– Net sales grew 9.0% as reported, 12.9% on a
constant currency basis –
– C360 portfolio delivers record quarter in
cervical net sales –
– Company updates full-year 2022 guidance
–
SAN
DIEGO, Nov. 9, 2022 /PRNewswire/ -- NuVasive,
Inc. (NASDAQ: NUVA), the leader in spine technology innovation,
focused on transforming spine surgery with minimally disruptive,
procedurally integrated solutions, today announced financial
results for the quarter ended September 30,
2022.
Third Quarter
2022
- Net sales were $295.3 million, a
9.0% increase as reported and a 12.9% increase on a constant
currency basis, compared to the prior year period;
- GAAP operating margin of 7.4%; Non-GAAP operating margin of
13.6%; and
- GAAP diluted loss per share of ($0.04); Non-GAAP diluted earnings per share of
$0.54.
"The strategic investments we've made in product and technology
innovation are delivering continued above-market growth—as
demonstrated by double-digit growth in net sales on a constant
currency basis," said Chris Barry,
chief executive officer of NuVasive. "Despite the challenging macro
environment, we continue to execute as evidenced by our top- and
bottom-line performance in the quarter. I remain excited about the
future of NuVasive—and our commitment to deliver meaningful
innovation to support our surgeons, providers, and patients."
Third Quarter 2022
Results
NuVasive reported total net sales of $295.3 million, a 9.0% increase as reported and a
12.9% increase on a constant currency basis, compared to
$270.8 million in the prior year
period. Third quarter 2022 total net sales were driven by
further adoption of new products, higher procedural volumes in the
U.S., and strong international performance.
For the third quarter of 2022, GAAP gross profit was
$214.4 million, compared to
$182.2 million in the prior year
period. GAAP gross margin was 72.6%, compared to 67.3% in the prior
year period. On a non-GAAP basis, gross profit was $214.4 million, compared to $197.0 million in the prior year period. Non-GAAP
gross margin was 72.6%, compared to 72.7% in the prior year
period.
The Company reported GAAP net loss of ($2.0) million, or diluted loss per share of
($0.04), compared to GAAP net loss of
($21.6) million, or diluted loss per
share of ($0.42) in the prior year
period. On a non-GAAP basis, the Company reported net income of
$28.3 million, or diluted earnings
per share of $0.54, compared to
non-GAAP net income of $16.9 million,
or diluted earnings per share of $0.32 in the prior year period.
Cash and cash equivalents were $237.5
million as of September 30,
2022.
Full-year 2022 Financial
Guidance
The Company updated its full-year 2022 guidance range for net
sales growth, operating margin, and diluted EPS as shown in the
table below.
|
Prior guidance range
**
|
Current guidance range
**
|
GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
Net sales growth
(reported)*
|
6.0%-8.0%
|
6.0%-8.0%
|
5.5%-6.5%
|
5.5%-6.5%
|
Net sales growth
(constant currency)*
|
|
8.7%-10.7%
|
|
8.7%-9.7%
|
Operating
margin
|
7.6%-9.1%
|
13.0%-14.5%
|
6.7%-7.4%
|
12.3%-13.0%
|
Diluted earnings per
share
|
$0.95-$1.25***
|
$2.15-$2.45
|
$0.50-$0.60***
|
$2.00-$2.10
|
|
* Reflects expectations
for net sales growth in 2022 compared to 2021. Net sales growth on
a constant currency basis excludes year-over-year currency
fluctuations, which the Company currently expects to create a
negative impact of approximately 320 basis points in
2022.
|
** Prior guidance
reflects ranges provided on August 3, 2022. Current guidance
reflects ranges provided on November 9, 2022.
|
*** Reflects updated
expectations for the impact on diluted EPS of applying the
if-converted method to the Company's convertible notes.
Additionally, includes the impact of net unrealized foreign
currency exchange gains or losses incurred as of September 30,
2022, and does not assume future net unrealized gains or losses
related to foreign currency exchange rates.
|
A full reconciliation of GAAP to non-GAAP financial measures can
be found in the tables of this press release and in the Investor
Relations section of our website.
