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 First Quarter 2006 Revenue of $19.7 Million

- Annual Revenue Guidance Increased to $87 - $91 Million -

First Quarter Highlights:

* Total revenues increased to $19.7 million; up 48.3% from the first quarter of 2005

* Gross profit increased to $15.8 million; up 48.5% from the first quarter of 2005

* Gross margin increased to 80.3%; up 10 basis points from the first quarter of 2005

* Surgeons trained on MAS(TM) Platform was 132

* Sales force exclusivity increased from 60% at December 31, 2005, to 84% at March 31, 2006

* Percentage of vertically integrated hospitals increased to 31% from 29% at December 31, 2005

* Completed an underwritten public offering with net proceeds of $142.1 million

* Launched Gradient Plus(TM) Anterior Cervical Plating System

SAN DIEGO, April 27 /PRNewswire-FirstCall/ -- NuVasive, Inc. (Nasdaq: NUVA), a medical device company focused on developing products for minimally disruptive surgical treatments for the spine, announced today first quarter financial results for the period ended March 31, 2006.

The Company reported first quarter revenues of $19.7 million, a 48.3% increase over the $13.3 million for the first quarter of 2005 and a 4.6% increase over the $18.8 million for the fourth quarter of 2005.

Gross profit for the first quarter of 2006 was $15.8 million with a gross margin of 80.3%, compared with a gross profit of $10.6 million with a gross margin of 80.2% in the first quarter of 2005. For the fourth quarter of 2005, gross profit was $15.5 million with a gross margin of 82.5%.

Total operating expenses for the first quarter of 2006 were $25.0 million, compared with $14.5 million in the first quarter of 2005 and $19.9 million in the fourth quarter of 2005. The quarter-over-quarter and year-over-year increases are due primarily to (i) additional sales and marketing expenses related to the Company's program to transition its sales force toward exclusivity; (ii) continued investment in the Company's next generation MAS products, accelerated surgeon and sales representative training, and marketing related costs; and (iii) the inclusion of compensation expense related to employee stock options in the Company's total operating expenses.

Total revenues for the first quarter includes freight charges, which the Company historically recognized as an offset against sales, marketing and administrative expenses. These charges will be recognized as revenue going forward. As a result, the Company is increasing its annual revenue guidance to a range of $87 - $91 million.

On a GAAP basis for the three-month period ended March 31, 2006, the Company reported a net loss of $8.1 million or $0.27 per share. On a non-GAAP basis, the first quarter net loss was $4.3 million, or $0.14 per share. Non- GAAP net loss calculations exclude amortization of acquired intangible assets of $0.2 million and stock-based compensation of $3.6 million in the first quarter of 2006.

Cash, cash equivalents and short-term investments were $155.3 million at March 31, 2006.

During the first quarter of 2006, NuVasive launched the Gradient Plus(TM) Anterior Cervical Plating System. The system was developed internally as a next-generation enhancement of the Company's SmartPlate(R) Gradient CLP(TM) dynamic cervical plate, originally acquired from RSB Spine LLC in June 2005. Gradient Plus(TM) allows spine surgeons to choose, during the procedure, between three fixation options based on the surgical requirement: fixed, semi-constrained, or dynamic. NuVasive believes this is the only system on the market to allow intra-operative selection of all three plate styles, eliminating a surgeon's need to use separate systems for each desired fixation option.

Alexis V. Lukianov, Chairman and Chief Executive Officer, said, "We are pleased with our first quarter results. Our year-over-year top line growth of 48.3% was driven by the continued penetration of our MAS Platform as well as our nine new products launched in 2005. We are particularly pleased with our progress toward greater sales force exclusivity, which reached 84% as of March 31, 2006. This hybrid sales force is already contributing to increased penetration of our MAS Platform in the marketplace. We also trained 132 surgeons in the first quarter, thanks in large part to an extended visit from the lead clinical advisor in the development of the XLIF(R) procedure, who conducted multiple training sessions. In addition, at the close of the quarter, the percentage of hospitals vertically integrated across our MAS product lines rose to 31%, on track to meet our previously stated guidance of 35% to 38% for the full year 2006."

Secondary Offering

In early February of 2006, NuVasive completed an underwritten public offering of 7,829,120 shares of its common stock for $19.25 per share, with aggregate net proceeds to NuVasive of $142.1 million. The Company expects proceeds from this offering will be used to expand sales and marketing activities, fund research and development relating to potential new products, acquire or invest in complementary products or technologies, fund the expansion of distribution infrastructure, finance continued development costs related to assets and technology recently acquired, and finance regulatory approval activities and clinical trials. The Company also expects to use up to an aggregate of $31.5 million of the net proceeds to fund milestone payments to Pearsalls Limited related to the Company's acquisition of the NeoDisc(TM) investigational device.

Non-GAAP Information

Management uses certain non-GAAP financial measures, such as non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share, which exclude the following charges: (i) stock based compensation, (ii) charges directly related to acquisition transactions such as in-process research and development, amortization of the acquired technology assets and certain other non-recurring internal costs incurred as a result of the transaction, and (iii) certain other amounts related to non- recurring events. Management does not consider these costs in evaluating the continuing operations of the Company because management believes they are not indicative of the ongoing business operations. 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 a 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.

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 (877) 407-4018 for domestic callers, and (201) 689-8471 for international. A live Web cast of the conference call will be available online from the investor relations page of the Company's corporate Web site at

After the live Web cast, the call will remain available on NuVasive's Web site,, through May 27, 2006. In addition, a telephonic replay of the call will be available until May 18, 2006. The replay dial-in numbers are (877) 660-6853 for domestic callers and (201) 612-7415 for international callers. Please use account number 3055 and conference ID number 199289.

