Market Overview

GlassHouse: NuVasive Using The 'Valeant Playbook' To Deceive Investors

GlassHouse: NuVasive Using The 'Valeant Playbook' To Deceive Investors

Short seller GlassHouse Research has accused medical device company NuVasive, Inc. (NASDAQ: NUVA) of “irregular accounting” practices and says the stock has more than 50 percent downside.

In a new report, GlassHouse claims NuVasive has been using every accounting trick in the book to mask the fact that its organic business is in decline.

GlassHouse accuses NuVasive of inflating its earnings and growth numbers using nefarious strategies such as channel stuffing, pulling forward revenue, and delaying normalized expenses.

GlassHouse says NuVasive is closely following the growth blueprint that led to Valeant Pharmaceuticals Intl Inc (NYSE: VRX)’s explosive growth and rapid downfall.

“NUVA has borrowed from the Valeant playbook and has employed an ‘acquire at all cost’ model that has helped them to artificially inflate true earnings,” GlassHouse wrote.

The company says NuVasive have been flying under the radar on Wall Street because its non-GAAP numbers seem just fine. However, the difference between NuVasive’s non-GAAP trailing 12-month EPS of $1.77 and its GAAP EPS of 62 cents has now expanded to 185.5 percent.

Finally, GlassHouse points to the recent abrupt departure of former CFO Quentin Blackford and former COO Jason Hannon within the last three months as evidence company insiders see the writing on the wall. GlassHouse says the departures suggest the clock is running out for NuVasive.

“[In] light of our concerns regarding the abrupt departure of key executives, corporate culture, lackluster free-cash-flow generation, channel-stuffing concerns, bloated AR on the balance sheet and depleted accrued expense balance, GHR finds the current stock price to be highly egregious,” the firm wrote.

GlassHouse has set a $24.18 price target for NuVasive and is predicting a major earnings miss sometime in the next three quarters.

At time of writing, the stock was trading around $56.60.

Related Link: Want To Short Bitcoin? Here Are A Few Ways


Related Articles (NUVA)

View Comments and Join the Discussion!

Posted-In: Citron ResearchShort Sellers Short Ideas Health Care Price Target Top Stories Trading Ideas General Best of Benzinga

Latest Ratings

PCTYJMP SecuritiesMaintains220.0
KMBRBC CapitalMaintains147.0
AZEKRBC CapitalMaintains50.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at