nuva-8k_20190730.htm
false NUVASIVE INC 0001142596 false NUVA DE false false false false 0001142596 2019-07-01 2019-07-30

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 30, 2019

 

NuVasive, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

000-50744

33-0768598

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification Number)

 

 

 

7475 Lusk Boulevard, San Diego, California 92121

(Address of principal executive offices) (Zip Code)

 

 

 

(858) 909-1800

(Registrant’s telephone number, including area code)

 

 

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

NUVA

The NASDAQ Stock Market LLC

(NASDAQ Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 


Item 2.02

Results of Operations and Financial Condition.

On July 30, 2019, NuVasive, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2019. A copy of this press release is furnished as Exhibit 99.1 to this Current Report.

 

Item 7.01

Regulation FD Disclosure.

During a conference call scheduled to be held at 1:30 p.m. Pacific Time on July 30, 2019, the Company’s Chief Executive Officer and Chief Financial Officer will discuss the Company’s results for the quarter ended June 30, 2019 and the Company’s outlook for the year ending December 31, 2019.

The information contained in this Current Report and the Exhibits hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

 

(d)

Exhibits.

 

 

Exhibit No.

Description

99.1

Press release issued by NuVasive, Inc. on July 30, 2019



SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

NUVASIVE, INC.

 

 

 

Date: July 30, 2019

 

/s/ Rajesh Asarpota

 

 

Rajesh Asarpota

 

 

Executive Vice President and Chief Financial Officer

 

 

 

nuva-ex991_8.htm

Exhibit 99.1

 

 

NEWS RELEASE

 

NuVasive Announces Second Quarter 2019 Financial Results


SAN DIEGO July 30, 2019 – NuVasive, Inc. (NASDAQ: NUVA), the leader in spine technology innovation, focused on transforming spine surgery with minimally disruptive, procedurally integrated solutions, today announced financial results for the quarter ended June 30, 2019.

 

Second Quarter 2019 Highlights

 

Revenue increased 3.7% to $292.1 million, or 4.7% on a constant currency basis;

 

GAAP operating profit margin of 10.3%; Non-GAAP operating profit margin of 16.3%; and

 

GAAP diluted earnings per share of $0.29; Non-GAAP diluted earnings per share of $0.63.

 

“NuVasive continued to deliver consistent revenue growth in the second quarter 2019, with a notably solid performance from the U.S. Hardware business,” said J. Christopher Barry, chief executive officer of NuVasive. “We saw meaningful case volume growth driven by increased surgeon adoption of lateral single-position surgery and NuVasive’s innovative X360 system. Our strong profitability results over the first half of the year demonstrate the clear initiatives and focused execution throughout the business and are reflected in our raised full-year 2019 non-GAAP guidance for operating margin and earnings per share.”

 

A full reconciliation of GAAP to non-GAAP financial measures can be found in the tables of this news release.

 

Second Quarter 2019 Results

NuVasive reported second quarter 2019 total revenue of $292.1 million, a 3.7% increase compared to $281.6 million for the second quarter 2018. On a constant currency basis, second quarter 2019 total revenue increased 4.7% compared to the same period last year.

 

For the second quarter 2019, both GAAP and non-GAAP gross profit was $214.5 million and GAAP and non-GAAP gross margin was 73.4%. These results compared to the second quarter 2018 GAAP and non-GAAP gross profit of $204.5 million and $204.9 million, respectively, and GAAP and non-GAAP gross margin of 72.6% and 72.8%, respectively.

 

On a GAAP basis, the Company reported net income of $15.0 million, or diluted earnings per share of $0.29, for the second quarter 2019 compared to a net income of $11.5 million, or diluted earnings per share of $0.22, for the second quarter 2018. On a non-GAAP basis, the Company reported net income of $32.8 million, or diluted earnings per share of $0.63 per share, for the second quarter 2019 compared to net income of $30.3 million, or diluted earnings per share of $0.58 per share, for the second quarter 2018.

 

Annual Financial Guidance for 2019

The Company updated its full-year 2019 financial guidance to reflect first-half 2019 results.


