nuva-8k_20200220.htm
false NUVASIVE INC 0001142596 0001142596 2020-02-20 2020-02-20

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 20, 2020

 

NuVasive, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

000-50744

33-0768598

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification Number)

 

 

 

7475 Lusk Boulevard, San Diego, California 92121

(Address of principal executive offices) (Zip Code)

 

 

 

(858) 909-1800

(Registrant’s telephone number, including area code)

 

 

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

NUVA

The NASDAQ Stock Market LLC

(NASDAQ Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 


Item 2.02

Result of Operations and Financial Condition.

On February 20, 2020, NuVasive, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and full year ended December 31, 2019. A copy of this press release is furnished as Exhibit 99.1 to this Current Report.

Item 7.01

Regulation FD Disclosure.

During a conference call scheduled to be held at 1:30 p.m. Pacific Time on February 20, 2020, the Company’s Chief Executive Officer and Chief Financial Officer will discuss the Company’s results for the quarter and full year ended December 31, 2019 and the Company’s outlook for the year ending December 31, 2020.

The information contained in this Current Report and the Exhibits hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

 

(d)

Exhibits.

 

 

Exhibit No.

Description

99.1

Press Release issued by NuVasive, Inc. on February 20, 2020

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

NUVASIVE, INC.

 

 

 

Date: February 20, 2020

 

/s/ Matthew K. Harbaugh

 

 

Matthew K. Harbaugh

 

 

Executive Vice President and Chief Financial Officer

 

 

 

nuva-ex991_17.htm

Exhibit 99.1

NEWS RELEASE

 

NuVasive Announces Fourth Quarter and Full Year 2019 Financial Results

Company provides 2020 guidance


SAN DIEGO February 20, 2020 – NuVasive, Inc. (NASDAQ: NUVA), the leader in spine technology innovation, focused on transforming spine surgery with minimally disruptive, procedurally integrated solutions, today announced financial results for the quarter and full year ended Dec. 31, 2019.

 

Fourth Quarter 2019

 

Revenue increased 7.6% to $310.4 million, or 7.8% on a constant currency basis;

 

GAAP operating margin of 13.6%; Non-GAAP operating margin of 16.4%; and

 

GAAP diluted earnings per share of $0.55; Non-GAAP diluted earnings per share of $0.73.

 

Full Year 2019

 

Revenue increased 6.0% to $1.168 billion, or 6.6% on a constant currency basis;

 

GAAP operating margin of 10.5%; Non-GAAP operating margin of 15.8%; and

 

GAAP diluted earnings per share of $1.23; Non-GAAP diluted earnings per share of $2.47.

 

“NuVasive delivered strong financial results in 2019 with consistent, above-market growth of 6.0% over prior year,” said J. Christopher Barry, chief executive officer of NuVasive. “In 2020, our primary growth drivers include continuing to lead in lateral spine surgery, further innovation in targeted spine segments and achieving scale in key global markets to drive value and deliver on our long-term commitments.”

 

A full reconciliation of GAAP to non-GAAP financial measures can be found in the tables of this news release.

 

Fourth Quarter 2019 Results

NuVasive reported fourth quarter 2019 total revenue of $310.4 million, a 7.6% increase compared to $288.3 million for the fourth quarter 2018. On a constant currency basis, fourth quarter 2019 total revenue increased 7.8% compared to the same period last year.

 

For the fourth quarter 2019, both GAAP and non-GAAP gross profit was $227.1 million and GAAP and non-GAAP gross margin was 73.2%. These results compared to GAAP and non-GAAP gross profit of $202.2 million and GAAP and non-GAAP gross margin of 70.1%, for the fourth quarter 2018.

 

The Company reported GAAP net income of $29.9 million, or diluted earnings per share of $0.55, for the fourth quarter 2019 compared to GAAP net income of $12.2 million, or diluted earnings per share of $0.23, for the fourth quarter 2018. On a non-GAAP basis, the Company reported net income of $38.5 million, or diluted earnings per share of $0.73, for the fourth quarter 2019 compared to non-GAAP net income of $36.1 million, or diluted earnings per share of $0.69, for the fourth quarter 2018.


 

Full Year 2019 Results

NuVasive reported full year 2019 total revenue of $1.168 billion, a 6.0% increase compared to $1.102 billion for the full year 2018. On a constant currency basis, full year 2019 total revenue increased 6.6% compared to the full year 2018.

