SAN DIEGO, Oct. 24, 2017 /PRNewswire/ -- NuVasive, Inc.
(NASDAQ: NUVA), the leader in spine technology innovation, focused
on transforming spine surgery with minimally disruptive,
procedurally-integrated solutions, announced today financial
results for the quarter ended September
30, 2017.
Third Quarter 2017 Highlights
- Revenue increased 3.2% to $247.4
million, or 3.4% on a constant currency basis
- GAAP operating profit margin of 12.4%; Non-GAAP operating
profit margin of 17.6%, up 150 basis points from prior year
- GAAP diluted earnings per share of $0.64; Non-GAAP diluted earnings per share up 30%
from prior year to $0.52
- Company updates full year 2017 guidance
"Our results for the third quarter reflect continued strength in
our International business with 46% growth on a constant currency
basis year over year, representing the fourth consecutive quarter
with growth in excess of 20%," said Gregory
T. Lucier, NuVasive's chairman and chief executive officer.
"In the U.S., we are making significant inroads in the deformity
market with our RELINE® posterior fixation
system and have launched multiple spinal hardware technologies over
the last quarter that continue to enhance our differentiated and
procedurally-focused portfolio."
Lucier continued, "Disruptions from the recent hurricanes in our
U.S. and International business negatively affected third quarter
total revenue results by approximately $5
million. Excluding the impact of the hurricanes and one less
selling day, revenue growth would have been approximately 6%."
A full reconciliation of GAAP to non-GAAP measures can be found
in the tables of this news release.
Third Quarter 2017 Results
NuVasive reported
third quarter 2017 total revenue of $247.4
million, a 3.2% increase compared to $239.6 million for the third quarter 2016. On a
constant currency basis, third quarter 2017 total revenue increased
3.4% compared to the same period last year.
For the third quarter 2017, GAAP and non-GAAP gross profit was
$181.8 million and $182.0 million, respectively, while both GAAP and
non-GAAP gross margin was 73.5%. These results compared to GAAP and
non-GAAP gross profit of $180.5
million and $182.9 million,
respectively, and GAAP and non-GAAP gross margin of 75.3% and
76.3%, respectively, for the third quarter 2016. Total GAAP and
non-GAAP operating expenses were $151.2
million and $138.5 million,
respectively, for the third quarter of 2017. These results compared
to GAAP and non-GAAP operating expenses of $159.3 million and $144.4
million, respectively, for the third quarter 2016.
NuVasive reported a GAAP net income of $33.6 million, or $0.64 per diluted share, for the third quarter
2017 compared to $3.9 million, or
$0.07 per diluted share, for the
third quarter 2016.
On a non-GAAP basis, the Company reported net income of
$26.7 million, or $0.52 per diluted share, for the third quarter
2017 compared to $21.1 million, or
$0.40 per diluted share, for the
third quarter 2016.
Cash and cash equivalents were approximately $62.2 million at September
30, 2017.
Updated Full Year Guidance for 2017
The
Company updated its full year 2017 financial guidance to reflect
third-quarter results, the continued impact of Hurricane Maria in
Puerto Rico in the fourth quarter
and anticipated lower U.S. procedural volumes continuing into the
fourth quarter.
