Saturday, January 30, 2010

Party on the West Coast, Dark Clouds on the East Coast

The timing could not have been worse. As NuVasive was getting ready to kick off their NSM this week, the market was reacting to concerns as to what is happening in the spine industry and specifically XLIF. TSB received many unusual calls from investors concerned about what was going on at the company. With a 52 week high of $45.06 and a low of $24.17 one can understand why NuVa has investors wondering.

I'm sure as all the NuVa employees were sitting anxiously awaiting the arrival of the Emcee, the old 70's song "Everything Is Beautiful" by Ray Stevens was playing in the background. It was a great year for Lukianov and his band of gypsies. There was a lot of chest pumping and high fives along with confidence that 2010 will be the year of the Purple People Eaters. PT Barnum and Barney would be proud. Revenue guidance for 2010 of 30-35% growth or $480-$500 million takes some "cohonies" considering that the guidance for the industry has been adjusted by the analysts to meet the challenging environment in the healthcare industry, let alone the economy. As "cockey" as Lukianov is, he should go to bed praying that the insurance industry doesn't further continue to sink its teeth into coverage for XLIF. We are sure that if he is as savvy as he is, NuVa is in the war room weighing every option in the event the worm turns. Potentially, a request can be made by the carriers to modify the ICD-9 and CPT Codes for this procedure. NASS has already jumped into this melee to defend its members and NuVa. Would we expect otherwise?

But here is the bigger question: Will surgeons that are pressed by the insurance industry want to defend every XLIF procedure that they perform to ensure that their post-op dictation match the definition of an ALIF? TSB finds it hard to believe that no-one hasn't been denied reimbursement for XLIF when Lukianov himself stated in his conference call that this is a "local" not national issue, but that's old news and we all know that Alex can perform the aztec two-step better than anyone in the business. Regardless of the "dog and pony" act, analysts need to calm down since NuVa is not going anywhere. If they have one achilles heel, it is that XLIF has carried the burden of getting this company to where it is. And you know what my grand-daddy use to say, "you can only milk one cow for so long and then you run out of milk." If NuVa is as intelligent as we believe they are, they are looking at the option of using the Xtreme lateral approach for lumbar disc arthroplasty and how to beef up their portfolio. Let's face it, outside of XLIF what else is there?

You know what they say, "he isn't making $9 million a year because he's stupid." TSB wants to know what our readers have heard on the street? In addition, we would love to have some surgeons weigh in on the debate.

8 comments:

  1. Will it make a difference if NUVA develops an anterior lumbar disc replacement that can be implanted from the lateral approach? I don't think so. First of all lumbar disc replacements are not getting reimbursed, except for workman's comp or if you are a physician doing the implants in a government owned military hospital. Just because the lateral approach to the anterior lumbar spine is different it is the same procedure based on the codes and the final placement of the implant used as the anterior approach. Some insurance companies are not paying for the XLIF because the codes are ALIF codes even though the end result of the implant placement is identical. Even if NUVA establishes codes for the lateral approach the lumbar total disc is dying if not dead. This would not really help them expand thier portfolio.

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  2. I agree, lateral disc access? Who cares? Show me the results, not another cult marketing plan. And with the top three spine companies each having a lateral access system, what does that do to NUVAs 35% growth in 2010? My prediction is 2010 is the year NUVAs heat cools down.

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  3. Nuvasive is at risk as a one-trick pony but where they separate themselves is with training. When compared to all companies and distributors outside of the big 4, they're one of the few that actually focus on training. I work with many distributors and reps in the independent channel and am embarrassed by how many can't read films, don't know anatomy, can't problem solve and think it's their God-given right to earn big $$. My experience with young Nuvasive reps is at least they've been pretty well trained. As long as there are so many reps in surgery that were selling copiers 4 weeks ago, well-trained, professionals will always be able to differentiate their products and themselves.

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  4. To me it looks like 2010 is the year Nuvasive heats up...

    The big companies must care enough (smell the opportunity) to follow Nuvasive into the lateral market. With Nuvasive the market leader in lateral surgery (can these companies offer, or have experience with, procedures involving thoracic approaches? Corpectomies for tumor and trauma? How do these companies bypass the lumbar plexus for traditional lumbar approaches? When will they have a lateral disc? And the questions go on...

    With a growing bag of innovative and much needed traditional technologies coupled with, as the other anonymous poster stated, talented representation, it seems NuVasive is well positioned to keep climbing up the charts and advancing medicine.

    Give credit where credit is due.

    Thank you for the blog MS Man...

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  5. A lateral disc is not the answer as long as lumbar TDR keeps getting denied by insurance, and, when it is covered, it pays less than half that of ALIF/TLIF. That's the cold hard business perspective.

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  6. Seems like Nuvasive's profit and ranking is upsetting a LOT of people!!! While no company is perfect,let's give credit to companies which grown 38% in 2009 despite the negative economic climate.This only means more jobs for Americans and a better country for ALL.God bless

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  7. I sat in an Emerging Technology Meeting in DC 5 years ago and was first introducted to XLIF. On that day, manylaughed looking down from their mountain top of traditional fusion business. Since that time, NuVasive has gone all in with their pursuit of changing the paradigm in spine. Let's give credit where credit is due. There were no "NuVasive" docs back then . . . their growth has come at the conversion of competitive business. Fact is this . . . they have made themsleves into a feared competitior. The big 4 have taken notice and are now scrambling to just enter the market, let alone keep up. NuVasive is here to stay . . . most likely at the expense of Stryker, then Synthes and Depuy . . . and one day may go hunting for the big dog (MSD). It will be interesting to watch.

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  8. Just out of curiosity how many consulting surgeons does NuVasive have on their payroll?

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