Press Release
- Increases 2007 Revenue and GAAP EPS Guidance -
Second Quarter 2007 Highlights:
* Total revenues increased to $35.6 million; up 56.7% from the second
quarter of 2006
* Gross profit increased to $28.9 million; up 63.9% from the second
quarter of 2006
* Gross margin was 81.2%; up 360 basis points from the second quarter of
2006
* GAAP loss per share for the quarter was $(0.10); non-GAAP earnings per
share was $0.01
* Vertical integration was 47%; up from 45% at March 31, 2007;
approximately 50 new accounts were added in the quarter
* NeoDisc(TM) clinical trial continues to progress with enrollment over
40%
SAN DIEGO, July 25 /PRNewswire-FirstCall/ -- NuVasive, Inc. (Nasdaq: NUVA), a medical device company focused on developing products for minimally disruptive surgical treatments for the spine, announced today financial results for the quarter ended June 30, 2007.
The Company reported second quarter revenues of $35.6 million, a 56.7% increase over the $22.7 million for the second quarter of 2006 and a 7.2% increase over the $33.2 million for the first quarter of 2007.
Gross profit for the second quarter of 2007 was $28.9 million and gross margin was 81.2%, compared to a gross profit of $17.6 million and a gross margin of 77.6% in the second quarter of 2006. For the first quarter of 2007, gross profit was $27.5 million and gross margin was 82.8%.
Total operating expenses for the second quarter of 2007 were $34.0 million, compared with $37.9 million (or $27.4 million, excluding a charge of $10.5 million for the NeoDisc buyout) in the second quarter of 2006 and $33.8 million in the first quarter of 2007. Operating expenses for the second quarter of 2007 included (i) costs associated with continued investment in the Company's next generation MAS(TM) products, specifically those launched late in the second quarter and those scheduled for launch later in the year; (ii) costs incurred in the second quarter of 2007 related to the NeoDisc clinical trial; and (iii) additional sales costs directly associated with higher revenue.
On a GAAP basis for the second quarter of 2007, the Company reported a net loss of $3.4 million or $(0.10) per share. On a non-GAAP basis, the Company reported net income of $0.5 million or $0.01 per share. The non-GAAP earnings per share calculation in the second quarter of 2007 excludes (i) stock based
compensation of $3.5 million and (ii) amortization of acquired intangible assets of $0.4 million.
Cash, cash equivalents and short and long-term investments were $96.7 million at June 30, 2007.
Alexis V. Lukianov, Chairman and Chief Executive Officer, said, "Our strong second quarter results demonstrate the increasing effectiveness of our exclusive sales force and our initial success with the newly launched products. This progress on our growth strategy is demonstrated by the increasing number of vertically integrated hospitals, the revenue we derive from those hospitals, and from an increasing number of accounts. Additionally, our unique lateral access XLIF(R) technique continues rapidly to proliferate and drive our selling strategy. During the second quarter, we completed building inventory and successfully completed launches of our SpheRx(R) II pedicle screw system, XLP(TM) Lateral Plate and Formagraft(R) biologic, enhancing our potential revenue per procedure and providing for incremental revenue growth in the second half of 2007. Initial surgeon demand for these products has been strong."
Mr. Lukianov continued, "Our NeoDisc clinical trial enrollment continues to progress on schedule. In the second half of 2007, we will increase our investment in our NeoDisc clinical study and the next generation NeuroVision(R) system, which we believe will protect and expand our position as a leader in spine technology."
Guidance
NuVasive announced increased full year 2007 financial guidance as follows:
Revenue: $143 to $146 million, up from $139 to $143 million
GAAP loss per share: $(0.38) to $(0.31), down from $(0.43) to $(0.36)
Non-GAAP earnings per share: $0.05 to $0.09 (unchanged)
The increase with respect to GAAP net loss primarily reflects reduced stock-based compensation.
Reconciliation of Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP earnings per share and non-GAAP net loss per share, which exclude stock based compensation and charges directly related to acquisition transactions such as in-process research and development, milestone payments, amortization of the acquired technology assets and certain other non-recurring internal costs incurred as a result of the transaction. 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. Set forth below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measure.
Reconciliation of Second Quarter 2007 Results
(in thousands, except per share amounts)
GAAP net loss (A) $ (3,416)
Stock based compensation (B) 3,469
Amortization of acquired intangible assets (C) 397
Non-GAAP earnings (A) $ 450
GAAP net loss per share (A) $ (0.10)
Stock based compensation (B) 0.10
Amortization of acquired intangible assets (C) 0.01
Non-GAAP earnings per share (A) $ 0.01
Shares used in computing GAAP net loss per
share (A) 34,654
Shares used in computing non-GAAP earnings per
share (A) 36,110
Reconciliation of Full Year 2007 Guidance
(in thousands, except per share amounts)
Range for Year Ending
December 31, 2007
Low High
GAAP net loss per share (A) $ (0.38) $ (0.31)
Stock based compensation (B) 0.39 0.36
Amortization of acquired intangible
assets (C) 0.04 0.04
Non-GAAP earnings per share (A) $ 0.05 $ 0.09
Shares used in computing GAAP net
loss per share (A) 34,756 34,756
Share used in computing non-GAAP
earnings per share (A) 36,256 36,256
A - GAAP net loss per share is calculated using basic weighted shares
outstanding; Non-GAAP earnings per share is calculated using diluted
weighted shares outstanding,
B - Non-cash stock-based compensation.
C - Amortization of technology assets purchased in 2005 and 2007.
