Press Release
- First quarter 2014 total revenue of
$177.5 million ; up 11.3% from first quarter 2013;
$30 million litigation liability recognized due to a recent jury verdict, which remains subject to potential reversal or appeal;
- GAAP operating loss margin of (15.4%);
- Non-GAAP operating profit margin of 13.2%;
- GAAP net loss of
($18.3) million , or($0.40) per share;
- Non-GAAP earnings of
$14.3 million , or$0.29 per share.
Gross profit for the first quarter 2014 was
Total operating expenses for the first quarter 2014 were
On a GAAP basis, the Company reported a net loss of
On a Non-GAAP basis, the Company reported net income of
A full reconciliation of the non-GAAP measures to GAAP can be found below.
Cash, cash equivalents and short and long-term marketable securities were approximately
2014 Full Year Financial Guidance (Updated to Reflect First Quarter Litigation Liability):
- Revenue of approximately
$725 million ; unchanged from prior guidance - GAAP Loss per Share of approximately
($0.27) ; compared to Earnings per Share of$0.11 previously - Non-GAAP EPS of approximately
$1.06 ; unchanged from prior guidance - Non-GAAP Operating Margin of approximately 16%; unchanged from prior guidance
- GAAP effective tax expense of approximately
$6.5 million ; compared to$19 million previously
Supplementary Financial Information
For additional financial detail, please CLICK HERE to access Supplementary Financial Information or visit the Investor Relations section of our website at www.nuvasive.com.
Reconciliation of Full Year EPS Guidance | ||||||||
2014 Guidance | ||||||||
Prior 1 | Current 2 | |||||||
GAAP earnings (loss) per share guidance | $ | 0.11 | $ | (0.27 | ) | |||
Impact of change from basic to diluted share count | - | 0.01 | ||||||
GAAP earnings (loss) per share, adjusted to diluted share count | $ | 0.11 | $ | (0.26 | ) | |||
Non-cash stock based compensation | 0.43 | 0.43 | ||||||
Litigation Liability | - | 0.36 | ||||||
Amortization of intangible assets | 0.19 | 0.19 | ||||||
Non-cash interest expense on convertible notes | 0.18 | 0.18 | ||||||
Leasehold Termination Charge | 0.08 | 0.08 | ||||||
Certain intellectual property litigation expenses | 0.06 | 0.06 | ||||||
One-time and acquisition related items 3 | 0.01 | 0.02 | ||||||
Non-GAAP earnings per share guidance | $ | 1.06 | $ | 1.06 | ||||
Weighted shares outstanding - basic | 47,500 | 47,500 | ||||||
Weighted shares outstanding - diluted | 50,000 | 50,000 |
1Effective tax expense rate of ~80% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments |
2Effective tax expense rate of ~85% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments |
3Acquisition related items include expenses associated with prior M&A related activity and as incurred |
Reconciliation of Non-GAAP Operating Margin % | |||||||||
2014 Guidance | |||||||||
2013 Actuals | Prior | Current | |||||||
Non-GAAP Gross Margin % [A] | 74.8 | % | 76.0 | % | 76.0 | % | |||
Non-cash stock based compensation | 0.0 | % | 0.0 | % | 0.0 | % | |||
Out-of-period royalty expense charge | -1.2 | % | 0.0 | % | 0.0 | % | |||
GAAP Gross Margin [D] | 73.7 | % | 76.0 | % | 76.0 | % | |||
Non-GAAP Sales, Marketing & Administrative Expense [B] | 55.9 | % | 54.5 | % | 54.5 | % | |||
Non-cash stock based compensation | 4.6 | % | 4.8 | % | 4.8 | % | |||
Certain intellectual property litigation expenses | 0.8 | % | 0.7 | % | 0.7 | % | |||
Leasehold termination charge | 0.0 | % | 0.9 | % | 0.9 | % | |||
One-time and acquisition related items* | 0.0 | % | 0.1 | % | 0.2 | % | |||
GAAP Sales, Marketing & Administrative Expense [E] | 61.3 | % | 61.0 | % | 61.1 | % | |||
Non-GAAP Research & Development Expense [C] | 4.1 | % | 5.5 | % | 5.5 | % | |||
Non-cash stock based compensation | 0.2 | % | 0.2 | % | 0.2 | % | |||
Acquisition related items* | 0.4 | % | 0.1 | % | 0.1 | % | |||
GAAP Research & Development Expense [F] | 4.7 | % | 5.8 | % | 5.8 | % | |||
Litigation Liability [G] | 0.0 | % | 0.0 | % | 4.1 | % | |||
