San Diego Business Journal

San Diego medical device maker NuVasive Inc. announced Tuesday that it will acquire Aliso Viejo-based Ellipse Technologies Inc. in a deal worth $410 million.

The deal includes a $380 million upfront cash payment and a potential $30 million milestone payment, which may become payable in 2017 if certain revenue targets are met.

NuVasive, which makes devices for spinal surgery, stated that the acquisition will accelerate its revenue growth within one year.

Ellipse is the developer and marketer of magnetically adjustable implant systems for a broad spectrum of spinal and orthopedic applications.

“The acquisition of Ellipse will aggressively insert NuVasive into early onset and idiopathic scoliosis, an important and attractive part of the spinal deformity market for NuVasive where we have tremendous opportunities for accelerated growth,” said Greg Lucier, CEO and chairman of NuVasive, in a statement.

“Additionally," Lucier said, "this investment expands NuVasive's footprint into new niche markets with highly differentiated technology that, when coupled with our market-making expertise, will be strategically applied in other spine and orthopedic applications, including degenerative spine disease, trauma and knee osteoarthritis. Ellipse's robust product pipeline also enhances internal development and licensing opportunities for NuVasive.”

In 2015, Ellipse had revenues of about $40 million compared with $26 million in 2014, a 54 percent year-over-year growth, according to a NuVasive news release. For 2016, Ellipse's revenues are expected to be about $60 million.

NuVasive’s acquisition of Ellipse is expected to close by the end of February 2016, and the company expects to fund the acquisition with existing cash on hand.

After the closing of the transaction, NuVasive plans to maintain a Design Center of Excellence in Aliso Viejo, where Ellipse is headquartered, according to the release. Ellipse’s president and CEO, Edmund Roschak, will join NuVasive as a member of the NuVasive executive leadership team reporting directly to Lucier.