NuVasive Investor Relations

NuVasive is a world leader in minimally invasive, procedurally-integrated spine solutions. From complex spinal deformity to degenerative spinal conditions, NuVasive is transforming spine surgery with innovative technologies designed to deliver reproducible and clinically proven surgical outcomes.

Press Release

NuVasive Reports Second Quarter 2012 Financial Results

Jul 25, 2012 (Marketwire via COMTEX) -- NuVasive, Inc. (NASDAQ: NUVA)

  • Second quarter 2012 total revenue of $154.4 million; up 16.1% from second quarter 2011
  • GAAP net income of $2.9 million, or $0.06 per share
  • Non-GAAP net income of $12.0 million, or $0.27 per share

NuVasive, Inc. (NASDAQ: NUVA), a medical device company focused on developing minimally disruptive surgical products and procedures for the spine, announced today financial results for the quarter ended June 30, 2012.

Alex Lukianov, Chairman and Chief Executive Officer, said, "Our financial performance in the second quarter and first half of 2012 attests to excellent execution of our market-share taking strategy, and gives us confidence to raise our full year revenue and profitability guidance. We made strong improvements in profitability and will continue to balance the necessary investments into NuVasive's differentiation and share taking strategy. Looking forward, we expect our top line to grow in conjunction with an improving profitability profile and continual improvements in free cash flow. We are laying the groundwork today to become the #3 spine company in the world."

NuVasive reported second quarter 2012 revenue of $154.4 million, a 16.1% increase over the $133.0 million for the second quarter 2011 and a 1.8% increase over the $151.7 million reported for the first quarter 2012. 

Gross profit for the second quarter 2012 was $117.9 million and gross margin was 76.3%, compared to a gross profit of $107.5 million and a gross margin of 80.8% for the second quarter 2011. For the first quarter 2012, gross profit was $114.8 million and gross margin was 75.7%. 

Total operating expenses for the second quarter 2012 were $104.9 million compared to $96.0 million in the second quarter 2011 and $107.5 million in the first quarter 2012. The higher operating expenses in the second quarter 2012 compared to the prior year resulted primarily from additional costs associated with higher revenue and infrastructure expansion.

On a GAAP basis, the Company reported net income of $2.9 million, or $0.06 per share, for the second quarter 2012.

On a Non-GAAP basis, the Company reported net income of $12.0 million, or $0.27 per share, for the second quarter 2012. The Non-GAAP earnings per share calculation for the second quarter excludes, (i) non-cash stock-based compensation of $8.3 million; (ii) certain intellectual property litigation expenses of $0.3 million; (iii) amortization of intangible assets of $2.9 million; (iv) acquisition related items of $0.6 million; and (v) non-cash interest expense on convertible notes of $3.1 million.

Cash, cash equivalents and short and long-term marketable securities were $265.5 million at June 30, 2012.

Updated 2012 Full Year Financial Guidance

  • Revenue of approximately $625 million; up from previous guidance of approximately $615 million
  • GAAP EPS of approximately $0.16; up from previous guidance of approximately $0.09
  • Non-GAAP EPS of approximately $0.97; up from previous guidance of approximately $0.93
  • Non-GAAP Operating Margin of approximately 14.5%; up from previous guidance of approximately 14.0%
  • GAAP effective tax rate of approximately 55%; down from previous guidance of approximately 60%
  • Non-GAAP effective tax rate of approximately 40% remains unchanged

         
         
2012 Reconciliation of Full Year EPS Guidance
         
    Prior   Revised
    Guidance 1   Guidance 2
GAAP earnings per share guidance   $ 0.09   $ 0.16
  Non-cash stock based compensation     0.46     0.43
  Certain intellectual property litigation expenses     0.03     0.03
  Amortization of intangible assets     0.16     0.16
  Acquisition related items 3     0.02     0.02
  Non-cash interest expense on convertible notes     0.17     0.17
Non-GAAP earnings per share guidance   $ 0.93   $ 0.97
             
Weighted shares outstanding - basic 4     43,500     43,500
Weighted shares outstanding - diluted 4     45,000     45,000
             
(1) Effective tax rate of ~60% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments
(2) Effective tax rate of ~55% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments
(3) Acquisition related items include expenses associated with prior M&A activity and as incurred
(4) Weighted shares outstanding shown as pre "if-converted" method
   
