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NuVasive to Acquire Ellipse Technologies

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NuVasive (NUVA) entered into a definitive agreement to acquire Ellipse Technologies for US $380MM in cash, with a potential $30MM milestone payable in 2017. The transaction is slated to close in mid-1Q16. Ellipse posted 2015 revenue of ~$40MM, +54% vs. 2014.

Founded in 2005, Ellipse markets a platform of magnetically-adjustable implant systems based on its MAGnetic External Control (MAGEC®) technology, namely, MAGEC−EOS spinal bracing and distraction for treatment of early onset scoliosis and the PRECICE® limb lengthening system. The company had filed for its IPO in early 4Q15. (Read additional highlights from 2010 and onward for the MAGEC and PRECICE systems.)

Ellipse's implants are adjustable at the time of implantation and are distracted, non-invasively and remotely, over the course of treatment as patients heal, grow or age. This represents entry into the early onset and idiopathic scoliosis treatment arena, for NUVA, and could lead to partnerships in the treatment of trauma and knee OA.

Ellipse products have been used to treat >5,000 patients worldwide. Ex-U.S. revenues comprised ~45% and ~37% of 2014 and 2015 total revenue, respectively. For 2016, Ellipse's revenues are expected to be ~$60MM pro forma.

NuVasive expects the acquisition to accelerate its revenue growth toward the high-single-digit range within the first 12 months. ORTHOWORLD estimates a 9.5 sales multiple for the transaction based on 2015 sales, or 6.3 based on 2016 estimated pro forma revenue.

Source: NuVasive, Inc.