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2017
Guidance
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Prior
1
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Current
1
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(in Million's;
except %'s and EPS)
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GAAP
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Non-GAAP
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GAAP
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Non-GAAP
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Revenue
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$
1,065
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$
1,065
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$
1,030
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$
1,030
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% Growth -
Reported
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10.7%
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10.7%
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7.1%
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7.1%
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% Growth -
Constant Currency 2
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11.1%
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7.2%
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Operating
margin
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12.4%
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17.1%
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11.5%
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16.6%
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Earnings per
share
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$
1.13
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$
2.00
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$
1.37
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$
1.91
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EBITDA
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23.6%
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26.7%
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23.3%
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25.9%
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Tax
Rate
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~33%
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~35%
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~7%
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~34%
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1
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Prior guidance
provided July 27, 2017. Current guidance reflects guidance
provided October 24, 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 approximately $1,030.0
million for 2017, which now includes approximately
$2 million in year-over-year currency
headwinds, and reflects 7.1% growth on a reported basis and 7.2%
growth on a constant currency basis compared to revenue of
$962.0 million for 2016; versus a
prior expectation of $1,065.0 million
for 2017;
- Non-GAAP diluted earnings per share of approximately
$1.91, compared with the prior
expectation of $2.00, compared to
non-GAAP diluted earnings per share of $1.66 for 2016;
- Non-GAAP operating profit margin of approximately 16.6%,
compared with the prior expectation of 17.1%, compared to non-GAAP
diluted operating profit margin of 16.1% for 2016;
- Adjusted EBITDA margin of approximately 25.9% for 2017;
compared with the prior expectation of approximately 26.7% for
2017, compared to 25.2% for 2016; and
- Non-GAAP effective tax expense rate of approximately 34%;
slight improvement from prior expectation of approximately 35% for
2017.
Supplementary Financial Information
For
additional financial detail, please visit the Investor Relations
section at www.nuvasive.com to access Supplementary Financial
Information.
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Reconciliation of
Full Year EPS Guidance
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2017
Guidance1
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2016
Actuals
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Prior 2,
3
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Current
2,4
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GAAP net income
per share
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$
0.69
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$
1.13
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$
1.37
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Impact of change to
diluted share count
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0.02
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0.09
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0.07
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GAAP net income
per share, adjusted to diluted Non-GAAP share count
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$
0.71
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$
1.22
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$
1.44
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Litigation
liability
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(0.83)
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-
|
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0.01
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Business
transition costs 5
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0.35
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0.05
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0.04
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Non-cash
interest expense on convertible notes
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0.38
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0.33
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0.33
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Non-cash
purchase accounting adjustments on acquisitions
6
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0.28
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-
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0.01
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Loss on
repurchase of convertible notes
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0.37
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-
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-
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Amortization of
intangible assets 7
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0.78
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0.88
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0.92
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Tax effect of
adjustments 8
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(0.38)
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(0.48)
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(0.85)
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Non-GAAP earnings
per share
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$
1.66
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$
2.00
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$
1.91
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GAAP Weighted shares
outstanding - basic
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50,077
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50,864
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50,867
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GAAP Weighted shares
outstanding - diluted
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54,102
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56,617
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55,237
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Non-GAAP Weighted
shares outstanding - diluted 9
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51,981
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52,738
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52,390
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1
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Items may not foot
due to rounding.
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2
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Prior guidance
provided July 27, 2017. Current guidance reflects guidance
provided October 24, 2017.
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3
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Effective tax
expense rate of ~33% applied to GAAP earnings and ~35% applied to
Non-GAAP earnings.
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4
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Effective tax
expense rate of ~7% applied to GAAP earnings and ~34% applied to
Non-GAAP earnings.
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5
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Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs, contingent consideration
fair value adjustments, and other costs directly associated with
such activities.
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6
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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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7
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Excludes the
amortization associated with non-controlling
interest.
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8
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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 ~34% on a non-GAAP
basis.
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9
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Excludes the
impact of dilutive convertible notes and warrants for which the
Company is economically hedged through its anti-dilutive bond hedge
arrangements.
