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 Third Quarter 2009 Financial Results
- Increases 2009 Guidance for Revenue and Earnings per Share -

SAN DIEGO, Oct. 20 /PRNewswire-FirstCall/ -- NuVasive, Inc. (Nasdaq: NUVA), a medical device company focused on developing products for minimally disruptive surgical treatments for the spine, announced today financial results for the quarter ended September 30, 2009.

NuVasive reported third quarter revenue of $94.9 million, a 41.8% increase over the $66.9 million for the third quarter 2008 and a 7.3% increase over the $88.5 million for the second quarter 2009.

Gross profit for the third quarter 2009 was $76.5 million and gross margin was 80.6%, compared to a gross profit of $54.7 million and a gross margin of 81.8% for the third quarter 2008. For the second quarter 2009, gross profit was $71.8 million and gross margin was 81.1%.

Total operating expenses for the third quarter 2009 were $70.4 million compared to $77.7 million in the third quarter 2008 and $67.3 million in the second quarter 2009. Operating expenses include $0.6 million of acquisition related costs, a $2.0 million reversal of a leasehold termination charge and $0.8 million related to intellectual property litigation.

On a GAAP basis, the Company reported net income of $5.1 million, or $0.13 per share, for the third quarter 2009.

On a Non-GAAP basis, the Company reported net income of $11.0 million, or $0.28 per share, for the third quarter 2009. The Non-GAAP earnings per share calculations for the third quarter exclude (i) stock-based compensation of $5.2 million; (ii) amortization of acquired intangible assets of $1.4 million; (iii) acquisition related costs of $0.6 million; (iv) intellectual property litigation costs of $0.8 million, and (v) the reversal of a leasehold termination charge of $2.0 million.

Cash, cash equivalents and short and long-term marketable securities were $200.2 million at September 30, 2009.

Alex Lukianov, Chairman and Chief Executive Officer, said, "NuVasive is pioneering the lateral approach with our proprietary XLIF® procedure and MAS® platform. We continue to take market share and expand our addressable market by broadening the application of our technology throughout the spine. We are the only company with the ability to laterally address a wide range of applications in the lumbar and thoracic spine, from single level procedures to complex multi level deformity corrections. We are pleased with our financial performance in the third quarter of 2009, and are confident in our strategy to become the #4 global spine company."

Updated 2009 Financial Guidance

NuVasive is updating its full year 2009 financial guidance as follows:

Revenue:

    --  $365 million to $367 million; up from previous guidance of $360 million
        to $365 million

Gross Margin:

    --  Gross Margin of approximately 81%

EPS:

    --  GAAP: earnings per share of $0.11 to $0.14; up from previous guidance of
        $0.06 to $0.08

    --  Earnings per share of $0.27 to $0.30 excluding adjustments per the
        enclosed table; up from previous guidance of $0.25 to $0.27

Reconciliation of Non-GAAP Information

Management uses certain Non-GAAP financial measures such as Non-GAAP earnings per share, which exclude intellectual property litigation expenses, the reversal of leasehold termination charges, acquisition related costs, stock-based compensation, and the amortization of acquired intangible assets. 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 Third Quarter 2009 Results

    (in thousands, except per share amounts)        $        Per Share
                                               -----------  -----------
    GAAP net income                              $5,064        $0.13
    IP litigation costs                             780         0.02
    Reversal of leasehold termination charge     (1,997)       (0.05)
    Acquisition related costs                       621         0.02
                                                    ---         ----
    Earnings excluding other adjustments          4,468         0.11
    Non-cash stock-based compensation             5,166         0.13
    Amortization of acquired intangible assets    1,364         0.04
                                                  -----         ----
    Non-GAAP earnings                           $10,998        $0.28
                                                =======        =====
    Diluted weighted shares outstanding                       39,216
                                                              ======


               Reconciliation of Year-to-Date 2009 Results

    (in thousands, except per share amounts)        $        Per Share
                                                ----------- -----------
    GAAP net income                              $3,527        $0.09
    IP litigation costs                           3,408         0.09
    Reversal of leasehold termination charge     (1,997)       (0.05)
    Acquisition related costs                     3,096         0.08
                                                  -----         ----
    Earnings excluding other adjustments          8,034         0.21
    Non-cash stock-based compensation            18,165         0.47
    Amortization of acquired intangible assets    4,071         0.11
                                                  -----         ----
    Non-GAAP earnings                           $30,270        $0.79
                                                =======        =====
    Diluted weighted shares outstanding                       38,384
                                                              ======



                 Reconciliation of Full Year 2009 Guidance

                                                         Range for
                                                        Year Ending
                                                        December 31,
                                                            2009
                                                       -------------
      (in thousands, except per share amounts)          Low    High
      GAAP net earnings per share                      $0.11   $0.14
      IP litigation costs                               0.13    0.13
      Reversal of leasehold termination charge         (0.05)  (0.05)
      Acquisition related costs                         0.08    0.08
                                                        ----    ----
      Earnings per share excluding other adjustments    0.27    0.30
      Non-cash stock-based compensation                 0.64    0.64
      Amortization of acquired intangible assets        0.13    0.13
                                                        ----    ----
      Non-GAAP earnings per share                      $1.04   $1.07
                                                       =====   =====
      Diluted weighted shares outstanding             38,800  38,800
                                                      ======  ======

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 1-877-407-4018 for domestic callers and 1-201-689-8471 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 www.nuvasive.com.

