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NuVasiveInc Doubles Down On Orange County Politics While Slashing 2018FY Guidance

|Includes: NuVasive, Inc. (NUVA)

Just when it seemed NuVasive Inc. might be turning a corner, the San Diego spinal surgery device company surprised Wall Street investors Tuesday by slashing its 2018 earnings guidance.

NuVasive (Nasdaq: NUVA) said it now expects 2018 EPS of between $0.45 and $0.48, compared to a range of $0.71 and $0.74 it had forecast three months ago. Embattled CEO Greg Lucier certainly has some explaining to do.

Whip-saw guidance like this – along with a string of disappointing headlines – is enough to cause a pain in the neck for investors.

But that’s not the only reason to be alarmed.

Instead of focusing on new efforts to increase revenue and control costs, NuVasive is focusing time, energy and money on a bizarre political campaign in Orange County. It’s the second time this year that NuVasive has decided to wage political warfare in Orange County.

Karen Jaffe, senior director of regulatory and clinical affairs for NuVasive, is leading a campaign to slow growth in neighboring Orange County. The company appears to believe that Orange County’s growing biotech industry could create competition for talent, at a time when top NuVasive employees are leaving the company.

I previously reported that NuVasive was behind a “grassroots” effort to stop commercial and industrial development in Orange County. That effort ended in an embarrassing failure in April, but now Jaffe has launched a new effort to slow economic growth in the region.

Jaffe recently did a radio interview with the Voice of OC – conducted during her work hours, so investors are footing the bill – to discuss how she is leading a new effort to stop development in Orange County. This time the focus is on City Council elections.

“We are constantly going into City Hall. We have a lot of people going in and doing public records requests,” NuVasive’s regulatory director said.

Jaffe explained that she “walked the streets for six months” trying to get signatures on NuVasive’s failed no-growth petition. (In April, Jaffe conceded defeat, admitting that she wasn’t able to get enough Irvine residents to sign NuVasive’s petition.) Now, she’s targeting local City Council elections, trying to elect candidates who will stop development.

She said Orange County should embrace new technology like Hyperloop high-speed transit and make it a requirement for future development.

“How freaking genius is that?” she said.

Is this really how top level Nuvasive executives speak?

Requiring developers to pay for uproven and wildly expensive transportation technology is one way to bring Orange County’s booming biotech growth to a halt. That seems to be NuVasive’s goal here.

It’s sheer lunacy that Lucier is assigning a senior executive to work on Orange County politics when she should be monitoring the development of new devices that could create much-needed revenue for the company.

And if he’s going to stick to politics, maybe he should find someone who knows how to run a campaign – instead of misusing the resources of his FDA liaison.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.