SAN DIEGO, Feb. 26, 2018 /PRNewswire/ -- NuVasive, Inc.
(NASDAQ: NUVA), the leader in spine technology innovation,
transforming spine surgery with minimally disruptive,
procedurally-integrated solutions, announced today financial
results for the quarter and full year ended Dec. 31, 2017.
Fourth Quarter 2017 Highlights:
- Revenue remained flat at $271.7
million compared to prior year, with strong international
growth of 34% on a constant currency basis;
- GAAP operating profit margin of 11.0%; Non-GAAP operating
profit margin of 18.2%; and
- GAAP diluted earnings per share of $0.46; Non-GAAP diluted earnings per share
increase of 5.7% to $0.56.
Full Year 2017 Highlights:
- Revenue increased to $1,029.5
million, or 7.0% on a reported and constant currency
basis;
- GAAP operating profit margin of 11.0%; Non-GAAP operating
profit margin up 50 basis points to 16.6%; and
- GAAP diluted earnings per share of $1.50; Non-GAAP diluted earnings per share
increase of 15.1% to $1.91.
"2017 was a milestone year for NuVasive as we surpassed the
$1 billion revenue mark driven by
impressive international sales growth of more than 20 percent, and
achieved record profitability of 18.2% non-GAAP operating margins
in the fourth quarter," said Gregory T.
Lucier, chairman and chief executive officer of NuVasive.
"As we set the stage for 2018, we remain focused on accelerating
our growth momentum by furthering our investment in R&D to
bring innovative offerings to the market, developing our
differentiated intraoperative neurophysiological monitoring
services business with the completed acquisition of SafePassage and
growing the number of surgeons worldwide who use NuVasive
technologies to improve patients' quality of life."
A full reconciliation of non-GAAP to GAAP measures can be found
in the tables of this news release.
Fourth Quarter 2017 Results
NuVasive reported
fourth quarter 2017 total revenue of $271.7
million, indicating flat year-over-year growth on a reported
and constant currency basis, compared to $271.1 million for the fourth quarter 2016.
For the fourth quarter 2017, GAAP and non-GAAP gross profit was
$196.3 million and $196.7 million, respectively, and GAAP and
non-GAAP gross margin was 72.2% and 72.4%, respectively. These
results compared to gross profit of $204.2
million on a GAAP and non-GAAP basis, and GAAP and non-GAAP
gross margin of 75.3% for the fourth quarter 2016. Total GAAP and
non-GAAP operating expenses for the fourth quarter 2017 were
$166.5 million and $147.2 million, respectively. These results
compared to GAAP and non-GAAP operating expenses of $174.1 million and $155.4
million, respectively, for the fourth quarter 2016.
The Company reported a GAAP net income of $24.0 million, or $0.46 per share, for the fourth quarter 2017
compared to a GAAP net income of $6.4
million, or $0.11 per share,
for the fourth quarter 2016. On a non-GAAP basis, the Company
reported net income of $29.1 million,
or $0.56 per share, for the fourth
quarter 2017 compared to net income of $27.6
million, or $0.53 per share,
for the fourth quarter 2016.
Full Year 2017 Results
NuVasive reported full
year 2017 total revenue of $1,029.5
million, a 7.0% increase on both a reported and constant
currency basis, compared to $962.1
million for the full year 2016.
Total GAAP and non-GAAP gross profit for the full year 2017 was
$760.5 million and $761.1 million, respectively, and both GAAP and
non-GAAP gross margin was 73.9%. These results compared to gross
profit of $722.0 million and
$736.7 million on a GAAP and non-GAAP
basis, respectively, and a GAAP and non-GAAP gross margin of 75.0%
and 76.6%, respectively, for the full year 2016. Total GAAP and
non-GAAP operating expenses for the full year 2017 were
$647.2 million and $590.3 million, respectively. These results
compared to GAAP and non-GAAP operating expenses of $598.5 million and $581.6
million, respectively, for the full year 2016.
The Company reported a GAAP net income of $83.0 million, or $1.50 per share, for the full year 2017 compared
to a GAAP net income of $37.1
million, or $0.69 per share,
for the full year 2016. On a non-GAAP basis, the Company reported
net income of $99.9 million, or
$1.91 per share, for the full year
2017 compared to net income of $86.5
million, or $1.66 per share,
for the full year 2016.
Cash and cash equivalents were approximately $72.8 million at December
31, 2017.
