beefed up its offshore footprint by appointing an exclusive Argentinian distributor and tasked its individual country leaders with developing new market opportunities in Germany, Italy, Spain and the United Kingdom. NuVasive relocated and expanded its U.K. office, adding offices, warehousing capabilities and space for staff training and surgeon events.

The company further infiltrated the Japanese market last year by opening an office in Tokyo (headed by Takaaki Tanaka, executive vice president of Asia-Pacific) and winning Shonin approval for both its XLIF technique and Precept system, part of the company’s line of minimally disruptive posterior fixation solutions. The Precept system consists of various polyaxial screws, reduction screws, offset connectors, rods, locking nuts and transverse connectors. The implant components can be rigidly locked into various configurations to suit patients’ individual pathologies and anatomical conditions.

NuVasive claims the system offers ease-of-use, advanced compression/distraction systems and instruments that help improve patient outcomes.

The launches likely will help NuVasive gain shares in Japan’s pedicle screw systems market, a sector that is expected to nearly double to $662 million in the next four years.

“With the approval and launch of Precept, we can introduce Japanese surgeons to additional innovation within our portfolio of procedurally integrated spine solutions,” Lukianov said in announcing the Japan’s first Precept posterior surgeries. “We have our sights set on changing spine surgery and improving patient outcomes in Japan, an exciting new market for us.”

NuVasive remained true to its other markets as well. In May, it released its Maximum Access surgery posterior lumbar interbody fusion (MAS PLIF) procedure internationally, enabling surgeons in Australia, Switzerland, Italy, Germany and the United Kingdom to access the procedure. The system reportedly avoids the need to retract back muscles as wide laterally as a traditional, or “open” PLIF, thereby allowing a smaller incision and reducing the amount of muscle disruption, which helps patients recover faster.

Last fall, the firm rewarded its home market (where revenues climbed 7.8 percent to $620.3 million) with the XLIF Decade plate and an anterior column realignment (ACR) procedure for anterior lumbar interbody fusion (ALIF).

The XLIF Decade plate system provides a comprehensive stabilization solution with four points of fixation for enhanced biomechanical rigidity and load sharing, according to NuVasive. It is designed for the XLIF approach and contoured specifically for the MaXcess IV retractor and CoRoent XL family of implants.

The ALIF ACR procedure corrects the sagittal plane imbalance that can result from advanced degeneration. The product gives surgeons a less invasive approach to achieve the same balance as with traditional techniques. Conventional ALIF implants offer only 8 degrees to 15 degrees of lordosis, but the implants developed for the ALIF ACR procedure offer 20 degree and 30 degree hyperlordotic footprints, potentially improving sagittal balance restoration capabilities.

Besides boosting its international presence last year, NuVasive also ramped up its vertical integration efforts, acquiring one of its major suppliers for $4.5 million. The deal for Dayton, Ohio-based spine implant manufacturer ANC LLC gives the firm a total of 35,000 square feet of manufacturing space and the capability of turning and milling most of its titanium parts. The additional proficiencies will help increase the company’s operational leverage by increasing speed to market and improving the deployment of its resources.

$620 Million
NO. OF EMPLOYEES: 1,173

The American Dream has had a great run. For the better part of 80 years, the Dream served as a beacon of hope, a source of both inspiration and courage to those seeking better lives for themselves and/or their families. It has assumed a variety of identities over the course of its lifetime—encouragement for the disheartened, unification for the divided, comfort for the insecure—but has been an amorphous idea since colonial times.

NuVasive’s cadaveric labs (one is in San Diego, Calif., the other in Paramus, N.J.) are used for extensive hands–on surgeon education and training. Image courtesy of NuVasive Inc.

