Who knew you could make a $1 million guaranteed salary selling
spinal surgery products? Apparently not medical device company
), which told investors yesterday that it has lost 14 sales
representatives since July to competitors that guaranteed
salaries between $600,000 and $1 million. That's one of the
reasons NuVasive shares are down some 35% in less than 48
The dive started when NuVasive's cut third-quarter revenue
forecasts by about 4.5% to $147 million and listed some alarming
reasons for the miss. The company sells devices used in a type of
spinal surgery aimed at getting patients out of bed very quickly,
and competitors are selling similar products more cheaply. And
several big accounts walked out the door recently along with
those sales reps.
Rep stealing is common practice in any industry, but it's
particularly fierce in the low growth world of medical devices.
points out, it grew by poaching reps from larger companies.
NUVA Revenue TTM
NuVasive blamed smaller, not larger, competitors for the
recent poaching. The company competes fiercely with Orthofix
) and Globus Medical (
), which went public in August.
For the record, NuVasive has no intention of matching those
salary guarantees, which CEO Alex Lukianov calls "absurd and
ludicrous." (His total pay was $6.1 million last year, so he
knows of what he speaks.)
"We're not going to play that game," he said, although he said
he couldn't "give confidence" that reps won't continue to defect.
He just expects it all to end soon. "There's only so many
$800,000 checks one can write."
That's a nice stance for
but not necessarily a good one for market share, which NuVasive
is in the midst of a concerted effort to build. Still, several
analysts that follow NuVasive have been unexpectedly sanguine
about the rather incredible share price decline. Noting
international expansion plans and limits to the poaching problem,
analysts at both William Blair & Co. and Canaccord Genuity
reiterated buy or overweight ratings on the shares.
Still, if investing in a small cap in a competitive business
makes you nervous, you might want to look into a job in the
Dee Gill is an editor for the
YCharts Pro Investor Service
which includes professional