Press Release
First Quarter 2017 Highlights
- Revenue increased 16.2% to
$250 million , or 16.0% on a constant currency basis; - GAAP operating profit margin of 9.3%; Non-GAAP operating profit margin of 14.1%;
- GAAP diluted earnings per share of
$0.22 ; Non-GAAP diluted earnings per share increase of 11.8% to$0.38 ; and - Expanded existing revolving line of credit from
$150 million up to$500 million .
"
The Company also announced it amended its existing revolving line of credit to expand the facility from
A full reconciliation of GAAP to non-GAAP measures can be found in the tables of this news release.
First Quarter 2017 Results
For the first quarter 2017, both GAAP and non-GAAP gross profit was
The Company reported a GAAP net income of
Cash, cash equivalents and short and long-term marketable securities were approximately
Annual Financial Guidance for 2017
The Company reiterated its full year 2017 guidance:
2017 Guidance 1 |
||||||
(in Million's; except %'s and EPS) |
GAAP |
Non-GAAP |
||||
Revenue |
$ 1,065 |
$ 1,065 |
||||
% Growth - Reported |
10.7% |
10.7% |
||||
% Growth - Constant Currency 2 |
11.7% |
|||||
Operating margin |
12.3% |
17.1% |
||||
Earnings per share |
$ 1.13 |
$ 2.00 |
||||
EBITDA |
23.6% |
26.7% |
||||
Tax Rate |
~34% |
~35% |
||||
1 |
Current guidance reflects guidance provided April 25, 2017. |
|||||
2 |
Constant currency is a measure that adjusts US GAAP revenue for the |
|||||
- Revenue of
$1.065 billion , which includes approximately$10 million in year-over-year currency headwinds, and reflects 10.7% growth on a reported basis and 11.7% growth on a constant currency basis compared to revenue of$962.1 million for 2016; - Non-GAAP diluted earnings per share of
$2.00 , an increase of 20% compared to non-GAAP diluted earnings per share of$1.66 for 2016; - Non-GAAP operating profit margin of 17.1%, an increase of 100 basis points compared to 16.1% for 2016; and
- Adjusted EBITDA margin of 26.7%, an increase of 150 basis points compared to 25.2% for 2016.
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 |
|||||||
2017 Guidance |
|||||||
2016 Actuals |
Prior 1, 2 |
Current 1, 3 |
|||||
GAAP net income per share |
$ 0.69 |
$ 1.16 |
$ 1.13 |
||||
Impact of change to diluted share count |
0.02 |
0.07 |
0.07 |
||||
GAAP net income per share, adjusted to diluted Non-GAAP share count |
$ 0.71 |
$ 1.23 |
$ 1.20 |
||||
Litigation liability gain |
(0.83) |
- |
- |
||||
Business transition costs 4 |
0.35 |
0.05 |
0.04 |
||||
Non-cash interest expense on convertible notes |
0.38 |
0.33 |
0.33 |
||||
Non-cash purchase accounting adjustments on acquisitions 5 |
0.28 |
- |
- |
||||
Loss on repurchase of convertible notes |
0.37 |
- |
- |
||||
Amortization of intangible assets 6 |
0.78 |
0.83 |
0.89 |
||||
Tax effect of adjustments 7 |
(0.38) |
(0.44) |
(0.46) |
||||
Non-GAAP earnings per share |
$ 1.66 |
$ 2.00 |
$ 2.00 |
||||
GAAP Weighted shares outstanding - basic |
50,077 |
50,967 |
50,967 |
||||
GAAP Weighted shares outstanding - diluted |
54,102 |
56,269 |
56,269 |
||||
Non-GAAP Weighted shares outstanding - diluted |
51,981 |
53,069 |
53,069 |
||||
1 |
Prior guidance provided February 9, 2017. Current guidance reflects guidance provided April 25, 2017. |
||||||
2 |
Effective tax expense rate of ~35% applied to GAAP earnings and ~35% applied to Non-GAAP earnings. |
||||||
3 |
Effective tax expense rate of ~34% applied to GAAP earnings and ~35% applied to Non-GAAP earnings. |
||||||
4 |
Costs related to acquisition, integration and business transition activities which include severance, relocation, |
||||||
5 |
Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market |
||||||
6 |
Excludes the amortization associated with non-controlling interest. |
||||||
7 |
The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into |
||||||
Reconciliation of Non-GAAP Operating Margin % |
||||||||
2017 Guidance |
||||||||
(in thousands, except %) |
2016 |
Prior 1 |