Share Repurchase Program
Extension
The NuVasive Board of Directors has approved a one-year
extension of the Company's previously announced share repurchase
program. As a result, the Company is now authorized to repurchase
up to $100.0 million dollars of its
common stock through December 31,
2023. Under this program, the Company may repurchase stock
from time to time, in amounts, at prices, and at such times the
Company deems appropriate, subject to market conditions, legal
requirements, and other considerations.
Conference Call and
Webcast
NuVasive will hold a conference call on Wednesday,
November 9, 2022, at 1:30 p.m. PT / 4:30 p.m. ET to
discuss the results of its financial performance for the third
quarter 2022. The dial-in numbers are 1-877-300-8521 for domestic
callers and 1-412-317-6026 for international callers. A live
webcast of the conference call and supplemental financial
information of our third quarter 2022 results will be available on
the Investor Relations section of our website
at www.nuvasive.com. An audio replay of the call will be
available until November 16, 2022. 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: 10172422. In
addition, the webcast will be archived
on NuVasive's Investor Relations section of our
website.
About NuVasive
NuVasive, Inc. (NASDAQ: NUVA) is the leader in spine technology
innovation, with a mission to transform surgery, advance care, and
change lives. The Company's less-invasive, procedurally integrated
surgical solutions are designed to deliver reproducible and
clinically proven outcomes. The Company's comprehensive procedural
portfolio includes surgical access instruments, spinal implants,
fixation systems, biologics, software for surgical planning,
navigation and imaging solutions, magnetically adjustable implant
systems for spine and orthopedics, and intraoperative
neuromonitoring technology and service offerings. With more than
$1 billion in net sales, NuVasive
operates in more than 50 countries serving surgeons, hospitals, and
patients. For more information, please visit www.nuvasive.com.
Reconciliation of GAAP to
Non-GAAP Information
Management uses certain non-GAAP financial measures such as
non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP operating margin, non-GAAP net income (loss),
and non-GAAP diluted earnings (loss) per share. These non-GAAP
financial measures exclude amortization of intangible assets,
business transition costs, purchased in-process research and
development, one-time restructuring charges, non-cash purchase
accounting adjustments, inventory charges associated with product
withdrawals, certain foreign currency impacts and related items in
connection with acquisitions, investments and divestitures, certain
litigation expenses and settlements, certain European medical
device regulation costs, gains and losses from strategic
investments, gains and losses from changes in fair value of
derivatives, non-cash interest expense (excluding debt issuance
cost) and other significant one-time items. Management also uses
certain non-GAAP measures which are intended to exclude the impact
of foreign exchange currency fluctuations. The measure constant
currency utilizes 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, business transition costs, purchased
in-process research and development, one-time restructuring
charges, non-cash purchase accounting adjustments, inventory
charges associated with product withdrawals, certain foreign
currency impacts and related items in connection with acquisitions,
investments and divestitures, certain litigation expenses and
settlements, certain European medical device regulation costs,
gains and losses on strategic investments, gains and losses from
changes in fair value of derivatives 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 in the financial tables
accompanying this press release are reconciliations of the non-GAAP
financial measures to the most directly comparable GAAP financial
measure.