“The American Dream is a haunting place, but what it means has never been entirely clear,” New York Times book reviewer Orville Prescott noted in a late 1950s commentary. “Some people think it was a vision of a classless society of equal opportunity where every boy could aspire to be president. Others, more cynical of mind, believe it was a dream of individual escape from an unsatisfactory present to a future of success, wealth and happiness in a land where the streets were said to be paved with gold…”

In its early years, the Dream was a mix of both: an asylum for victims of prejudice as well as a utopia for the downtrodden. Much like a religion, the Dream has infiltrated our national psyche, influencing our world views and daily decisions; it’s become as much a part of our cultural DNA as the freedoms granted by our founding fathers.

Over the last few decades, however, (especially since the Great Recession) the Dream has become more of a myth than a reality. Research indicates that income disparity steadily has grown since 1980, with considerable increases in “permanent inequality” (the advantaged becoming permanently better off and the disadvantaged becoming permanently worse off). Specifically, only 58 percent of Americans born into the bottom fifth of income earners move out of that category and just 6 percent eventually make it to the top, according to Brookings Institution data.

That kind of longshot has eroded Americans’ faith in their dream: Only half of U.S. adults still believe in the merits of hard work (courtesy of Gallup) and a mere 45 percent are confident they can improve their economic position (Associated Press). “…in the U.S., the mood is sour,” Time Editor-at-Large Fareed Zakaria wrote in a 2010 column after returning from a trip to his native India. “Indians are brimming with hope and faith in the future … the can-do country is convinced that it can’t.”

Maybe so, but Americans remain surprisingly loyal to their Dream. A 2012 Pew Charitable Trust study found that 70.4 percent of U.S. residents consider the American Dream either “very much” or “somewhat” alive, and 67.5 percent believe they have achieved the Dream or will reach it within their lifetime.

Among the disciples is NuVasive Inc. Chairman/CEO Alexis V. Lukianov. “NuVasive embodies the American dream,” Lukianov wrote in a June 2012 editorial for The San Diego Union-Tribune on the 2.3 percent medical device excise tax. “In just 13 years, we’ve grown from simply having an idea as a startup backed by venture capital to becoming a market leader and the fifth-largest company in the global spine market.”

Quite an impressive feat, considering the cavalcade of market hurdles the company has had to overcome in recent years, namely pricing pressures, escalating surgical costs and shrinking reimbursement rates. Lukianov will encounter those same headwinds as he attempts to fulfill his next Dream—generating $1 billion in sales and becoming the industry’s third-largest spinal company.

Lukianov’s firm is more than halfway to his goal, having grown sales 14.7 percent last year to $620.2 million. Gross profit climbed 9 percent to $466.8 million and GAAP (generally accepted accounting principles) operating margin was 6 percent.

NuVasive experienced significant gains in all three product categories, with its monitoring service line (which includes hospital-based revenues and intra-operative monitoring solution proceeds) more than quadrupling to $38.8 million. Biologics product sales swelled 10.4 percent to $110.1 million and spine surgery devices—those for the thoracolumbar and cervical spine as well as motion preservation products—climbed 9.3 percent to $471.1 million, according to the firm’s 2012 annual report.

Executives reported solid growth of the company’s signature eXtreme Lateral Interbody Fusion portfolio, which allow surgeons to access the spine for a fusion procedure from the side of the patient’s body rather than from the front or back.

Growth generally was consistent throughout the calendar year, though NuVasive stumbled a bit in the third quarter as sales force departures and physician-owned distributors (PODs) curbed domestic lumbar and biologics as well as overall monitoring service proceeds, ultimately forcing executives to lower the company’s third-quarter guidance by 4.5 percent.

“What happened in the third quarter is that [customer loss] accelerated, and the account churn took place in a number of larger accounts that we lost, together with the reps,” Lukianov told investors during a third-quarter conference call. “They’re going to PODs, or really being taken out in terms of our ability to work with them through smaller, very aggressive companies.”

