NuVasive appointed former Covidien and Mallinckrodt executive Matthew Harbaugh as its CFO, the company said Thursday.
The appointment led NuVasive to part company with Rajesh Asarpota, although the former CFO will continue in an advisory capacity until May.
NuVasive moved to stop concerns arising from the surprise, immediate CFO appointment by reiterating its financial guidance for 2019.
Asarpota spent almost 2.5 years as CFO of NuVasive, overseeing financial matters at the spine device specialist during a time in which its share price rose more than 25%. However, the former CFO is now on his way out, replaced by an executive who left his former employer in September amid significant, ongoing problems at the business.
Harbaugh spent the past six years of his career at Mallinckrodt, initially as CFO and later as president of its specialty generics business. Affected by its ties to the opioid crisis, Mallinckrodt struggled over Harbaugh's time at the company. However, analysts at Cowen see the posts Harbaugh held before joining Mallinckrodt as more relevant to his arrival at NuVasive.
"He served in several roles within financial management of Covidien. This is noteworthy given CEO Chris Barry’s ties to Covidien, and [NuVasive] believes Harbaugh's similar management philosophies make him an ideal fit," the analysts wrote in a note to investors.
NuVasive appointed Harbaugh in the final days of 2019, offering him an annual salary of $525,000 plus the chance to earn a similarly sized bonus. Asarpota left his post days later but will continue as an advisor until May on his current salary. After leaving the company in May, Asarpota will receive $1,000 a month from NuVasive as a consultant through September.
The Cowen analysts said "[a] CFO change at this time of year could raise investor concerns regarding 4Q results" but were reassured that the appointment of Harbaugh is not an indication of problems at NuVasive. In disclosing the appointment, NuVasive reiterated its financial guidance and said the CFO change was planned and followed a thorough search for a new executive.
That means NuVasive should post full-year revenues of around $1.16 billion when it reports its final results next month. NuVasive raised its guidance in the third quarter to the top end of its prior range.