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 2022, as well as
projections for 2022 financial guidance and expectations regarding
longer-term financial performance. The Company's results for the
third quarter of 2022 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 2022
financial guidance and expectations regarding longer-term financial
performance 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, the impact of the COVID-19 pandemic on the Company's
business and financial results; further deterioration of general
macroeconomic conditions, including inflationary pressures,
disruptions to the global supply chain, fluctuations in currency
exchange rates, higher freight and labor costs, and weakness in
economic conditions generally; the Company's ability to maintain
operations to support its customers and patients in the near-term
and to capitalize on future growth opportunities; risks associated
with acceptance of the Company's surgical products and procedures
by spine surgeons and hospitals, development and acceptance of new
products or product enhancements, clinical and statistical
verification of the benefits achieved via the use of NuVasive's
products, the Company's ability to adequately 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
September 30,
|
|
Nine Months Ended
September 30,
|
(unaudited)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales:
|
|
|
|
|
|
|
|
|
Products
|
|
$
267,208
|
|
$
247,061
|
|
$
813,600
|
|
$
759,275
|
Services
|
|
28,072
|
|
23,775
|
|
82,893
|
|
77,638
|
Total net
sales
|
|
295,280
|
|
270,836
|
|
896,493
|
|
836,913
|
Cost of sales
(excluding below amortization of intangible assets):
|
|
|
|
|
|
|
|
|
Products
|
|
59,220
|
|
69,609
|
|
181,670
|
|
181,495
|
Services
|
|
21,652
|
|
19,043
|
|
64,057
|
|
57,248
|
Total cost of
sales
|
|
80,872
|
|
88,652
|
|
245,727
|
|
238,743
|
Gross profit
|
|
214,408
|
|
182,184
|
|
650,766
|
|
598,170
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
154,005
|
|
146,056
|
|
474,982
|
|
449,407
|
Research and
development
|
|
23,666
|
|
23,405
|
|
72,937
|
|
67,393
|
Amortization of
intangible assets
|
|
12,157
|
|
14,805
|
|
37,826
|
|
43,230
|
Business transition
costs
|
|
2,811
|
|
4,551
|
|
(1,753)
|
|
21,688
|
Total operating
expenses
|
|
192,639
|
|
188,817
|
|
583,992
|
|
581,718
|
Interest and other
expense, net:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
820
|
|
23
|
|
1,125
|
|
119
|
Interest
expense
|
|
(4,352)
|
|
(4,320)
|
|
(13,083)
|
|
(16,738)
|
Other expense,
net
|
|
(21,053)
|
|
(13,082)
|
|
(34,490)
|
|
(24,339)
|
Total interest and
other expense, net
|
|
(24,585)
|
|
(17,379)
|
|
(46,448)
|
|
(40,958)
|
(Loss) income before
income taxes
|
|
(2,816)
|
|
(24,012)
|
|
20,326
|
|
(24,506)
|
Income tax benefit
(expense)
|
|
839
|
|
2,373
|
|
(3,995)
|
|
(2,844)
|
Consolidated net (loss)
income
|
|
$
(1,977)
|
|
$
(21,639)
|
|
$
16,331
|
|
$
(27,350)
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.04)
|
|
$
(0.42)
|
|
$
0.31
|
|
$
(0.53)
|
Diluted
|
|
$
(0.04)
|
|
$
(0.42)
|
|
$
0.31
|
|
$
(0.53)
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
52,067
|
|
51,669
|
|
51,974
|
|
51,539
|
Diluted
|
|
52,067
|
|
51,669
|
|
52,512
|
|
51,539
|
NuVasive,
Inc.
