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Spinal-device maker NuVasive Inc. (NUVA) lowered part of its forecast for 2011 sales growth Thursday, following a reduction just six weeks ago, while citing a downturn in procedural growth linked to health insurers pushing back more aggressively against certain spinal-fusion procedures.
NuVasive now sees sales growth of 10% to 20% next year, Alex Lukianov, the company's chairman and chief executive, said on a conference call Thursday. That is down from the 15% to 20% range projected in September and the 25% to 30% growth range projected before then.
Shares of the San Diego-based company plunged late Thursday, when it also reduced guidance for the current year. They recently traded down 25% to $27.40 after hours.
The spinal-device maker continues to grow much faster than a market where growth has dropped off precipitously over several quarter, pressured in part by declining product prices. NuVasive hasn't been immune to the market challenges, but its less-invasive devices used in spinal-fusion surgery have fueled market-share gains and rapid growth.
Other companies including Johnson & Johnson (JNJ) and Medtronic Inc. (MDT) have also reported pushback from insurers, which are raising hurdles to get certain surgery requests cleared, as a contributing factor hurting the market. But at the mid-September analyst meeting, Lukianov indicated this was an ongoing issue and not something new.
While that may be the case, NuVasive indicated Thursday that situation has recently gotten worse. Lukianov said insurers are scrutinizing pre-authorization submissions for surgery more and are requesting x-rays from surgeons, among other steps. Lukianov said the company sees an "unprecedented rate" of procedural cancellations.
"It's been accelerating," including in October, he said. "We just didn't expect that." He noted an issue is treatment for isolated back back, where a certain number of patients had been receiving fusion surgery, but now "those patients are being outright denied."
He also stressed that spinal-fusion procedures "cannot be postponed indefinitely", and that the insurer activity has led to a "significant over-correction."
But "we cannot be sure when procedural growth will return to the industry," he said.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728; firstname.lastname@example.org