Amortization of intangible assets [H] | 2.8 | % | 2.2 | % | 2.2 | % | |||
Non-GAAP Operating Margin % [A-B-C] | 14.9 | % | 16.0 | % | 16.0 | % | |||
GAAP Operating Margin % [D-E-F-G-H] | 4.8 | % | 7.0 | % | 2.8 | % | |||
* 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, Non-GAAP gross margin, Non-GAAP operating expenses, and Non-GAAP operating margin, which exclude non-cash stock-based compensation, certain intellectual property litigation expenses, amortization of intangible assets, a leasehold termination charge, acquisition related items, non-cash interest expense on convertible notes, and a litigation liability. 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 First Quarter 2014 Results | ||||||||||||
(in thousands, except per share data) | Pre-Tax Adjustments | Net of Tax | Earnings Per Share | |||||||||
GAAP net loss | $ | (18,276 | ) | $ | (0.40 | ) | ||||||
Impact of change from basic to diluted share count | 0.03 | |||||||||||
GAAP net loss, adjusted to diluted share count | $ | (18,276 | ) | (0.37 | ) | |||||||
Non-cash stock-based compensation | $ | 7,764 | 4,658 | 0.10 | ||||||||
Certain intellectual property litigation expenses | 1,323 | 794 | 0.02 | |||||||||
Amortization of intangible assets | 3,998 | 2,399 | 0.05 | |||||||||
Leasehold termination charge | 6,408 | 3,845 | 0.07 | |||||||||
One-time and acquisition related items | 1,244 | 746 | 0.01 | |||||||||
Non-cash interest expense on convertible notes | 3,572 | 2,143 | 0.04 | |||||||||
Litigation liability | 30,000 | 18,000 | 0.37 | |||||||||
Non-GAAP earnings | 14,309 | 0.29 | ||||||||||
GAAP weighted shares outstanding - basic and diluted | 45,798 | |||||||||||
Non-GAAP weighted shares outstanding - diluted | 48,996 | |||||||||||
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About
Having pioneered the lateral approach to spine fusion,
NuVasive, Inc. | |||||||||
Condensed Consolidated Statements of Operations | |||||||||
(in thousands, except per share data) | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
(Unaudited) | (Unaudited) | ||||||||
Revenue | $ | 177,496 | $ | 159,504 | |||||
Cost of goods sold (excluding amortization of purchased technology) | 43,294 | 39,096 | |||||||
Gross profit | 134,202 | 120,408 | |||||||
Operating expenses: | |||||||||
Sales, marketing and administrative | 118,104 | 99,886 | |||||||
Research and development | 9,455 | 9,694 | |||||||
Amortization of intangible assets | 3,998 | 4,376 | |||||||
Litigation Liability | 30,000 | - | |||||||
Total operating expenses | 161,557 | 113,956 | |||||||
Interest and other expense, net: | |||||||||
Interest income | 217 | 172 | |||||||
Interest expense | (6,865 | ) | (7,032 | ) | |||||
Other income, net | 375 | 240 | |||||||
Total interest and other expense, net | (6,273 | ) | (6,620 | ) | |||||
Loss before income taxes | (33,628 | ) | (168 | ) | |||||
Income tax benefit | (15,095 | ) | (764 | ) | |||||
Consolidated net (loss) income | $ | (18,533 | ) | $ | 596 | ||||
Net loss attributable to noncontrolling interests | $ | (257 | ) | $ | (255 | ) | |||
Net (loss) income attributable to NuVasive, Inc. | $ | (18,276 | ) | $ | 851 | ||||
Net (loss) income per share attributable to NuVasive, Inc.: | |||||||||
Basic | $ | (0.40 | ) | $ | 0.02 | ||||
Diluted | $ | (0.40 | ) | $ | 0.02 | ||||
Weighted average shares outstanding: | |||||||||
Basic | 45,798 | 44,025 | |||||||
Diluted | 45,798 | 45,316 | |||||||
NuVasive, Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(in thousands) | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
(Unaudited) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 110,777 | $ | 102,825 | |||||
Short-term marketable securities | 176,608 | 143,449 | |||||||
Accounts receivable, net of allowances of $3,343 and $3,481, respectively | 106,269 | 104,774 | |||||||
Inventory, net | 147,721 | 136,937 | |||||||
Deferred tax assets, current | 37,091 | 37,076 | |||||||
Income tax receivable | 16,512 | - | |||||||
Prepaid expenses and other current assets | 11,273 | 10,947 | |||||||