 

For the full year 2019, both GAAP and non-GAAP gross profit was $855.7 million and GAAP and non-GAAP gross margin was 73.3%. These results compared to GAAP and non-GAAP gross profit of $790.6 million and $791.6 million, respectively, and GAAP and non-GAAP gross margin of 71.8% and 71.9%, respectively, for the full year 2018. For the full year 2019, GAAP and non-GAAP operating expenses were $732.7 million and $670.7 million, respectively. These results compared to GAAP and non-GAAP operating expenses of $736.4 million and $624.8 million, respectively, for the full year 2018.

 

The Company reported GAAP net income of $65.2 million, or diluted earnings per share of $1.23, for the full year 2019 compared to GAAP net income of $12.5 million, or diluted earnings per share of $0.24, for the full year 2018. On a non-GAAP basis, the Company reported net income of $129.8 million, or diluted earnings per share of $2.47, for the full year 2019 compared to non-GAAP net income of $116.6 million, or diluted earnings per share of $2.23, for the full year 2018.

 

Annual Financial Guidance for 2020

The company estimates full year 2020 revenue growth to be in the range of 4.0% to 6.0%, GAAP diluted earnings per share in the range of $1.15 to $1.25 and non-GAAP diluted earnings per share in the range of $2.55 to $2.65.

 

 

 

 

 

2020 Guidance Range 1

 

 

 

 

GAAP

Non-GAAP

 

 

 

Total Revenue Growth

4.0% - 6.0%

 

4.0% - 6.0%

 

 

 

U.S. Spinal Hardware

5.0% - 7.0 %

 

5.0% - 7.0 %

 

 

 

U.S. Surgical Support

(3.0%) - 1.0%

 

(3.0%) - 1.0%

 

 

 

International

10.0% - 12.0%

 

10.0% - 12.0%

 

 

 

Operating margin

10.1% - 10.5%

 

15.8% - 16.2%

 

 

 

Diluted earnings per share

$1.15 - 1.25

 

$2.55 - 2.65

 

 

 

 

 

 

 

 

1

 

Guidance reflects the range provided February 20, 2020.

 


 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Actuals 1

 

2020 Guidance Range  1, 2

 

 

 

GAAP diluted earnings per share

$1.23

 

 

 

$1.15 - 1.25

 

 

 

Impact of change to diluted share count 3

 

0.01

 

 

 

0.05 - 0.10

 

 

 

Amortization of intangible assets

 

0.97

 

 

 

0.95 - 1.00

 

 

 

Non-cash interest expense on convertible notes

 

0.33

 

 

 

0.30 - 0.35

 

 

 

European medical device regulation 4

 

0.10

 

 

 

0.15 - 0.20

 

 

 

Other 5

 

0.20

 

 

 

0.15 - 0.20

 

 

 

Tax effect of adjustments 6

 

(0.38

)

 

 

(0.30) - (0.35)

 

 

 

Non-GAAP diluted earnings per share

$2.47

 

 

 

$2.55 - 2.65

 

 

 

 

 

 

 

 

 

 

 

1

 

Items may not foot due to rounding.

 

2

 

Guidance reflects the range provided February 20, 2020.

 

3

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

4

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

5

 

Includes costs associated with certain ongoing litigation related expenses and settlements, net losses on strategic investments and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables for further detail.

 

6

 

Represents the impact from tax affecting the adjustments above at their statutory tax rate.


 

 

Reconciliation of Full Year Operating Margin %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 Actuals 1

 

 

2020 Guidance Range 1, 2

 

 

 

GAAP operating margin %

 

10.5%

 

 

10.1% - 10.5%

 

 

 

Amortization of intangible assets

 

4.4%

 

 

4.2% - 4.3%

 

 

 

European medical device regulation 3

 

0.4%

 

 

0.7% - 0.9%

 

 

 

Other 4

 

0.5%

 

 

0.7% - 0.9%

 

 

 

Non-GAAP operating margin %

 

15.8%

 

 

15.8% - 16.2%

 

 

 

 

 

 

 

 

 

 

 

1

 

Items may not foot due to rounding.

 

2

 

Guidance reflects the range provided February 20, 2020.

 

3

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

4

 

Includes costs associated with certain ongoing litigation related expenses and settlements and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables for further detail.