Annual Financial Guidance for 2018
The Company
estimates revenue for full-year 2018 to be in range of $1,095 million to $1,105 million reflecting organic growth in
the range of 4.4% to 5.4% and reported growth of 6.4% to 7.3%
inclusive of the recent acquisition of SafePassage. Assuming
current exchange rates remain similar for the rest of the year, the
Company expects currency to have a positive impact in 2018 of
approximately $5 million. The Company
estimates full-year 2018 net income on a GAAP basis in a range of
$1.56 to $1.59 per share and non-GAAP earnings per share
in a range of $2.44 to $2.47. Additionally, the Company continues to
expect to drive at least 100 basis points in non-GAAP operating
margin expansion and adjusted EBITDA of approximately $295 million to $305
million. The above guidance assumes a full-year benefit of
U.S. tax reform, suspension of the medical device tax and the
recent acquisition of SafePassage.
|
|
|
|
2018 Guidance
Range 1
|
|
|
(in million's;
except %'s and EPS)
|
|
|
GAAP
|
|
Non-GAAP
|
|
|
Revenue
|
|
|
$
1,095
|
|
$
1,105
|
|
$
1,095
|
|
$
1,105
|
|
|
% Growth -
Reported 2
|
|
|
6.4%
|
|
7.3%
|
|
6.4%
|
|
7.3%
|
|
|
% Growth -
Constant Currency 2, 3
|
|
|
|
|
|
|
5.9%
|
|
6.9%
|
|
|
Operating
margin
|
|
|
13.0%
|
|
13.0%
|
|
17.6%
|
|
17.6%
|
|
|
Earnings per
share
|
|
|
$
1.56
|
|
$
1.59
|
|
$
2.44
|
|
$
2.47
|
|
|
EBITDA
margin
|
|
|
23.4%
|
|
23.4%
|
|
26.9%
|
|
26.9%
|
|
|
Tax
Rate
|
|
|
~19%
|
|
~19%
|
|
~24%
|
|
~24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Guidance reflects the range provided February 26,
2018.
|
|
|
|
|
|
2 2017
as reported, does not include adoption of revenue recognition
Accounting Standards Codification 606 (ASC 606).
|
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|
|
|
|
3
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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|
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
Full Year EPS Guidance
|
|
|
|
|
|
|
2017
Actuals 1, 2
|
|
2018 Guidance
Range 2, 3, 4
|
|
|
GAAP net income
per share
|
$
1.50
|
|
$
1.56
|
|
$
1.59
|
|
|
Impact of change to
diluted share count
|
0.09
|
|
0.01
|
|
0.01
|
|
|
GAAP net income
per share, adjusted to diluted Non-GAAP share count
|
$
1.59
|
|
$
1.57
|
|
$
1.60
|
|
|
Litigation
liability5
|
0.09
|
|
-
|
|
-
|
|
|
Business transition
costs 6
|
0.08
|
|
0.04
|
|
0.04
|
|
|
Non-cash interest
expense on convertible notes
|
0.33
|
|
0.32
|
|
0.32
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 7
|
0.01
|
|
0.02
|
|
0.02
|
|
|
Amortization of
intangible assets 8
|
0.89
|
|
0.88
|
|
0.88
|
|
|
Tax effect of
adjustments 9
|
(1.08)
|
|
(0.39)
|
|
(0.39)
|
|
|
Non-GAAP earnings
per share
|
$
1.91
|
|
$
2.44
|
|
$
2.47
|
|
|
|
|
|
|
|
|
|
|
GAAP Weighted shares
outstanding - basic
|
50,874
|
|
51,025
|
|
51,025
|
|
|
GAAP Weighted shares
outstanding - diluted
|
55,196
|
|
52,647
|
|
52,647
|
|
|
Non-GAAP Weighted
shares outstanding - diluted 10
|
52,348
|
|
52,185
|
|
52,185
|
|
|
|
|
|
|
|
|
|
|
1 2017 as reported,
does not include adoption of revenue recognition ASC
606.
|
|
|
|
|
|
2 Items
may not foot due to rounding.
|
|
|
|
|
|
3
Guidance reflects the range provided February 26,
2018.
|
|
|
|
|
|
4
Effective tax expense rate of ~19% applied to GAAP earnings and
~24% applied to Non-GAAP earnings.
|
|
|
|
|
|
5
Represents the settlement of fees associated with the outcome of
the Medtronic litigation matter.