Total current assets | 606,251 | 536,008 | |||||||
Property and equipment, net | 128,857 | 128,064 | |||||||
Long-term marketable securities | 52,209 | 79,829 | |||||||
Intangible assets, net | 89,593 | 93,986 | |||||||
Goodwill | 154,650 | 154,944 | |||||||
Deferred tax assets, non-current | 42,874 | 42,863 | |||||||
Restricted cash and investments | 123,068 | 119,195 | |||||||
Other assets | 27,586 | 24,679 | |||||||
Total assets | $ | 1,225,088 | $ | 1,179,568 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable and accrued liabilities | $ | 102,571 | $ | 86,057 | |||||
Accrued payroll and related expenses | 24,219 | 31,095 | |||||||
Current litigation liability | 30,000 | - | |||||||
Total current liabilities | 156,790 | 117,152 | |||||||
Senior Convertible Notes | 349,632 | 346,060 | |||||||
Deferred tax liabilities, non-current | 2,933 | 2,934 | |||||||
Litigation liability | 93,700 | 93,700 | |||||||
Other long-term liabilities | 17,545 | 14,844 | |||||||
Commitments and contingencies | |||||||||
Stockholders' equity: | |||||||||
Preferred stock, $0.001 par value; 5,000 shares authorized, none outstanding | - | - | |||||||
Common stock, $0.001 par value; 120,000 shares authorized at March 31, 2014 and December 31, 2013, respectively, 46,540 and 44,943 issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 47 | 45 | |||||||
Additional paid-in capital | 786,285 | 769,203 | |||||||
Accumulated other comprehensive income | (2,179 | ) | (3,238 | ) | |||||
Accumulated deficit | (188,494 | ) | (170,218 | ) | |||||
Total NuVasive, Inc. stockholders' equity | 595,659 | 595,792 | |||||||
Noncontrolling interests | 8,829 | 9,086 | |||||||
Total equity | 604,488 | 604,878 | |||||||
Total liabilities and equity | $ | 1,225,088 | $ | 1,179,568 | |||||
NuVasive, Inc. | |||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||
(in thousands) | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
(Unaudited) | (Unaudited) | ||||||||
Operating activities: | |||||||||
Consolidated net (loss) income | $ | (18,533 | ) | $ | 596 | ||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 15,363 | 14,581 | |||||||
Amortization of non-cash interest | 4,000 | 3,800 | |||||||
Stock-based compensation | 7,764 | 6,787 | |||||||
Reserves | 1,366 | 28 | |||||||
Other non-cash adjustments | 1,661 | 1,410 | |||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||
Accounts receivable | (1,194 | ) | (1,619 | ) | |||||
Inventory | (11,743 | ) | (4,098 | ) | |||||
Prepaid expenses and other current assets | (2,807 | ) | (929 | ) | |||||
Accounts payable and accrued liabilities | 4,491 | 10,373 | |||||||
Litigation liability | 30,000 | - | |||||||
Accrued payroll and related expenses | (7,068 | ) | (6,823 | ) | |||||
Net cash provided by operating activities | 23,300 | 24,106 | |||||||
Investing activities: | |||||||||
Cash paid for business and asset acquisitions | - | (5,031 | ) | ||||||
Purchases of property and equipment | (13,390 | ) | (9,200 | ) | |||||
Purchases of marketable securities | (46,126 | ) | (48,916 | ) | |||||
Sales of marketable securities | 36,257 | 68,621 | |||||||
Net cash (used in) provided by investing activities | (23,259 | ) | 5,474 | ||||||
Financing activities: | |||||||||
Principal payment of 2013 Senior Convertible Notes | - | (74,311 | ) | ||||||
Proceeds from the issuance of common stock | 8,749 | 36 | |||||||
Other financing activities | (1,094 | ) | 100 | ||||||
Net cash provided by (used in) financing activities | 7,655 | (74,175 | ) | ||||||
Effect of exchange rate changes on cash | 256 | (232 | ) | ||||||
Increase (decrease) in cash and cash equivalents | 7,952 | (44,827 | ) | ||||||
Cash and cash equivalents at beginning of period | 102,825 | 123,299 | |||||||
Cash and cash equivalents at end of period | $ | 110,777 | $ | 78,472 |
Investor Contact:
858-320-5215
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858-909-1907
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