 

Reconciliation of GAAP to Non-GAAP Information

Management uses certain non-GAAP financial measures such as non-GAAP diluted earnings per share, non-GAAP net income, non-GAAP operating expenses and non-GAAP operating margin, which exclude amortization of intangible assets, business transition costs, purchased in-process research and development, one-time restructuring and related items in connection with acquisitions, investments and divestitures, non-recurring consulting fees, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses from strategic investments, and non-cash interest expense (excluding debt issuance cost). Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency utilizes 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, business transition costs, purchased in-process research and development, one-time restructuring and related items in connection with acquisitions, investments and divestitures, non-recurring consulting fees, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses on strategic investments, 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.

 


 

 

 

 

For the Three Months Ended December 31, 2019

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited - in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

Operating Profit

 

Net Income

 

Diluted EPS

 

Diluted WASO 5

 

Net Income to Adjusted EBITDA

 

 

 

 

Reported GAAP

$

227,098

 

$

42,166

 

$

29,876

 

$

0.55

 

 

54,638

 

$

29,876

 

 

 

 

% of revenue

 

73.2

%

 

13.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

 

 

12,599

 

 

12,599

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related expenses and settlements 1

 

 

 

 

818

 

 

818

 

 

 

 

 

 

 

 

818

 

 

 

 

Business transition costs 2

 

 

 

 

(7,141

)

 

(7,141

)

 

 

 

 

 

 

 

(7,141

)

 

 

 

European medical device regulation 3

 

 

 

 

2,384

 

 

2,384

 

 

 

 

 

 

 

 

2,384

 

 

 

 

Non-cash interest expense on convertible notes

 

 

 

 

 

 

 

4,492

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of adjustments 4

 

 

 

 

 

 

 

(4,513

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,147

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,271

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,348

 

 

 

 

Non-cash stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,285

 

 

 

 

Adjusted Non-GAAP

$

227,098

 

$

50,826

 

$

38,515

 

$

0.73

 

 

52,979

 

$

82,988

 

 

 

 

% of revenue

 

73.2

%

 

16.4

%

 

 

 

 

 

 

 

 

 

 

26.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Represents expenses associated with certain ongoing litigation matters, including infringement of the Company’s intellectual property.

 

 

2

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

3

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

4

 

Represents the impact from tax affecting the adjustments above at their statutory tax rate. The impact of these adjustments to the tax rate results in an annual tax rate of ~19% on a GAAP basis and ~21% on a non-GAAP basis.

 

 

5

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

 

 


 

 

 

 

For the Year Ended December 31, 2019

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited - in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

Operating Profit

 

Net Income

 

Diluted EPS

 

Diluted WASO 5

 

Net Income to Adjusted EBITDA

 

 

 

 

Reported GAAP

$

855,713

 

$

123,050

 

$

65,234

 

$

1.23

 

 

53,160

 

$

65,234

 

 

 

 

% of revenue

 

73.3

%

 

10.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

 

 

51,097

 

 

51,097

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related expenses and settlements 1

 

 

 

 

7,794

 

 

7,794

 

 

 

 

 

 

 

 

7,794

 

 

 

 

Business transition costs 2

 

 

 

 

(1,995

)

 

(1,995

)

 

 

 

 

 

 

 

(1,995

)

 

 

 

European medical device regulation 3

 

 

 

 

5,069

 

 

5,069

 

 

 

 

 

 

 

 

5,069

 

 

 

 

Non-cash interest expense on convertible notes

 

 

 

 

 

 

 

17,617

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss on strategic investments

 

 

 

 

 

 

 

4,767

 

 

 

 

 

 

 

 

4,767

 

 

 

 

Tax effect of adjustments 4

 

 

 

 

 

 

 

(19,782

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,608

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,283

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

135,593

 

 

 

 

Non-cash stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,732

 

 

 

 

Adjusted Non-GAAP

$

855,713

 

$

185,015

 

$

129,801

 

$

2.47

 

 

52,629

 

$

299,085

 

 

 

 

% of revenue

 

73.3

%

 

15.8

%

 

 

 

 

 

 

 

 

 

 

25.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Represents expenses associated with certain ongoing litigation matters, including infringement of the Company’s intellectual property.

 

 

2

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

3

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

4

 

Represents the impact from tax affecting the adjustments above at their statutory tax rate. The impact of these adjustments to the tax rate results in an annual tax rate of ~19% on a GAAP basis and ~21% on a non-GAAP basis.