PODs have become more prevalent in the healthcare industry recently; Lukianov estimates they currently represent as much as 15 percent of the U.S. spine market. The entities, regardless of their owners, act as intermediaries between device makers and hospitals: In exchange for marketing and stocking devices, the distributors receive a certain percentage of each sale. Surgeon owners pocket that commission and potentially can create a monopoly, as they often influence hospitals’ equipment purchases.

PODs can be legal, depending on their structure. But in March, the U.S. Department of Health and Human Services’ Office of Inspector General issued a special fraud alert about the entities, warning that they “pose dangers to patient safety” by inducing surgeons to perform more procedures than necessary and to favor devices from which they profit over more “clinically appropriate” ones.

The strongly worded alert has prompted many hospitals throughout the country to reassess their business relationships with PODs and restrict the purchase of medical devices from such entities. The edicts came from HCA Corp.; Providence Health & Services, a not-for-profit system with institutions in Alaska, California, Montana, Oregon and Washington; Tromball Regional Medical Center in Tromball, Texas; and Martin Memorial Health Systems in Stuart, Fla., among others.

Proponents of PODs contend they save the healthcare system money by selling their products to hospitals for considerably less money than OEMs. But critics claim the practice clearly presents a conflict of interest for surgeons and should be monitored closely by federal investigators. Companies such as Medtronic Inc., for example, purposely have distanced themselves from PODs—Chairman and CEO Omar Ishrak told investors last fall that his company considers the distributors to be inappropriate and generally would avoid them unless they become “really big.”

“If it becomes really big, then that means there’s some level of acceptance, in which case we need to re-examine our business model in that area and change our strategy,” he noted. “But clearly, if it gets really big, it’s something we have to pay attention to.”

Lukianov is taking a different approach to PODs, choosing to educate doctors, hospitals, surgical societies and elected officials of the ethical issues at stake. Executives also are attempting to raise awareness of the distributors’ potential to stifle spinal research and development.

Despite its struggles with PODs and the poaching of its sales force, NuVasive turned in a decent performance in Q3, posting $2.4 million in profit, or 5 cents per share, on sales of $148.4 million during the three months ended Sept. 30, 2012. The figures represent a market turnaround from losses of $67.6 million, or $1.69 per share, during the third quarter of 2011.

The company reversed its fortunes in Q4, increasing its sales force by 17 members and making three executive appointments. Lukianov named Matt Link executive vice president of U.S. sales; Russell Powers executive vice president of international sales; and Scott Durall executive vice president of strategic sales and operations.

Also fueling NuVasive’s fourth-quarter fortunes was the U.S. Food and Drug Administration’s October approval of its PCM Cervical Disc System, a technology the firm acquired in 2009 with the $80 million purchase of Cervitech. Bigwigs expect the product to generate nearly $200 million and drain market share from both Medtronic and DePuy Synthes. Wells Fargo analyst Larry Biegelsen predicts modest PCM sales over the next five years, with the product tripling in sales through 2016 and capturing roughly 10 percent of the market.

“The PCM Cervical Disc is a game-changing solution for the cervical spine,” Lukianov said. “This device has many design considerations that make it a unique product offering compared to other cervical motion preserving devices. Its low-profile design enables it to be minimally disruptive to the adjacent anatomy and a viable treatment option for levels adjacent to prior fusions.”

The first PCM Cervical Disc surgery occurred shortly before Christmas, around the same time the company received Japanese approval for two of its titanium alloy devices—the CoRoent Large Impacted and CoRoent Large Tapered implants. Both are used in posterior spine fusion procedures; they are the firm’s first two interbody fusion cages to be approved in Japan.

The mid-December infusion of $62.5 million from a restricted escrow account completed NuVasive’s pre-holiday bonanza. The money had been set aside in June 2011 to compensate Ventura, Calif.-based Neurovision Medical Products Inc., for alleged patent infringement. Last fall, however, a federal appeals court reversed the trial division’s decision (NuVasive’s attorney insisted the judge “fundamentally misunderstood trademark law” and “exhibited hostility toward counsel in front of the jury.”). Neurovision failed to contest the appeals court ruling last year, thereby forfeiting the cash.

