SAN DIEGO, July 27, 2017 /PRNewswire/ -- 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 June
30, 2017.
Second Quarter 2017 Highlights
- Revenue increased 10.3% to $260.6
million, or 10.7% on a constant currency basis;
- GAAP operating profit margin of 11.4%; Non-GAAP operating
profit margin up 40 basis points from prior year to 16.3%;
- GAAP diluted earnings per share of $0.22; Non-GAAP diluted earnings per share up
15.0% from prior year to $0.46;
and
- Company reiterates revenue, non-GAAP operating margin and
non-GAAP diluted earnings per share guidance for 2017.
"NuVasive delivered better than expected operating profitability
and earnings per share results in the second quarter 2017, along
with continued strength across our International business, growing
at more than 20% for the third quarter in a row," said Gregory T. Lucier, chairman and chief executive
officer of NuVasive. "In addition, several of our
industry-disrupting technologies completed alpha and beta testing
this quarter and will commercially launch over the next few months,
giving surgeons and patients access to some of the most innovative
technologies to address spine and trauma conditions, as well as
radiation reduction in the operating room."
A full reconciliation of GAAP to non-GAAP measures can be found
in the tables of this news release.
Second Quarter 2017 Results
NuVasive reported second quarter 2017 total revenue of
$260.6 million, a 10.3% increase
compared to $236.2 million for the
second quarter 2016. On a constant currency basis, second quarter
2017 total revenue increased 10.7% compared to the same period last
year.
For the second quarter 2017, both GAAP and non-GAAP gross profit
was $194.2 million, while both GAAP
and non-GAAP gross margin was 74.5%. These results compared to GAAP
and non-GAAP gross profit of $176.5
million and $183.8 million,
respectively, and GAAP and non-GAAP gross margin of 74.7% and 77.8%
respectively, for the second quarter 2016. Total GAAP and non-GAAP
operating expenses were $164.4
million and $151.7 million,
respectively, for the second quarter 2017. These results compared
to GAAP and non-GAAP operating expenses of $116.4 million and $146.4
million, respectively, for the second quarter 2016.
NuVasive reported a GAAP net income of $12.7 million, or $0.22 per share, for the second quarter 2017
compared to $30.2 million, or
$0.57 per share, for the second
quarter 2016.
On a non-GAAP basis, the Company reported net income of
$24.1 million, or $0.46 per share for the second quarter 2017
compared to $20.6 million, or
$0.40 per share, for the second
quarter 2016.
Cash, cash equivalents and short and long-term marketable
securities were approximately $130.9
million at June 30, 2017.
Annual Guidance for 2017
The Company reiterated full year 2017 financial guidance in line
with prior expectations, with the exception of the impact of
updated foreign exchange rates.
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2017 Guidance
1
|
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(in Million's;
except %'s and EPS)
|
GAAP
|
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Non-GAAP
|
|
|
Revenue
|
$
1,065
|
|
$
1,065
|
|
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% Growth -
Reported
|
10.7%
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|
10.7%
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% Growth -
Constant Currency 2
|
|
|
11.1%
|
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Operating
margin
|
12.4%
|
|
17.1%
|
|
|
Earnings per
share
|
$
1.13
|
|
$
2.00
|
|
|
EBITDA
|
23.6%
|
|
26.7%
|
|
|
Tax
Rate
|
~33%
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|
~35%
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|
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|
|
|
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1
|
Current guidance
reflects guidance provided July 27, 2017.
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2
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Constant currency
is a measure that adjusts US GAAP revenue for
the impact of currency over the same period in the prior
year.
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- Revenue of $1.065 billion, which
now includes approximately $4 million
in year-over-year currency headwinds, and reflects 10.7% growth on
a reported basis and 11.1% 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 at www.nuvasive.com to access Supplementary
Financial Information.