   
   
2012 Guidance Reconciliation of Non-GAAP Operating Margin %
         
    Prior
Guidance
  Revised
Guidance
   
Gross Margin % [A]   ~76.0%   ~75.5%
         
Non-GAAP Operating Expenses [B]   ~62.0%   ~61.0%
Non-cash stock-based compensation   ~5.5%   ~5.0%
Certain intellectual property litigation expenses   ~0.5%   ~0.5%
Amortization of intangible assets   ~2.0%   ~2.0%
Acquisition related items*   ~0.2%   ~0.2%
GAAP Operating Expenses   ~70.2%   ~68.7%
         
Non-GAAP Operating Margin % [A-B]   ~14.0%   ~14.5%
         
* Acquisition related items include expenses associated with prior M&A activity and as incurred
 

Reconciliation of Non-GAAP Information
Management uses certain Non-GAAP financial measures such as Non-GAAP operating margin and Non-GAAP earnings per share, which exclude such items as non-cash stock-based compensation, certain intellectual property litigation expenses, amortization of intangible assets, acquisition related items, and non-cash interest expense on convertible notes. Management does not consider these costs in evaluating the continuing operations of the Company. Therefore, management calculates the Non-GAAP financial measures provided in this earnings release excluding these costs and uses these Non-GAAP financial measures to enable it to analyze further, and more consistently, the period-to-period financial performance of its core business operations. Management believes that providing investors with these Non-GAAP measures gives them additional important information to enable them to assess, in the same way management assesses, the Company's current and future continuing operations. These Non-GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different from Non-GAAP measures used by other companies. Set forth below are reconciliations of the Non-GAAP financial measures to the comparable GAAP financial measure.

             
Reconciliation of Second Quarter 2012 Results
             
(in thousands, except per share data)   Pre-Tax Adjustments   Net of Tax   Earnings Per Share
GAAP net income         $ 2,863   $ 0.06
  Non-cash stock-based compensation   $ 8,345     5,007     0.11
  Certain intellectual property litigation expenses     292     175     0.00
  Amortization of intangible assets     2,903     1,741     0.04
  Acquisition related items     585     351     0.01
  Non-cash interest expense on convertible notes     3,145     1,887     0.04
                   
Non-GAAP earnings         $ 12,024   $ 0.27
                   
Weighted shares outstanding - diluted                 44,318
             
             
             
Reconciliation of Year To Date 2012 Results
             
(in thousands, except per share data)   Pre-Tax Adjustments   Net of Tax   Earnings Per Share
GAAP net income         $ 3,536   $ 0.08
  Non-cash stock-based compensation   $ 14,966     8,980     0.20
  Certain intellectual property litigation expenses     816     490     0.01
  Amortization of intangible assets     5,749     3,449     0.08
  Acquisition related items     1,033     620     0.01
  Non-cash interest expense on convertible notes     6,233     3,740     0.09
                   
Non-GAAP earnings         $ 20,814   $ 0.47
                   
Weighted shares outstanding - diluted                 43,857
                   
                   

Conference Call
NuVasive will hold a conference call today at 5:30 p.m. ET / 2:30 p.m. PT to discuss the results. The dial-in numbers are 1-877-407-9039 for domestic callers and 1-201-689-8470 for international callers. A live webcast of the conference call will be available online from the investor relations page of the Company's corporate website at http://ctt.marketwire.com/?release=912946&id=1842892&type=1&url=http%3a%2f%2fwww.nuvasive.com%2f.

After the live webcast, the call will remain available on NuVasive's website, http://ctt.marketwire.com/?release=912946&id=1842895&type=1&url=http%3a%2f%2fwww.nuvasive.com%2f, through August 26, 2012. In addition, a telephonic replay of the call will be available until August 8, 2012. The replay dial-in numbers are 1-877-870-5176 for domestic callers and 1-858-384-5517 for international callers. Please use pin number 394522.

About NuVasive
NuVasive is a medical device company focused on developing minimally disruptive surgical products and procedurally integrated solutions for the spine. The Company is the 4th largest player in the $7.6 billion global spine market.