After the live webcast, the call will remain available on NuVasive's website, www.nuvasive.com, through November 20, 2009. In addition, a telephonic replay of the call will be available until November 3, 2009. The replay dial-in numbers are 1-877-660-6853 for domestic callers and 1-201-612-7415 for international callers. Please use account number 3055 and conference ID number 331825.

About NuVasive

NuVasive is a medical device company focused on the design, development, and marketing of products for the surgical treatment of spine disorders. The Company's product portfolio is focused primarily on the $4.6 billion U.S. spine implant market. Additionally, the Company has expanded into the $1.5 billion global biologics market, the $1.5 billion international market, and is developing products for the emerging motion preservation market.

NuVasive's principal product offering is based on its Maximum Access Surgery, or MAS® platform. The MAS platform combines four categories of products that collectively minimize soft tissue disruption during spine surgery with maximum visualization and safe, easy reproducibility for the surgeon: NeuroVision®, a proprietary software-driven nerve avoidance system; 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 nearly 50 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 the Company's revenue or profitability projections may prove incorrect because of unexpected difficulty in generating sales or achieving anticipated 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 www.sec.gov. NuVasive assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.



    Contact:
    Kevin C. O'Boyle
    EVP & Chief Financial Officer
    NuVasive, Inc.
    858-909-1998
    investorrelations@nuvasive.com

    Investors:
    Patrick F. Williams
    Vice President, Finance & Investor Relations
    NuVasive, Inc.
    858-638-5511
    investorrelations@nuvasive.com

    Media:
    Jason RandoThe Ruth Group
    646-536-7025
    jrando@theruthgroup.com



                                  NuVasive, Inc.
              Unaudited Condensed Consolidated Statement of Operations
                       (in thousands, except per share data)

                                        Three Months Ended  Nine Months Ended
                                          September 30,       September 30,
                                        ------------------  -----------------
                                          2009      2008      2009      2008
                                          ----      ----      ----      ----

    Revenues                            $94,916   $66,915  $263,405  $175,501
    Cost of goods sold                   18,417    12,195    49,901    30,845
                                         ------    ------    ------    ------
    Gross profit                         76,499    54,720   213,504   144,656

    Operating expenses:
      Sales, marketing and
       administrative                    59,761    54,557   176,391   135,975
      Research and development           10,654     6,396    30,047    19,797
      In-process research and
       development                            -    16,700         -    20,876
                                              -    ------         -    ------
    Total operating expenses             70,415    77,653   206,438   176,648

    Interest income (expense) and
     other, net                          (1,648)     (146)   (4,850)      764
    Net loss attributable to
     noncontrolling interests               628         -     1,311         -
                                            ---         -     -----         -
    Total other income (expense)         (1,020)     (146)   (3,539)      764

                                         ------  --------    ------  --------
    Net income (loss) attributable to
     NuVasive, Inc.                      $5,064  $(23,079)   $3,527  $(31,228)
                                         ======  ========    ======  ========


    Net income (loss) per share
     attributable to NuVasive, Inc.:
      Basic net income (loss) per share   $0.13    $(0.64)    $0.10    $(0.88)
                                          =====    ======     =====    ======
      Diluted net income (loss) per
       share                              $0.13    $(0.64)    $0.09    $(0.88)
                                          =====    ======     =====    ======
      Weighted average shares - basic    37,733    35,931    37,008    35,674
                                         ======    ======    ======    ======
      Weighted average shares - diluted  39,216    35,931    38,384    35,674
                                         ======    ======    ======    ======

    Stock-based compensation is
     included in operating expenses
     in the following categories:
      Sales, marketing and
       administrative                    $4,265    $4,499   $14,748   $13,541
      Research and development              901       922     3,417     2,178
                                            ---       ---     -----     -----
                                         $5,166    $5,421   $18,165   $15,719
                                         ======    ======   =======   =======



                                  NuVasive, Inc.
                  Unaudited Condensed Consolidated Balance Sheets
                                  (in thousands)

