DEFA14A: Globus Medical to Acquire Nevro Corp. for $5.85 Per Share in All-Cash Deal

Globus Medical will acquire Nevro in an all-cash transaction for $5.85 per share, aiming to expand treatment options for patients and create a combined medical technology leader.

Summary

• Globus Medical and Nevro Corp. have entered into a definitive agreement for Globus Medical to acquire all shares of Nevro in an all-cash transaction.
• Globus Medical will acquire all shares of Nevro for $5.85 per share, representing a total equity value of approximately $250 million.
• The transaction is expected to close late in the second quarter of 2025, pending shareholder and regulatory approvals.
• Globus Medical reaffirms its 2025 net sales guidance of $2.66 billion to $2.69 billion on a stand-alone basis.
• Following the acquisition, Globus Medical anticipates 2025 net sales of $2.80 billion to $2.90 billion and fully diluted non-GAAP earnings per share range between $3.10 to $3.40.
• Globus Medical expects the Nevro acquisition to be accretive to its earnings in the second year of operation.
• Nevro announced preliminary 2024 worldwide revenue of $408 million to $409 million.
• The $5.85 per share consideration represents a 27% premium to the 90-day volume-weighted average price (VWAP) of $4.61, a 38% premium to the 30-day VWAP of $4.23, and a 17% premium to Nevro's closing market price on February 5, 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The acquisition is presented as a strategic move that will benefit both companies and their stakeholders. While there are risks associated with the transaction, the overall tone is optimistic about the future prospects of the combined entity.

Positives

• The acquisition is expected to expand Globus Medical's presence into new markets and provide access to differentiated technologies.
• Globus Medical believes its size and operational capabilities will accelerate market penetration of Nevro's technology.
• The combined company is expected to offer clinically superior relief to patients suffering from chronic pain.
• Globus Medical anticipates the acquisition will enhance profitability and create long-term value.
• The acquisition is expected to strengthen the combined company's ability to develop and offer innovative products.

Negatives

• The acquisition is subject to shareholder and regulatory approvals, and customary closing conditions, which could delay or prevent the transaction.
• Globus Medical's earnings per share are expected to be diluted in 2025 following the consummation of the transaction.
• The integration of Nevro's business may present risks and costs.
• The transaction is subject to the risk of competing offers or acquisition proposals for Nevro.

Risks

• The proposed transaction may not be completed in a timely manner or at all.
• Required regulatory approvals may not be obtained, may be delayed, or may be subject to unanticipated conditions.
• The approval of Nevro's stockholders may not be obtained.
• The anticipated benefits of the proposed transaction may not be realized.
• Competing offers or acquisition proposals for Nevro may be made.
• Various conditions to the consummation of the merger may not be satisfied or waived.
• An event, change, or other circumstance could give rise to the termination of the merger agreement.
• The announcement or pendency of the merger could affect Nevro's ability to retain and hire key personnel, or its operating results and business generally.

Future Outlook

Globus Medical anticipates 2025 net sales of $2.80 billion to $2.90 billion and fully diluted non-GAAP earnings per share range between $3.10 to $3.40 following the consummation of the transaction. Globus Medical expects the Nevro acquisition to be accretive to its earnings in the second year of operation.

Management Comments

• Dan Scavilla, President and CEO of Globus Medical, stated that the transaction furthers their mission to become the preeminent musculoskeletal technology company and will enable them to expand into new markets.
• Kevin Thornal, Nevro's CEO and President, said that joining Globus Medical will allow them to reach more patients globally with clinically proven, innovative products.

Industry Context

The acquisition reflects a trend of consolidation in the medical device industry, with larger companies seeking to expand their product portfolios and market reach through strategic acquisitions. Globus Medical's acquisition of Nevro allows it to enter the neuromodulation market and offer a broader range of solutions for musculoskeletal conditions and chronic pain management.

Comparison to Industry Standards

• Globus Medical's acquisition of Nevro is similar to other strategic acquisitions in the medical device industry, such as Medtronic's acquisition of Mazor Robotics and Stryker's acquisition of K2M Group Holdings.
• These acquisitions aim to combine complementary technologies and expand market share in competitive segments.
• The $250 million deal value and the premium offered to Nevro's shareholders are within the typical range for acquisitions of medical device companies with similar revenue profiles.
• The expected accretion to Globus Medical's earnings in the second year of operation is a common goal for strategic acquisitions in the industry.

Stakeholder Impact

• Shareholders of Nevro will receive $5.85 per share in cash.
• Patients are expected to benefit from expanded treatment options and clinically superior relief from chronic pain.
• Employees of Nevro may experience changes as a result of the integration with Globus Medical.
• Suppliers and customers of both companies are expected to continue their relationships with the combined entity.

Next Steps

• Nevro will hold a special stockholder meeting to obtain approval for the proposed transaction.
• The companies will seek regulatory approval for the transaction.
• The companies will work to satisfy other customary closing conditions.
• Globus Medical expects to report full financial results for 2024 and provide its updated financial outlook for 2025 during its scheduled earnings announcement on February 20, 2025.
• Nevro expects to report its full-year 2024 financial results on March 4, 2025.

Key Dates

Keywords

acquisition, merger, Globus Medical, Nevro Corp, musculoskeletal, neuromodulation, chronic pain, spinal cord stimulation, SCS, SI joint fusion