SAN DIEGO, CA – April 25, 2017 – 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 March 31, 2017.
First Quarter 2017 Highlights
- Revenue increased 16.2% to $250 million, or 16.0% on a constant currency basis;
- GAAP operating profit margin of 9.3%; Non-GAAP operating profit margin of 14.1%;
- GAAP diluted earnings per share of $0.22; Non-GAAP diluted earnings per share increase of 11.8% to $0.38; and
- Expanded existing revolving line of credit from $150 million up to $500 million.
“NuVasive is off to a solid start to the year, with our International business exceeding our expectations, and we saw momentum building in our U.S. business as we exited the quarter,” said Gregory T. Lucier, chairman and chief executive officer of NuVasive. “We are on track to deliver non–GAAP operating profit margin expansion of at least 100 basis points in 2017, reflecting our continued focus on operational efficiencies and the ramp up of our in-house manufacturing facility. Coupled with several innovative product and systems launches planned for 2017, including LessRay designed for radiation reduction, RELINE Trauma system, expandable cages and UNYTE system for complex fractures, we anticipate strong revenue acceleration for the balance of the year.”
The Company also announced it amended its existing revolving line of credit to expand the facility from $150 million up to $500 million. The credit facility amendment demonstrates the Company’s opportunistic approach to its capital structure, and provides for a five-year term at reasonable borrowing rates. The Company expects the expanded facility to allow greater flexibility in planning for the maturity of its convertible notes due July 2017, and support future investment in organic and inorganic growth initiatives.
A full reconciliation of GAAP to non-GAAP measures can be found in the tables of this news release.
First Quarter 2017 Results
NuVasive reported first quarter 2017 total revenue of $249.9 million, a 16.2% increase compared to $215.1 million for the first quarter 2016. On a constant currency basis, first quarter 2017 total revenue increased 16.0% compared to the same period last year.
For the first quarter 2017, both GAAP and non-GAAP gross profit was $188.3 million, and both GAAP and non-GAAP gross margin was 75.3%. These results compared to GAAP and non-GAAP gross profit of $160.9 million and $165.8 million, respectively, and GAAP and non-GAAP gross margin of 74.8% and 77.1% respectively, for the first quarter 2016. The lower gross margin profile year-over-year is primarily driven by the expense profile of the Biotronic NeuroNetwork business acquired in July 2016. Total GAAP and non-GAAP operating expenses were $165.0 million and $152.9 million, respectively, for the first quarter of 2017. These results compared to GAAP and non-GAAP operating expenses of $148.6 million and $135.5 million, respectively, for the first quarter 2016.
The Company reported a GAAP net income of $12.8 million, or $0.22 per share, for the first quarter 2017 compared to a GAAP net loss of ($3.4) million, or ($0.07) per share, for the first quarter 2016. On a non-GAAP basis, the Company reported net income of $20.0 million, or $0.38 per share, for the first quarter 2017 compared to net income of $17.2 million, or $0.34 per share, for the first quarter 2016.
Cash, cash equivalents and short and long-term marketable securities were approximately $134 million at March 31, 2017.
Annual Financial Guidance for 2017
The Company reiterated its full year 2017 guidance:
- Revenue of $1.065 billion, which includes approximately $10 million in year-over-year currency headwinds, and reflects 10.7% growth on a reported basis and 11.7% growth on a constant currency basis compared to revenue of $962.1 million for 2016;
- Non-GAAP diluted earnings per share of $2.00, an increase of 20% compared to non-GAAP diluted earnings per share of $1.66 for 2016;
- Non-GAAP operating profit margin of 17.1%, an increase of 100 basis points compared to 16.1% for 2016; and
- Adjusted EBITDA margin of 26.7%, an increase of 150 basis points compared to 25.2% for 2016.
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, purchase accounting related changes, 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
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 first quarter 2017. 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 May 25, 2017. In addition, a telephone replay of the call will be available until May 2, 2017. 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: 13658678.
NuVasive, Inc. (NASDAQ: NUVA) is a world leader in minimally invasive, procedurally-integrated spine solutions. From complex spinal deformity to degenerative spinal conditions, NuVasive is transforming spine surgery with innovative technologies designed to deliver reproducible and clinically proven surgical outcomes. NuVasive’s highly differentiated, procedurally-integrated solutions include access instruments, implantable hardware and software systems for surgical planning and reconciliation technology that centers on achieving the global alignment of the spine. With $962 million in revenues (2016), NuVasive has an approximate 2,300 person workforce in more than 40 countries around the world. For more information, please visit www.nuvasive.com.
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 2017, as well as projections for 2017 financial guidance and longer-term financial performance goals. The Company’s results for the first quarter 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 2017 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.