Monday, November 1, 2010

Black Friday

           When Black Friday comes, I'll stand down by the door
      And catch the gray men when they dive from the fourteenth floor,
             When Black Friday comes, I'll collect everything I'm owned
              And before my friends find out I'll be on the road

                                                                            Steely Dan
      
 
Yes fellow bloggers Friday, October 29th, 2010 felt a little like Black Friday for our friends the Purple
People Eaters, aka NuVasive.   TSB did not see any NuVa executives jumping out of fourteenth floor windows, primarily because there are no fourteenth floor windows at corporate.  Based on the latest earnings call NuVa’s stock dropped 28.84%, the equivalent of $10.56 per share, closing at 26.05, with an oh sooooooooooo slight rebound this morning.


In retrospect, NuVa’s full year guidance has caught up with the company, not only due to the economy, but also because of the uncertainty as to where healthcare is going.  It's funny how times have changed.  A year ago Lukianov was telling the market and investors that based on feedback from surgeons, things were not slowing up.  In April of this year,  Lukianov discussed how NuVasive’s focus was to become the most creative spine technology company in the world  vis-à-vis speed and innovation.  Unfortunately, like the rest of the market, NuVa is now learning that even with a state-of-the art educational program and facility, this downturn is bigger than the both of us.  In addition, forecasting is more art than science, and unfortunately the economic canvass is creating angst for expansion.   Guidance of $480 to $500 million may be a thing of the past.  But this doesn’t mean that they won’t come close.  Unfortunately, coming close is like coming in fifth in the trifecta, and everyone knows that when you woo the Street , sometimes it comes back to bite you, as it did NuVa on Friday.

NuVasive is no longer the only show in town when it comes to lateral access devices. Yet, the XLif still has history and tenure.  Unfortunately, squatters are proliferating a segment of the industry that was abandoned or unoccupied with the exception of NuVa.   Granted NuVasive has flexed its corporate prowess with XLif, but eventually steroids take their toll.  So how low will they go?  In all likelihood, the stock will rebound.  But will it ever rebound to the highest of highs is the $500 million dollar question?  NuVa will finish strong, just shy of their revenue objective.  But, the question must be asked, did Alex bite off more than he could chew?  Or, is he much shrewder than we even give him credit for?   TSB wants to know what our readers think? 

56 comments:

  1. Have you all gone mad with envy? You know, just because a company missed its guidance by a measly $2 million doesn't mean the company is tanking. NuVa is still outperforming almost every other spine company in the industry. 27% growth was pretty a darn good number last time I checked. Am I wrong?

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  2. Not only did the company cut its full-year revenue guidance, it adjusted EPS guidance down 9 to 12 percent. Shrewd? That's funny. Shrewd executives don't miss guidance by 12 percent.

    Contributing to the slide is the federal court in California that dealt the company a $60 million setback in a trademark infringement lawsuit by NeuroVision Medical Products. Undoubtedly, Tinky Winky will appeal the verdict, but that's a hefty blow to such a small company.

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  3. To put things in perspective, 60 million is a lot more than what Synthes got from Globus for theft. I guess it's not only the health care system which is in need of an overhaul. 27% growth yoy, nice. However, Wall street seems to be looking at virtually no growth Q2/Q3, and two downward forecast adjustments within 2 months...

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  4. it's way more than guidance. The entire tone of the call was as if the company hit a severe air-pocket and did not have a clue as to how far the plane would drop...it was especially embarassing that 2 weeks previous there had been an "analyst day" and absolutely NO forwarning given then.

    The cockroach theory is at play here now. I'm afraid the convertible notes will get called and NUVA will have a $200 mio immediate IOU knocking at the door. What is going on here is more than "the market"...just watch.

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  5. when will the shareholder lawsuits commence? Come on, the company did not foresee any of this? I don't buy it. The conference call was gut wrenching. Iwanted to tell the russian to shut-up. It was painful the lack of knowledge, the guesswork, the portrayal of bewilderment.

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  6. It's about time NuVa is knocked off of the purple pedistal. The convertible notes will no doubt be called and NuVa is going to have a $225 million IOU to deal with, plus the 60 million in lawsuits that they just lost. It ain't pretty in the purple block of San Diego. I would certainly start looking if you work here, it is only going downhill. They had their ride though.

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  7. it's way more than guidance. The entire tone of the call was as if the company hit a severe air-pocket and did not have a clue as to how far the plane would drop..

    Black Friday ads

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  8. Black Friday hitting other companies also...

    Anyone know whats going on with Arthrocare Spine??? They let got of their direct reps and word is that the entire place is being run by two guys??? They just received FDA clearance to market their vetebroplasty as a Kyphoplasty system..

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  9. As a vested shareholder and former Globus rep. I recieved a letter from Globus mgmt (Dave Demski) That Globus had a 19% increase in sales Q2 09 v Q2 10. I dont have the letter in front of me as I am travleing but if anyone is interested I will post the specifics of the letter when I return home in 2 days. IPO has been put off indefinetly and that may be a good thing quite honestly.