|
Consolidated Balance
Sheets
|
(in thousands,
except par value data)
|
|
|
|
|
|
|
|
September 30,
2022
|
|
December 31,
2021
|
ASSETS
|
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
237,500
|
|
$
246,091
|
Accounts receivable,
net of allowances of $18,702 and $21,064, respectively
|
|
235,582
|
|
214,398
|
Inventory,
net
|
|
340,995
|
|
315,845
|
Prepaid income
taxes
|
|
7,163
|
|
5,425
|
Prepaid expenses and
other current assets
|
|
21,991
|
|
20,665
|
Total current
assets
|
|
843,231
|
|
802,424
|
Property and equipment,
net
|
|
336,808
|
|
303,664
|
Intangible assets,
net
|
|
187,280
|
|
242,675
|
Goodwill
|
|
625,141
|
|
633,467
|
Operating lease
right-of-use assets
|
|
96,352
|
|
102,987
|
Deferred tax
assets
|
|
60,503
|
|
48,003
|
Restricted cash and
investments
|
|
1,494
|
|
1,494
|
Other assets
|
|
24,136
|
|
19,361
|
Total assets
|
|
$
2,174,945
|
|
$
2,154,075
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
119,297
|
|
$
115,614
|
Contingent
consideration liabilities
|
|
59,477
|
|
7,986
|
Accrued payroll and
related expenses
|
|
60,889
|
|
66,596
|
Operating lease
liabilities
|
|
10,025
|
|
9,867
|
Income tax
liabilities
|
|
819
|
|
828
|
Senior convertible
notes
|
|
446,898
|
|
-
|
Total current
liabilities
|
|
697,405
|
|
200,891
|
Long-term senior
convertible notes
|
|
443,533
|
|
884,984
|
Deferred tax
liabilities
|
|
11,697
|
|
3,049
|
Operating lease
liabilities
|
|
104,729
|
|
111,592
|
Contingent
consideration liabilities
|
|
71,740
|
|
139,824
|
Other long-term
liabilities
|
|
13,695
|
|
18,528
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, $0.001
par value; 5,000 shares authorized, none outstanding
|
|
—
|
|
—
|
Common stock, $0.001
par value; 150,000 shares authorized at September 30, 2022
and December 31, 2021; 58,880 shares issued and 52,076
outstanding at
September 30, 2022; 58,469 shares issued and 51,769
outstanding at December 31,
2021
|
|
63
|
|
63
|
Additional paid-in
capital
|
|
1,457,828
|
|
1,434,976
|
Accumulated other
comprehensive loss
|
|
(4,355)
|
|
(7,792)
|
Retained
earnings
|
|
62,039
|
|
45,708
|
Treasury stock at cost;
6,804 shares and 6,700 shares at September 30, 2022 and
December 31, 2021, respectively
|
|
(683,429)
|
|
(677,748)
|
Total equity
|
|
832,146
|
|
795,207
|
Total liabilities and
equity
|
|
$
2,174,945
|
|
$
2,154,075
|
NuVasive,
Inc.
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
(unaudited)
|
|
2022
|
|
2021
|
Operating
activities:
|
|
|
|
|
Consolidated net income
(loss)
|
|
$
16,331
|
|
$
(27,350)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
110,200
|
|
111,818
|
Deferred income
taxes
|
|
(5,004)
|
|
(5,211)
|
Amortization of
non-cash interest
|
|
5,906
|
|
6,672
|
Stock-based
compensation
|
|
19,136
|
|
17,972
|
Changes in fair value
of contingent consideration
|
|
(8,560)
|
|
6,646
|
Net loss (gain) on
strategic investments
|
|
1,248
|
|
(2,101)
|
Net loss from foreign
currency adjustments
|
|
33,619
|
|
26,572
|
Reserves on current
assets
|
|
(342)
|
|
25,418
|
Other non-cash
adjustments
|
|
13,654
|
|
8,750
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Accounts
receivable
|
|
(27,934)
|
|
4,142
|
Inventory
|
|
(26,469)
|
|
(29,266)
|
Prepaid expenses and
other current assets
|
|
4,538
|
|
(367)
|
Accounts payable and
accrued liabilities
|
|
(8,329)
|
|
(779)
|
Accrued payroll and
related expenses
