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NuVasive Takes Steps toward Insourcing Goal with Acquisition of New Site

NuVasive advanced its effort to move 100 percent of its manufacturing in-house with the acquisition of a site in West Carrollton, Ohio. 
 
NuVasive executives announced the insourcing goal in August, stating that vertical integration of its manufacturing offers the greatest opportunity to hit NuVasive’s goal of a 20 percent operating margin ratio as it drives to $1 billion in revenue. The company expects 400 bps of gross margin improvement with ~100 bps improvements in 2016 and ~150 bps in both 2018 and 2019, according to Wells Fargo analysts.*
 
NuVasive plans to invest ~$45 million over the next 24 months to build out and equip the 160,000-square-foot facility, which is located ~30 miles from the site acquired through a $4.5 million purchase of ANC in 2013.
 
Commercial scale production is expected to begin by the end of 2016. When at full scale, the facility is expected to employ 300 full-time staff and house approximately 100 CNC machine tools, CMM inspection equipment and a clean room.  
 
NuVasive competitors Alphatec Spine and Globus Medical also recently announced strategic manufacturing initiatives. 
 
 
*100 bps = 1%
We realize that basis point (bps) is rarely found in our reporting. Analysts use it as a more stable number to demonstrate percentage growth/decline, and here we found the context to be appropriate.

 

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