|
|
|
|
|
|
6 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.
|
|
|
|
|
|
7
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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8
Excludes the amortization associated with non-controlling
interest.
|
|
|
|
|
|
9 The
impact on results from taxes include tax effecting the adjustments
above at the statutory rate, taking into account discrete items and
including those discrete items in the annual effective tax rate
calculation, as well as the one-time impact of the Tax Cuts and
Jobs Act of 2017. 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 ~24% on a
non-GAAP basis.
|
|
|
|
|
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10
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
Non-GAAP Operating Margin %
|
|
|
|
|
|
|
|
|
|
(in thousands,
except %)
|
|
2017
Actuals 1, 2
|
|
2018
Guidance2, 3
|
|
|
Non-GAAP Gross
Margin %[A]
|
|
73.9%
|
|
74.0%
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 4
|
|
(0.1%)
|
|
(0.1%)
|
|
|
GAAP Gross Margin
[B]
|
|
73.9%
|
|
73.9%
|
|
|
|
|
|
|
|
|
|
GAAP &
Non-GAAP Sales, Marketing & Administrative Expense
[C]
|
|
52.4%
|
|
51.1%
|
|
|
|
|
|
|
|
|
|
Non-GAAP Research
& Development Expense [D]
|
|
4.9%
|
|
5.3%
|
|
|
In-process research
& development
|
|
0.0%
|
|
0.0%
|
|
|
GAAP Research &
Development Expense [E]
|
|
4.9%
|
|
5.3%
|
|
|
|
|
|
|
|
|
|
Litigation liability
[F]5
|
|
0.4%
|
|
0.0%
|
|
|
Amortization of
intangible assets [G] 6
|
|
4.7%
|
|
4.3%
|
|
|
Business transition
costs [H] 7
|
|
0.4%
|
|
0.2%
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating
Margin % [A - C - D]
|
|
16.6%
|
|
17.6%
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin
% [B - C - E - F - G - H]
|
|
11.0%
|
|
13.0%
|
|
|
|
|
|
|
|
|
|
1 2017 as reported,
does not include adoption of revenue recognition ASC
606.
|
|
|
|
|
|
2 Items
may not foot due to rounding.
|
|
|
|
|
|
3
Guidance reflects the range provided February 26,
2018.
|
|
|
|
|
|
4
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.
|
|
|
|
|
|
5
Represents the settlement of fees associated with the outcome of
the Medtronic litigation matter.
|
|
|
|
|
|
6
Excludes the amortization associated with non-controlling
interest.
|
|
|
|
|
|
7 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.
|
|
|
|
|
|
|
|
Reconciliation of
EBITDA %
|
|
|
|
|
|
(in thousands,
except %)
|
2017
Actuals 1, 2
|
|
2018
Guidance2, 3
|
|
|
Net Income /
(Loss)
|
8.1%
|
|
7.5%
|
|
|
Interest (income) /
expense, net
|
3.7%
|
|
3.6%
|
|
|
Provision for income
taxes
|
(0.7%)
|
|
1.7%
|
|
|
Depreciation and
amortization 4
|
11.6%
|
|
10.6%
|
|
|
EBITDA
Margin
|
22.7%
|
|
23.4%
|
|
|
Non-cash stock based
compensation
|
2.2%
|
|
3.2%
|
|
|
Business transition
costs 5
|
0.4%
|
|
0.2%
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 6
|
0.1%
|
|
0.1%
|
|
|
Litigation liability
7
|
0.4%
|
|
0.0%
|
|
|
Adjusted EBITDA
Margin
|
25.8%
|
|
26.9%
|
|
|
|
|
|
|
|
|
1 2017 as reported, does not
include adoption of revenue recognition ASC
606.
|
|
|
|
|
|
2 Items may not
foot due to rounding.
|
|
|
|
|
|
3 Guidance
reflects the range provided February 26, 2018.
|
|
|
|
|
|
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.
|
|
|
|
|
|
7 Represents the
settlement of fees associated with the outcome of the Medtronic
litigation matter.
|
|
|
Reconciliation of Non-GAAP
Information
Management uses certain non-GAAP financial
measures such as non-GAAP earnings per share, non-GAAP net income,
non-GAAP operating expenses and non-GAAP operating profit margin,
which exclude amortization of intangible assets, leasehold related
charges, integration related expenses associated with acquired
businesses, one-time restructuring and acquisition related items,
CEO transition related costs, certain litigation charges and
non-cash interest expense (excluding debt issuance cost) and or
losses on convertible notes. Management also uses certain non-GAAP
measures which are intended to exclude the impact of foreign
exchange currency fluctuations. The measure constant currency is
the use of an exchange rate that eliminates fluctuations when
calculating financial performance numbers.