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Reconciliation of
Full Year EPS Guidance
|
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|
|
2017
Guidance
|
|
|
|
2016
Actuals
|
|
Prior 1,
2
|
|
Current 1,
3
|
|
|
GAAP net income
per share
|
$
0.69
|
|
$
1.13
|
|
$
1.13
|
|
|
Impact of change to
diluted share count
|
0.02
|
|
0.07
|
|
0.09
|
|
|
GAAP net income
per share, adjusted to diluted Non-GAAP share count
|
$
0.71
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|
$
1.20
|
|
$
1.22
|
|
|
Litigation liability
gain
|
(0.83)
|
|
-
|
|
-
|
|
|
Business transition
costs 4
|
0.35
|
|
0.04
|
|
0.05
|
|
|
Non-cash interest
expense on convertible notes
|
0.38
|
|
0.33
|
|
0.33
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 5
|
0.28
|
|
-
|
|
-
|
|
|
Loss on repurchase of
convertible notes
|
0.37
|
|
-
|
|
-
|
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Amortization of
intangible assets 6
|
0.78
|
|
0.89
|
|
0.88
|
|
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Tax effect of
adjustments 7
|
(0.38)
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|
(0.46)
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|
(0.48)
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Non-GAAP earnings
per share
|
$
1.66
|
|
$
2.00
|
|
$
2.00
|
|
|
|
|
|
|
|
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|
GAAP Weighted shares
outstanding - basic
|
50,077
|
|
50,967
|
|
50,864
|
|
|
GAAP Weighted shares
outstanding - diluted
|
54,102
|
|
56,269
|
|
56,617
|
|
|
Non-GAAP Weighted
shares outstanding - diluted
|
51,981
|
|
53,069
|
|
52,738
|
|
|
|
|
|
|
|
|
|
|
1
|
Prior guidance
provided April 25, 2017. Current guidance reflects guidance
provided July 27, 2017.
|
|
|
2
|
Effective tax
expense rate of ~34% applied to GAAP earnings and ~35% applied to
Non-GAAP earnings.
|
|
|
3
|
Effective tax
expense rate of ~33% applied to GAAP earnings and ~35% applied to
Non-GAAP earnings.
|
|
|
4
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs and other costs directly
associated with such activities.
|
|
|
5
|
Represents costs
associated with non-cash purchase accounting adjustments, such as
acquired inventory fair market value adjustments, which are
amortized over the period in which underlying products are
sold.
|
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|
6
|
Excludes the
amortization associated with non-controlling
interest.
|
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|
7
|
The impact on
results from taxes include tax effecting the adjustments above at
the statutory rate as well as taking into account discrete items
and including those discrete items in the annual effective tax rate
calculation. The Company also includes those adjustments that would
have benefited the tax rate in lieu of the above adjustments as
part of the Company's tax filings. The impact of the changes to the
tax rate results in an annual estimated rate of ~35% on a non-GAAP
basis.
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|
|
|
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|
|
Reconciliation of
Non-GAAP Operating Margin %
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|
|
|
|
|
|
|
|
|
|
|
|
2017
Guidance
|
|
|
(in thousands,
except %)
|
|
2016
Actuals
|
|
Prior
1
|
|
Current
1
|
|
|
Non-GAAP Gross
Margin %[A]
|
|
76.6%
|
|
76.1%
|
|
75.6%
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 2
|
|
(1.5%)
|
|
0.0%
|
|
0.0%
|
|
|
GAAP Gross Margin
[B]
|
|
75.0%
|
|
76.1%
|
|
75.6%
|
|
|
|
|
|
|
|
|
|
|
|
GAAP &
Non-GAAP Sales, Marketing & Administrative Expense
[C]
|
|
55.5%
|
|
54.0%
|
|
53.5%
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Research
& Development Expense [D]
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
|
|
In-process research
& development
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
|
GAAP Research &
Development Expense [E]
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
|
|
|
|
|
|
|
|
|
|
|
Litigation liability
[F]
|
|
(4.5%)
|
|
0.0%
|
|
0.0%
|
|
|
Amortization of
intangible assets [G] 3
|
|
4.4%
|
|
4.6%
|
|
4.5%
|
|
|
Business transition
costs [H] 4
|
|
1.9%
|
|
0.2%
|
|
0.2%
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating
Margin % [A - C - D]
|
|
16.1%
|
|
17.1%
|
|
17.1%
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin
% [B - C - E - F - G - H]
|
|
12.8%
|
|
12.3%
|
|
12.4%
|
|
|
|
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|
|
|
|
|
|
|
1
|
Prior guidance
provided April 25, 2017. Current guidance reflects guidance
provided July 27, 2017.
|
|
|
2
|
Represents costs
associated with non-cash purchase accounting adjustments, such as
acquired inventory fair market value adjustments, which are
amortized over the period in which underlying products are
sold.
|
|
|
3
|
Excludes the
amortization associated with non-controlling
interest.
|
|
|
4
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs and other costs directly
associated with such activities.