$540 Million
NO. OF EMPLOYEES: 1,500

If you ask NuVasive Inc. employees for the secret to the company’s success, they’re likely to repeat the firm’s mantra it takes the combination of “speed of innovation; absolute responsiveness; and superior clinical outcomes.” That’s pretty much a winning formula in any medical device manufacturer’s book, but it’s not easy to get all those proverbial parts moving in the same direction. At least a little something must be working well with a 13 percent increase in revenue for fiscal 2011 (ended Dec. 31, 2011).

It’s no secret that the Southern California-based spinal firm aggressively has been chasing market share. By the company’s estimates, it is the fifth-largest player in the nearly $8 billion global spine market.

“We have our sights set on becoming a $1 billion ‘start up,’ where we can offer the speed and passion of a start up, with the experience and resources of a larger company,” CEO Alex Lukianov said.

They’re a little more than halfway there. Sales for the fiscal year were just shy of $541 million (which put it—for the first time—on Orthopedic Design & Technology’s Top 10 list).

The company’s principal product offering is based on its Maximum Access Surgery (MAS) platform, which is designed to minimize soft tissue disruption during spine surgery with improved visualization and safe, and reproducibility for the surgeon; a proprietary software-driven nerve avoidance system and intra-operative monitoring support; MaXcess, a unique split-blade retractor system; a variety of specialized implants; and several biologic fusion enhancers. With the MAS platform’s lateral approach, which is dubbed eXtreme Lateral Interbody Fusion (XLIF), NuVasive has built an entire spine franchise. At present, the company has more than 70 products spanning lumbar, thoracic and cervical applications.

Gross profit for the full year 2011 was $428 million and gross margin was 79.3 percent, compared to a gross profit of $393 million and gross margin of 82.2 percent for the full year 2010. Full year 2011 operating expenses were $513 million compared to $361 million reported for 2010. The higher operating expenses in 2011 resulted primarily from a charge related to intellectual property litigation, an intangible asset impairment charge, and additional costs associated with higher revenue and infrastructure expansion. On the basis of generally accepted accounting principles, the company reported a net loss of nearly $70 million, or $1.73 per share for the full year 2011. Cash, cash equivalents and short and long-term marketable securities were $342 million at the end of the year.

Many of the current market challenges in the U.S. spine market are the result of several commercial insurance providers increasing the level of scrutiny and the enforcement of criteria necessary for spine patients to receive reimbursement preauthorization for lumbar fusion procedures.

To further expand its reach—in addition to a robust research and development budget—NuVasive acquired Columbia, Md.-based Impulse Monitoring Inc. in October, which provides the firm with a comprehensive intra-operative monitoring (IOM) solution. NuVasive paid $80 million, ($40 million in cash and $40 million in stock).

“The integration of Impulse will open up an incremental per procedure revenue opportunity in a market that is growing about 15 percent annually, and while that aspect alone is encouraging, the strategic rationale behind the combination will play out over the long term,” said Lukianov at the time the deal was announced. “Our team of neurophysiologists, who are exceptionally valued members of their operating room teams, can help surgeons fundamentally appreciate the power of integrated neuromonitoring and our highly differentiated and broad product portfolio. Combined with our focus on superior clinical outcomes, we believe this strategy will drive surgeon conversion and accelerate our ability to take market share.”

Intra-operative monitoring technology allows procedural detection of neurological problems and identification of functional neural structures during surgeries that involve spine; cardio; ear, nose and throat; brain; and general orthopedic. The IOM model employs highly trained neurophysiologists located in the operating room who function as part of the surgical team, assisting with patient preparation, administering neuro-diagnostic testing, and working in partnership with supervising physicians who provide real time interpretation of the neurophysiological data. Neuromonitoring of the spine was 80 percent of Impulse Monitoring’s case volume.

