Press Release
- Second quarter 2013 revenue of
$165.7 million ; up 7.3% from second quarter 2012 - Non-GAAP operating margin of 14.0%
- GAAP net loss of
$6.5 million , or$0.15 per share - Non-GAAP earnings of
$9.4 million , or$0.20 per share - Reiterates 2013 guidance for revenue, non-GAAP operating margin, and non-GAAP earnings per share
Gross profit for the second quarter 2013 was
Total operating expenses for the second quarter 2013 were
On a GAAP basis, the Company reported a net loss of
On a Non-GAAP basis, the Company reported net income of
Cash, cash equivalents and short and long-term marketable securities were
2013 Full Year Financial Guidance:
- Revenue of approximately
$655 million , unchanged from prior guidance - GAAP loss per share of approximately
$(0.09) , compared to income of$0.02 previously - Non-GAAP EPS of approximately
$1.00 , unchanged from prior guidance - Non-GAAP Operating Margin of approximately 14%, unchanged from prior guidance
- GAAP effective tax benefit rate of approximately 30%, compared to a tax expense rate of approximately 80% previously
| Reconciliation of Full Year EPS Guidance | ||||||||
| 2013 Guidance | ||||||||
| Prior 1 | Revised 2 | |||||||
| GAAP earnings (loss) per share guidance | $ | 0.02 | $ | (0.09 | ) | |||
| Impact of change from basic to diluted share count | $ | - | ||||||
| GAAP earnings (loss) per share, adjusted to diluted share count | $ | 0.02 | $ | (0.09 | ) | |||
| Non-cash stock based compensation | 0.45 | 0.45 | ||||||
| Certain intellectual property litigation expenses | 0.06 | 0.06 | ||||||
| Amortization of intangible assets | 0.27 | 0.27 | ||||||
| Acquisition related items 3 | 0.03 | 0.03 | ||||||
| Non-cash interest expense on convertible notes | 0.18 | 0.18 | ||||||
| Out-of-period royalty expense charge | - | 0.10 | ||||||
| Non-GAAP earnings per share guidance | $ | 1.00 | $ | 1.00 | ||||
| Weighted shares outstanding - basic | 45,500 | 45,500 | ||||||
| Weighted shares outstanding - diluted | 46,500 | 46,500 | ||||||
| 1 | Effective tax expense rate of ~80% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments |
| 2 | Effective tax benefit rate of ~30% 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 |
| Reconciliation of Non-GAAP Operating Margin % | ||||||
| 2012 | 2013 Guidance | |||||
| Actuals | Prior | Revised | ||||
| Non-GAAP Gross Margin % [A] | 75.3% | ~74.0% | ~75.0% | |||
| Out-of-period royalty expense charge | - | - | ~(1.2%) | |||
| GAAP Gross Margin | 75.3% | ~74.0% | ~73.8% | |||
| Non-GAAP Operating Expenses [B] | 60.8% | ~60.0% | ~61.0% | |||
| Non-cash stock-based compensation | 4.2% | ~5.5% | ~5.5% | |||
| Certain intellectual property litigation expenses | 0.4% | ~1.0% | ~1.0% | |||
| Amortization of intangible assets | 2.0% | ~3.0% | ~3.0% | |||
| Intangible asset and goodwill impairment charge | 1.5% | - | - | |||
| Acquisition related items* | 0.3% | ~0.3% | ~0.3% | |||
| GAAP Operating Expenses | 69.3% | ~69.8% | ~70.8% | |||
| Non-GAAP Operating Margin % [A-B] | 14.5% | ~14.0% | ~14.0% | |||
| * 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 earnings per share, which exclude non-cash stock-based compensation, certain intellectual property litigation expenses, amortization of intangible assets, intangible asset and goodwill impairment charges, acquisition related items, non-cash interest expense on convertible notes and an out of period royalty expense charge. 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 2013 Results | ||||||||||||
| (in thousands, except per share data) | Pre-Tax Adjustments | Net of Tax | (Loss) Earnings Per Share | |||||||||
| GAAP net loss | $ | (6,469 | ) | $ | (0.15 | ) | ||||||
| Impact of change from basic to diluted share count | 0.01 | |||||||||||
| GAAP net loss, adjusted to diluted share count | $ | (6,469 | ) | $ | (0.14 | ) | ||||||
| Non-cash stock-based compensation | $ | 8,761 | 5,257 | 0.11 | ||||||||
| Certain intellectual property litigation expenses | 1,480 | 888 | 0.02 | |||||||||
| Amortization of intangible assets | 4,913 | 2,948 | 0.06 | |||||||||
| Acquisition related items | 56 | 34 | 0.00 | |||||||||
| Non-cash interest expense on convertible notes | 3,382 | 2,029 | 0.04 | |||||||||