Current 1 |
|||||
Non-GAAP Gross Margin %[A] |
76.6% |
76.1% |
76.1% |
|||||
Non-cash purchase accounting adjustments on acquisitions 2 |
(1.5%) |
0.0% |
0.0% |
|||||
GAAP Gross Margin [B] |
75.0% |
76.1% |
76.1% |
|||||
GAAP & Non-GAAP Sales, Marketing & Administrative Expense [C] |
55.5% |
54.0% |
54.0% |
|||||
Non-GAAP Research & Development Expense [D] |
5.0% |
5.0% |
5.0% |
|||||
In-process research & development |
0.0% |
0.0% |
0.0% |
|||||
GAAP Research & Development Expense [E] |
5.0% |
5.0% |
5.0% |
|||||
Litigation liability [F] |
(4.5%) |
0.0% |
0.0% |
|||||
Amortization of intangible assets [G] 3 |
4.4% |
4.3% |
4.6% |
|||||
Business transition costs [H] 4 |
1.9% |
0.3% |
0.2% |
|||||
Non-GAAP Operating Margin % [A - C - D] |
16.1% |
17.1% |
17.1% |
|||||
GAAP Operating Margin % [B - C - E - F - G - H] |
12.8% |
12.6% |
12.3% |
|||||
1 |
Prior guidance provided February 9, 2017. Current guidance reflects guidance provided April 25, 2017. |
|||||||
2 |
Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair |
|||||||
3 |
Excludes the amortization associated with non-controlling interest. |
|||||||
4 |
Costs related to acquisition, integration and business transition activities which include severance, |
|||||||
Reconciliation of EBITDA % |
|||||||
2017 Guidance |
|||||||
(in thousands, except %) |
2016 |
Prior 1 |
Current 1 |
||||
Net Income / (Loss) |
3.9% |
6.1% |
6.0% |
||||
Interest (income) / expense, net 2 |
6.1% |
3.5% |
3.5% |
||||
Provision for income taxes |
3.0% |
3.1% |
3.0% |
||||
Depreciation and amortization 3 |
10.5% |
10.8% |
11.1% |
||||
EBITDA |
23.5% |
23.6% |
23.6% |
||||
Non-cash stock based compensation |
2.8% |
2.9% |
3.0% |
||||
Business transition costs 4 |
1.9% |
0.3% |
0.2% |
||||
Non-cash purchase accounting adjustments on acquisitions 5 |
1.5% |
0.0% |
0.0% |
||||
In-process research & development |
0.0% |
0.0% |
0.0% |
||||
Litigation liability gain |
(4.5%) |
0.0% |
0.0% |
||||
Adjusted EBITDA |
25.2% |
26.7% |
26.7% |
||||
1 |
Prior guidance provided February 9, 2017. Current guidance reflects guidance provided April 25, 2017. |
||||||
2 |
Interest (income) / expense, net for the quarter and year ended December 31, 2016 includes loss on |
||||||
3 |
Excludes the amortization associated with non-controlling interest. |
||||||
4 |
Costs related to acquisition, integration and business transition activities which include severance, relocation, |
||||||
5 |
Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair |
||||||
Reconciliation of Non-GAAP 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, leasehold related charges, integration related expenses associated with acquired businesses, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges and non-cash interest expense (excluding debt issuance cost) and or losses on convertible notes. Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency is the use of 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, purchase accounting related changes, leasehold related charges, integration related expenses associated with acquired businesses, CEO transition related costs, certain litigation liabilities, acquisition related items 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 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 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 First Quarter 2017 Results |
||||||
GAAP Net Income to Adjusted EBITDA |
||||||
Three months ended |
||||||
(in thousands, except per share data) |
March 31, 2017 |
|||||
GAAP net income |
$ 12,768 |
|||||
Interest expense/(income), net |
9,662 |
|||||
Provision for income taxes |
1,490 |
|||||
Depreciation and amortization 1 |
29,158 |
|||||
EBITDA |
$ 53,078 |
|||||
Business transition costs2 |
55 |
|||||
Non-cash stock based compensation |
7,017 |
|||||
Adjusted EBITDA |
$ 60,150 |
|||||
As a percentage of revenue |
24.1% |
|||||
1 |
Excludes the amortization associated with non-controlling interest. |