The Company also uses measures such as free cash flow, which
represents cash flow from operations less cash used in the
acquisition and disposition of capital. Additionally, the Company
uses an adjusted EBITDA measure which represents earnings before
interest, taxes, depreciation and amortization and excludes the
impact of stock-based compensation, leasehold related charges,
integration related expenses associated with acquired businesses,
CEO transition related costs, certain litigation liabilities,
acquisition related items and other significant one-time items.
Management calculates the non-GAAP financial measures provided in
this earnings release excluding these costs and uses these non-GAAP
financial measures to enable it to further and more consistently
analyze the period-to-period financial performance of its core
business operations. Management believes that providing investors
with these non-GAAP measures gives them additional information to
enable them to assess, in the same way management assesses, the
Company's current and future continuing operations. These non-GAAP
measures are not in accordance with, or an alternative for, GAAP,
and may be different from non-GAAP measures used by other
companies. Set forth below are reconciliations of the non-GAAP
financial measures to the comparable GAAP financial
measure.
|
|
|
Reconciliation of
Fourth 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
|
|
|
$
23,960
|
|
$
0.46
|
|
|
|
|
|
|
|
|
|
|
Business transition
costs 1
|
|
|
2,518
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 2
|
|
|
404
|
|
|
|
|
Litigation liability
3
|
|
|
3,750
|
|
|
|
|
Non-cash interest
expense on convertible notes
|
|
|
4,046
|
|
|
|
|
Amortization of
intangible assets4
|
|
|
12,677
|
|
|
|
|
Tax effect of
adjustments 5
|
|
|
(18,273)
|
|
|
|
|
Adjustments to GAAP
net income
|
|
|
5,122
|
|
|
|
|
Non-GAAP
earnings
|
|
|
$
29,082
|
|
$
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares
outstanding - diluted
|
|
|
|
|
51,857
|
|
|
Non-GAAP weighted
shares outstanding - diluted 6
|
|
|
|
|
51,857
|
|
|
|
|
|
|
|
|
|
|
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
Represents the settlement of fees associated with the outcome of
the Medtronic litigation matter.
|
|
|
|
|
|
4
Excludes the amortization associated with non-controlling
interest.
|
|
|
|
|
|
5 The
impact on results from taxes include tax effecting the adjustments
above at the statutory rate, taking into account discrete items and
including those discrete items in the annual effective tax rate
calculation, as well as the one-time impact of the Tax Cuts and
Jobs Act of 2017. 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.
|
|
|
|
|
|
6
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
|
|
|
$
83,006
|
|
$
1.50
|
|
|
|
|
|
|
|
|
|
|
Business transition
costs 1
|
|
|
4,287
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 2
|
|
|
540
|
|
|
|
|
Litigation liability
3
|
|
|
4,500
|
|
|
|
|
Non-cash interest
expense on convertible notes
|
|
|
17,290
|
|
|
|
|
Amortization of
intangible assets 4
|
|
|
46,750
|
|
|
|
|
Tax effect of
adjustments 5
|
|
|
(56,470)
|
|
|
|
|
Adjustments to GAAP
net income
|
|
|
16,897
|
|
|
|
|
Non-GAAP
earnings
|
|
|
$
99,903
|
|
$
1.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares
outstanding - diluted
|
|
|
|
|
55,193
|
|
|
Non-GAAP weighted
shares outstanding - diluted 6
|
|
|
|
|
52,345
|
|
|
|
|
|
|
|
|
|
|
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
Represents the settlement of fees associated with the outcome of
the Medtronic litigation matter.
|
|
|
|
|
|
4
Excludes the amortization associated with non-controlling
interest.
|
|
|
|
|
|
5 The
impact on results from taxes include tax effecting the adjustments
above at the statutory rate, taking into account discrete items and
including those discrete items in the annual effective tax rate
calculation, as well as the one-time impact of the Tax Cuts and
Jobs Act of 2017. 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.