 

 

 

 

2019 Guidance Range 1

 

 

 

 

Prior

 

Current

 

 

 

 

GAAP

Non-GAAP

 

GAAP

Non-GAAP

 

 

 

Revenue

$1.14B - $1.16B

 

$1.14B - $1.16B

 

$1.14B - $1.16B

 

$1.14B - $1.16B

 

 

 

% Growth - Reported

3.5% - 5.5%

 

3.5% - 5.5%

 

3.4% - 5.4%

 

3.4% - 5.4%

 

 

 

% Growth - Constant Currency 2

 

 

3.8% - 5.8%

 

 

 

3.8% - 5.8%

 

 

 

Operating margin

9.0% - 9.5%

 

15.0% - 15.5%

 

9.1% - 9.5%

 

15.3% - 15.7%

 

 

 

Earnings per share

$0.95 - $1.05

 

$2.20 - $2.30

 

$0.93 - $1.03

 

$2.25 - $2.35

 

 

 

EBITDA margin

20.9% - 21.3%

 

25.2% - 25.7%

 

21.2% - 21.5%

 

25.5% - 25.9%

 

 

 

Tax Rate

~22%

 

~23%

 

~24%

 

~23%

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Prior guidance reflects the range provided May 1, 2019. Current guidance reflects the range provided July 30, 2019.

 

2

 

Constant currency is a measure that adjusts US GAAP revenue for the impact of currency over the same period in the prior year.

 

 

The Company maintains full-year 2019 revenue guidance to be in the range of $1.14 billion to $1.16 billion, which now includes approximately $5 million in year-over-year currency headwinds compared to prior guidance of $4 million. This reflects reported growth in the range of 3.4% to 5.4%, compared with prior guidance of 3.5% to 5.5%. Revenue growth on a constant currency basis remains unchanged at 3.8% to 5.8%;

 

Non-GAAP diluted earnings per share in a range of $2.25 to $2.35, compared with prior guidance of $2.20 to $2.30;

 

Non-GAAP operating profit margin of 15.3% to 15.7%, compared with prior guidance of 15.0% to 15.5%;

 

EBITDA margin of 25.5% to 25.9%, compared with prior guidance of 25.2% to 25.7%; and

 

Non-GAAP effective tax expense rate of approximately 23%.

 

Supplementary Financial Information

For additional financial detail, please visit the Investor Relations section of the Company's website at www.nuvasive.com to access Supplementary Financial Information.


 

Reconciliation of Full Year EPS Guidance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Guidance Range  1, 2

 

 

 

 

 

2018 Actuals 1

 

Prior 3

 

 

Current 4

 

 

 

 

GAAP net income per share

$0.24

 

 

 

$0.95 - 1.05

 

 

$0.93 - 1.03

 

 

 

 

Impact of change to diluted share count

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income per share, adjusted to diluted Non-GAAP share count

$0.24

 

 

 

$0.95 - 1.05

 

 

$0.93 - 1.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business transition costs 5

 

0.22

 

 

 

 

0.10

 

 

 

0.11

 

 

 

 

Non-cash purchase accounting adjustments on acquisitions 6

 

0.02

 

 

 

 

 

 

 

 

 

 

 

Non-cash interest expense on convertible notes

 

0.32

 

 

 

 

0.30

 

 

 

0.34

 

 

 

 

Litigation related expenses and settlements 7

 

0.65

 

 

 

 

0.20

 

 

 

0.18

 

 

 

 

Non-recurring consulting fees 8

 

0.12

 

 

 

 

 

 

 

 

 

 

 

Net loss on strategic investments

 

0.07

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

0.97

 

 

 

 

0.95

 

 

 

0.96

 

 

 

 

Purchase of in-process research and development 9

 

0.17

 

 

 

 

 

 

 

 

 

 

 

European medical device regulation 10

 

0.01

 

 

 

 

0.10

 

 

 

0.11

 

 

 

 

Tax effect of adjustments 11

 

(0.56

)

 

 

 

(0.40

)

 

 

(0.38

)

 

 

 

Non-GAAP earnings per share

$2.23

 

 

 

$2.20 - 2.30

 

 

$2.25 - 2.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Weighted shares outstanding - basic

 

51,382

 

 

 

 

51,999

 

 

 

51,954

 

 

 

 

GAAP Weighted shares outstanding - diluted

 

52,355

 

 

 

 

52,991

 

 

 

52,898

 

 

 

 

Non-GAAP Weighted shares outstanding - diluted 12

 

52,178

 

 

 

 

52,718

 

 

 

52,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Items may not foot due to rounding.

 

 

2

 

Prior guidance reflects the range provided May 1, 2019. Current guidance reflects the range provided July 30, 2019.

 

 

3

 

Effective tax expense rate of ~22% applied to GAAP earnings and ~23% applied to Non-GAAP earnings.