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Reconciliation of
Non-GAAP Operating Margin %
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2017
Guidance1
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(in thousands,
except %)
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2016
Actuals
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Prior
2
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Current
2
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Non-GAAP Gross
Margin %[A]
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76.6%
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75.6%
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74.2%
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Non-cash purchase
accounting adjustments on acquisitions 3
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(1.5%)
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0.0%
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(0.1%)
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GAAP Gross Margin
[B]
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75.0%
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75.6%
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74.2%
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GAAP &
Non-GAAP Sales, Marketing & Administrative Expense
[C]
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55.5%
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53.5%
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52.7%
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Non-GAAP Research
& Development Expense [D]
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5.0%
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5.0%
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5.0%
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In-process research
& development
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0.0%
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0.0%
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0.0%
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GAAP Research &
Development Expense [E]
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5.0%
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5.0%
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5.0%
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Litigation liability
[F]
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(4.5%)
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0.0%
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0.1%
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Amortization of
intangible assets [G] 4
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4.4%
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4.5%
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4.8%
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Business transition
costs [H] 5
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1.9%
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0.2%
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0.2%
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Non-GAAP Operating
Margin % [A - C - D]
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16.1%
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17.1%
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16.6%
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GAAP Operating Margin
% [B - C - E - F - G - H]
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12.8%
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12.4%
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11.5%
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1
|
Items may not foot
due to rounding.
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2
|
Prior guidance
provided July 27, 2017. Current guidance reflects guidance
provided October 24, 2017.
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3
|
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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4
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Excludes the
amortization associated with non-controlling
interest.
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5
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs, contingent consideration
fair value adjustments, and other costs directly associated with
such activities.
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|
|
Reconciliation of
EBITDA %
|
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|
2017
Guidance1
|
|
|
|
|
(in thousands,
except %)
|
2016
Actuals
|
|
Prior
2
|
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Current
2
|
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|
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Net Income /
(Loss)
|
3.9%
|
|
6.0%
|
|
7.3%
|
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Interest
(income) / expense, net 3
|
6.1%
|
|
3.6%
|
|
3.7%
|
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Provision for
income taxes
|
3.0%
|
|
2.9%
|
|
0.5%
|
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|
|
Depreciation
and amortization 4
|
10.5%
|
|
11.0%
|
|
11.8%
|
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|
EBITDA
|
23.5%
|
|
23.6%
|
|
23.3%
|
|
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|
|
Non-cash stock
based compensation
|
2.8%
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|
3.0%
|
|
2.3%
|
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|
|
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Business
transition costs 5
|
1.9%
|
|
0.2%
|
|
0.2%
|
|
|
|
|
Non-cash
purchase accounting adjustments on acquisitions
6
|
1.5%
|
|
0.0%
|
|
0.1%
|
|
|
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In-process
research & development
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
|
|
|
Litigation
liability
|
(4.5%)
|
|
0.0%
|
|
0.1%
|
|
|
|
|
Adjusted
EBITDA
|
25.2%
|
|
26.7%
|
|
25.9%
|
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1
|
Items may not foot
due to rounding.
|
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2
|
Prior guidance
provided July 27, 2017. Current guidance reflects guidance
provided October 24, 2017.
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3
|
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.
|
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4
|
Excludes the
amortization associated with non-controlling
interest.
|
|
|
|
5
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs, contingent consideration
fair value adjustments, and other costs directly associated with
such activities.
|
|
|
|
6
|
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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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, non-cash purchase
accounting adjustments on acquisitions, business transition costs,
CEO transition related costs, certain litigation charges,
significant one-time items, non-cash interest expense and/or losses
on repurchase of 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, non-cash purchase
accounting adjustments on acquisition, business transition costs,
CEO transition related costs, certain litigation charges, 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.
|
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|
|
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|
|
|
|
|
|
|
Reconciliation of
Third Quarter 2017 Results
|
|
|
|
|
GAAP Net Income
per Share to Non-GAAP Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(in thousands,
except per share data)
|
|
|
Adjustments
|
|
Diluted Earnings
Per
Share
|
|
|
|
|
GAAP net
income
|
|
|
$
33,617
|
|
$
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business transition
costs 1
|
|
|
345
|
|
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 2
|
|
|
136
|
|
|
|
|
|
|
Litigation
liability
|
|
|
750
|
|
|
|
|
|
|
Non-cash interest
expense on convertible notes
|
|
|
3,980
|
|
|
|
|
|
|
Amortization of
intangible assets 3
|
|
|
11,307
|
|
|
|
|
|
|
Tax effect of
adjustments 4
|
|
|
(23,413)
|
|
|
|
|
|
|
Adjustments to GAAP
net income
|
|
|
(6,895)
|
|
|
|
|
|
|
Non-GAAP
earnings
|
|
|
$
26,722
|
|
$
0.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares
outstanding - diluted
|
|
|
|
|
52,794
|
|
|
|
|
Non-GAAP weighted
shares outstanding - diluted 5
|
|
|
|
|
51,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs, contingent consideration
fair value adjustments, and other costs directly associated with
such activities.