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
EBITDA %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
Guidance
|
|
|
(in thousands,
except %)
|
2016
Actuals
|
|
Prior
1
|
|
Current
1
|
|
|
Net Income /
(Loss)
|
3.9%
|
|
6.0%
|
|
6.0%
|
|
|
Interest (income) /
expense, net 2
|
6.1%
|
|
3.5%
|
|
3.6%
|
|
|
Provision for income
taxes
|
3.0%
|
|
3.0%
|
|
2.9%
|
|
|
Depreciation and
amortization 3
|
10.5%
|
|
11.1%
|
|
11.0%
|
|
|
EBITDA
|
23.5%
|
|
23.6%
|
|
23.6%
|
|
|
Non-cash stock based
compensation
|
2.8%
|
|
3.0%
|
|
3.0%
|
|
|
Business transition
costs 4
|
1.9%
|
|
0.2%
|
|
0.2%
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 5
|
1.5%
|
|
0.0%
|
|
0.0%
|
|
|
In-process research
& development
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
|
Litigation liability
gain
|
(4.5%)
|
|
0.0%
|
|
0.0%
|
|
|
Adjusted
EBITDA
|
25.2%
|
|
26.7%
|
|
26.7%
|
|
|
|
|
|
|
|
|
|
|
1
|
Prior guidance
provided April 25, 2017. Current guidance reflects guidance
provided July 27, 2017.
|
|
2
|
Interest (income)
/ expense, net for the quarter and year ended December 31, 2016
includes loss on extinguishment of debt for $1.6 million and $19.1
million, respectively.
|
|
|
3
|
Excludes the
amortization associated with non-controlling
interest.
|
|
|
4
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs and other costs directly
associated with such activities.
|
|
|
5
|
Represents costs
associated with non-cash purchase accounting adjustments, such as
acquired inventory fair market value adjustments, which are
amortized over the period in which underlying products are
sold.
|
|
|
|
|
|
|
|
|
|
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, purchase accounting
related charges, leasehold related charges, integration related
expenses associated with acquired businesses, one-time
restructuring and acquisition related items, CEO transition related
costs, certain litigation charges, non-cash interest expense and/or
losses on convertible notes, and the impact from taxes related to
these items, including those taxes that would have occurred in lieu
of these items. 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.
|
Reconciliation of
Second Quarter 2017 Results
|
|
|
|
GAAP Net Income
per Share to Non-GAAP Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
Adjustments
|
|
Diluted Earnings
Per
Share
|
|
|
|
GAAP net
income
|
|
|
$
12,661
|
|
$
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
Business transition
costs 1
|
|
|
1,369
|
|
|
|
|
|
Non-cash interest
expense on convertible notes
|
|
|
4,665
|
|
|
|
|
|
Amortization of
intangible assets 2
|
|
|
11,028
|
|
|
|
|
|
Tax effect of
adjustments 3
|
|
|
(5,661)
|
|
|
|
|
|
Adjustments to GAAP
net income
|
|
|
11,401
|
|
|
|
|
|
Non-GAAP
earnings
|
|
|
$
24,062
|
|
$
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares
outstanding - diluted
|
|
|
|
|
58,330
|
|
|
|
Non-GAAP weighted
shares outstanding - diluted 4
|
|
|
|
|
52,743
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs and other costs directly
associated with such activities.
|
|
|
2
|
Excludes the
amortization associated with non-controlling
interest.
|
|
|
3
|
The impact on
results from taxes include tax effecting the adjustments above at
the statutory rate as well as taking into account discrete items
and including those discrete items in the annual effective tax rate
calculation. The Company also includes those adjustments that would
have benefited the tax rate in lieu of the above adjustments as
part of the Company's tax filings. The impact of the changes to the
tax rate results in an annual estimated rate of ~35% on a non-GAAP
basis.
|
|
|
4
|
Excludes the
impact of dilutive convertible notes and warrants for which the
Company is economically hedged through its anti-dilutive bond hedge
arrangements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Year To Date 2017 Results
|
|
|
|
GAAP Net Income
per Share to Non-GAAP Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
Adjustments
|
|
Diluted Earnings
Per
Share
|
|
|
|
GAAP net
income
|
|
|
$
25,429
|
|
$
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
transition costs 1
|
|
|
1,424
|
|
|
|
|
|
Non-cash
interest expense on convertible notes
|
|
|
9,264
|
|
|
|
|
|
Amortization of intangible assets 2
|
|
|
22,766
|
|
|
|
|
|
Tax
effect of adjustments 3
|
|
|
(14,784)
|
|
|
|
|
|
Adjustments to GAAP
net income
|
|
|
18,670
|
|
|
|
|
|
Non-GAAP
earnings
|
|
|
$
44,099
|
|
$
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares
outstanding - diluted
|
|
|
|
|
58,059
|
|
|
|
Non-GAAP weighted
shares outstanding - diluted 4
|
|
|
|
|
52,713
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs and other costs directly
associated with such activities.
