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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                 to                

Commission File Number: 000-50744

 

 

NUVASIVE, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

33-0768598

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

7475 Lusk Boulevard

San Diego, CA 92121

(Address of principal executive offices)

(858) 909-1800

(Registrant’s telephone number, including area code)

 

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

☐  

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 5, 2021, there were 51,736,141 shares of the registrant’s common stock (par value $0.001 per share) outstanding.

 

 

2


 

 

NuVasive, Inc.

Quarterly Report on Form 10-Q

September 30, 2021

 

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

4

 

Consolidated Balance Sheets

4

 

Consolidated Statements of Operations

5

 

Consolidated Statements of Comprehensive (Loss) Income

6

 

Consolidated Statements of Equity

7

 

Consolidated Statements of Cash Flows

9

 

Notes to Unaudited Consolidated Financial Statements

11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

35

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

49

Item 4.

Controls and Procedures

49

 

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

49

Item 1A.

Risk Factors

49

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

50

Item 3.

Defaults Upon Senior Securities

50

Item 4.

Mine Safety Disclosures

50

Item 5.

Other Information

50

Item 6.

Exhibits

51

 

SIGNATURES

52

 

 

 

3


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NUVASIVE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value data)

 

 

September 30, 2021

 

 

December 31, 2020

 

ASSETS

 

(Unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

234,578

 

 

$

856,869

 

Short-term marketable securities

 

 

 

 

 

173,145

 

Accounts receivable, net of allowances of $21,756 and $20,631, respectively

 

 

199,366

 

 

 

207,071

 

Inventory, net

 

 

311,414

 

 

 

300,623

 

Prepaid income taxes

 

 

5,623

 

 

 

4,727

 

Prepaid expenses and other current assets

 

 

19,380

 

 

 

19,749

 

Total current assets

 

 

770,361

 

 

 

1,562,184

 

Property and equipment, net

 

 

302,195

 

 

 

286,369

 

Intangible assets, net

 

 

256,416

 

 

 

152,264

 

Goodwill

 

 

633,121

 

 

 

559,553

 

Operating lease right-of-use assets

 

 

104,590

 

 

 

102,270

 

Deferred tax assets

 

 

48,851

 

 

 

15,755

 

Restricted cash and investments

 

 

1,494

 

 

 

1,494

 

Other assets

 

 

17,005

 

 

 

13,193

 

Total assets

 

$

2,134,033

 

 

$

2,693,082

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

110,796

 

 

$

110,401

 

Contingent consideration liabilities

 

 

7,468

 

 

 

7,289

 

Accrued payroll and related expenses

 

 

65,741

 

 

 

63,421

 

Operating lease liabilities

 

 

9,627

 

 

 

7,875

 

Income tax liabilities

 

 

1,730

 

 

 

2,073

 

Senior convertible notes

 

 

 

 

 

645,303

 

Total current liabilities

 

 

195,362

 

 

 

836,362

 

Long-term senior convertible notes

 

 

883,180

 

 

 

766,226

 

Deferred tax liabilities

 

 

2,683

 

 

 

2,807

 

Operating lease liabilities

 

 

113,128

 

 

 

111,634

 

Contingent consideration liabilities

 

 

93,584

 

 

 

29,752

 

Other long-term liabilities

 

 

21,900

 

 

 

22,686

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Redeemable equity component of senior convertible notes

 

 

 

 

 

4,697

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000 shares authorized, none outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 150,000 shares authorized at September 30, 2021 and December 31, 2020; 58,349 shares issued and 51,677 outstanding at September 30, 2021; 57,945 shares issued and 51,376 outstanding at December 31, 2020

 

 

63

 

 

 

62

 

Additional paid-in capital

 

 

1,425,242

 

 

 

1,550,001

 

Accumulated other comprehensive loss

 

 

(7,309

)

 

 

(7,585

)

Retained earnings

 

 

82,444

 

 

 

45,322

 

Treasury stock at cost; 6,672 shares and 6,569 shares at September 30, 2021 and December 31, 2020, respectively

 

 

(676,244

)

 

 

(668,882

)

Total equity

 

 

824,196

 

 

 

918,918

 

Total liabilities and equity

 

$

2,134,033

 

 

$

2,693,082

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 

 

4


Table of Contents

 

 

NUVASIVE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(unaudited)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

247,061

 

 

$

267,571

 

 

$

759,275

 

 

$

685,922

 

Services

 

 

23,775

 

 

 

27,711

 

 

 

77,638

 

 

 

72,853

 

Total net sales

 

 

270,836

 

 

 

295,282

 

 

 

836,913

 

 

 

758,775

 

Cost of sales (excluding below amortization of intangible assets):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

69,609

 

 

 

66,049

 

 

 

181,495

 

 

 

182,067

 

Services

 

 

19,043

 

 

 

18,584

 

 

 

57,248

 

 

 

54,936

 

Total cost of sales

 

 

88,652

 

 