|||||
2 |
Costs related to acquisition, integration and business transition activities which includes severance, relocation, consulting, |
Reconciliation of First Quarter 2017 Results |
||||||||
GAAP Net Income per Share to Non-GAAP Earnings per Share |
||||||||
Adjustments |
Diluted Earnings Per |
|||||||
(in thousands, except per share data) |
||||||||
GAAP net income |
$ 12,768 |
$ 0.22 |
||||||
Business transition costs 1 |
55 |
|||||||
Non-cash interest expense on convertible notes |
4,599 |
|||||||
Amortization of intangible assets 2 |
11,738 |
|||||||
Tax effect of adjustments 3 |
(9,123) |
|||||||
Adjustments to GAAP net income |
7,269 |
0.14 |
||||||
Non-GAAP earnings |
$ 20,037 |
$ 0.38 |
||||||
GAAP weighted shares outstanding - diluted |
57,786 |
|||||||
Non-GAAP weighted shares outstanding - diluted 4 |
52,683 |
|||||||
1 |
Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, |
|||||||
2 |
Excludes the amortization associated with non-controlling interest. |
|||||||
3 |
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 |
|||||||
4 |
Represents the exclusion of diluted shares associated with the Company's convertible debt and warrant which are economically hedged by the |
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Investor Conference Call
About
Forward-Looking Statements
NuVasive, Inc. |
||||
Consolidated Statements of Operations |
||||
(in thousands, except per share data) |
||||
Three Months Ended March 31, |
||||
(unaudited) |
2017 |
2016 |
||
Revenue |
$ 249,864 |
$ 215,104 |
||
Cost of goods sold (excluding below amortization of intangible assets) |
61,613 |
54,226 |
||
Gross profit |
188,251 |
160,878 |
||
Operating expenses: |
||||
Sales, marketing and administrative |
140,502 |
124,838 |
||
Research and development |
12,414 |
10,629 |
||
Amortization of intangible assets |
12,061 |
7,871 |
||
Business transition costs |
55 |
5,307 |
||
Total operating expenses |
165,032 |
148,645 |
||
Interest and other expense, net: |
||||
Interest income |
137 |
328 |
||
Interest expense |
(9,799) |
(8,472) |
||
Loss on repurchases of convertible notes |
— |
(17,444) |
||
Other income, net |
258 |
50 |
||
Total interest and other expense, net |
(9,404) |
(25,538) |
||
Income (loss) before income taxes |
13,815 |
(13,305) |
||
Income tax (expense) benefit |
(1,490) |
9,480 |
||
Consolidated net income (loss) |
$ 12,325 |
$ (3,825) |
||
Add back net loss attributable to non-controlling interest |
$ (443) |
$ (457) |
||
Net income (loss) attributable to NuVasive, Inc. |
$ 12,768 |
$ (3,368) |
||
Net income (loss) per share attributable to NuVasive, Inc.: |
||||
Basic |
$ 0.25 |
$ (0.07) |
||
Diluted |
$ 0.22 |
$ (0.07) |
||
Weighted average shares outstanding: |
||||
Basic |
50,566 |
49,617 |
||
Diluted |
57,786 |
49,617 |
NuVasive, Inc. |
||||
Consolidated Balance Sheets |
||||
(in thousands, except par values and share amounts) |
||||
March 31, 2017 |
December 31, 2016 |
|||
ASSETS |
(Unaudited) |
|||
Current assets: |
||||
Cash and cash equivalents |
$ 134,008 |
$ 153,643 |
||
Accounts receivable, net of allowances of $8,086 and $8,912, respectively |
172,103 |
171,595 |
||
Inventory, net |
223,075 |
208,249 |
||
Prepaid income taxes |
21,161 |
31,926 |
||
Prepaid expenses and other current assets |
12,921 |
10,030 |
||
Total current assets |
563,268 |
575,443 |
||
Property and equipment, net |
203,677 |
181,524 |
||
Intangible assets, net |
279,603 |
291,143 |
||
Goodwill |
486,342 |
485,685 |
||
Deferred tax assets |
5,977 |
5,810 |
||
Restricted cash and investments |
7,547 |
7,405 |
||
Other assets |
23,721 |
23,794 |
||
Total assets |
$ 1,570,135 |
$ 1,570,804 |
||
LIABILITIES AND EQUITY |
||||
Current liabilities: |
||||
Accounts payable and accrued liabilities |
$ 82,467 |
$ 77,585 |
||
Contingent consideration liabilities |
48,576 |
49,742 |
||
Accrued payroll and related expenses |
38,651 |
51,000 |
||
Income tax liabilities |
