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NuVasive CEO Backs Views Of Spinal-Market Pressure, Outlook

By Jon Kamp Of DOW JONES NEWSWIRES The top official at spinal-device maker NuVasive Inc. (NUVA) on Wednesday stood by his recent assessment that health insurers are raising higher hurdles and slowing the market for certain spinal-fusion procedures, and he backed recently lowered forecasts for the rest of this year and 2011. NuVasive Chief Executive Alex Lukianov also had some comments about industry heavyweight Medtronic Inc. (MDT), where Lukianov's counterpart--Bill Hawkins--has said he disagrees with NuVasive's recently stated views. Medtronic is "underestimating what is happening," Lukianov said, while speaking at a Piper Jaffray health-care conference. NuVasive in late October lowered the low end of its 2011 sales growth forecast while cutting its 2010 earnings and sales guidance. The reductions followed some outlook cuts just six weeks earlier. The San Diego-based company blamed insurers pushing back more against spinal-fusion procedures to treat lower back pain without pain radiating out to other places, while saying there was a spillover effect slowing other procedures as well. The conditions are "pretty much the same," Lukianov said Wednesday, with no improvement. "We're seeing a lot of pushback," he said. He added that criteria for getting patients pre-approved for surgery "is definitely more stringent" and has slowed the market, with surgeons that used to be booked for three to four months now booked for just one month. All of this is what the company anticipated when it most recently lowered guidance, and it hasn't seen anything since "that would make us deviate from that," Lukianov said. The company's current outlook includes sales growth of 10% to 20% next year amid expectations the spinal market overall won't grow at all from a revenue perspective. That forecast entails expectations procedure volumes could increase a bit, but sliding product prices would offset that and lead to a flat market overall. While NuVasive lowered guidance twice within a short span and called out more severe pushback from insurers, Medtronic has had a different perspective. The company reported results last week for a fiscal quarter that ran through October while saying it has seen stability in the overall market following a dip this summer. While Medtronic's spinal business is much bigger than NuVasive, and the companies have many differences in terms of products and market areas they serve, Medtronic's CEO has disagreed with NuVasive's views on more aggressive insurer pushback. "I don't know what compelled them to be so dramatic," Hawkins said in a recent interview. NuVasive's Lukianov said Wednesday that Medtronic is off base, and had some pointed comments of his own. "I don't know where they get their information from," Lukianov said. "We get ours directly from the field. We're not a division of a division of a division." A Medtronic spokesman said Wednesday that the company stands by its recent comments. Elsewhere in the market, Michael Mahoney, who heads Johnson & Johnson's (JNJ) DePuy franchise, said Wednesday that he expects the 10% to 15% of the spinal market that involves procedures insurers are targeting to continue getting challenged next year. But, also speaking at the Piper Jaffray conference, Mahoney said he expects an overall market growth rate of zero to 2% next year following flat performance this year, indicating things could get slightly better following a year when the market slowed significantly. DePuy, J&J's orthopedics business, is the health-care conglomerate's largest medical-devices franchise. NuVasive shares recently traded down 5 cents to $23.31 and are off 27% on the year. -By Jon Kamp, Dow Jones Newswires; 617-654-6728;

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