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  10. Anyone care to guess why so many top field managers and top income-achieving reps have departed Nuva voluntarily over the last 30 days?

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  11. Where are they going?

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  12. We saw the writing on the wall. The NuVa train has ended and for some of us, it was a great ride. For the ones that stay, good luck, it isn't going to be pretty.

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  13. Agree with the above poster. This is about 20% market and 80% NuVa. It sure is easy to blame this on the market and again, it might have a small something to do with it, but the majority is NuVa. Sit back and watch. I have not ever worked at NuVa but know a top rep that just quit, it is going to be a massive ammount of people leaving and NuVa's dreams of 500 million is down the drain. The call was the most gut wrenching call I have heard, and I have been on all top 10 spine company calls this quarter. It was scary, embarrassing, and seemed as though things are much worse than they are even making it out to be. If you are a rep here, I would start looking. It is bad guys.

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  14. One year ago TSB spoke about the challenge of carrying convertible debt, in addition how NuVa was placing too much stress on XLif and NV, but like our readers, that was my opinion, and considering that I do not work for NuVasive, what would I know? I have sat next to many investors that have questioned this company's structural make-up, its a wonder that it took this long. But like TSB said, what do I know? What we will find out is whether the elastic band theory works in spine like it does in earthquakes. Stay tuned.

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  15. Their unique product offering is no longer unique. What they are selling is a costly technology with no comparative data. They are reaching the limits of surgeon consulting/relations. With the pressures of cost containment and the increasing benefits of posterior-only surgery, I dont see a long-term future for lateral access platforms.

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  16. Keep it coming NuVa haters! For the rest of you, now might be a good time to buy up some extremely undervalued stock. Power to the purple!!

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  17. 2:02, you couldn't be more wrong. Lateral access surgery is growing like wild-fire all across the country. It has absolutely changed the face of spine surgery as we know it, and it is not going away. Please, provide us with the clinical data supporting your statement about "increasing benefits of posterior-only surgery". Would love to see that.

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  18. NuVa is doing pretty darn good in my area. They seem to be slipping checks into a lot of pockets out here.

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  19. globus sales were up 12% 2nd qtr over year ago qtr. 19% for first 6 months over prior year. message here is that things are slowing down dramatically. what i found very interesting was the letter for q2 was dated october 20th. they know what q3 was, yet didnt put it in the letter, it must have been bad. lost a key distributor and several reps turned over. DP screwed the pooch, should have sold a couple of years ago. with nuva stock dropping like a rock, and the environment the way it is, will globus ever get an ipo out the door. i think they will negotiate a sale to somebody. alot of folks are getting nervous about getting their money.....

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  20. Synthes has negative sales growth for the year in the -10% range.

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  21. Hey Sherlock - where did you get the info on Synthes?

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  22. Globus gained about 6 mil back of the 13mil they lost through that distributor by signing two 3mil + Synthes reps on the west coast

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  23. Globus has been taking quiet a bit of Nuva's business over the last two to three months. I personally know of about $8 million they will be losing and that's just 4 to 5 surgeons in Florida and Texas. Can't imagine what else is happening across the country...
    Yes spine has slowed down but they should have seen that coming, what they weren't expecting was the response to Globus' system...
    Hence the law suit..

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  24. 5:48 How much of their current business does a rep typically bring over with them? I heard it averages around 30%. Maybe different in CA with no enforceable Non-competes, but it seems a lot of business would gets lost in the typical year NC.

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  25. Sometimes people spend too much time focusing on the front of the car, rather than the direction their driving, until someone hits them, and then its too late. This might be a typical example of hit and run. Now it's going to cost Nuvasive millions in legal fees. Great leaders anticipate. When a company starts to sue everyone in its way, you end up taking your eye off the ball.

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  26. ATEC spanked Q2, NUVA spanked Q3, yet both these companies increased YOY and QOQ. Who's next? Credit to NUVA they did grow with great marketing, labs, and agreements. But too many eggs in one basket and not meeting numbers cracks the humpty dumpty russian. Yeah that's it EGGSLIFT and how do you want your monitoring? Poached, scrambled, sunnyside up, or overeasy? Can't sell those pretty purple easter eggs same price anymore in the good ole USA; how do you think you can sell them to us in Europe? Cheerio Mates

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  27. I guess we're not competing in a Zero-Sum Market, EY?
    (Canadian version for HEY)

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  28. Sounds like spine needs a new darling. NUVA is a hasbeen.

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  29. ATEC anyone?? Not!!

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  30. TSB:

    " When Black Friday falls you know its got to be, don't let it fall on me."

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  31. Perhaps Alex should have been a bit more focused on Nuvasive's business earlier in the year instead of spending so much time promoting his stake in the broadway show "Memphis",,??

    Maybe THEN he would have seen this coming,,

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  32. Does anyone know why Globus reps around the country are dusting off their resume's?

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  33. Perhaps because they suck in the biologics area?