|
|
|
|
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
|
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 ~34% on a non-GAAP
basis.
|
|
|
5
|
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
|
|
|
$
59,046
|
|
$
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business transition
costs 1
|
|
|
1,769
|
|
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 2
|
|
|
136
|
|
|
|
|
|
|
Litigation
liability
|
|
|
750
|
|
|
|
|
|
|
Non-cash interest
expense on convertible notes
|
|
|
13,244
|
|
|
|
|
|
|
Amortization of
intangible assets 3
|
|
|
34,073
|
|
|
|
|
|
|
Tax effect of
adjustments 4
|
|
|
(38,197)
|
|
|
|
|
|
|
Adjustments to GAAP
net income
|
|
|
11,775
|
|
|
|
|
|
|
Non-GAAP
earnings
|
|
|
$
70,821
|
|
$
1.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares
outstanding - diluted
|
|
|
|
|
56,304
|
|
|
|
|
Non-GAAP weighted
shares outstanding - diluted 5
|
|
|
|
|
52,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs, contingent consideration
fair value adjustments, and other costs directly associated with
such activities.
|
|
|
|
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
|
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 ~34% on a non-GAAP
basis.
|
|
|
5
|
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
Third Quarter and Nine Months 2017 Results
|
|
|
GAAP net income to
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
(in thousands,
except per share data)
|
September 30,
2017
|
|
September 30,
2017
|
|
|
|
GAAP net
income
|
$
33,617
|
|
$
59,046
|
|
|
|
Interest (income) /
expense, net
|
8,819
|
|
28,425
|
|
|
|
Provision for income
taxes
|
(11,540)
|
|
(2,971)
|
|
|
|
Depreciation and
amortization 1
|
29,858
|
|
87,872
|
|
|
|
EBITDA
|
$
60,754
|
|
$
172,372
|
|
|
|
Business transition
costs2
|
345
|
|
1,769
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 3
|
136
|
|
136
|
|
|
|
Litigation
liability
|
750
|
|
750
|
|
|
|
Non-cash stock based
compensation
|
(427)
|
|
14,984
|
|
|
|
Adjusted
EBITDA
|
$
61,558
|
|
$
190,011
|
|
|
|
As a percentage of
revenue
|
24.9%
|
|
25.1%
|
|
|
|
|
|
|
|
|
|
1
|
Excludes the
amortization associated with non-controlling
interest.
|
|
2
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
third party merger and acquisitions costs, contingent consideration
fair value adjustments, and other costs directly associated with
such activities.
|
|
3
|
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.
|
|
|
|
|
|
|
|
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 third 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 November 21, 2017. In
addition, a telephone replay of the call will be available until
October 31, 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: 13671687.