| Out-of-period royalty expense charge | 7,901 | 4,741 | 0.10 | |||||||||
| Non-GAAP earnings | $ | 9,428 | $ | 0.20 | ||||||||
| GAAP weighted shares outstanding - basic and diluted | 44,412 | |||||||||||
| Non-GAAP weighted shares outstanding - diluted | 46,627 | |||||||||||
| Reconciliation of Year To Date 2013 Results | ||||||||||||
| (in thousands, except per share data) | Pre-Tax Adjustments | Net of Tax | (Loss) Earnings Per Share | |||||||||
| GAAP net loss | $ | (5,618 | ) | $ | (0.13 | ) | ||||||
| Impact of change from basic to diluted share count | 0.01 | |||||||||||
| GAAP net loss, adjusted to diluted share count | $ | (5,618 | ) | $ | (0.12 | ) | ||||||
| Non-cash stock-based compensation | $ | 15,548 | 9,329 | 0.20 | ||||||||
| Certain intellectual property litigation expenses | 2,889 | 1,733 | 0.04 | |||||||||
| Amortization of intangible assets | 9,288 | 5,573 | 0.12 | |||||||||
| Acquisition related items | 2,517 | 1,510 | 0.03 | |||||||||
| Non-cash interest expense on convertible notes | 6,704 | 4,022 | 0.09 | |||||||||
| Out-of-period royalty expense charge | 7,901 | 4,741 | 0.10 | |||||||||
| Non-GAAP earnings | $ | 21,290 | $ | 0.46 | ||||||||
| GAAP weighted shares outstanding - basic and diluted | 44,220 | |||||||||||
| Non-GAAP weighted shares outstanding - diluted | 45,973 | |||||||||||
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About
Having pioneered the lateral approach to spine fusion,
| NuVasive, Inc. | |||||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| Revenue | $ | 165,698 | $ | 154,419 | $ | 325,202 | $ | 306,110 | |||||||||
| Cost of goods sold (excluding amortization of purchased technology) | 48,744 | 36,534 | 87,840 | 73,467 | |||||||||||||
| Gross profit | 116,954 | 117,885 | 237,362 | 232,643 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Sales, marketing and administrative | 104,272 | 92,615 | 204,158 | 187,293 | |||||||||||||
| Research and development | 7,712 | 9,335 | 17,407 | 19,323 | |||||||||||||
| Amortization of intangible assets | 4,913 | 2,903 | 9,288 | 5,749 | |||||||||||||
| Total operating expenses | 116,897 | 104,853 | 230,853 | 212,365 | |||||||||||||
| Interest and other expense, net: | |||||||||||||||||
| Interest income | 231 | 204 | 403 | 412 | |||||||||||||
| Interest expense | (6,652 | ) | (6,972 | ) | (13,685 | ) | (13,797 | ) | |||||||||
| Other expense, net | (440 | ) | (551 | ) | (199 | ) | (114 | ) | |||||||||
| Total interest and other expense, net | (6,861 | ) | (7,319 | ) | (13,481 | ) | (13,499 | ) | |||||||||
| (Loss) income before income taxes | (6,804 | ) | 5,713 | (6,972 | ) | 6,779 | |||||||||||
| Income tax (benefit) expense | (76 | ) | 3,103 | (840 | ) | 3,700 | |||||||||||
| Consolidated net (loss) income | $ | (6,728 | ) | $ | 2,610 | $ | (6,132 | ) | $ | 3,079 | |||||||
| Net loss attributable to noncontrolling interests | $ | (259 | ) | $ | (253 | ) | $ | (514 | ) | $ | (457 | ) | |||||
| Net (loss) income attributable to NuVasive, Inc. | $ | (6,469 | ) | $ | 2,863 | $ | (5,618 | ) | $ | 3,536 | |||||||
| Net (loss) income per share attributable to NuVasive, Inc.: | |||||||||||||||||
| Basic | $ | (0.15 | ) | $ | 0.07 | $ | (0.13 | ) | $ | 0.08 | |||||||
| Diluted | $ | (0.15 | ) | $ | 0.06 | $ | (0.13 | ) | $ | 0.08 | |||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 44,412 | 43,347 | 44,220 | 43,095 | |||||||||||||
| Diluted | 44,412 | 44,318 | 44,220 | 43,857 | |||||||||||||
| Stock-based compensation is included in expenses in the following categories: | |||||||||||||||||
| Sales, marketing and administrative | $ | 8,278 | $ | 7,737 | $ | 14,703 | $ | 13,879 | |||||||||
| Research and development | 449 | 592 | 791 | 1,057 | |||||||||||||
| Cost of goods sold | 34 | 16 | 54 | 30 | |||||||||||||
| $ | 8,761 | $ | 8,345 | $ | 15,548 | $ | 14,966 | ||||||||||
| NuVasive, Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (in thousands) | |||||||||
| June 30, 2013 | December 31, 2012 | ||||||||
| (Unaudited) | |||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 58,880 | $ | 123,299 | |||||
| Short-term marketable securities | 113,779 | 138,405 | |||||||
| Accounts receivable, net | 96,314 | 88,958 | |||||||