|
|
|
|
|
|
6
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
Fourth Quarter and Twelve Months 2017 Results
|
|
|
GAAP Net Income to
Adjusted EBITDA
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
(in thousands,
except per share data)
|
December 31,
2017
|
|
December 31,
2017
|
|
|
GAAP net
income
|
$
23,960
|
|
$
83,006
|
|
|
Interest (income) /
expense, net
|
9,156
|
|
37,581
|
|
|
Provision for income
taxes
|
(4,067)
|
|
(7,038)
|
|
|
Depreciation and
amortization 1
|
32,055
|
|
119,927
|
|
|
EBITDA
|
$
61,104
|
|
$
233,476
|
|
|
Business transition
costs2
|
2,518
|
|
4,287
|
|
|
Non-cash purchase
accounting adjustments on acquisitions 3
|
404
|
|
540
|
|
|
Litigation liability
4
|
3,750
|
|
4,500
|
|
|
Non-cash stock based
compensation
|
7,407
|
|
22,391
|
|
|
Adjusted
EBITDA
|
$
75,183
|
|
$
265,194
|
|
|
As a percentage of
revenue
|
27.7%
|
|
25.8%
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
4
Represents the settlement of fees associated with the outcome of
the Medtronic litigation matter.
|
|
|
Investor Conference Call
The Company will hold
a conference call today at 4:30 p.m.
ET / 1:30 p.m. PT to discuss
the results of its fourth quarter and full year 2017 financial
performance. The dial-in numbers are 1-877-407-9039 for domestic
callers and 1-201-689-8470 for international callers. A live
webcast of the conference call will be available online from the
Investor Relations page of the Company's website at
www.nuvasive.com.
After the live webcast, the call will remain available on
NuVasive's website through March 26,
2018. In addition, a telephone replay of the call will be
available until March 5, 2018. The
replay dial-in numbers are 1-844-512-2921 for domestic callers and
1-412-317-6671 for international callers. Please use pin number:
13675438.
About NuVasive
NuVasive, Inc. (NASDAQ: NUVA) is
the leader in spine technology innovation, focused on transforming
spine surgery and beyond with minimally disruptive,
procedurally-integrated solutions designed to deliver reproducible
and clinically-proven surgical outcomes. The Company's portfolio
includes access instruments, implantable hardware, biologics,
software systems for surgical planning, navigation and imaging
solutions, magnetically adjustable implant systems for spine and
orthopedics, and intraoperative monitoring service offerings. With
approximately $1,030 million in
revenues (2017), NuVasive has an approximate 2,400 person workforce
in more than 50 countries serving surgeons, hospitals and patients.
For more information, please visit www.nuvasive.com.
Forward-Looking Statements
NuVasive cautions you that
statements included in this news release or made on the investor
conference call referenced herein that are not a description of
historical facts are forward-looking statements that involve risks,
uncertainties, assumptions and other factors which, if they do not
materialize or prove correct, could cause NuVasive's results to
differ materially from historical results or those expressed or
implied by such forward-looking statements. In addition, this news
release contains selected financial results from the fourth quarter
and full year 2017, as well as projections for 2018 financial
guidance and longer-term financial performance goals. The Company's
results for the fourth quarter and full year 2017 are prior to the
completion of review and audit procedures by the Company's external
auditors and are subject to adjustment. In addition, the Company's
projections for 2018 financial guidance and longer-term financial
performance goals represent initial estimates, and are subject to
the risk of being inaccurate because of the preliminary nature of
the forecasts, the risk of further adjustment, or unanticipated
difficulty in selling products or generating expected
profitability. The potential risks and uncertainties which
contribute to the uncertain nature of these statements include,
among others, risks associated with acceptance of the Company's
surgical products and procedures by spine surgeons, spine surgeons,
development and acceptance of new products or product enhancements,
clinical and statistical verification of the benefits achieved via
the use of NuVasive's products (including the iGA™ platform), the
Company's ability to effectually manage inventory as it continues
to release new products, its ability to recruit and retain
management and key personnel, and the other risks and uncertainties
more fully described in the Company's news releases and periodic
filings with the Securities and Exchange Commission. NuVasive's
public filings with the Securities and Exchange Commission are
available at www.sec.gov. NuVasive assumes no obligation to update
any forward-looking statement to reflect events or circumstances
arising after the date on which it was made.