About NuVasive
NuVasive,
Inc. (NASDAQ: NUVA) is the leader in spine technology innovation,
focused on 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 third quarter 2017, as well as projections for 2017
financial guidance and longer-term financial performance goals. 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
September 30,
|
|
Nine Months Ended
September 30,
|
(unaudited)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
|
$ 247,431
|
|
$ 239,649
|
|
$ 757,868
|
|
$ 690,963
|
Cost of goods sold
(excluding below amortization of intangible assets)
|
|
65,583
|
|
59,196
|
|
193,617
|
|
173,167
|
Gross
profit
|
|
181,848
|
|
180,453
|
|
564,251
|
|
517,796
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Sales, marketing and
administrative
|
|
125,800
|
|
131,886
|
|
405,411
|
|
391,211
|
Research and
development
|
|
12,720
|
|
12,516
|
|
37,706
|
|
35,016
|
Amortization of
intangible assets
|
|
11,630
|
|
11,438
|
|
35,040
|
|
29,912
|
Litigation liability
loss (gain)
|
|
750
|
|
—
|
|
750
|
|
(43,310)
|
Business transition
costs
|
|
345
|
|
3,451
|
|
1,769
|
|
11,514
|
Total operating
expenses
|
|
151,245
|
|
159,291
|
|
480,676
|
|
424,343
|
Interest and other
expense, net:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
79
|
|
190
|
|
355
|
|
924
|
Interest
expense
|
|
(8,898)
|
|
(10,979)
|
|
(28,780)
|
|
(29,988)
|
Loss on repurchases
of convertible notes
|
|
—
|
|
—
|
|
—
|
|
(17,444)
|
Other expense,
net
|
|
(139)
|
|
94
|
|
(382)
|
|
(102)
|
Total interest and
other expense, net
|
|
(8,958)
|
|
(10,695)
|
|
(28,807)
|
|
(46,610)
|
Income before income
taxes
|
|
21,645
|
|
10,467
|
|
54,768
|
|
46,843
|
Income tax
expense
|
|
11,540
|
|
(6,972)
|
|
2,971
|
|
(17,383)
|
Consolidated net
income
|
|
$
33,185
|
|
$
3,495
|
|
$
57,739
|
|
$
29,460
|
Add back net loss
attributable to non-controlling interest
|
|
$
(432)
|
|
$
(431)
|
|
$
(1,307)
|
|
$
(1,311)
|
Net income
attributable to NuVasive, Inc.
|
|
$
33,617
|
|
$
3,926
|
|
$
59,046
|
|
$
30,771
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to NuVasive, Inc.:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.66
|
|
$
0.08
|
|
$
1.16
|
|
$
0.62
|
Diluted
|
|
$
0.64
|
|
$
0.07
|
|
$
1.05
|
|
$
0.58
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
50,747
|
|
50,264
|
|
50,799
|
|
49,970
|
Diluted
|
|
52,794
|
|
55,782
|
|
56,304
|
|
53,498
|
NuVasive,
Inc.
|
Consolidated
Balance Sheets
|
(in thousands,
except par values and share amounts)
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
(Unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
62,200
|
|
$
153,643
|
Restricted cash and
investments
|
|
2,402
|
|
—
|
Accounts receivable,
net of allowances of $10,708 and $8,912, respectively
|
|
187,247
|
|
171,595
|
Inventory,
net
|
|
249,003
|
|
208,249
|
Prepaid income
taxes
|
|
19,817
|
|
31,926
|
Prepaid expenses and
other current assets
|
|
9,184
|
|
10,030
|
Total current
assets
|
|
529,853
|
|
575,443
|
Property and
equipment, net
|
|
220,809
|
|
181,524
|
Intangible assets,
net
|
|
294,445
|
|
291,143
|
Goodwill
|
|
538,310
|
|
485,685
|
Deferred tax
assets
|
|
6,093
|
|
5,810
|
Restricted cash and
investments
|
|
4,946
|
|
7,405
|
Other
assets
|
|
34,460
|
|
23,794
|
Total
assets
|
|
$
1,628,916
|
|
$
1,570,804
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
73,552
|
|
$
77,585
|
Contingent
consideration liabilities
|
|
19,275
|
|
49,742
|
Accrued payroll and
related expenses
|
|
51,965
|
|
51,000
|
Income tax
liabilities
|
|
857
|
|
2,469
|
Short-term
borrowings
|
|
40,000
|
|
—
|
Senior convertible
notes
|
|
—
|
|
61,701
|
Total current
liabilities
|
|
185,649
|
|
242,497
|
Long-term senior
convertible notes
|
|
578,192
|
|
564,412
|
Deferred and income
tax liabilities, non-current
|
|
29,667
|
|
18,607
|
Other long-term
liabilities
|
|
75,213
|
|
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 September
30, 2017 and December 31, 2016, 55,959,798 and 55,184,660 issued
and outstanding at September 30, 2017 and December 31, 2016,
respectively
|
|
60
|
|
55
|
Additional paid-in
capital
|
|
1,347,482
|
|
1,010,238
|
Accumulated other
comprehensive loss
|
|
(6,855)
|
|
(10,631)
|
Accumulated
deficit
|
|
(19,460)
|
|
(66,859)
|
Treasury stock at
cost; 4,992,333 shares and 4,758,828 shares at September 30, 2017
and December 31, 2016, respectively
|
|
(565,313)
|
|
(237,867)
|
Total NuVasive, Inc.
