NuVasive® Reports First Quarter 2015 Financial Results

First Quarter 2015 Highlights:

  • Revenue increased 8.4% to $192.4 million, or 10.0% on a constant currency basis;
  • Non-GAAP operating profit margin of 12.6%; GAAP operating profit margin of 28.9%; 
  • Adjusted EBITDA margin of 23.0%;
  • Non-GAAP net income of $15.1 million; GAAP net income of $31.6 million; and
  • Non-GAAP earnings per share of $0.30; GAAP earnings per share of $0.61

SAN DIEGO, CA – May 4, 2015 – NuVasive, Inc. (Nasdaq: NUVA) (“NuVasive” or the “Company”), a leading medical device company focused on transforming spine surgery with minimally disruptive, procedurally integrated solutions, announced today financial results for the quarter ended March 31, 2015.

“We are pleased to report strong results for the first quarter 2015, including double-digit revenue growth on a constant currency basis, as well as exceptional operating and EBITDA margin expansion.  These outstanding results speak to the ongoing strength of our innovative edge in the marketplace and commitment to leveraging our scale as NuVasive evolves into a global spine player,” said Gregory T. Lucier, Chairman and Interim Chief Executive Officer of NuVasive. “Looking ahead, NuVasive’s strategy has not changed.  We remain laser-focused on increasing our market share in a profitable way, driving innovation in our products and business, and making our culture and people a competitive advantage.  Fueled by even greater efficiencies, accelerated globalization and the continued introduction of game-changing innovation, we are well-positioned to continue our positive momentum in 2015 and beyond.”

Lucier continued, “More recently, we are pleased to have reached an agreement in principle with the U.S. Department of Justice related to the Company’s ongoing investigation by the Office of Inspector General of the Department of Health and Human Services (“OIG”).   This understanding with OIG, coupled with the March 2015 court order to reassess a proper damages award in the Company’s ongoing patent lawsuit with Medtronic, provides us with greater clarity related to these legal matters.”

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

First Quarter 2015 Results

NuVasive reported first quarter 2015 total revenue of $192.4 million, an 8.4% increase compared to $177.5 million for the first quarter 2014.  On a constant currency basis, first quarter 2015 total revenue increased 10.0% compared to the same period last year.

GAAP gross profit for the first quarter 2015 was $146.7 million and gross margin was 76.3% compared to a gross profit of $134.2 million and a gross margin of 75.6% for the first quarter 2014.  Total GAAP operating expenses for the first quarter 2015 were $91.2 million compared to $161.6 million in the first quarter 2014.  The reduction in operating expenses for the first quarter 2015 was primarily driven by a $56.4 million gain related to the partial reversal of an accrual related to a Medtronic litigation liability.

The Company reported a GAAP net income of $31.6 million, or $0.61 per share, for the first quarter 2015 compared to a GAAP net loss of $(18.3) million, or $(0.40) per share, for the first quarter 2014.

On a non-GAAP basis, the Company reported net income of $15.1 million, or $0.30 per share, for the first quarter 2015 compared to net income of $8.9 million, or $0.18 per share, for the first quarter 2014.  The non-GAAP earnings per share calculations for the first quarter 2015 exclude the following amounts pre-tax: (i) amortization of intangible assets of $3.0 million; (ii) leasehold related charges of $2.9 million; (iii) one-time and acquisition related items of $2.0 million; (iv) CEO related transition charges of $3.4 million; (v) a net gain from changes in litigation liabilities of $42.6 million; and (vi) non-cash interest expense on convertible notes of $3.8 million.

Cash, cash equivalents and short and long-term marketable securities were approximately $316.8 million at March 31, 2015.

Annual Guidance for 2015

The Company provided the following updated projections to its full year 2015 guidance:

  • Revenue of approximately $810.0 million, which includes an approximate $12.0 million of currency headwinds versus a prior expectation of an approximate $10.0 million currency impact for 2015, or approximately 6.0% growth compared to revenue of $762.4 million for 2014; on a constant currency basis revenue is expected to grow approximately 7.8%;
  • GAAP earnings per share of approximately $1.12 compared to GAAP loss per share of ($0.36) for 2014; versus a prior expectation of $0.67 for 2015;
  • Non-GAAP earnings per share of approximately $1.10, an increase of approximately 64.0% compared to non-GAAP earnings of $0.67 for 2014; unchanged from prior expectations for 2015;
  • Non-GAAP operating margin of approximately 14.4%, an increase of approximately 300 basis points compared to 11.4% for 2014; unchanged from prior expectations for 2015;
  • Adjusted EBITDA margin of approximately 24.6%, an increase of approximately 270 basis points compared to 21.9% for 2014; unchanged from prior expectations for 2015;
  • GAAP effective tax expense rate of approximately 46.0%; versus a prior expectation of 49.0% for 2015; and
  • Non-GAAP effective tax expense rate of approximately 46.0%; unchanged from prior expectations for 2015.

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 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 amortization of intangible assets, leasehold related charges, one-time and acquisition related items, CEO related transition costs, net gain from changes in litigation liabilities and non-cash interest expense on convertible notes.

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, a leasehold related charge, acquisition related items, an intangible asset impairment charge, 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.

Investor Conference Call

The Company will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its first quarter 2015 financial performance.  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 June 4, 2015.  In addition, a telephone replay of the call will be available until May 18, 2015.  The replay dial-in numbers are 1-877-870-5176 for domestic callers and 1-858-384-5517 for international callers.  Please use pin number: 13605837.

About NuVasive

NuVasive is an innovative global medical device company that is changing spine surgery with minimally disruptive surgical products and procedurally-integrated solutions for the spine. The Company is the third largest player in the $9.0 billion global spine market. NuVasive offers a comprehensive spine portfolio of more than 90 unique products developed to improve spine surgery and patient outcomes. The Company’s principal procedural solution is its Maximum Access Surgery, or MAS®, platform for lateral spine fusion. MAS was designed to provide safe, reproducible, and clinically proven outcomes, and is a highly differentiated solution with fully integrated neuromonitoring, customizable exposure, and a broad offering of application-specific implants and fixation devices designed to address a variety of pathologies.

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 first quarter 2015, as well as financial projections for 2015.  The numbers for first quarter 2015 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 2015 represent its 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 that could cause actual growth and results to differ materially include, but are not limited to: the risk that NuVasive’s revenue or earnings projections may turn out to be inaccurate because of the preliminary nature of the forecasts; the risk of further adjustment to financial results or future financial expectations; unanticipated difficulty in selling products, generating revenue or producing expected profitability; and those 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.

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Investor/Media Contact:
Stacy Roughan
NuVasive, Inc.
1-858-909-1812
sroughan@nuvasive.com

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