 

84,633

 

 

 

238,743

 

 

 

237,003

 

Gross profit

 

 

182,184

 

 

 

210,649

 

 

 

598,170

 

 

 

521,772

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

146,056

 

 

 

146,260

 

 

 

449,407

 

 

 

402,935

 

Research and development

 

 

23,405

 

 

 

20,404

 

 

 

67,393

 

 

 

58,067

 

Amortization of intangible assets

 

 

14,805

 

 

 

13,826

 

 

 

43,230

 

 

 

39,150

 

Purchase of in-process research and development

 

 

 

 

 

 

 

 

 

 

 

1,011

 

Business transition costs

 

 

4,551

 

 

 

3,107

 

 

 

21,688

 

 

 

2,541

 

Total operating expenses

 

 

188,817

 

 

 

183,597

 

 

 

581,718

 

 

 

503,704

 

Interest and other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

23

 

 

 

271

 

 

 

119

 

 

 

1,306

 

Interest expense

 

 

(4,320

)

 

 

(21,123

)

 

 

(16,738

)

 

 

(49,164

)

Other (expense) income, net

 

 

(13,082

)

 

 

251

 

 

 

(24,339

)

 

 

(18,819

)

Total interest and other expense, net

 

 

(17,379

)

 

 

(20,601

)

 

 

(40,958

)

 

 

(66,677

)

(Loss) income before income taxes

 

 

(24,012

)

 

 

6,451

 

 

 

(24,506

)

 

 

(48,609

)

Income tax benefit (expense)

 

 

2,373

 

 

 

(579

)

 

 

(2,844

)

 

 

9,764

 

Consolidated net (loss) income

 

$

(21,639

)

 

$

5,872

 

 

$

(27,350

)

 

$

(38,845

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.42

)

 

$

0.11

 

 

$

(0.53

)

 

$

(0.76

)

Diluted

 

$

(0.42

)

 

$

0.11

 

 

$

(0.53

)

 

$

(0.76

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,669

 

 

 

51,261

 

 

 

51,539

 

 

 

51,440

 

Diluted

 

 

51,669

 

 

 

51,805

 

 

 

51,539

 

 

 

51,440

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 

 

 

5


Table of Contents

 

 

NUVASIVE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(unaudited)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Consolidated net (loss) income

 

$

(21,639

)

 

$

5,872

 

 

$

(27,350

)

 

$

(38,845

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities, net of tax

 

 

 

 

 

101

 

 

 

(13

)

 

 

53

 

Translation adjustments, net of tax

 

 

313

 

 

 

1,922

 

 

 

289

 

 

 

(787

)

Other comprehensive income (loss)

 

 

313

 

 

 

2,023

 

 

 

276

 

 

 

(734

)

Total consolidated comprehensive (loss) income

 

$

(21,326

)

 

$

7,895

 

 

$

(27,074

)

 

$

(39,579

)

 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 

6


Table of Contents

 

 

 

NUVASIVE, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

Additional

 

 

 

 

Accumulated Other

 

 

 

 

 

 

 

 

 

 

Treasury Stock

 

 

Total

 

(unaudited)

 

Shares

 

 

Amount

 

 

 

 

Paid-in Capital

 

 

 

 

Comprehensive Loss

 

 

 

 

Retained Earnings

 

 

 

 

Shares

 

 

 

 

Amount

 

 

Stockholders' Equity

 

Balance at December 31, 2020

 

 

57,945

 

 

$

62

 

 

 

 

$

1,550,001

 

 

 

 

$

(7,585

)

 

 

 

$

45,322

 

 

 

 

 

(6,569

)

 

 

 

$

(668,882

)

 

$

918,918

 

Adjustment for modified retrospective adoption of accounting standard

 

 

 

 

 

 

 

 

 

 

(147,161

)

 

 

 

 

 

 

 

 

 

64,472

 

 

 

 

 

 

 

 

 

 

 

 

 

(82,689

)

Issuance of common stock under employee and director equity option and purchase plans

 

 

4

 

 

 

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

(55

)

 

 

(61

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

7,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,709

 

Settlement of convertible note hedge

 

 

(1

)

 

 

 

 

 

 

 

53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(53

)

 

 

 

Equity component of convertible note settlement

 

 

1

 

 

 

 

 

 

 

 

574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

574

 

Consolidated net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,510

)

 

 

 

 

 

 

 

 

 

 

 

 

(7,510

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,554

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,554

)

Balance at March 31, 2021

 

 

57,949

 

 

$

62

 

 

 

 

$

1,411,170

 

 

 

 

$

(9,139

)

 

 

 

$

102,284

 

 

 

 

 

(6,570

)

 

 

 

$

(668,990

)

 

$

835,387

 

Issuance of common stock under employee and director equity option and purchase plans

 

 

383

 

 

 

 

 

 

 

 

3,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(97

)

 

 

 

 

(6,909

)

 

 

(3,100

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

5,298