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  34. Who is the new darling?

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  35. Keep your eye on K2!

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  36. If it goes something like. "Keep your eye on Company X!" Its somewhat obvious you are a shill for Company X.

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  37. "Hide yo surgeons, hide yo reps, and hide yo mid-level management kus we're stealin' everybody up in here!"

    ~Globus

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  38. Hahaha! Keep your eye on Harrington rods! Retro is in!

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  39. Keep your eye on the "Glow-Bus" man and everyone will ride to the promised land.

    ~D.Paul

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  40. DP should have taken Globus public 2 yrs ago. Now he's lost his #1 distributor, reps are leaving in droves, morale is low, everyone hates the CFO Demski, sales are flat, doctors are getting impatient about their promised payouts. They won't stick around too much longer. DP waited too long.

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  41. The conference call was brutal. Anyone with skin in the spine game or specifically NUVA should listen.

    I don't know how you could believe anything from these guys after this discussion.

    Replay is at 1-877--870-5176, with dialin PIN of 357132. Should be up until November 11.

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  42. The sole purpose of nuva exec's (I say this term loosely) was to skim the cream until the cow was dry. They're rich now...who cares.

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  43. I couldn't have said it better myself:

    http://stocks.investopedia.com/stock-analysis/2010/NuVasive-Stumbles-Investors-Get-A-Concussion-NUVA-SYK-MDT-EW-MASI-VOLC-IART1102.aspx?partner=YahooSA

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  44. The Memphis Mafia

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  45. next cockroaches to show up on the kitchen counter-top....the convertible note and a couple shareholder lawsuits...these will go nicely with the trademark infringement suit and the IP litigation...

    does anyone know how many lawyers NUVA retains?

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  46. can anyone rule out chapter 11 here? Why would another device company buy NUVA? Somehow I see a buyout as the only way this doesn't go out of business. I know it sounds crazy, but what is to keep NUVA afloat? There are many, many alternatives to back surgery and when it is necessary, there seems to be many alternatives to XLIF...whether they are posterior, anterior or a "generic" lateral. The convertible plus trademark infringment plus potential IP infringement...who would buy this bucket of headaches? and if not bought, why could NUVA (not) get "litigated" into oblivion? You can buy alot of competitive litigation firepower for less than the cost to buy this company...

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  47. hey 9:26, I have worked for Globus for over 2 years, our area is growing in triple digits (without a single consultant or surgeon royalty deal) and very few guys have left recently that I am sad to see go. Ansari was a loss, but Nick did good for himself. Can't blame the guy. He did a lot of good for GMI and left when the right deal came his way. Good for him!

    Demski hated? Easy to bitch about maybe, but hated? If you work, know what the f#*% you are talking about and get it done at the end of the month/quarter/year.....he leaves you alone to run your business. He is also the only CEO that I have ever worked for that will pick up the phone when you have a question and congratulate you when you kick ass.

    Globus is no different than any other of the big spine focused companies I have worked for, with the exception that we produce FASTER than anyone. Somebody tell me which of the companies over $250mil annual sales hasn't got a few consultants, royalty deals and "grants" out there pumping up their strongest docs?

    Lots of crickets on that one.

    All the Synthes guys bitch, but in the end, all you have to do is walk into one of the teaching institutions they pump money into and you will see how their "ethical" behavior gets the business.

    What the two guys that talked about the growth failed to correlate was that GLOBUS GREW 19%....anyone else see that growth? Nobody I have heard of except some small companies that sold $100k last year and sold $200k this year.

    Grow up boys and girls. Globus is here to stay and we are coming after your business and solid reps with better products.

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  48. That's quite an endorsement for a company founded and built on theft and deceit. And your observation about having "a few consultants, deals and "grants" is funny. I think you just reset the definition for 'a few'. Those 'few' are now becoming the restless many as they wait for their payday.

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  49. Hey 12:28 you must have scraped your knees and developed blisters after that one. Are you going to produce a Robin Young like video for the blog showing the love affair that you have with Demski. You sound like Rudy Guliani when you describe the consultancy deals at Globus as a "few." LATYTTB!

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  50. LOL @ 12:28 Glad you are so full of compliments about your CEO Demski. Perhaps hated was too strong a word, but he certainly isn't respected. Cheats on his wife (who got him the job @ Globus) with a sales rep who's now preggers by him Not exactly a sign of high character. Nice to hear you're so high on him, though. I'm sure you won't protest when he goes after your wife next.

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  51. This is my target
    - http://astore.amazon.com/shopping.black.friday-20/detail/B002M3SOC4
    - http://astore.amazon.com/buy.tv.black.friday-20/detail/B0039213XY
    - http://astore.amazon.com/best.buy.black.friday.2010-20/detail/B003G2ZKMC

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  52. Is that really true, did Demski get a sales rep preggers? Say it ain't so!

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  53. Yes, they live together even though he's still married. Class act.

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  54. Demski sounds like a real card, but David Paul should be selling slurpees, not Medical parts.

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