 

 

5

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

 


 

 

 

 

For the Three Months Ended December 31, 2018

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited - in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

Operating Profit

 

Net Income

 

Diluted EPS

 

Diluted WASO 5

 

Net Income to Adjusted EBITDA

 

 

 

 

Reported GAAP

$

202,198

 

$

25,856

 

$

12,157

 

$

0.23

 

 

52,530

 

$

12,157

 

 

 

 

% of revenue

 

70.1

%

 

9.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

 

 

13,268

 

 

13,268

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related expenses and settlements 1

 

 

 

 

2,750

 

 

2,750

 

 

 

 

 

 

 

 

2,750

 

 

 

 

Business transition costs 2

 

 

 

 

3,779

 

 

3,779

 

 

 

 

 

 

 

 

3,779

 

 

 

 

European medical device regulation 3

 

 

 

 

373

 

 

373

 

 

 

 

 

 

 

 

373

 

 

 

 

Non-cash interest expense on convertible notes

 

 

 

 

 

 

 

4,262

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain on strategic investments

 

 

 

 

 

 

 

(30

)

 

 

 

 

 

 

 

(30

)

 

 

 

Tax effect of adjustments 4

 

 

 

 

 

 

 

(444

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,193

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,175

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,356

 

 

 

 

Non-cash stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,699

 

 

 

 

Adjusted Non-GAAP

$

202,198

 

$

46,026

 

$

36,115

 

$

0.69

 

 

52,471

 

$

69,452

 

 

 

 

% of revenue

 

70.1

%

 

16.0

%

 

 

 

 

 

 

 

 

 

 

24.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Represents expenses associated with certain ongoing litigation matters, including infringement of the Company’s intellectual property.

 

 

2

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

3

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

4

 

Represents the impact from tax affecting the adjustments above at their statutory tax rate. The impact of these adjustments to the tax rate results in an annual tax rate of ~43% benefit on a GAAP basis and ~18% on a non-GAAP basis.

 

 

5

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

 

 


 

 

 

 

For the Year Ended December 31, 2018

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited - in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

Operating Profit

 

Net Income

 

Diluted EPS

 

Diluted WASO 8

 

Net Income to Adjusted EBITDA

 

 

 

 

Reported GAAP

$

790,555

 

$

54,168

 

$

12,479

 

$

0.24

 

 

52,355

 

$

12,479

 

 

 

 

% of revenue

 

71.8

%

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash purchase accounting adjustments on acquisitions 1

 

1,080

 

 

1,080

 

 

1,080

 

 

 

 

 

 

 

 

1,080

 

 

 

 

Non-recurring consulting fees 2

 

 

 

 

6,084

 

 

6,084

 

 

 

 

 

 

 

 

6,084

 

 

 

 

Amortization of intangible assets

 

 

 

 

50,670

 

 

50,670

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation related expenses and settlements 3

 

 

 

 

34,052

 

 

34,052

 

 

 

 

 

 

 

 

34,052

 

 

 

 

Business transition costs 4

 

 

 

 

11,473

 

 

11,473

 

 

 

 

 

 

 

 

11,473

 

 

 

 

Purchase of in-process research and development 5

 

 

 

 

8,913

 

 

8,913

 

 

 

 

 

 

 

 

8,913

 

 

 

 

European medical device regulation 6

 

 

 

 

373

 

 

373

 

 

 

 

 

 

 

 

373

 

 

 

 

Non-cash interest expense on convertible notes

 

 

 

 

 

 

 

16,722

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss on strategic investments

 

 

 

 

 

 

 

3,837

 

 

 

 

 

 

 

 

3,837

 

 

 

 

Tax effect of adjustments 7

 

 

 

 

 

 

 

(29,126

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense/(income), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,271

 

 

 

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,756

)

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

129,765

 

 

 

 

Non-cash stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,761

 

 

 

 

Adjusted Non-GAAP

$

791,635

 

$

166,813

 

$

116,557

 

$

2.23

 

 

52,178

 

$

267,332

 

 

 

 

% of revenue

 

71.9

%

 

15.1

%

 

 

 

 

 

 

 

 

 

 

24.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.

 

 

2

 

Non-recurring consulting fees associated with the implementation of our state tax-planning strategy.