|
|
|
2
|
Excludes the
amortization associated with non-controlling
interest.
|
|
|
3
|
The impact on
results from taxes include tax effecting the adjustments above at
the statutory rate as well as taking into account discrete items
and including those discrete items in the annual effective tax rate
calculation. The Company also includes those adjustments that would
have benefited the tax rate in lieu of the above adjustments as
part of the Company's tax filings. The impact of the changes to the
tax rate results in an annual estimated rate of ~35% on a non-GAAP
basis.
|
|
|
4
|
Excludes the
impact of dilutive convertible notes and warrants for which the
Company is economically hedged through its anti-dilutive bond hedge
arrangements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Second Quarter and Six Months 2017 Results
|
|
GAAP net income to
Adjusted EBITDA
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
(in thousands,
except per share data)
|
June 30,
2017
|
|
June 30,
2017
|
|
|
GAAP net
income
|
$
12,661
|
|
$
25,429
|
|
|
Interest
expense/(income), net
|
9,944
|
|
19,606
|
|
|
Provision for income
taxes
|
7,079
|
|
8,569
|
|
|
Depreciation and
amortization 1
|
28,856
|
|
58,014
|
|
|
EBITDA
|
$
58,540
|
|
$
111,618
|
|
|
Business transition
costs2
|
1,369
|
|
1,424
|
|
|
Non-cash stock based
compensation
|
8,394
|
|
15,411
|
|
|
Adjusted
EBITDA
|
$
68,303
|
|
$
128,453
|
|
|
As a percentage of
revenue
|
26.2%
|
|
25.2%
|
|
|
|
|
|
|
|
|
1
|
Excludes the
amortization associated with non-controlling
interest.
|
|
|
2
|
Costs related to
acquisition, integration and business transition activities which
includes severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs and other costs directly
associated with such activities.
|
|
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 second 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 August 28, 2017. In addition, a telephone replay
of the call will be available until August
3, 2017. The replay dial-in numbers are 1-844-512-2921 for
domestic callers and 1-412-317-6617 for international callers.
Please use pin number: 13665648.
About NuVasive
NuVasive, Inc. (NASDAQ: NUVA) is transforming spine surgery and
beyond with minimally invasive, 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 $962
million in revenues (2016), NuVasive has an approximate
2,300 person workforce in more than 40 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 second quarter 2017, as well as
projections for 2017 financial guidance and longer-term financial
performance goals. The numbers for the second quarter 2017 are
prior to the completion of review 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 current
estimates, including initial estimates of the potential benefits,
synergies and cost savings associated with acquisitions, which 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; the risk that acquisitions will
not be integrated successfully or that the benefits and synergies
from the acquisition may not be fully realized or may take longer
to realize than expected; 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. The forward-looking statements contained
herein are based on the current expectations and assumptions of
NuVasive and not on historical facts. NuVasive assumes no
obligation to update any forward-looking statement to reflect
events or circumstances arising after the date on which it was
made.
|
NuVasive,
Inc.
