Globus Medical GMED has entered into a definitive agreement to acquire Nevro Corp. NVRO in an all-cash transaction valued at approximately $250 million. Under the terms of the agreement, unanimously approved by the boards of directors of both companies, Globus Medical will acquire all shares of Nevro for $5.85 per share.
The 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 Feb. 5, 2025. The transaction is expected to close late in the second quarter of 2025, subject to the approval of Nevro’s shareholders, regulatory approval and other customary closing conditions.
Potential Trend of GMED Stock Following the News
Since the announcement on Feb. 6, shares of Globus Medical have dropped 0.6%, closing at $87.38 yesterday. On a positive note, the company is gaining market share in the musculoskeletal solutions space, fueled by the strong performance of its implantable devices, biologics, accessories and unique surgical instruments used in spinal, orthopedic and neurosurgical procedures. Reflecting on the robust synergies from the NuVasive merger, we anticipate that the latest news should positively impact the market sentiment toward GMED stock.
Globus Medical has a market capitalization of $11.93 billion. Going by the Zacks Consensus Estimate, the company’s 2024 revenues are expected to surge 59.4% year over year. In the trailing four quarters, it delivered an average earnings surprise of 17.7%.
Importance of GMED’s New Acquisition
The transaction furthers Globus Medical’s goal of becoming the preeminent musculoskeletal technology company in the world. Nevro’s comprehensive HFX spinal cord stimulation (SCS) platform includes the Senza SCS system and support services for the treatment of chronic pain of the trunk and limb and painful diabetic neuropathy. The company also provides minimally invasive treatment options for patients suffering from chronic sacroiliac joint pain.
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According to a key GMED spokesperson, the deal allows them to expand into new markets for future growth while gaining access to Nevro’s world-class, differentiated technologies that can provide significant benefits in neuromodulation, enabling technologies and future implant solutions. Furthermore, the company’s scale and operational discipline will help optimize Nevro’s financial performance, driving enhanced profitability and creating long-term value.
Upon the completion of the transaction, as planned, Globus Medical projects net sales of $2.80 billion to $2.90 billion and fully diluted non-GAAP earnings per share (EPS) between $3.10 and $3.40 for 2025. Meanwhile, on a stand-alone basis, the company has reaffirmed a full-year net sales outlook of $2.66 billion-$2.69 billion and non-GAAP EPS within the $3.40-$3.50 range. The Nevro acquisition is expected to be accretive to GMED’s earnings in the second year of operation.
Industry Prospects Favoring GMED Stock
Per a research report, the global orthopedic devices market was valued at $59.4 billion in 2023 and is expected to witness a compound annual rate of 5.3% through 2032. The market’s growth is being driven by the rising prevalence of osteoporosis and musculoskeletal diseases, growing technological advancements, the increasing incidence of sports and traumatic injuries and the growing aging population.
More Developments at Globus Medical
In November 2024, Globus Medical announced the commercial launch of the ExcelsiusHub navigation system, extending the capabilities and reach of the ExcelsiusHub technologies. It is designed to elevate the standard for freehand navigation, which provides surgeons with real-time visualization of instrument placement to reduce the reliance on X-ray imaging during spine surgery.
GMED Stock Price Performance
In the past year, shares of GMED have surged 67% compared with the industry’s rise of 7.7%.
GMED’s Zacks Rank and Key Picks
Globus Medical currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Phibro Animal Health PAHC and Penumbra PEN. Each of them carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Phibro Animal Health’s shares have surged 115.4% in the past year. Estimates for the company’s fiscal 2025 EPS have increased 4.3% to $1.69 in the past 30 days. PAHC’s earnings beat estimates in each of the trailing four quarters, the average surprise being 27.1%. In the last reported quarter, it posted an earnings surprise of 28.6%.
Estimates for Penumbra’s 2024 earnings per share have remained constant at $2.81 in the past 30 days. Shares of the company have fallen 3.3% in the past year against the industry’s 7.7% rise. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.5%. In the last reported quarter, it delivered an earnings surprise of 23.2%.
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