NuVasive's principal product offering is based on its Maximum Access Surgery, or MAS® platform. The MAS platform combines several categories of solutions that collectively minimize soft tissue disruption during spine surgery with maximum visualization and safe, easy reproducibility for the surgeon: a proprietary software-driven nerve avoidance system and intra-operative monitoring support; MaXcess®, a unique split-blade retractor system; a wide variety of specialized implants; and several biologic fusion enhancers. MAS significantly reduces surgery time and returns patients to activities of daily living much faster than conventional approaches. Having redefined spine surgery with the MAS platform's lateral approach, known as eXtreme Lateral Interbody Fusion, or XLIF®, NuVasive has built an entire spine franchise. With over 75 products today spanning lumbar, thoracic and cervical applications, the Company will continue to expand and evolve its offering predicated on its R&D focus and dedication to outstanding service levels supported by a culture of Absolute Responsiveness®.

NuVasive cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause NuVasive's results to differ materially from historical results or those expressed or implied by such forward-looking statements. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to: the risk that NuVasive's revenue or earnings projections may turn out to be inaccurate because of the preliminary nature of the forecasts and the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability; the uncertain process of seeking regulatory approval or clearance for NuVasive's products or devices, including risks that such process could be significantly delayed; the possibility that the FDA may require significant changes to NuVasive's products or clinical studies; the risk that products may not perform as intended and may therefore not achieve commercial success; the risk that competitors may develop superior products or may have a greater market position enabling more successful commercialization; the risk that additional clinical data may call into question the benefits of NuVasive's products to patients, hospitals and surgeons; and other risks and uncertainties more fully described in NuVasive's press releases and periodic filings with the Securities and Exchange Commission. NuVasive's public filings with the Securities and Exchange Commission are available at http://ctt.marketwire.com/?release=912946&id=1842898&type=1&url=http%3a%2f%2fwww.sec.gov%2f. NuVasive assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.

   
   
NuVasive, Inc.  
Unaudited Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
   
    Three Months Ended June 30,     Six Months Ended June 30,  
    2012     2011     2012     2011  
                                 
Revenue   $ 154,419     $ 132,966     $ 306,110     $ 257,432  
Cost of goods sold (excluding amortization of purchased technology)     36,534       25,508       73,467       49,034  
Gross profit     117,885       107,458       232,643       208,398  
                                 
Operating expenses:                                
  Sales, marketing and administrative     92,346       84,323       186,617       168,543  
  Research and development     9,604       10,258       19,999       21,027  
  Amortization of intangible assets     2,903       1,395       5,749       2,737  
Total operating expenses     104,853       95,976       212,365       192,307  
                                 
Interest and other expense, net:                                
  Interest income     204       151       412       334  
  Interest expense     (6,972 )     (1,915 )     (13,797 )     (3,686 )
  Other (expense) income, net     (551 )     80       (114 )     577  
Total interest and other expense, net     (7,319 )     (1,684 )     (13,499 )     (2,775 )
                                 
Income before income taxes     5,713       9,798       6,779       13,316  
Income tax expense     3,103       4,776       3,700       6,316  
Consolidated net income   $ 2,610     $ 5,022     $ 3,079     $ 7,000  
Net loss attributable to noncontrolling interests   $ (253 )   $ (358 )   $ (457 )   $ (739 )
Net income attributable to NuVasive, Inc.   $ 2,863     $ 5,380     $ 3,536     $ 7,739  
                                 
Net income per share attributable to NuVasive, Inc.:                                
  Basic   $ 0.07     $ 0.14     $ 0.08     $ 0.19  
  Diluted   $ 0.06     $ 0.13     $ 0.08     $ 0.19  
Weighted average shares outstanding:                                
  Basic     43,347       39,786       43,095       39,701  
  Diluted     44,318       40,868       43,857       40,691  
                                 
Stock-based compensation is included in expenses in the following categories:                          
  Sales, marketing and administrative   $ 7,737     $ 7,124     $ 13,879     $ 14,459  
  Research and development     592       601       1,057       1,212  
  Cost of goods sold     16       -       30       -  
    $ 8,345     $ 7,725     $ 14,966     $ 15,671  
                                 
                                 
                                 
NuVasive, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands)  
   