stockholders' equity
|
|
755,914
|
|
694,936
|
Non-controlling
interest
|
|
4,281
|
|
5,588
|
Total
equity
|
|
760,195
|
|
700,524
|
Total liabilities and
equity
|
|
$
1,628,916
|
|
$
1,570,804
|
NuVasive,
Inc.
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
(unaudited)
|
|
2017
|
|
2016
|
Operating
activities:
|
|
|
|
|
Consolidated net
income
|
|
$
57,739
|
|
$
29,460
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
88,922
|
|
73,765
|
Loss on repurchases
of convertible notes
|
|
—
|
|
17,444
|
Amortization of
non-cash interest
|
|
15,676
|
|
16,906
|
Stock-based
compensation
|
|
14,984
|
|
19,645
|
Reserves on current
assets
|
|
1,741
|
|
9,027
|
Other non-cash
adjustments
|
|
11,029
|
|
11,369
|
Deferred income
taxes
|
|
(3,705)
|
|
24,810
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Accounts
receivable
|
|
(14,796)
|
|
(3,038)
|
Inventory
|
|
(36,180)
|
|
(22,423)
|
Prepaid expenses and
other current assets
|
|
226
|
|
(3,457)
|
Contingent
consideration liabilities
|
|
(11,200)
|
|
—
|
Accounts payable and
accrued liabilities
|
|
(5,857)
|
|
5,854
|
Litigation
liability
|
|
1,000
|
|
(88,450)
|
Accrued payroll and
related expenses
|
|
502
|
|
(1,670)
|
Income
taxes
|
|
(1,195)
|
|
6,778
|
Net cash provided by
operating activities
|
|
118,886
|
|
96,020
|
Investing
activities:
|
|
|
|
|
Acquisition of
Ellipse Technologies, net of cash acquired
|
|
—
|
|
(380,080)
|
Other acquisitions
and investments
|
|
(62,371)
|
|
(108,150)
|
Purchases of
intangible assets
|
|
(2,270)
|
|
(5,918)
|
Purchases of property
and equipment
|
|
(97,030)
|
|
(73,882)
|
Purchases of
marketable securities
|
|
—
|
|
(128,956)
|
Proceeds from sales
of marketable securities
|
|
—
|
|
407,032
|
Net cash used in
investing activities
|
|
(161,671)
|
|
(289,954)
|
Financing
activities:
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
5,517
|
|
6,668
|
Purchase of treasury
stock
|
|
(11,709)
|
|
(24,441)
|
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
|
|
(63,317)
|
|
(343,835)
|
Proceeds from
revolving line of credit
|
|
60,000
|
|
50,000
|
Repayments on
revolving line of credit
|
|
(20,000)
|
|
(50,000)
|
Other financing
activities
|
|
(2,316)
|
|
(1,701)
|
Net cash (used
in)provided by financing activities
|
|
(50,625)
|
|
204,531
|
Effect of exchange
rate changes on cash
|
|
1,967
|
|
882
|
(Decrease) increase
in cash and cash equivalents
|
|
(91,443)
|
|
11,479
|
Cash and cash
equivalents at beginning of period
|
|
153,643
|
|
192,339
|
Cash and cash
equivalents at end of period
|
|
$
62,200
|
|
$ 203,818
|
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SOURCE NuVasive, Inc.