|
|
(3,878)
|
|
3,021
|
Income taxes
|
|
(1,769)
|
|
(1,167)
|
Net cash provided by
operating activities
|
|
122,347
|
|
144,770
|
Investing
activities:
|
|
|
|
|
Acquisition of Simplify
Medical, net of cash acquired
|
|
(750)
|
|
(149,463)
|
Payment of contingent
consideration for Simplify Medical
|
|
—
|
|
(45,850)
|
Acquisitions and
investments
|
|
(5,650)
|
|
(500)
|
Purchases of intangible
assets
|
|
—
|
|
(1,200)
|
Purchases of property
and equipment
|
|
(107,120)
|
|
(85,630)
|
Proceeds from sales of
marketable securities
|
|
—
|
|
127,023
|
Proceeds from
maturities of marketable securities
|
|
—
|
|
46,000
|
Other investing
activities
|
|
(697)
|
|
(819)
|
Net cash used in
investing activities
|
|
(114,217)
|
|
(110,439)
|
Financing
activities:
|
|
|
|
|
Payment of contingent
consideration
|
|
(6,839)
|
|
(3)
|
Proceeds from the
issuance of common stock
|
|
3,716
|
|
3,803
|
Purchases of treasury
stock
|
|
(5,681)
|
|
(7,309)
|
Payments upon
settlement of senior convertible notes
|
|
—
|
|
(649,426)
|
Other financing
activities
|
|
(1,362)
|
|
(1,038)
|
Net cash used in
financing activities
|
|
(10,166)
|
|
(653,973)
|
Effect of exchange rate
changes on cash
|
|
(6,555)
|
|
(2,649)
|
Decrease in cash, cash
equivalents and restricted cash
|
|
(8,591)
|
|
(622,291)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
247,585
|
|
858,363
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
238,994
|
|
$
236,072
|
|
For the Three Months
Ended September 30, 2022
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited - in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
Operating
Profit
|
Net (Loss)
Income
|
Diluted
EPS
|
Diluted
WASO6
|
Net (Loss) to
Adjusted EBITDA
|
|
Reported
GAAP
|
$ 214,408
|
$
21,769
|
$
(1,977)
|
$ (0.04)
|
52,067
|
$
(1,977)
|
|
% of net
sales
|
72.6 %
|
7.4 %
|
|
|
|
|
|
Amortization of
intangible assets
|
|
12,157
|
12,157
|
|
|
|
|
Litigation related
expenses and settlements1
|
|
828
|
828
|
|
|
828
|
|
Business transition
costs2
|
|
2,811
|
2,811
|
|
|
2,811
|
|
European medical device
regulation3
|
|
2,517
|
2,517
|
|
|
2,517
|
|
Net loss on strategic
investments
|
|
|
1,016
|
|
|
1,016
|
|
Non-cash
acquisition-related foreign currency impacts4
|
|
|
18,434
|
|
|
18,434
|
|
Tax effect of
adjustments5
|
|
|
(7,461)
|
|
|
|
|
Interest
expense/(income), net
|
|
|
|
|
|
3,532
|
|
Income tax
benefit
|
|
|
|
|
|
(839)
|
|
Depreciation and
amortization
|
|
|
|
|
|
36,915
|
|
Non-cash stock-based
compensation
|
|
|
|
|
|
4,815
|
|
Adjusted
Non-GAAP
|
$ 214,408
|
$
40,082
|
$
28,325
|
$
0.54
|
52,584
|
$
68,052
|
|
% of net
sales
|
72.6 %
|
13.6 %
|
|
|
|
23.0 %
|
|
|
|
|
|
|
|
|
1
|
Represents expenses and
settlements associated with certain ongoing litigation matters,
including infringement of the Company's intellectual
property.
|
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
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
4
|
Represents non-cash
adjustments to acquisition-related intercompany balances and
contingent consideration liabilities held in a foreign
currency.
|
5
|
Represents the impact
from tax affecting the adjustments above at their statutory tax
rate.
|
6
|
Adjusted non-GAAP
diluted WASO excludes the impact of dilutive convertible notes for
which the Company is economically hedged through its anti-dilutive
bond hedge arrangements.