2,130 |
2,469 |
||
Senior convertible notes |
62,486 |
61,701 |
||
Total current liabilities |
234,310 |
242,497 |
||
Long-term senior convertible notes |
568,939 |
564,412 |
||
Deferred and income tax liabilities, non-current |
20,529 |
18,607 |
||
Other long-term liabilities |
47,629 |
44,764 |
||
Commitments and contingencies |
||||
Stockholders' equity: |
||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none outstanding |
— |
— |
||
Common stock, $0.001 par value; 120,000,000 shares authorized at March 31, 2017 and December 31, 2016, 55,623,735 and 55,184,660 issued and outstanding at March 31, 2017 and December 31, 2016, respectively |
56 |
55 |
||
Additional paid-in capital |
1,020,672 |
1,010,238 |
||
Accumulated other comprehensive loss |
(8,774) |
(10,631) |
||
Accumulated deficit |
(65,738) |
(66,859) |
||
Treasury stock at cost; 4,963,014 shares and 4,758,828 shares at March 31, 2017 and December 31, 2016, respectively |
(252,633) |
(237,867) |
||
Total NuVasive, Inc. stockholders' equity |
693,583 |
694,936 |
||
Non-controlling interest |
5,145 |
5,588 |
||
Total equity |
698,728 |
700,524 |
||
Total liabilities and equity |
$ 1,570,135 |
$ 1,570,804 |
NuVasive, Inc. |
||||
Consolidated Statements of Cash Flows |
||||
(in thousands) |
||||
Three Months Ended March 31, |
||||
(unaudited) |
2017 |
2016 |
||
Operating activities: |
||||
Consolidated net income (loss) |
$ 12,325 |
$ (3,825) |
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||
Depreciation and amortization |
29,510 |
21,224 |
||
Loss on repurchases of convertible notes |
— |
17,444 |
||
Amortization of non-cash interest |
5,369 |
5,112 |
||
Stock-based compensation |
7,017 |
4,492 |
||
Reserves on current assets |
(2,153) |
4,162 |
||
Other non-cash adjustments |
3,013 |
3,491 |
||
Deferred income taxes |
1,645 |
(2,630) |
||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||
Accounts receivable |
924 |
6,939 |
||
Inventory |
(13,630) |
(9,449) |
||
Prepaid expenses and other current assets |
(2,756) |
1,303 |
||
Accounts payable and accrued liabilities |
593 |
10,021 |
||
Accrued payroll and related expenses |
(12,531) |
(9,219) |
||
Income taxes |
(1,298) |
8,327 |
||
Net cash provided by operating activities |
28,028 |
57,392 |
||
Investing activities: |
||||
Acquisition of Ellipse Technologies, net of cash acquired |
— |
(380,674) |
||
Other acquisitions and investments |
(2,500) |
(8,079) |
||
Purchases of intangible assets |
(1,249) |
(1,027) |
||
Purchases of property and equipment |
(34,545) |
(18,279) |
||
Purchases of marketable securities |
— |
(36,096) |
||
Proceeds from sales of marketable securities |
— |
253,435 |
||
Net cash used in investing activities |
(38,294) |
(190,720) |
||
Financing activities: |
||||
Proceeds from the issuance of common stock |
410 |
444 |
||
Purchase of treasury stock |
(10,356) |
(12,599) |
||
Proceeds from issuance of convertible debt, net of issuance costs |
— |
634,140 |
||
Proceeds from sale of warrants |
— |
44,850 |
||
Purchase of convertible note hedge |
— |
(111,150) |
||
Repurchases of convertible notes |
— |
(343,835) |
||
Proceeds from revolving line of credit |
— |
50,000 |
||
Repayments on revolving line of credit |
— |
(50,000) |
||
Other financing activities |
(181) |
(1,442) |
||
Net cash (used in) provided by financing activities |
(10,127) |
210,408 |
||
Effect of exchange rate changes on cash |
758 |
686 |
||
(Decrease) increase in cash and cash equivalents |
(19,635) |
77,766 |
||
Cash and cash equivalents at beginning of period |
153,643 |
192,339 |
||
Cash and cash equivalents at end of period |
$ 134,008 |
$ 270,105 |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nuvasive-announces-first-quarter-2017-financial-results-300445403.html
SOURCE
Investor Contact: Suzanne Hatcher, NuVasive, Inc., 858-458-2240, investorrelations@nuvasive.com; Media Contact: Stefanie Mazer, NuVasive, Inc., 858-320-5243, media@nuvasive.com