Company Provides Financial Performance Guidance for 2018
SAN DIEGO, CA – Feb. 26, 2018 – NuVasive, Inc. (NASDAQ: NUVA), the leader in spine technology innovation, transforming spine surgery with minimally disruptive, procedurally-integrated solutions, announced today financial results for the quarter and full year ended Dec. 31, 2017.
Fourth Quarter 2017 Highlights:
- Revenue remained flat at $271.7 million compared to prior year, with strong international growth of 34% on a constant currency basis;
- GAAP operating profit margin of 11.0%; Non-GAAP operating profit margin of 18.2%; and
- GAAP diluted earnings per share of $0.46; Non-GAAP diluted earnings per share increase of 5.7% to $0.56.
Full Year 2017 Highlights:
- Revenue increased to $1,029.5 million, or 7.0% on a reported and constant currency basis;
- GAAP operating profit margin of 11.0%; Non-GAAP operating profit margin up 50 basis points to 16.6%; and
- GAAP diluted earnings per share of $1.50; Non-GAAP diluted earnings per share increase of 15.1% to $1.91.
“2017 was a milestone year for NuVasive as we surpassed the $1 billion revenue mark driven by impressive international sales growth of more than 20 percent, and achieved record profitability of 18.2% non-GAAP operating margins in the fourth quarter,” said Gregory T. Lucier, chairman and chief executive officer of NuVasive. “As we set the stage for 2018, we remain focused on accelerating our growth momentum by furthering our investment in R&D to bring innovative offerings to the market, developing our differentiated intraoperative neurophysiological monitoring services business with the completed acquisition of SafePassage and growing the number of surgeons worldwide who use NuVasive technologies to improve patients’ quality of life.”
A full reconciliation of non-GAAP to GAAP measures can be found in the tables of this news release.
Fourth Quarter 2017 Results
NuVasive reported fourth quarter 2017 total revenue of $271.7 million, indicating flat year-over-year growth on a reported and constant currency basis, compared to $271.1 million for the fourth quarter 2016.
For the fourth quarter 2017, GAAP and non-GAAP gross profit was $196.3 million and $196.7 million, respectively, and GAAP and non-GAAP gross margin was 72.2% and 72.4%, respectively. These results compared to gross profit of $204.2 million on a GAAP and non-GAAP basis, and GAAP and non-GAAP gross margin of 75.3% for the fourth quarter 2016. Total GAAP and non-GAAP operating expenses for the fourth quarter 2017 were $166.5 million and $147.2 million, respectively. These results compared to GAAP and non-GAAP operating expenses of $174.1 million and $155.4 million, respectively, for the fourth quarter 2016.
The Company reported a GAAP net income of $24.0 million, or $0.46 per share, for the fourth quarter 2017 compared to a GAAP net income of $6.4 million, or $0.11 per share, for the fourth quarter 2016. On a non-GAAP basis, the Company reported net income of $29.1 million, or $0.56 per share, for the fourth quarter 2017 compared to net income of $27.6 million, or $0.53 per share, for the fourth quarter 2016.
Full Year 2017 Results
NuVasive reported full year 2017 total revenue of $1,029.5 million, a 7.0% increase on both a reported and constant currency basis, compared to $962.1 million for the full year 2016.
Total GAAP and non-GAAP gross profit for the full year 2017 was $760.5 million and $761.1 million, respectively, and both GAAP and non-GAAP gross margin was 73.9%. These results compared to gross profit of $722.0 million and $736.7 million on a GAAP and non-GAAP basis, respectively, and a GAAP and non-GAAP gross margin of 75.0% and 76.6%, respectively, for the full year 2016. Total GAAP and non-GAAP operating expenses for the full year 2017 were $647.2 million and $590.3 million, respectively. These results compared to GAAP and non-GAAP operating expenses of $598.5 million and $581.6 million, respectively, for the full year 2016.
The Company reported a GAAP net income of $83.0 million, or $1.50 per share, for the full year 2017 compared to a GAAP net income of $37.1 million, or $0.69 per share, for the full year 2016. On a non-GAAP basis, the Company reported net income of $99.9 million, or $1.91 per share, for the full year 2017 compared to net income of $86.5 million, or $1.66 per share, for the full year 2016.
Cash and cash equivalents were approximately $72.8 million at December 31, 2017.
Annual Financial Guidance for 2018
The Company estimates revenue for full-year 2018 to be in range of $1,095 million to $1,105 million reflecting organic growth in the range of 4.4% to 5.4% and reported growth of 6.4% to 7.3% inclusive of the recent acquisition of SafePassage. Assuming current exchange rates remain similar for the rest of the year, the Company expects currency to have a positive impact in 2018 of approximately $5 million. The Company estimates full-year 2018 net income on a GAAP basis in a range of $1.56 to $1.59 per share and non-GAAP earnings per share in a range of $2.44 to $2.47. Additionally, the Company continues to expect to drive at least 100 basis points in non-GAAP operating margin expansion and adjusted EBITDA of approximately $295 million to $305 million. The above guidance assumes a full-year benefit of U.S. tax reform, suspension of the medical device tax and the recent acquisition of SafePassage.
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 net income, non-GAAP operating expenses and non-GAAP operating profit margin, which exclude amortization of intangible assets, leasehold related charges, integration related expenses associated with acquired businesses, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges and non-cash interest expense (excluding debt issuance cost) and or losses on convertible notes. Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency is the use of 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, leasehold related charges, integration related expenses associated with acquired businesses, CEO transition related costs, certain litigation liabilities, acquisition related items 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 fourth quarter and full year 2017 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 March 26, 2018. In addition, a telephone replay of the call will be available until March 5, 2018. 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: 13675438.
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 approximately $1,030 million in revenues (2017), NuVasive has an approximate 2,400 person workforce 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 2017, as well as projections for 2018 financial guidance and longer-term financial performance goals. The Company’s results for the fourth quarter and full year 2017 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 2018 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, spine surgeons, development and acceptance of new products or product enhancements, clinical and statistical verification of the benefits achieved via the use of NuVasive’s products (including the iGA™ platform), the Company’s ability to effectually 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.
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Investor Contact:
Suzanne Hatcher
NuVasive, Inc.
858-458-2240
[email protected]
Media Contact:
Troy Anderson
NuVasive, Inc.
858-349-6983
[email protected]