|
|
For the Nine Months
Ended September 30, 2022
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited - in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
Operating
Profit
|
Net
Income
|
Diluted
EPS7
|
Diluted
WASO8
|
Net Income to
Adjusted EBITDA
|
|
Reported
GAAP
|
$ 650,766
|
$
66,774
|
$
16,331
|
$
0.31
|
52,512
|
$
16,331
|
|
% of net
sales
|
72.6 %
|
7.4 %
|
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions1
|
557
|
557
|
557
|
|
|
557
|
|
Amortization of
intangible assets
|
|
37,826
|
37,826
|
|
|
|
|
Litigation related
expenses and settlements2
|
|
3,676
|
3,676
|
|
|
3,676
|
|
Business transition
costs3
|
|
(1,753)
|
(1,753)
|
|
|
(1,753)
|
|
European medical device
regulation4
|
|
7,463
|
7,463
|
|
|
7,463
|
|
Net loss on strategic
investments
|
|
|
1,248
|
|
|
1,248
|
|
Non-cash
acquisition-related foreign currency impacts5
|
|
|
34,209
|
|
|
34,209
|
|
Tax effect of
adjustments6
|
|
|
(18,238)
|
|
|
|
|
Interest
expense/(income), net
|
|
|
|
|
|
11,958
|
|
Income tax
expense
|
|
|
|
|
|
3,995
|
|
Depreciation and
amortization
|
|
|
|
|
|
110,200
|
|
Non-cash stock-based
compensation
|
|
|
|
|
|
19,136
|
|
Adjusted
Non-GAAP
|
$ 651,323
|
$ 114,543
|
$
81,319
|
$
1.55
|
52,512
|
$
207,020
|
|
% of net
sales
|
72.7 %
|
12.8 %
|
|
|
|
23.1 %
|
|
|
|
|
|
|
|
|
1
|
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.
|
2
|
Represents expenses and
settlements associated with certain ongoing litigation matters,
including infringement of the Company's intellectual
property.
|
3
|
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.
|
4
|
Represents costs
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
5
|
Represents non-cash
adjustments to acquisition-related intercompany balances and
contingent consideration liabilities held in a foreign
currency.
|
6
|
Represents the impact
from tax affecting the adjustments above at their statutory tax
rate.
|
7
|
Reported GAAP diluted
EPS is calculated using Net Income plus interest and debt issuance
costs on senior convertible notes whose effect is dilutive, net of
tax divided by diluted WASO.
|
8
|
Adjusted non-GAAP
diluted WASO excludes the impact of dilutive convertible notes for
which the Company is economically hedged through its anti-dilutive
bond hedge arrangements.
|
|
For the Three Months
Ended September 30, 2021
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited - in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
Operating
(Loss) Profit
|
Net (Loss)
Income
|
Diluted
EPS
|
Diluted
WASO8
|
Net (Loss) to
Adjusted EBITDA
|
|
Reported
GAAP
|
$ 182,184
|
$
(6,633)
|
$
(21,639)
|
$ (0.42)
|
51,669
|
$
(21,639)
|
|
% of net
sales
|
67.3 %
|
(2.4 %)
|
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions1
|
557
|
557
|
557
|
|
|
557
|
|
Inventory charges
associated with product withdrawals2
|
14,215
|
14,215
|
14,215
|
|
|
14,215
|
|
Amortization of
intangible assets
|
|
14,805
|
14,805
|
|
|
|
|
Litigation related
expenses and settlements3
|
|
762
|
762
|
|
|
762
|
|
Business transition
costs4
|
|
4,551
|
4,551
|
|
|
4,551
|
|
European medical device
regulation5
|
|
2,132
|
2,132
|
|
|
2,132
|
|
Non-cash
acquisition-related foreign currency impacts6
|
|
|
10,280
|
|
|
10,280
|
|
Tax effect of
adjustments7
|
|
|
(8,775)
|
|
|
|
|
Interest
expense/(income), net
|
|
|
|
|
|
4,297
|
|
Income tax
benefit
|
|
|
|
|
|
(2,373)
|
|
Depreciation and
amortization
|
|
|
|
|
|
37,864
|
|
Non-cash stock-based
compensation
|
|
|
|
|
|
4,965
|
|
Adjusted
Non-GAAP
|
$ 196,956
|
$
30,389
|
$
16,888
|
$
0.32
|
52,268
|
$
55,611
|
|
% of net
sales
|
72.7 %
|
11.2 %
|
|
|
|
20.5 %
|
|
|
|
|
|
|
|
|
1
|
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.