|
|
Consolidated
Statements of Operations
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
(unaudited)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenue
|
|
$ 260,573
|
|
$ 236,210
|
|
$ 510,437
|
|
$ 451,314
|
|
Cost of goods sold
(excluding below amortization of intangible assets)
|
|
66,421
|
|
59,745
|
|
128,034
|
|
113,971
|
|
Gross
profit
|
|
194,152
|
|
176,465
|
|
382,403
|
|
337,343
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Sales, marketing and
administrative
|
|
139,109
|
|
134,487
|
|
279,611
|
|
259,325
|
|
Research and
development
|
|
12,572
|
|
11,871
|
|
24,986
|
|
22,500
|
|
Amortization of
intangible assets
|
|
11,349
|
|
10,603
|
|
23,410
|
|
18,474
|
|
Litigation liability
(gain)
|
|
—
|
|
(43,310)
|
|
—
|
|
(43,310)
|
|
Business transition
costs
|
|
1,369
|
|
2,756
|
|
1,424
|
|
8,063
|
|
Total operating
expenses
|
|
164,399
|
|
116,407
|
|
329,431
|
|
265,052
|
|
Interest and other
expense, net:
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
139
|
|
406
|
|
276
|
|
734
|
|
Interest
expense
|
|
(10,083)
|
|
(10,537)
|
|
(19,882)
|
|
(19,009)
|
|
Loss on repurchases
of convertible notes
|
|
—
|
|
—
|
|
—
|
|
(17,444)
|
|
Other expense,
net
|
|
(501)
|
|
(246)
|
|
(243)
|
|
(196)
|
|
Total interest and
other expense, net
|
|
(10,445)
|
|
(10,377)
|
|
(19,849)
|
|
(35,915)
|
|
Income before income
taxes
|
|
19,308
|
|
49,681
|
|
33,123
|
|
36,376
|
|
Income tax
expense
|
|
(7,079)
|
|
(19,891)
|
|
(8,569)
|
|
(10,411)
|
|
Consolidated net
income
|
|
$
12,229
|
|
$
29,790
|
|
$
24,554
|
|
$
25,965
|
|
Add back net loss
attributable to non-controlling interest
|
|
$
(432)
|
|
$
(423)
|
|
$
(875)
|
|
$
(880)
|
|
Net income
attributable to NuVasive, Inc.
|
|
$
12,661
|
|
$
30,213
|
|
$
25,429
|
|
$
26,845
|
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to NuVasive, Inc.:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.25
|
|
$
0.60
|
|
$
0.50
|
|
$
0.54
|
|
Diluted
|
|
$
0.22
|
|
$
0.57
|
|
$
0.44
|
|
$
0.51
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
51,082
|
|
50,027
|
|
50,825
|
|
49,822
|
|
Diluted
|
|
58,330
|
|
53,159
|
|
58,059
|
|
52,354
|
|
NuVasive,
Inc.
|
|
Consolidated
Balance Sheets
|
|
(in thousands,
except par values and share amounts)
|
|
|
|
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
|
ASSETS
|
|
(Unaudited)
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
130,932
|
|
$
153,643
|
|
Restricted cash and
investments
|
|
2,402
|
|
—
|
|
Accounts receivable,
net of allowances of $9,399 and $8,912, respectively
|
|
190,169
|
|
171,595
|
|
Inventory,
net
|
|
236,839
|
|
208,249
|
|
Prepaid income
taxes
|
|
19,576
|
|
31,926
|
|
Prepaid expenses and
other current assets
|
|
12,310
|
|
10,030
|
|
Total current
assets
|
|
592,228
|
|
575,443
|
|
Property and
equipment, net
|
|
214,601
|
|
181,524
|
|
Intangible assets,
net
|
|
268,466
|
|
291,143
|
|
Goodwill
|
|
486,439
|
|
485,685
|
|
Deferred tax
assets
|
|
5,961
|
|
5,810
|
|
Restricted cash and
investments
|
|
4,945
|
|
7,405
|
|
Other
assets
|
|
33,744
|
|
23,794
|
|
Total
assets
|
|
$
1,606,384
|
|
$
1,570,804
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
82,933
|
|
$
77,585
|
|
Contingent
consideration liabilities
|
|
19,271
|
|
49,742
|
|
Accrued payroll and
related expenses
|
|
49,323
|
|
51,000
|
|
Income tax
liabilities
|
|
11,995
|
|
2,469
|
|
Short-term
borrowings
|
|
20,000
|
|
—
|
|
Senior convertible
notes
|
|
63,302
|
|
61,701
|
|
Total current
liabilities
|
|
246,824
|
|
242,497
|
|
Long-term senior
convertible notes
|
|
573,532
|
|
564,412
|
|
Deferred and income
tax liabilities, non-current
|
|
16,110
|
|
18,607
|
|
Other long-term
liabilities
|
|
46,312
|
|
44,764
|
|
Commitments and
contingencies
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 5,000,000 shares authorized, none
outstanding
|
|
—
|
|
—
|
|
Common stock,
$0.001 par value; 120,000,000 shares authorized at June 30,
2017 and December 31, 2016, 58,081,702 and 55,184,660 issued and
outstanding at June 30, 2017 and December 31, 2016,
respectively
|
|
58
|
|
55
|
|
Additional paid-in
capital
|
|
1,033,546
|
|
1,010,238
|
|
Accumulated other
comprehensive loss
|
|
(8,131)
|
|
(10,631)
|
|
Accumulated
deficit
|
|
(53,077)
|
|
(66,859)
|
|
Treasury stock at
cost; 4,974,534 shares and 4,758,828 shares at June 30, 2017 and
December 31, 2016, respectively
|
|
(253,503)
|
|
(237,867)
|
|
Total NuVasive, Inc.