NuVasive,
Inc.
|
Consolidated
Statements of Operations
|
(in thousands,
except per share data)
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
Revenue
|
|
$
271,652
|
|
$
271,109
|
|
$
1,029,520
|
|
$
962,072
|
Cost of goods sold
(excluding below amortization of intangible assets)
|
|
75,391
|
|
66,926
|
|
269,008
|
|
240,093
|
Gross
profit
|
|
196,261
|
|
204,183
|
|
760,512
|
|
721,979
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Sales,
marketing and administrative
|
|
134,502
|
|
142,413
|
|
539,913
|
|
533,624
|
Research
and development
|
|
12,719
|
|
12,983
|
|
50,425
|
|
47,999
|
Amortization of intangible assets
|
|
12,999
|
|
12,089
|
|
48,039
|
|
42,001
|
Litigation liability loss (gain)
|
|
3,750
|
|
—
|
|
4,500
|
|
(43,310)
|
Business
transition costs
|
|
2,518
|
|
6,624
|
|
4,287
|
|
18,138
|
Total operating
expenses
|
|
166,488
|
|
174,109
|
|
647,164
|
|
598,452
|
Interest and other
expense, net:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
85
|
|
167
|
|
440
|
|
1,091
|
Interest
expense
|
|
(9,241)
|
|
(10,532)
|
|
(38,021)
|
|
(40,520)
|
Loss on repurchases
of convertible notes
|
|
—
|
|
(1,641)
|
|
—
|
|
(19,085)
|
Other
(expense) income, net
|
|
(1,160)
|
|
(203)
|
|
(1,542)
|
|
(305)
|
Total interest and
other expense, net
|
|
(10,316)
|
|
(12,209)
|
|
(39,123)
|
|
(58,819)
|
Income before income
taxes
|
|
19,457
|
|
17,865
|
|
74,225
|
|
64,708
|
Income tax benefit
(expense)
|
|
4,067
|
|
(11,899)
|
|
7,038
|
|
(29,282)
|
Consolidated net
income
|
|
$
23,524
|
|
$
5,966
|
|
$
81,263
|
|
$
35,426
|
Add back net loss
attributable to non-controlling interests
|
|
$
(436)
|
|
$
(410)
|
|
$
(1,743)
|
|
$
(1,721)
|
Net income
attributable to NuVasive, Inc.
|
|
$
23,960
|
|
$
6,376
|
|
$
83,006
|
|
$
37,147
|
Net income per share
attributable to NuVasive, Inc.:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.47
|
|
$
0.13
|
|
$
1.63
|
|
$
0.74
|
Diluted
|
|
$
0.46
|
|
$
0.11
|
|
$
1.50
|
|
$
0.69
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
51,094
|
|
50,394
|
|
50,874
|
|
50,077
|
Diluted
|
|
51,857
|
|
55,913
|
|
55,193
|
|
54,102
|
NuVasive,
Inc.
|
Consolidated
Balance Sheets
|
(in thousands,
except par values and share amounts)
|
|
|
|
December
31,
|
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
72,803
|
|
$
153,643
|
Restricted cash and
investments
|
|
3,901
|
|
—
|
Accounts receivable,
net of allowances of $13,669 and $8,912, respectively
|
|
199,040
|
|
171,595
|
Inventory,
net
|
|
247,245
|
|
208,249
|
Prepaid income
taxes
|
|
17,209
|
|
31,926
|
Prepaid expenses and
other current assets
|
|
18,792
|
|
10,030
|
Total current
assets
|
|
558,990
|
|
575,443
|
Property and
equipment, net
|
|
215,326
|
|
181,524
|
Intangible assets,
net
|
|
280,774
|
|
291,143
|
Goodwill
|
|
536,926
|
|
485,685
|
Deferred tax
assets
|
|
6,440
|
|
5,810
|
Restricted cash and
investments
|
|
1,494
|
|
7,405
|
Other
assets
|
|
39,117
|
|
23,794
|
Total
assets
|
|
$
1,639,067
|
|
$
1,570,804
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
75,076
|
|
$
77,585
|
Contingent
consideration liabilities
|
|
18,952
|
|
49,742
|
Accrued payroll and
related expenses
|
|
55,582
|
|
51,000
|
Litigation
liability
|
|
8,150
|
|
—
|
Income tax
liabilities
|
|
2,908
|
|
2,469
|
Short-term senior
convertible notes
|
|
—
|
|
61,701
|
Total current
liabilities
|
|
160,668
|
|
242,497
|
Long-term senior
convertible notes
|
|
582,920
|
|
564,412
|
Deferred and income
tax liabilities, non-current
|
|
18,786
|
|
18,607
|
Other long-term
liabilities
|
|
77,539
|
|
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 December
31, 2017
and December 31, 2016, 56,164,060 and 55,184,660 issued and
outstanding at
December 31, 2017 and December 31, 2016, respectively
|
|
60
|
|
55
|
Additional paid-in
capital
|
|
1,363,549
|
|
1,010,238
|
Accumulated other
comprehensive loss
|
|
(6,933)
|
|
(10,631)
|
Retained earnings
(accumulated deficit)
|
|
4,500
|
|
(66,859)
|
Treasury stock at
cost; 5,001,886 shares and 4,758,828 shares at December 31,
2017
and December 31, 2016, respectively
|
|
(565,867)
|
|
(237,867)
|
Total NuVasive, Inc.