|
2
|
Represents charges for
inventory write-offs associated with the Company's product
withdrawals. During the three months ended September 30, 2021, the
Company made a determination to withdraw certain products marketed
and sold by its wholly-owned subsidiary, NuVasive Specialized
Orthopedics.
|
3
|
Represents expenses
associated with certain ongoing litigation matters, including
infringement of the Company's intellectual property.
|
4
|
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.
|
5
|
Represents costs
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
6
|
Represents non-cash
adjustments to acquisition-related intercompany balances and
contingent consideration liabilities held in a foreign
currency.
|
7
|
Represents the impact
from tax affecting the adjustments above at their statutory tax
rate.
|
8
|
Adjusted non-GAAP
diluted WASO excludes the impact of dilutive convertible notes for
which the Company is economically hedged through its anti-dilutive
bond hedge arrangements.
|
|
For the Nine Months
Ended September 30, 2021
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited - in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
Operating
Profit
|
Net (Loss)
Income
|
Diluted
EPS
|
Diluted
WASO8
|
Net (Loss) to
Adjusted EBITDA
|
|
Reported
GAAP
|
$ 598,170
|
$
16,452
|
$
(27,350)
|
$ (0.53)
|
51,539
|
$
(27,350)
|
|
% of net
sales
|
71.5 %
|
2.0 %
|
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions1
|
1,299
|
1,299
|
1,299
|
|
|
1,299
|
|
Inventory charges
associated with product withdrawals2
|
14,215
|
14,215
|
14,215
|
|
|
14,215
|
|
Amortization of
intangible assets
|
|
43,230
|
43,230
|
|
|
|
|
Litigation related
expenses and settlements3
|
|
4,010
|
4,010
|
|
|
4,010
|
|
Business transition
costs4
|
|
21,688
|
21,688
|
|
|
21,688
|
|
European medical device
regulation5
|
|
5,696
|
5,696
|
|
|
5,696
|
|
Net gain on strategic
investments
|
|
|
(2,101)
|
|
|
(2,101)
|
|
Non-cash
acquisition-related foreign currency impacts6
|
|
|
23,673
|
|
|
23,673
|
|
Tax effect of
adjustments7
|
|
|
(17,269)
|
|
|
|
|
Interest
expense/(income), net
|
|
|
|
|
|
16,619
|
|
Income tax
expense
|
|
|
|
|
|
2,844
|
|
Depreciation and
amortization
|
|
|
|
|
|
111,818
|
|
Non-cash stock-based
compensation
|
|
|
|
|
|
17,972
|
|
Adjusted
Non-GAAP
|
$ 613,684
|
$ 106,590
|
$
67,091
|
$
1.29
|
52,184
|
$
190,383
|
|
% of net
sales
|
73.3 %
|
12.7 %
|
|
|
|
22.7 %
|
|
|
|
|
|
|
|
|
1
|
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.
|
2
|
Represents charges for
inventory write-offs associated with the Company's product
withdrawals. During the three months ended September 30, 2021, the
Company made a determination to withdraw certain products marketed
and sold by its wholly-owned subsidiary, NuVasive Specialized
Orthopedics.
|
3
|
Represents expenses
associated with certain ongoing litigation matters, including
infringement of the Company's intellectual property.
|
4
|
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.
|
5
|
Represents costs
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
6
|
Represents non-cash
adjustments to acquisition-related intercompany balances and
contingent consideration liabilities held in a foreign
currency.
|
7
|
Represents the impact
from tax affecting the adjustments above at their statutory tax
rate.
|
8
|
Adjusted non-GAAP
diluted WASO excludes the impact of dilutive convertible notes for
which the Company is economically hedged through its anti-dilutive
bond hedge arrangements.