This acquisition will add to NuVasive’s NeuroVision nerve monitoring system, which is designed for discreet and directional nerve avoidance and detection, making lateral access to the spine during the XLIF procedure safer and more reproducible.

According to NuVasive there is $800 million market for intra-operative monitoring. Today, only 50 percent of spine procedures undergo IOM. Over the next several years, the market for outsourced IOM is expected to grow approximately 15 percent annually, the firm predicts.

In 2011, the company launched the next generation of its MaXcess retractor (a split-blade design retraction system providing what the company claims is improved surgical access to the spine) with integrated neuromonitoring; a software upgrade for NeuroVision nerve avoidance system; and a series of new indication-specific implants, including the X-Core expandable cage for corpectomies (a surgical procedure that involves removing part of the vertebral body—or corpus vertebrae in Latin, hence the name corpectomy—usually as a way to decompress the spinal cord and nerves).

You usually can’t have increased sales without a strong sales force. NuVasive’s increased its sales force in 2011, adding more sales representatives both domestically and internationally. With a footprint in more than 35 countries, 2011 marked the first year that the company’s international operations broke even from a profitability perspective. NuVasive is now in the second-largest spine market outside of the United States with operations in Japan, which began in this year. In addition to corporate headquarters in San Diego, the company has additional offices in Memphis, Tenn.; Paramus, N.J.; Puerto Rico; the United Kingdom; Germany; Australia; Singapore; and Malaysia.

During the year NuVasive licensed to Centennial, Colo.-based AlloSource certain intellectual property related to bone growth products containing endogenous mesenchymal stem cells. The license and royalty agreement allows AlloSource to distribute its AlloStem allograft cellular product. The agreement includes restrictions against AlloSource distributing into the spine market with a major partner other than NuVasive. AlloSource currently processes Osteocel Plus for NuVasive. AlloSource is a non-profit company that offers more than 200 precise bone, skin, soft-tissue and custom-machined allografts for use in an array of life-saving and life-enhancing medical procedures. It provides cartilage tissue used for joint repair and skin allografts to heal severe burns, and is one of the largest tissue networks, as well as the largest processor of live cellular bone growth substitutes.

Not all the news was rosy during the year, however. Medtronic won a $101.2 million jury award in a patent-infringement trial against NuVasive. The federal jury also held Medtronic liable for $660,000 in damages to NuVasive for infringing one of its patents. In a two-week trial, Warsaw Orthopedic Inc., a unit of Minneapolis-based Medtronic, accused NuVasive of infringing three patents for implants capable of being inserted trans-laterally between adjacent vertebrae, a plate and screw system used to stabilize vertebrae in the cervical spine and a tissue retractor, according to court filings. Though NuVasive leadership insisted they hadn’t copied anything and vowed to challenge the verdict, NuVasive’s requests to overturn the Sept. 20 jury verdict or order a new trial was denied by the court. The damages awarded to Medtronic were the 18th-largest jury award in the United States in 2011 and the fourth-largest in a patent-infringement claim, according to data compiled by Bloomberg. The judge, however, denied Medtronic’s request for a permanent injunction barring NuVasive from selling the devices found to infringe its patents. He also left intact the jury’s award of $660,000 in damages to NuVasive for Medtronic’s infringement of one of its patents.

In 2012, NuVasive—along with most of the medical device industry—has been active and vocal in its opposition of the 2.3 percent excise tax slated to take effect in 2013 as part of the healthcare reform legislation passed in 2010 and recently upheld by the U.S. Supreme Court. Lukianov recently wrote an op-ed for the San Diego Union Tribune newspaper highlighting the damage the medical device tax and universal healthcare reportedly would do to his company. Lukianov wrote that 100 percent of R&D is currently done within the United States, as well as 90 percent of all manufacturing. He added that he might need to layoff 200 of his 1,500 employees in 2013, and potentially move parts of his R&D and manufacturing process to more tax-favorable countries.