UPDATED April 1, 2015, with analysts’ comments, share performance.
NuVasive Inc. (NSDQ:NUVA) said today that it ousted longtime chairman & CEO Alex Lukianov over violations of its internal expense account and personnel policies, naming board member Greg Lucier interim CEO and chairman while it looks for a replacement.
Lead independent director Jack Blair said an outside investigation found that Lukianov "had not complied with certain of the company’s expense reimbursement and personnel policies."
"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. We believe this leadership transition is appropriate and in the best interests of the company and all of our stakeholders. We appreciate the positive contributions Alex has made to the company and wish him well in his future endeavors," Blair said in prepared remarks.
Lukianov resigned effective March 27, the company said, but will stay on as a consultant and advisor through September 2016. He’s in line to receive $1.4 million in severance and consulting fees plus the continued vesting of his outstanding equity awards, NuVasive said.
Lucier, a board member at San Diego-based NuVasive since 2013, is the former chairman & CEO of Life Technologies, acquired last year by Thermo Fisher Scientific for $13.6 billion. The news sent NUVA shares down 3.0% to$44.72 apiece in mid-day activity today.
Blair said Lucier’s experience makes him the "ideal choice" for chairman & interim CEO.
"As a director since 2013, Greg has gained a solid understanding of NuVasive’s strategy, business and priorities moving forward. As the former chairman & CEO of Life Technologies and a GE Healthcare (NYSE:GE) executive before that, Greg also brings extensive experience in growing companies into globally competitive organizations, particularly within the healthcare and biotechnology markets. Together with our dedicated senior management team, we are confident that Greg’s leadership will ensure a smooth transition," Blair said.
"I look forward to working with the NuVasive Board and management team in this expanded role. I have great confidence in the company’s senior management team, strategic direction and opportunities that lie ahead. NuVasive benefits from an experienced team, which shares a commitment to improving patient outcomes by providing our surgeon customers with the most innovative procedural offerings," Lucier added. "The company’s strengths have enabled NuVasive to become the #3 player in the global spine market. Going forward, we will remain focused on market share-taking strategies that have been responsible for driving double-digit revenue growth. At the same time, we will continue to leverage meaningful scale and efficiencies in our business, which are translating to both accelerated profit growth and strong free cash flow. All of us at NuVasive are committed to executing against our strategic priorities to ensure we build on our record of growth and value creation."
NuVasive also said it expects to report 1st-quarter revenues of more than $190 million and is "on track" to meet its profit goal for 2015. Analysts are looking for revenues of $189.3 million.
Analysts said Lukianov’s ouster could make NuVasive a more palatable takeover target.
"Undoubtedly, some will read into this management transition as a sign of increased take-out prospects. NUVA has been consistently talked about as a take-out, but perhaps less of a willing seller under Mr. Lukianov’s tenure. Therefore, we expect NUVA could now be considered an asset more likely to be in play under a new CEO," Leerink Partners analyst Richard Newitter wrote in a note to investors today. "NUVA management will likely remain very focused in the near-term on its goals of driving more profitable sales growth and greater shareholder value as a standalone company. That said, consolidation in orthopedics is happening (i.e. ZMH (OP) / Biomet), and spine is an area ripe for further acquisition activity in our view. Against this backdrop, the fact that NUVA has always been considered a take-out target – not to mention newly appointed interim CEO Lucier’s history of selling companies (i.e., Life Technologies) – we would not be surprised if discussion around a NUVA takeout begins to more aggressively heat up."
"On 1 had, we view Lukianov’s departure as a loss since we believe that he was the face of NUVA and instrumental in building it into the #3 spine company. On the other hand, we believe that an acquisition of NUVA may now be more likely with Lukianov out of the picture," echoed Needham &Co.’s Nike Matson.
Material from Reuters was used in this report.