|
Full Year 2022
Financial Guidance
|
Reconciliation of
GAAP to Non-GAAP EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 Guidance
Range1,
2
|
|
|
|
2021
Actuals1
|
|
Prior
|
|
Current
|
|
|
GAAP diluted
earnings (loss) per share
|
$(1.24)
|
|
$0.95-1.25
|
|
$0.50-0.60
|
|
|
Impact of
dilution3
|
0.02
|
|
~0.05
|
|
-
|
|
|
Amortization of
intangible assets
|
1.10
|
|
~1.00
|
|
~0.95
|
|
|
European medical device
regulation4
|
0.16
|
|
~0.25
|
|
~0.25
|
|
|
Inventory charges
associated with product withdrawal5
|
0.27
|
|
-
|
|
-
|
|
|
Other6
|
1.83
|
|
~0.30
|
|
~0.75
|
|
|
Tax effect of
adjustments7
|
(0.45)
|
|
~(0.40)
|
|
~(0.45)
|
|
|
Non-GAAP diluted
earnings per share
|
$1.68
|
|
$2.15-2.45
|
|
$2.00-2.10
|
|
|
|
|
|
|
|
|
|
1
|
Data has been
intentionally rounded and may not sum.
|
|
2
|
Prior guidance reflects
the range provided August 3, 2022. Current guidance reflects the
range provided November 9, 2022.
|
|
3
|
GAAP diluted EPS
includes the dilutive impact of applying the if-converted method to
the Company's convertible notes. Adjusted non-GAAP diluted WASO
excludes the impact of dilutive convertible notes for which the
Company is economically hedged through its anti-dilutive bond hedge
arrangements.
|
|
4
|
Represents costs
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
|
5
|
Represents charges for
inventory write-offs associated with the Company's product
withdrawals. During the third quarter of 2021, the Company made a
determination to withdraw certain products marketed and sold by its
wholly-owned subsidiary, NuVasive Specialized
Orthopedics.
|
|
6
|
Includes costs
primarily associated with litigation related expenses and
settlements, non-cash acquisition-related foreign currency impacts,
non-cash purchase accounting adjustments on acquisitions, net gain
on strategic investments and business transition costs. See
Reconciliation of GAAP to Non-GAAP Financial Measures tables within
respective earnings releases for further detail.
|
|
7
|
Represents the impact
from tax affecting the adjustments above at their statutory tax
rate.
|
|
Full Year 2022
Financial Guidance
|
Reconciliation of
GAAP to Non-GAAP Operating Margin %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 Guidance
Range1,
2
|
|
|
|
|
2021
Actuals1
|
|
Prior
|
|
Current
|
|
|
GAAP Operating
Margin %
|
|
(1.1 %)
|
|
7.6%-9.1%
|
|
6.7%-7.4%
|
|
|
Amortization of
intangible assets
|
|
5.0 %
|
|
~4.4%
|
|
~4.2%
|
|
|
European medical device
regulation3
|
|
0.7 %
|
|
~1.0%
|
|
~1.0%
|
|
|
Inventory charges
associated with product withdrawal4
|
1.3 %
|
|
-
|
|
-
|
|
|
Other
5
|
|
6.8 %
|
|
-
|
|
~0.4%
|
|
|
Non-GAAP Operating
Margin %
|
|
12.8 %
|
|
13.0%-14.5%
|
|
12.3%-13.0%
|
|
|
|
|
|
|
|
|
|
|
1
|
Data has been
intentionally rounded and may not sum.
|
|
2
|
Prior guidance reflects
the range provided August 3, 2022. Current guidance reflects the
range provided November 9, 2022.
|
|
3
|
Represents costs
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
|
4
|
Represents charges for
inventory write-offs associated with the Company's product
withdrawals. During the third quarter of 2021, the Company made a
determination to withdraw certain products marketed and sold by its
wholly-owned subsidiary, NuVasive Specialized
Orthopedics.
|
|
5
|
Includes costs
primarily associated with litigation related expenses and
settlements, non-cash purchase accounting adjustments on
acquisitions, and business transition costs. See Reconciliation of
GAAP to Non-GAAP Financial Measures tables within respective
earnings releases for further detail.
|
|
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SOURCE NuVasive, Inc.