 

 

4

 

Effective tax expense rate of ~24% applied to GAAP earnings and ~23% applied to Non-GAAP earnings.

 

 

5

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

6

 

Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

 

 

7

 

Represents the loss recorded in connection with the settlement of the Madsen Medical, Inc. litigation matter, as well as expenses associated with ongoing litigation with a former Board member and his current employer related to various matters, including infringement of the Company’s intellectual property.

 

 

8

 

Non-recurring consulting fees associated with the implementation of our state tax-planning strategy.

 

 

9

 

Purchase of an in-process research and development asset which had no future alternative use.

 

 

10

 

Costs related to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

11

 

The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company’s tax filings. The impact of the changes to the tax rate results in an annual rate of ~43% benefit on a GAAP basis and ~18% on a non-GAAP basis in 2018.

 

 

12

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes and warrants for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

 


 

Reconciliation of Non-GAAP Operating Margin %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Guidance Range 1, 2

 

 

 

 

(in thousands, except %)

 

2018 Actuals 1

 

 

Prior

 

 

Current

 

 

 

 

Non-GAAP Gross Margin % [A]

 

71.9%

 

 

72.5% - 73.0%

 

 

72.5% - 73.0%

 

 

 

 

Non-cash purchase accounting adjustments on acquisitions 3

 

(0.1%)

 

 

0.0%

 

 

0.0%

 

 

 

 

GAAP Gross Margin [B]

 

71.8%

 

 

72.5% - 73.0%

 

 

72.5% - 73.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Sales, Marketing & Administrative Expense [C]

 

51.1%

 

 

51.0% - 52.0%

 

 

50.8% - 51.7%

 

 

 

 

Non-recurring consulting fees 4

 

0.6%

 

 

0.0%

 

 

0.0%

 

 

 

 

Litigation related expenses 5

 

0.6%

 

 

0.7%

 

 

0.8%

 

 

 

 

GAAP Sales, Marketing & Administrative Expense [D]

 

52.3%

 

 

51.7% - 52.7%

 

 

51.6% - 52.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP and Non-GAAP Research & Development Expense [E]

 

5.6%

 

 

6.0%

 

 

6.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related settlements [F] 6

 

2.5%

 

 

0.0%

 

 

0.0%

 

 

 

 

Amortization of intangible assets [G]

 

4.6%

 

 

4.3%

 

 

4.4%

 

 

 

 

Purchase of in-process research and development [H] 7

 

0.8%

 

 

0.0%

 

 

0.0%

 

 

 

 

European medical device regulation [I] 8

 

0.0%

 

 

0.6%

 

 

0.5%

 

 

 

 

Business transition costs [J] 9

 

1.0%

 

 

0.4%

 

 

0.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Margin % [A - C - E]

 

15.1%

 

 

15.0% - 15.5%

 

 

15.3% - 15.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating Margin % [B - D - E - F - G - H - I - J]

 

4.9%

 

 

9.0% - 9.5%

 

 

9.1% - 9.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Items may not foot due to rounding.

 

 

2

 

Prior guidance reflects the range provided May 1, 2019. Current guidance reflects the range provided July 30, 2019.

 

 

3

 

Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

 

 

4

 

Non-recurring consulting fees associated with the implementation of our state tax-planning strategy.

 

 

5

 

Expenses associated with ongoing litigation with a former Board member and his current employer related to various matters, including infringement of the Company’s intellectual property.

 

 

6

 

Represents the loss recorded in connection with the settlement of the Madsen Medical, Inc. litigation matter.

 

 

7

 

Purchase of an in-process research and development asset which had no future alternative use.

 

 

8

 

Costs related to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

9

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 


 

Reconciliation of EBITDA Margin %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Guidance Range 1, 5

 

 

 

 

(in thousands, except %)

2018 Actuals 1, 2

 

 

Prior 3

 

 

Current 4

 

 

 

 

Net Income

1.1%

 

 

4.3% - 4.8%

 

 

4.3% - 4.7%

 

 

 

 

Interest income / expense, net

3.4%

 

 

3.3%

 

 

3.3%

 

 

 

 

Income tax benefit / (expense)

(0.3%)

 

 

1.3%

 

 

1.5%

 

 

 

 

Depreciation and amortization

11.8%

 

 

12.0%

 

 

11.9%

 

 

 

 

EBITDA Margin

16.0%

 

 

20.9% - 21.3%

 

 