                                         September 30,      December 31,
                                             2009               2008
                                        --------------     -------------
    ASSETS                              (In thousands, except par value)
    Current assets:
      Cash and cash equivalents            $134,276           $132,318
      Short-term marketable
       securities                            55,915             45,738
      Accounts receivable, net               51,245             51,622
      Inventory                              85,892             68,834
      Prepaid expenses and other
       current assets                         3,925              3,466
                                              -----              -----
    Total current assets                    331,253            301,978
    Property and equipment, net              77,543             73,686
    Long-term marketable
     securities                              10,032             45,305
    Goodwill                                102,264              2,332
    Intangible assets, net                  104,601             54,767
    Other assets                              7,337              9,338
                                              -----              -----
    Total assets                           $633,030           $487,406
                                           ========           ========
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and
       accrued liabilities                  $23,183            $26,633
      Accrued payroll and
       related expenses                      20,568             17,132
      Acquisition related
       liabilities                           15,414                  -
      Royalties payable                       2,201              1,722
                                              -----              -----
    Total current liabilities                61,366             45,487
    Senior convertible notes                230,000            230,000
    Long-term acquisition
     related liabilities                     30,318             12,111
    Other long-term liabilities              29,099             12,177
    Commitments and contingencies

    Noncontrolling interests                 13,689                  -

    Stockholders' equity:
        Common stock                             38                 36
        Additional paid-in
         capital                            460,290            383,293
        Accumulated other
         comprehensive income
         (loss)                                 211               (190)
        Accumulated deficit                (191,981)          (195,508)
                                           --------           --------
    Total stockholders' equity              268,558            187,631
                                            -------            -------
    Total liabilities and
     stockholders' equity                  $633,030           $487,406
                                           ========           ========



                                  NuVasive, Inc.
             Unaudited Condensed Consolidated Statements of Cash Flows
                                  (in thousands)

                                                    Nine Months Ended
                                                      September 30,
                                                    -----------------
                                                      2009      2008
                                                      ----      ----

     Operating activities:
       Net income (loss)                             $3,527  $(31,228)
       Adjustments to reconcile net income (loss)
        to net cash provided by (used in)
        operating activities:
         Depreciation and amortization               22,005    15,671
         In-process research and development              -    20,876
         Stock-based compensation                    18,165    15,719
         Leasehold abandonment                       (1,997)    4,486
         Noncontrolling interest                     (1,311)        -
         Allowance for doubtful accounts              1,175       410
         Allowance for excess and obsolete
          inventory                                   2,470        (3)
         Other non-cash adjustments                   2,248     1,019
         Changes in operating assets and liabilities:
           Accounts receivable                         (329)  (18,986)
           Inventory                                (19,027)  (22,136)
           Prepaid expenses and other current
            assets                                      788      (941)
           Accounts payable and accrued
            liabilities                               2,410     3,898
           Accrued payroll and related expenses       2,742     1,778
                                                      -----     -----
       Net cash provided by (used in) operating
        activities                                   32,866    (9,437)
     Investing activities:
         Cash paid for acquisitions                 (24,055)  (41,256)
         Investment in Progentix                    (10,000)        -
         Acquisition related milestone payments     (10,000)        -
         Purchases of property and equipment        (21,250)  (34,161)
         Purchases of short-term marketable
          securities                                (46,678)  (83,069)
         Sales of short-term marketable
          securities                                 56,365    29,842
         Purchases of long-term marketable
          securities                                (17,964)  (51,390)
         Sales of long-term marketable securities    32,971    14,778
         Other assets                                     -       544
                                                          -       ---
       Net cash provided by (used in) investing
        activities                                  (40,611) (164,712)
     Financing activities:
         Payments of long-term liabilities                -      (300)
         Issuance of convertible debt,  net of
          costs                                           -   222,414
         Purchase of convertible note hedges              -   (45,758)
         Sale of warrants                                 -    31,786
         Issuance of common stock                     9,618     8,480
                                                      -----     -----
       Net cash provided by financing activities      9,618   216,622
         Effect of exchange rate changes on cash         85         -
                                                         --         -
       Increase in cash and cash equivalents          1,958    42,473
     Cash and cash equivalents at beginning of
      year                                          132,318    61,915
                                                    -------    ------
     Cash and cash equivalents at end of year      $134,276  $104,388
                                                   ========  ========

SOURCE NuVasive, Inc.

Kevin C. O'Boyle, EVP & Chief Financial Officer of NuVasive, Inc., +1-858-909-1998, investorrelations@nuvasive.com; or Investors: Patrick F. Williams, Vice President, Finance & Investor Relations of NuVasive, Inc., +1-858-638-5511, investorrelations@nuvasive.com; or Media: Jason Rando of The Ruth Group, +1-646-536-7025, jrando@theruthgroup.com