Greatbatch Will Spin Off QiG As Nuvectra To Shareholders On March 14

Greatbatch(GB) shareholders should be prepared for their portfolios to look a bit different this year. Later this year, the medical device manufacturer will be changing its name to Integer Holdings Corporation. First, the company will spin off QiG Group, which will be renamed Nuvectra. On March 14, shareholders as of March 7 will receive one Nuvectra share for every three Greatbatch shares held.  The transaction is expected to be tax-free for shareholders. Nuvectra will trade under the ticker NVTR.

Nuvectra is a neuromodulation medical device company initially focused on the development and commercialization of a neurostimulation technology platform for treatment of various disorders through stimulation of tissues associated with the nervous system. The Algovita spinal cord stimulation system is the first application of this neurostimulation technology platform and has received FDA approval for the treatment of chronic pain of the trunk and limbs.

“This announcement marks an important milestone in Greatbatch’s strategy of developing complete active implantable medical device systems for our customers,” said Thomas J. Hook, president and CEO of Greatbatch. “This spin-off reaffirms Greatbatch’s commitment to ensuring its strategic priorities remain aligned with stockholders’ best interests while continuing to create enhanced value for customers, healthcare providers and other key stakeholders.”

Nuvectra’s Form 10 can be found here.  The company’s device is already on the market in Europe and has been approved in the United States, with sales to begin in the first half of this year. Revenue exceeded $5 million in 2015, a large increase over 2014. Nuvectra sports a strong balance sheet as Greatbatch is contributing $75 million in cash. In addition the company has $45 million in available credit. The company reports that this will be sufficient to provide at least two years of operating funds. Greatbatch will continue to be the manufacturer of Nuvectra’s product.

This feels a bit similar to Harvard Bioscience’s(HBIO) spinoff of Harvard Apparatus Regenerative Technologies(HART), except that, unlike HART, Nuvectra has an approved product and revenue.  If it is able to gain distribution for its product in a competitive marketplace, Nuvectra could be an interesting opportunity for investors. Greatbatch has just completed a large acquisition of Lake Region Medical, increasing the company’s scale as a medical device outsource manufacturer. As the integration proceeds the company could quickly regain some of the 40% its shares have lost since December.

Disclosure: The author holds shares in HBIO and HART