21.2% - 21.5%

 

 

 

 

Non-cash stock based compensation

2.3%

 

 

2.6%

 

 

2.5%

 

 

 

 

Business transition costs 6

1.0%

 

 

0.4%

 

 

0.5%

 

 

 

 

Non-cash purchase accounting adjustments on acquisitions 7

0.1%

 

 

0.0%

 

 

0.0%

 

 

 

 

Litigation related expenses and settlements 8

3.1%

 

 

0.7%

 

 

0.8%

 

 

 

 

Non-recurring consulting fees 9

0.6%

 

 

0.0%

 

 

0.0%

 

 

 

 

In-process research and development 10

0.8%

 

 

0.0%

 

 

0.0%

 

 

 

 

European medical device regulation 11

0.0%

 

 

0.6%

 

 

0.5%

 

 

 

 

Net loss on strategic investments

0.3%

 

 

0.0%

 

 

0.0%

 

 

 

 

Adjusted EBITDA Margin

24.3%

 

 

25.2% - 25.7%

 

 

25.5% - 25.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Items may not foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

2

 

Effective tax expense rate of ~43% benefit applied to GAAP earnings and ~18% applied to Non-GAAP earnings.

 

 

3

 

Effective tax expense rate of ~22% applied to GAAP earnings and ~23% applied to Non-GAAP earnings.

 

 

4

 

Effective tax expense rate of ~24% applied to GAAP earnings and ~23% applied to Non-GAAP earnings.

 

 

5

 

Prior guidance reflects the range provided May 1, 2019. Current guidance reflects the range provided July 30, 2019.

 

 

6

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

7

 

Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

 

 

8

 

Represents the loss recorded in connection with the settlement of the Madsen Medical, Inc. litigation matter, as well as expenses associated with ongoing litigation with a former Board member and his current employer related to various matters, including infringement of the Company’s intellectual property.

 

 

9

 

Non-recurring consulting fees associated with the implementation of our state tax-planning strategy.

 

 

10

 

Purchase of an in-process research and development asset which had no future alternative use.

 

 

11

 

Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 


 

 

Reconciliation of GAAP to Non-GAAP Financial Information

Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, non-GAAP net income, non-GAAP operating expenses and non-GAAP operating profit margin, which exclude amortization of intangible assets, business transition costs, purchased in-process research and development, one-time restructuring and related items in connection with acquisitions, investments and divestitures, non-recurring consulting fees, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses from strategic investments, and non-cash interest expense (excluding debt issuance cost). Management also uses certain non-GAAP financial measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency utilizes an exchange rate that eliminates fluctuations when calculating financial performance numbers. The Company also uses measures such as free cash flow, which represents cash flow from operations less cash used in the acquisition and disposition of capital. Additionally, the Company uses an adjusted EBITDA measure which represents earnings before interest, taxes, depreciation and amortization and excludes the impact of stock-based compensation, business transition costs, purchased in-process research and development, one-time restructuring and related items in connection with acquisitions, investments and divestitures, non-recurring consulting fees, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses on strategic investments, and other significant one-time items.

 

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 further and more consistently analyze the period-to-period financial performance of its core business operations. Management believes that providing investors with these non-GAAP financial measures gives them additional information to enable them to assess, in the same way management assesses, the Company's current and future continuing operations. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP, and may be different from non-GAAP financial measures used by other companies. Set forth below are reconciliations of the GAAP to non-GAAP financial measures.

 


 

 

 

 

For the Three Months Ended June 30, 2019

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited - in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

Operating Profit

 

Net Income

 

Diluted EPS

 

Diluted WASO 5

 

Net Income to Adjusted EBITDA

 

 

 

 

Reported GAAP

$

214,526

 

$

30,197

 

$

14,962

 

$

0.29

 

 

52,460

 

$

14,962

 

 

 

 

% of revenue

 

73.4

%

 

10.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

 

 

12,277

 

 

12,277

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related expenses and settlements 1

 

 

 

 

2,031

 

 

2,031

 

 

 

 

 

 

 

 

2,031

 

 

 

 

Business transition costs 2

 

 

 

 

1,646

 

 

1,646

 

 

 

 

 

 

 

 

1,646

 

 

 

 

European medical device regulation 3

 

 

 

 

1,400

 

 

1,400

 

 

 

 

 

 

 

 

1,400

 

 

 

 

Non-cash interest expense on convertible notes

 

 

 

 

 

 

 

4,374

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of adjustments 4

 

 

 

 

 

 

 

(3,881

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,323

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,921

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,560

 

 

 

 

Non-cash stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,901

 

 

 

 

Adjusted Non-GAAP

$

214,526

 

$

47,551

 

$

32,809

 

$

0.63

 

 

52,460

 

$

75,744

 

 

 

 

% of revenue

 

73.4

%

 

16.3

%

 

 

 

 

 

 

 

 

 

 

25.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Represents expenses associated with ongoing litigation with a former Board member and his current employer related to various matters, including infringement of the Company’s intellectual property.