stockholders' equity
|
|
795,309
|
|
694,936
|
Non-controlling
interests
|
|
3,845
|
|
5,588
|
Total
equity
|
|
799,154
|
|
700,524
|
Total liabilities and
equity
|
|
$
1,639,067
|
|
$
1,570,804
|
NuVasive,
Inc.
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
|
|
|
Year Ended
December 31,
|
|
|
2017
|
|
2016
|
Operating
activities:
|
|
|
|
|
Consolidated net
income
|
|
$
81,263
|
|
$
35,426
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
121,176
|
|
102,713
|
Deferred income tax
(benefit) expense
|
|
(12,384)
|
|
26,265
|
Loss on repurchases
of convertible notes
|
|
—
|
|
19,085
|
Amortization of
non-cash interest
|
|
20,538
|
|
22,721
|
Stock-based
compensation
|
|
22,391
|
|
26,924
|
Reserves on current
assets
|
|
5,718
|
|
11,408
|
Other non-cash
adjustments
|
|
16,561
|
|
16,928
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Accounts
receivable
|
|
(29,389)
|
|
(33,250)
|
Inventory
|
|
(35,300)
|
|
(22,636)
|
Prepaid expenses and
other current assets
|
|
(10,671)
|
|
(5,665)
|
Contingent
consideration liabilities
|
|
(11,200)
|
|
—
|
Accounts payable and
accrued liabilities
|
|
(5,580)
|
|
11,854
|
Accrued
royalties
|
|
163
|
|
471
|
Accrued payroll and
related expenses
|
|
4,088
|
|
8,849
|
Litigation
liability
|
|
8,150
|
|
(88,450)
|
Income
taxes
|
|
3,455
|
|
23,652
|
Net cash provided by
operating activities
|
|
178,979
|
|
156,295
|
Investing
activities:
|
|
|
|
|
Acquisition of
Ellipse Technologies, net of cash acquired
|
|
—
|
|
(380,080)
|
Other acquisitions
and investments
|
|
(62,370)
|
|
(108,591)
|
Purchases of
intangible assets
|
|
(2,270)
|
|
(5,918)
|
Purchases of property
and equipment
|
|
(110,221)
|
|
(88,372)
|
Purchases of
marketable securities
|
|
—
|
|
(128,956)
|
Proceeds from sales
of marketable securities
|
|
—
|
|
407,032
|
Net cash used in
investing activities
|
|
(174,861)
|
|
(304,885)
|
Financing
activities:
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
9,991
|
|
9,492
|
Payment of contingent
consideration
|
|
(19,400)
|
|
(422)
|
Purchase of treasury
stock
|
|
(11,860)
|
|
(24,734)
|
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)
|
|
(439,519)
|
Proceeds from
revolving line of credit
|
|
60,000
|
|
50,000
|
Repayments on
revolving line of credit
|
|
(60,000)
|
|
(50,000)
|
Other financing
activities
|
|
(2,442)
|
|
(1,834)
|
Net cash (used in)
provided by financing activities
|
|
(87,028)
|
|
110,823
|
Effect of exchange
rate changes on cash
|
|
2,070
|
|
(929)
|
(Decrease) in cash
and cash equivalents
|
|
(80,840)
|
|
(38,696)
|
Cash and cash
equivalents at beginning of year
|
|
153,643
|
|
192,339
|
Cash and cash
equivalents at end of year
|
|
$
72,803
|
|
$
153,643
|
View original
content:http://www.prnewswire.com/news-releases/nuvasive-reports-fourth-quarter-and-full-year-2017-financial-results-300604191.html
SOURCE NuVasive, Inc.