 

 

3

 

Represents the loss recorded in connection with the settlement of the Madsen Medical, Inc. litigation matter, as well as expenses associated with certain ongoing litigation matters, including infringement of the Company’s intellectual property.

 

 

4

 

Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.

 

 

5

 

Purchase of an in-process research and development asset which had no future alternative use.

 

 

6

 

Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.

 

 

7

 

Represents the impact from tax affecting the adjustments above at their statutory tax rate. The impact of these adjustments to the tax rate results in an annual tax rate of ~43% benefit on a GAAP basis and ~18% on a non-GAAP basis.

 

 

8

 

Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.

 

 


 

Investor Conference Call

NuVasive will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its financial performance for the fourth quarter and full year 2019. The dial-in numbers are 1-877-407-9039 for domestic callers and 1-201-689-8470 for international callers. A live webcast of the conference call will be available online from the Investor Relations page of the Company’s website at www.nuvasive.com. After the live webcast, the call will remain available on NuVasive’s website through March 20, 2020. In addition, a telephone replay of the call will be available until February 27, 2020. The replay dial-in numbers are 1-844-512-2921 for domestic callers and 1-412-317-6671 for international callers. Please use pin number: 13698333.

 

About NuVasive

NuVasive, Inc. (NASDAQ: NUVA) is the leader in spine technology innovation, focused on transforming spine surgery and beyond with minimally disruptive, procedurally integrated solutions designed to deliver reproducible and clinically proven surgical outcomes. The Company's portfolio includes access instruments, implantable hardware, biologics, software systems for surgical planning, navigation and imaging solutions, magnetically adjustable implant systems for spine and orthopedics, and intraoperative monitoring service offerings. With more than $1 billion in revenue, NuVasive has approximately 2,800 employees and operates in more than 50 countries serving surgeons, hospitals and patients. For more information, please visit www.nuvasive.com.

 

Forward-Looking Statements

NuVasive cautions you that statements included in this news release or made on the investor conference call referenced herein 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. In addition, this news release contains selected financial results from the fourth quarter and full year 2019, as well as projections for 2020 financial guidance and longer-term financial performance goals. The Company’s results for the fourth quarter and full year 2019 are prior to the completion of review and audit procedures by the Company’s external auditors and are subject to adjustment. In addition, the Company’s projections for 2020 financial guidance and longer-term financial performance goals represent initial estimates, and are subject to the risk of being inaccurate because of the preliminary nature of the forecasts, the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability. The potential risks and uncertainties which contribute to the uncertain nature of these statements include, among others, risks associated with acceptance of the Company’s surgical products and procedures by spine surgeons and hospitals, development and acceptance of new products or product enhancements, clinical and statistical verification of the benefits achieved via the use of NuVasive’s products, the Company’s ability to adequately manage inventory as it continues to release new products, its ability to recruit and retain management and key personnel, and the other risks and uncertainties more fully described in the Company’s news 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.

 

Consolidated Statements of Operations

 

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

279,234

 

 

$

258,226

 

 

$

1,044,611

 

 

$

986,458

 

Service revenue

 

 

31,120

 

 

 

30,101

 

 

 

123,459

 

 

 

115,256

 

Total revenue

 

 

310,354

 

 

 

288,327

 

 

 

1,168,070

 

 

 

1,101,714

 

Cost of revenue (excluding below amortization of intangible assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

63,211

 

 

 

66,375

 

 

 

232,474

 

 

 

234,509

 

Cost of services

 

 

20,045

 

 

 

19,754

 

 

 

79,883

 

 

 

76,650

 

Total cost of revenue

 

 

83,256

 

 

 

86,129

 

 

 

312,357

 

 

 

311,159

 

Gross profit

 

 

227,098

 

 

 

202,198

 

 

 

855,713

 

 

 

790,555

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales, marketing and administrative

 

 

160,365

 

 

 

142,201

 

 

 

611,181

 

 

 

575,836

 

Research and development

 

 

19,109

 

 

 

17,094

 

 

 

72,380

 

 

 

61,695

 

Amortization of intangible assets

 

 

12,599

 

 

 

13,268

 

 

 

51,097

 

 

 

50,670

 

Purchase of in-process research and development

 

 

 

 

 

 

 

 

 

 

 

8,913

 

Litigation liability loss

 

 

 

 

 

 

 

 

 

 

 

27,800

 

Business transition costs

 

 

(7,141

)

 

 

3,779

 

 

 

(1,995

)