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 on applications in the over $2.9 billion U.S. spine fusion market. The Company's current principal product offering includes a minimally disruptive surgical platform called Maximum Access Surgery, or MAS(TM), as well as classic fusion implants.

The MAS platform offers advantages for both patients and surgeons such as reduced surgery and hospitalization time and faster recovery. MAS combines three categories of current product offerings-NeuroVision(R), a proprietary software-driven nerve avoidance system; MaXcess(R), a unique split-blade design retraction system; and specialized implants, like SpheRx(R) and CoRoent(R)-that collectively minimize soft tissue disruption during spine surgery while allowing maximum visualization and surgical reproducibility. NuVasive's classic fusion portfolio is comprised predominantly of proprietary saline packaged bone allografts and internal fixation products. NuVasive also has a robust R&D pipeline emphasizing both MAS and motion preservation products such as Total Disc Replacement (TDR) and the NeoDisc(TM) investigational nucleus-like replacement device.

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 sales or development projections may turn out to be incorrect because of unanticipated difficulty in selling products or bringing products to market; 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 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 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.
                    (in thousands, except per share data)

                                           Three Months Ended March 31, 2006

                                           GAAP                      Non-GAAP
                                           Basis     Adjustments       Basis

    Revenue                               $19,685        $-          $19,685
    Cost of goods sold                      3,880       (99) B         3,781

    Gross profit                           15,805        99           15,904

    Operating expenses:
        Sales, marketing and
         administrative                    21,132    (2,924) A/C      18,208
        Research and development            3,877      (812) A         3,065
           Total operating expenses        25,009    (3,736)          21,273
    Interest and other income (expense),
     net                                    1,098         -            1,098
    Net loss                              $(8,106)   $3,835          $(4,271)

    Historical net loss per share:
        Basic and diluted                  $(0.27)                    $(0.14)
        Weighted average shares- basic
         and diluted                       29,649                     29,649

                                           Three Months Ended March 31, 2005

                                           GAAP                      Non-GAAP
                                           Basis     Adjustments       Basis

    Revenue                               $13,272        $-          $13,272
    Cost of goods sold                      2,627         -            2,627

    Gross profit                           10,645         -           10,645

    Operating expenses:
        Sales, marketing and
         administrative                    11,981      (539) A        11,442
        Research and development            2,559      (400) A         2,159
           Total operating expenses        14,540      (939)          13,601
    Interest and other income (expense),
     net                                      340         -              340
    Net loss                              $(3,555)     $939          $(2,616)

    Historical net loss per share:
        Basic and diluted                  $(0.15)                    $(0.11)
        Weighted average shares- basic
         and diluted                       23,881                     23,881

    A - Elimination of non-cash stock-based compensation.

    B - Amortization of the increase in the fair value on the date of
        acquisition of inventory acquired from RSB Spine.

    C - Amortization of technology assets purchased from RSB Spine and

                                NUVASIVE, INC.
                                (in thousands)

                                            March 31, 2006  December 31, 2005

    Current assets:
        Cash and cash equivalents                  $17,991           $12,545
        Short-term investments                     137,313             6,945
        Accounts receivable, net                    12,228            11,662
        Inventory, net                              13,960            11,870
        Prepaid expenses and other current assets    1,118             1,496
    Total current assets                           182,610            44,518
    Property and equipment, net                     18,432            17,974
    Intangible assets, net                           8,759             8,894
    Other assets                                       192               104
    Total Assets                                  $209,993           $71,490

    Liabilities and Stockholders' Equity
    Current liabilities:
        Accounts payable and accrued liabilities    $8,145            $6,102
        Accrued payroll and related expenses         3,987             5,587
    Total current liabilities                       12,132            11,689
    Long-term liabilities                            1,676             1,665
    Stockholders equity:
        Common stock                                    33                25
        Additional paid-in capital                 313,075           168,143
        Deferred compensation                            -            (1,195)
        Accumulated other comprehensive loss           (12)              (32)
        Accumulated deficit                       (116,911)         (108,805)
    Total stockholders' equity                     196,185            58,136
    Total liabilities and stockholders' equity    $209,993           $71,490

                                NUVASIVE, INC.
                                (in thousands)

                                                  Three Months Ended March 31,
                                                      2006              2005
    Operating activities:
    Net loss                                        $(8,106)          $(3,555)
    Add back non-cash expenses
      Depreciation and amortization                   1,611               681
      Stock-based compensation                        3,601               939
      Other non-cash adjustments                        (92)              198
      Changes in operating assets and liabilities:
        Accounts receivable                            (471)           (1,251)
        Inventory                                    (2,050)             (971)
        Prepaid expenses and other current assets       378               109
        Accounts payable and accrued liabilities      2,031             2,215
        Accrued payroll and related expenses         (1,600)             (670)
    Net cash used in operating activities            (4,698)           (2,305)

    Investing activities:
    Purchases of property and equipment              (1,934)           (4,252)
    (Purchases) sales of short-term
     investments, net                              (130,368)           14,389
    Other assets                                        (88)             (118)
    Net cash provided by investing activities      (132,390)           10,019

    Financing activities:
    Payment of capital leases                                              (1)
    Issuance of common stock                        142,534                98
    Net cash provided by financing activities       142,534                97

    Increase in cash and cash equivalents             5,446             7,811

    Cash and cash equivalents at
     beginning of period                             12,545             8,560
    Cash and cash equivalents at end of period      $17,991           $16,371

    Contact:                              Investors:
    Kevin C. O'Boyle                      Stephanie Carrington/Nick Laudico
    EVP & Chief Financial Officer         The Ruth Group
    NuVasive, Inc.                        646-536-7017/7030

NuVasive, Inc.