 

 

2

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

3

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

4

 

Represents the impact from tax affecting the adjustments above at their statutory tax rate. As of July 30, 2019, the Company estimated an annual tax rate of ~24% on a GAAP basis and ~23% on a non-GAAP basis.

 

 

5

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes and warrants for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

 


 

 

 

 

For the Six Months Ended June 30, 2019

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited - in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

Operating Profit

 

Net Income

 

Diluted EPS

 

Diluted WASO 5

 

Net Income to Adjusted EBITDA

 

 

 

 

Reported GAAP

$

414,808

 

$

50,370

 

$

24,348

 

$

0.46

 

 

52,471

 

$

24,348

 

 

 

 

% of revenue

 

73.2

%

 

8.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

 

 

25,902

 

 

25,902

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related expenses and settlements 1

 

 

 

 

5,077

 

 

5,077

 

 

 

 

 

 

 

 

5,077

 

 

 

 

Business transition costs 2

 

 

 

 

5,479

 

 

5,479

 

 

 

 

 

 

 

 

5,479

 

 

 

 

European medical device regulation 3

 

 

 

 

1,732

 

 

1,732

 

 

 

 

 

 

 

 

1,732

 

 

 

 

Non-cash interest expense on convertible notes

 

 

 

 

 

 

 

8,693

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of adjustments 4

 

 

 

 

 

 

 

(10,814

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,427

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,238

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,614

 

 

 

 

Non-cash stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,618

 

 

 

 

Adjusted Non-GAAP

$

414,808

 

$

88,560

 

$

60,417

 

$

1.15

 

 

52,471

 

$

142,533

 

 

 

 

% of revenue

 

73.2

%

 

15.6

%

 

 

 

 

 

 

 

 

 

 

25.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Represents expenses associated with ongoing litigation with a former Board member and his current employer related to various matters, including infringement of the Company’s intellectual property.

 

 

2

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

3

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

4

 

Represents the impact from tax affecting the adjustments above at their statutory tax rate. As of July 30, 2019, the Company estimated an annual tax rate of ~24% on a GAAP basis and ~23% on a non-GAAP basis.

 

 

5

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes and warrants for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

 


 

 

 

 

For the Three Months Ended June 30, 2018

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited - in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

Operating Profit

 

Net Income

 

Diluted EPS

 

Diluted WASO 5

 

Net Income to Adjusted EBITDA

 

 

 

 

Reported GAAP

$

204,508

 

$

28,563

 

$

11,531

 

$

0.22

 

 

51,956

 

$

11,531

 

 

 

 

% of revenue

 

72.6

%

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash purchase accounting adjustments on acquisitions 1

 

405

 

 

405

 

 

405

 

 

 

 

 

 

 

 

405

 

 

 

 

Amortization of intangible assets

 

 

 

 

12,628

 

 

12,628

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related expenses and settlements 2

 

 

 

 

383

 

 

383

 

 

 

 

 

 

 

 

383

 

 

 

 

Business transition costs 3

 

 

 

 

3,998

 

 

3,998

 

 

 

 

 

 

 

 

3,998

 

 

 

 

Non-cash interest expense on convertible notes

 

 

 

 

 

 

 

4,153

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of adjustments 4

 

 

 

 

 

 

 

(2,775

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,840

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,813

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,061

 

 

 

 

Non-cash stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,860

 

 

 

 

Adjusted Non-GAAP

$

204,913

 

$

45,977

 

$

30,323

 

$

0.58

 

 

51,956

 

$

69,891

 

 

 

 

% of revenue

 

72.8

%

 

16.3

%

 

 

 

 

 

 

 

 

 

 

24.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

 

 

2

 

Represents the change in the estimated loss contingency recorded in connection with the settlement of the Madsen Medical, Inc. litigation matter, as well as expenses associated with ongoing litigation with a former Board member and his current employer related to various matters, including i