Third Quarter 2015 Highlights:
- Revenue increased 5.6% to $200.5 million, or 7.8% on a constant currency basis;
- Non-GAAP operating profit margin increased 460 basis points to 16.3%; GAAP operating profit margin of 14.0%;
- Adjusted EBITDA margin increased 540 basis points to 26.7%;
- Non-GAAP net income of $18.1 million; GAAP net income of $13.0 million;
- Non-GAAP diluted earnings per share of $0.35; GAAP diluted earnings per share of $0.24; and
- Company reiterates 2015 revenue outlook and increases non-GAAP operating profit margin, adjusted EBITDA and EPS guidance
SAN DIEGO, CA – October 27, 2015 – NuVasive, Inc. (Nasdaq: NUVA), a leading medical device company focused on transforming spine surgery with minimally disruptive, procedurally-integrated solutions, announced today financial results for the quarter ended September 30, 2015.
“We are pleased to report another strong quarter in which we achieved revenue growth of nearly 8% on a constant currency basis in line with our mid to high single-digit growth goal and profitability that once again significantly outperformed our expectations,” said Gregory T. Lucier, Chairman and Chief Executive Officer of NuVasive. “By remaining focused on our margin expansion initiatives across the Company, we delivered incredibly strong year-over-year growth in non-GAAP operating profit margin and adjusted EBITDA margin, improving 460 and 540 basis points, respectively, while non-GAAP EPS increased nearly three and a half times compared to the same quarter last year.
“Our performance for the quarter was driven by continued strength in the United States and robust growth in certain international geographies where NuVasive is leading with our competitive XLIF® technology and differentiated offerings. We remain confident that our unrelenting focus on innovation and technology, increased operational efficiencies, international scalability and our commitment to increased self-manufacturing position NuVasive to be the leader in transforming spine and improving patient outcomes, ” said Mr. Lucier.
A full reconciliation of non-GAAP to GAAP measures can be found in the tables of this news release.
Third Quarter 2015 Results
NuVasive reported third quarter 2015 total revenue of $200.5 million, a 5.6 % increase compared to $189.9 million for the third quarter 2014. On a constant currency basis, third quarter 2015 total revenue increased 7.8% compared to the same period last year.
GAAP gross profit for the third quarter 2015 was $151.4 million and gross margin was 75.5% compared to a gross profit of $142.2 million and a gross margin of 74.9% for the third quarter 2014. Total GAAP operating expenses for the third quarter 2015 were $123.3 million compared to $125.9 million in the third quarter 2014.
The Company reported a GAAP net income of $13.0 million, or $0.24 per share, for the third quarter 2015 compared to a GAAP net loss of $(1.8) million, or $(0.04) per share, for the third quarter 2014.
On a non-GAAP basis, the Company reported net income of $18.1 million, or $0.35 per share, for the third quarter 2015 compared to net income of $3.9 million, or $0.08 per share, for the third quarter 2014.
Cash, cash equivalents and short and long-term marketable securities were approximately $451.2 million at September 30, 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 $13.0 million of currency headwinds, or approximately 6.2% growth compared to revenue of $762.4 million for 2014; on a constant currency basis revenue is expected to grow approximately 7.9%;
- GAAP diluted earnings per share of approximately $1.24 compared to GAAP loss per diluted share of $(0.36) for 2014; versus a prior expectation of $1.18 for 2015;
- Non-GAAP diluted earnings per share of approximately $1.25, an increase of approximately 86.6% compared to non-GAAP diluted earnings of $0.67 for 2014; versus a prior expectation of $1.17 for 2015;
- Non-GAAP operating profit margin of approximately 15.2%, an increase of approximately 380 basis points compared to 11.4% for 2014; versus a prior expectation of 15.0% for 2015;
- Adjusted EBITDA margin of approximately 25.4%, an increase of approximately 350 basis points compared to 21.9% for 2014; versus a prior expectation of 25.2% for 2015;
- GAAP effective tax expense rate of approximately 43.0%; versus a prior expectation of approximately 45.0% for 2015; and
- Non-GAAP effective tax expense rate of approximately 43.0%; versus a prior expectation of approximately 45.0% 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 net income, non-GAAP operating expenses and non-GAAP operating margin, which exclude amortization of intangible assets, leasehold related charges, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges and non-cash interest expense 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, 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 third 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 November 27, 2015. In addition, a telephone replay of the call will be available until November 3, 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: 13621771.
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. NuVasive has emerged from a small startup to become the #3 player in the $9 billion global spine market and remains focused on market share-taking strategies as the Company continues on its path to become the industry’s leading spine company. 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 safer, 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 third quarter 2015, as well as financial projections for 2015. The numbers for third 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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