  June 30, 2012   December 31, 2011  
  (Unaudited)      
ASSETS      
Current assets:            
  Cash and cash equivalents $ 121,156   $ 163,492  
  Short-term marketable securities   120,656     146,228  
  Accounts receivable, net   85,749     87,736  
  Inventory   128,559     119,313  
  Deferred tax assets, current   54,550     54,550  
  Prepaid expenses and other current assets   8,130     20,518  
Total current assets   518,800     591,837  
Property and equipment, net   129,435     124,754  
Long-term marketable securities   23,707     32,503  
Intangible assets, net   105,128     108,140  
Goodwill   160,745     159,349  
Deferred tax assets   19,857     19,857  
Restricted cash and investments   181,815     68,600  
Other assets   27,756     18,522  
Total assets $ 1,167,243   $ 1,123,562  
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
  Accounts payable and accrued liabilities $ 61,232   $ 51,744  
  Accrued payroll and related expenses   20,746     22,215  
  Litigation liability   -     101,200  
  Acquisition-related liabilities   32,290     32,221  
  Senior Convertible Notes, current   74,311     -  
Total current liabilities   188,579     207,380  
Senior Convertible Notes   325,941     394,019  
Deferred tax liabilities   3,952     3,952  
Litigation liability   101,200     -  
Other long-term liabilities   14,564     13,461  
Commitments and contingencies            
Noncontrolling interests   10,248     10,705  
Stockholders' equity:            
  Preferred stock   -     -  
  Common stock   43     42  
  Additional paid-in capital   700,409     674,790  
  Accumulated other comprehensive income   35     477  
  Accumulated deficit   (177,728 )   (181,264 )
Total stockholders' equity   522,759     494,045  
Total liabilities and stockholders' equity $ 1,167,243   $ 1,123,562  
             
             
             
NuVasive, Inc.  
Unaudited Condensed Consolidated Statements of Cash Flows  
(in thousands)  
   
    Six Months Ended June 30,  
    2012     2011  
                 
Operating activities:                
  Consolidated net income   $ 3,079     $ 7,000  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation and amortization     25,313       15,888  
    Amortization of debt discount     6,233       99  
    Amortization of debt issuance costs     912       756  
    Stock-based compensation     14,966       15,671  
    Allowance for excess and obsolete inventory, net of write-offs     1,275       2,341  
    Allowance for doubtful accounts and sales return reserve     1,622       529  
    Accretion of contingent consideration     599       914  
    Other non-cash adjustments     2,942       2,038  
  Changes in operating assets and liabilities, net of effects from acquisitions:                
    Accounts receivable     671       (5,351 )
    Inventory     (10,967 )     (12,146 )
    Prepaid expenses and other current assets     12,185       (791 )
    Accounts payable and accrued liabilities     7,099       (2,300 )
    Accrued payroll and related expenses     (1,973 )     (1,997 )
    Income taxes payable     1,803       5,043  
  Net cash provided by operating activities     65,759       27,694  
Investing activities:                
    Cash paid for business and asset acquisitions     (7,917 )     -  
    Purchases of property and equipment     (23,930 )     (27,944 )
    Purchases of marketable securities     (110,915 )     (54,317 )
    Sales of marketable securities     144,427       113,559  
    Purchases of restricted investments     (113,126 )     (4,701 )
    Payment for specific rights in connection with supply agreement, net of refund received     -       (5,000 )
  Net cash (used in) provided by investing activities     (111,461 )     21,597  
Financing activities:                
    Proceeds from the sale of warrants     -       47,898  
    Proceeds from the issuance of convertible debt, net of issuance costs     -       391,548  
    Purchase of convertible note hedges     -       (80,097 )
    Proceeds from the issuance of common stock     3,094       4,334  
    Other assets     242       (557 )
  Net cash provided by financing activities     3,336       363,126  
Effect of exchange rate changes on cash     30       70  
(Decrease) increase in cash and cash equivalents     (42,336 )     412,487  
Cash and cash equivalents at beginning of period     163,492       92,597  
Cash and cash equivalents at end of period   $ 121,156     $ 505,084  
                 

Contact:
Michael J. Lambert
EVP & Chief Financial Officer
NuVasive, Inc.
858-909-3394 
        
Investors:
Patrick F. Williams
Vice President, Strategy & Investor Relations
NuVasive, Inc.
858-638-5511
        
Media:
Nicholas S. Laudico
The Ruth Group
646-536-7030