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 1-877-407-4018 for domestic callers and 1-201-689-8471 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 www.nuvasive.com.
After the live Web cast, the call will remain available on NuVasive's Web site, www.nuvasive.com, through August 25, 2007. In addition, a telephonic replay of the call will be available until August 15, 2007. The replay dial-in numbers are 1-877-660-6853 for domestic callers and 1-201-612-7415 for international callers. Please use account number 3055 and conference ID number 247324.
Contact:
Kevin C. O'Boyle
EVP & Chief Financial Officer
NuVasive, Inc.
investorrelations@nuvasive.com
Investors:
Nick Laudico/ Zack Kubow
nlaudico@theruthgroup.com
The Ruth Group
646-536-7030 / 7020
zkubow@theruthgroup.com
Media:
Jason Rando
The Ruth Group
646-536-7025
jrando@theruthgroup.com
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 $3.6 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, as well as a growing offering of cervical and motion preservation products.
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 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 product offering is also focused on cervical internal fixation products and its R&D pipeline emphasizes both MAS and motion preservation.
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 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 the Company's financial projections may prove incorrect because of unexpected difficulty in generating sales or achieving anticipated profitability; 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, hospitals 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 www.sec.gov. 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.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues $35,618 $22,724 $68,838 $42,409
Cost of goods sold 6,710 5,087 12,417 8,967
Gross profit 28,908 17,637 56,421 33,442
Operating expenses:
Sales, marketing and
administrative 28,027 22,996 56,067 44,015
Research and development 5,925 4,448 11,677 8,438
Development milestone
expense - 10,500 - 10,500
Total operating expenses 33,952 37,944 67,744 62,953
Interest and other
income, net 1,628 1,837 3,487 2,935
Net loss $(3,416) $(18,470) $(7,836) $(26,576)
Net loss per share:
Basic and diluted $(0.10) $(0.56) $(0.23) $(0.85)
Weighted average shares
- basic and diluted 34,654 33,113 34,485 31,394
Stock-based compensation
is included in operating
expenses in the following
categories:
Sales, marketing and
administrative $2,894 $2,481 $5,522 $5,270
Research and development 575 741 1,091 1,553
$3,469 $3,222 $6,613 $6,823
NUVASIVE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30,2007 December 31, 2006
Assets
Current assets:
Cash and cash equivalents $44,218 $41,476
Short-term investments 44,460 73,930
Accounts receivable, net 23,261 18,960
Inventory, net 26,763 18,636
Prepaid expenses and other current
assets 1,628 1,716
Total current assets 140,330 154,718
Property and equipment, net of
accumulated depreciation 33,917 30,573
Intangible assets, net of accumulated
amortization 25,335 8,441
Long-term investments 9,987 1,996
Other assets 451 456
Total assets $210,020 $196,184
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $10,694 $8,937
Accrued payroll and related expenses 8,056 8,477
Royalties payable 1,424 1,068
Total current liabilities 20,174 18,482
Long-term liabilities 1,112 1,399
Commitments and contingencies
Stockholders' equity:
Common stock, 70,000 shares authorized
34,842 and 33,929 issued and
outstanding at June 30, 2007 and
December 31, 2006, respectively 35 34
Additional paid-in capital 353,311 333,009
Accumulated other comprehensive loss (61) (25)
Accumulated deficit (164,551) (156,715)
Total stockholders' equity 188,734 176,303
Total liabilities and stockholders'
equity $210,020 $196,184
NUVASIVE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30,
2007 2006
Operating activities:
Net loss $(7,836) $(26,576)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 5,933 3,545
Stock-based compensation 6,613 6,823
Write-off of inventory in connection with
planned 2006 product introductions and
enhancements - 343
Other non-cash adjustments 1,179 930
Changes in operating assets and
liabilities:
Accounts receivable (4,621) (2,157)
Inventory (8,868) (5,333)
Prepaid expenses and other current assets (39) (819)
Accounts payable and accrued liabilities 1,926 3,158
Accrued payroll and related expenses (421) (307)
Development milestone payable - 10,500
Net cash used in operating activities (6,134) (9,893)
Investing activities:
Cash paid for acquisition of Radius
Medical LLC (6,970) -
Investment in Maxigen Biotech, Inc. (2,000) -
Purchases of property and equipment (8,527) (8,561)
Sales of short-term investments 79,050 10,950
Purchases of short-term investments (49,580) (45,455)
Sales of long-term investments 6,000 -
Purchases of long-term investments (11,991) -
Other assets 5 (291)
Net cash provided by (used in) investing
activities 5,987 (43,357)
Financing activities:
Payment of long-term liabilities (300) (300)
Issuance of common stock, including net
proceeds from secondary offering 3,189 143,065
Net cash provided by financing activities 2,889 142,765
Increase in cash and cash equivalents 2,742 89,515
Cash and cash equivalents at beginning of
period 41,476 12,545
Cash and cash equivalents at end of
period $44,218 $102,060
SOURCE NuVasive, Inc.
07/25/2007
CONTACT: Kevin C. O'Boyle, EVP & Chief Financial Officer of NuVasive,
Inc., investorrelations@nuvasive.com; or Investors, Nick Laudico,
+1-646-536-7030, nlaudico@theruthgroup.com, or Zack Kubow, +1-646-536-7020,
zkubow@theruthgroup.com, Media, Jason Rando, +1-646-536-7025,
jrando@theruthgroup.com, all of The Ruth Group, for NuVasive, Inc.
Web site: http://www.nuvasive.com