| Inventory | 137,394 | 126,335 | |||||||
| Deferred tax assets, current | 31,136 | 28,236 | |||||||
| Prepaid expenses and other current assets | 9,016 | 8,516 | |||||||
| Total current assets | 446,519 | 513,749 | |||||||
| Property and equipment, net | 130,591 | 125,123 | |||||||
| Long-term marketable securities | 100,072 | 84,412 | |||||||
| Intangible assets, net | 97,183 | 101,362 | |||||||
| Goodwill | 154,846 | 154,106 | |||||||
| Deferred tax assets | 37,677 | 40,575 | |||||||
| Restricted cash and investments | 119,048 | 118,995 | |||||||
| Other assets | 22,248 | 25,463 | |||||||
| Total assets | $ | 1,108,184 | $ | 1,163,785 | |||||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable and accrued liabilities | $ | 78,298 | $ | 62,048 | |||||
| Accrued payroll and related expenses | 21,936 | 27,916 | |||||||
| Senior Convertible Notes, current | - | 74,311 | |||||||
| Total current liabilities | 100,234 | 164,275 | |||||||
| Senior Convertible Notes | 339,108 | 332,404 | |||||||
| Deferred tax liabilities | 3,125 | 3,129 | |||||||
| Litigation liability | 93,700 | 101,200 | |||||||
| Other long-term liabilities | 14,838 | 15,199 | |||||||
| Commitments and contingencies | |||||||||
| Noncontrolling interests | - | 10,003 | |||||||
| Stockholders' equity: | |||||||||
| Preferred stock | - | - | |||||||
| Common stock | 45 | 44 | |||||||
| Additional paid-in capital | 734,796 | 714,865 | |||||||
| Accumulated other comprehensive (loss) income | (3,413 | ) | 786 | ||||||
| Accumulated deficit | (183,738 | ) | (178,120 | ) | |||||
| Total NuVasive, Inc. stockholders' equity | 547,690 | 537,575 | |||||||
| Noncontrolling interests | 9,489 | - | |||||||
| Total equity | 557,179 | 537,575 | |||||||
| Total liabilities and equity | $ | 1,108,184 | $ | 1,163,785 | |||||
| NuVasive, Inc. | |||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||
| (in thousands) | |||||||||
| Six Months Ended June 30, | |||||||||
| 2013 | 2012 | ||||||||
| Operating activities: | |||||||||
| Consolidated net (loss) income | $ | (6,132 | ) | $ | 3,079 | ||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | 30,341 | 25,313 | |||||||
| Amortization of debt discount | 6,704 | 6,233 | |||||||
| Amortization of debt issuance costs | 865 | 912 | |||||||
| Stock-based compensation | 15,548 | 14,966 | |||||||
| Allowance for doubtful accounts and sales return reserve | 379 | 1,622 | |||||||
| Allowance for excess and obsolete inventory, net of write-offs | 1,404 | 1,275 | |||||||
| Other non-cash adjustments | 4,175 | 3,541 | |||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||
| Accounts receivable | (8,443 | ) | 671 | ||||||
| Inventory | (13,680 | ) | (10,967 | ) | |||||
| Prepaid expenses and other current assets | (1,722 | ) | 12,185 | ||||||
| Accounts payable and accrued liabilities | 8,830 | 8,902 | |||||||
| Accrued payroll and related expenses | (5,885 | ) | (1,973 | ) | |||||
| Net cash provided by operating activities | 32,384 | 65,759 | |||||||
| Investing activities: | |||||||||
| Cash paid for business and asset acquisitions | (7,719 | ) | (7,917 | ) | |||||
| Purchases of property and equipment | (26,209 | ) | (23,930 | ) | |||||
| Purchases of marketable securities | (136,988 | ) | (110,915 | ) | |||||
| Sales of marketable securities | 145,014 | 144,427 | |||||||
| Purchases of restricted investments | - | (113,126 | ) | ||||||
| Net cash used in investing activities | (25,902 | ) | (111,461 | ) | |||||
| Financing activities: | |||||||||
| Principal payment of 2013 Senior Convertible Notes | (74,311 | ) | - | ||||||
| Tax benefits related to stock-based compensation awards | 1,261 | - | |||||||
| Proceeds from the issuance of common stock | 3,123 | 3,094 | |||||||
| Other assets | 26 | 242 | |||||||
| Net cash (used in) provided by financing activities | (69,901 | ) | 3,336 | ||||||
| Effect of exchange rate changes on cash | (1,000 | ) | 30 | ||||||
| (Decrease) increase in cash and cash equivalents | (64,419 | ) | (42,336 | ) | |||||
| Cash and cash equivalents at beginning of period | 123,299 | 163,492 | |||||||
| Cash and cash equivalents at end of period | $ | 58,880 | $ | 121,156 | |||||
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