stockholders' equity
|
|
718,893
|
|
694,936
|
|
Non-controlling
interest
|
|
4,713
|
|
5,588
|
|
Total
equity
|
|
723,606
|
|
700,524
|
|
Total liabilities and
equity
|
|
$
1,606,384
|
|
$
1,570,804
|
|
NuVasive,
Inc.
|
|
Consolidated
Statements of Cash Flows
|
|
(in
thousands)
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
(unaudited)
|
|
2017
|
|
2016
|
|
Operating
activities:
|
|
|
|
|
|
Consolidated net
income
|
|
$
24,554
|
|
$
25,965
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
58,688
|
|
46,329
|
|
Loss on repurchases
of convertible notes
|
|
—
|
|
17,444
|
|
Amortization of
non-cash interest
|
|
10,882
|
|
10,943
|
|
Stock-based
compensation
|
|
15,411
|
|
12,357
|
|
Reserves on current
assets
|
|
(95)
|
|
6,751
|
|
Other non-cash
adjustments
|
|
7,380
|
|
8,387
|
|
Deferred income
taxes
|
|
(2,570)
|
|
14,691
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
|
(17,586)
|
|
(8,615)
|
|
Inventory
|
|
(29,012)
|
|
(12,019)
|
|
Prepaid expenses and
other current assets
|
|
(2,485)
|
|
728
|
|
Contingent
consideration liabilities
|
|
(11,200)
|
|
—
|
|
Accounts payable and
accrued liabilities
|
|
4,987
|
|
14,384
|
|
Litigation
liability
|
|
—
|
|
(43,310)
|
|
Accrued payroll and
related expenses
|
|
(2,004)
|
|
(4,356)
|
|
Income
taxes
|
|
10,172
|
|
10,534
|
|
Net cash provided by
operating activities
|
|
67,122
|
|
100,213
|
|
Investing
activities:
|
|
|
|
|
|
Acquisition of
Ellipse Technologies, net of cash acquired
|
|
—
|
|
(380,080)
|
|
Other acquisitions
and investments
|
|
(14,417)
|
|
(8,079)
|
|
Purchases of
intangible assets
|
|
(1,695)
|
|
(5,918)
|
|
Purchases of property
and equipment
|
|
(68,690)
|
|
(52,566)
|
|
Purchases of
marketable securities
|
|
—
|
|
(128,956)
|
|
Proceeds from sales
of marketable securities
|
|
—
|
|
339,320
|
|
Net cash used in
investing activities
|
|
(84,802)
|
|
(236,279)
|
|
Financing
activities:
|
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
5,369
|
|
6,150
|
|
Purchase of treasury
stock
|
|
(10,844)
|
|
(22,549)
|
|
Payment of contingent
consideration
|
|
(18,800)
|
|
—
|
|
Proceeds from
issuance of convertible debt, net of issuance costs
|
|
—
|
|
634,140
|
|
Proceeds from sale of
warrants
|
|
—
|
|
44,850
|
|
Purchase of
convertible note hedge
|
|
—
|
|
(111,150)
|
|
Repurchases of
convertible notes
|
|
—
|
|
(343,835)
|
|
Proceeds from
revolving line of credit
|
|
20,000
|
|
50,000
|
|
Repayments on
revolving line of credit
|
|
—
|
|
(50,000)
|
|
Other financing
activities
|
|
(2,205)
|
|
(1,545)
|
|
Net cash (used
in)provided by financing activities
|
|
(6,480)
|
|
206,061
|
|
Effect of exchange
rate changes on cash
|
|
1,449
|
|
748
|
|
(Decrease) increase
in cash and cash equivalents
|
|
(22,711)
|
|
70,743
|
|
Cash and cash
equivalents at beginning of period
|
|
153,643
|
|
192,339
|
|
Cash and cash
equivalents at end of period
|
|
$ 130,932
|
|
$ 263,082
|
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SOURCE NuVasive, Inc.