- Completes Acquisition of Osteocel Biologics Business from Osiris
Therapeutics - SAN DIEGO, July 24 /PRNewswire-FirstCall/ --
NuVasive, Inc. (NASDAQ: NUVA), a medical device company focused on
developing products for minimally disruptive surgical treatments
for the spine, announced today financial results for the quarter
ended June 30, 2008. NuVasive reported second quarter revenues of
$57.4 million, a 61.2% increase over the $35.6 million for the
second quarter of 2007 and a 12.2% increase over the $51.2 million
for the first quarter of 2008. Gross profit for the second quarter
of 2008 was $47.8 million and gross margin was 83.3%, compared to a
gross profit of $28.9 million and a gross margin of 81.2% in the
second quarter of 2007. For the first quarter of 2008, gross profit
was $42.1 million and gross margin was 82.2%. Total operating
expenses for the second quarter of 2008 were $48.5 million compared
to $34.0 million in the second quarter of 2007 and $50.5 million in
the first quarter of 2008. First quarter 2008 operating expenses
included an in-process research and development charge of $4.2
million, or ($0.12) per diluted share related to the acquisition of
pedicle screw intellectual property. Excluding the in-process
research and development charge, total first quarter 2008 operating
expenses were $46.3 million. On a GAAP basis, the Company reported
a net loss of $0.5 million or $(0.01) per share for the second
quarter of 2008. On a non-GAAP basis, the Company reported net
income of $5.1 million, or $0.14 per share, for the second quarter
of 2008. The non-GAAP earnings per share calculations exclude (i)
stock based compensation of $5.1 million and (ii) amortization of
acquired intangible assets of $0.5 million. Cash, cash equivalents
and short and long-term investments were $265.7 million at June 30,
2008. On July 24th, 2008, NuVasive completed its previously
announced acquisition of the Osteocel biologics business from
Osiris Therapeutics. The Osteocel business includes a proprietary
adult stem cell bone graft product which is the only viable bone
matrix product on the market that provides the three beneficial
properties similar to autograft: osteoconduction (provides a
scaffold for bone growth), osteoinduction (bone formation
stimulation) and osteogenesis (bone production). Alex Lukianov,
Chairman and Chief Executive Officer, said, "Our robust results in
the second quarter were driven by the continued maturation of our
exclusive sales force and its growing expertise in selling the full
mix of our innovative product portfolio. We also successfully
executed on several components of our growth strategy. These
included the recent closing of the Osteocel acquisition, conversion
of our enterprise software platform and the continued enrollment of
our NeoDisc clinical trial, which we expect to complete in August
2008. In addition, we completed our planned expansion of our
cervical product offering with the full national launch of our
Helix Mini Plate and VuePoint posterior system." Mr. Lukianov
continued, "We are pleased to complete the acquisition of the
Osteocel biologics business, which represents a significant
milestone in our strategy to expand our product portfolio with
synergistic and innovative technologies. We believe there is
substantial opportunity to create an aggressive marketing program
to achieve this product's full potential and, combined with our
Formagraft product, we look to create a $100 million biologics
business over the next several years." Mr. Lukianov added, "We
continue to execute on our strategic objectives, including rapid
product development, advancement of our MAS platform, continued
adoption of our XLIF procedure, and significant expansion of our
operating infrastructure. These initiatives are key to our long
term growth and ability to continue increasing our market share. We
are committed to advancing all of these objectives in concert with
robust revenue growth and expanding profitability. Although global
economic conditions have resulted in increased expenses relating to
items such as shipping, distribution, and travel, coupled with
lower yields on cash investments, we remain committed to GAAP
profitability as demonstrated by our increased earnings guidance
for the second half of 2008. Our shareowners are dedicated to
making NuVasive a major force in the spine industry." Updated 2008
Financial Guidance NuVasive is updating its full year 2008
financial guidance as follows: Revenue: - $238 million to $240
million, including $15 million in Osteocel; up from previous
guidance of $210 million to $214 million Gross margin: - 80% to
81%, down from previous guidance of 81% to 82%, which reflects
gross margin from Osteocel sales EPS: - GAAP: $(0.61) to $(0.45),
including $(0.66) to $(0.52) of one-time charges - Excluding
one-time charges, earnings per share $0.05 to $0.07; up from $0.00
to $0.03 - Non-GAAP: $0.68 to $0.70; up from $0.54 to $0.57
Reconciliation of Non-GAAP Information Management uses certain
non-GAAP financial measures such as non-GAAP earnings per share,
which exclude stock based compensation and charges directly related
to acquisition transactions such as in-process research and
development, milestone payments, and amortization of the acquired
technology assets. Management does not consider these costs in
evaluating the continuing operations of the Company. Therefore,
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 analyze further and more
consistently the period-to-period financial performance of its core
business operations. Management believes that providing investors
with these non-GAAP measures gives them additional important
information to enable them to assess, in the same way management
assesses, the Company's current and future continuing operations.
These non-GAAP measures are not in accordance with, or an
alternative for, GAAP, and may be different from non-GAAP measures
used by other companies. Set forth below are reconciliations of the
non-GAAP financial measures to the comparable GAAP financial
measure. Reconciliation of Second Quarter 2008 Results (in
thousands, except per share amounts) GAAP net loss (A) $(495)
Stock-based compensation (B) 5,148 Amortization of acquired
intangible assets (C) 467 Non-GAAP earnings (A) $5,120 GAAP net
loss per share (A) $(0.01) Stock-based compensation (B) 0.14
Amortization of acquired intangible assets (C) 0.01 Non-GAAP
earnings per share (A) $0.14 Shares used in computing GAAP net loss
per share (A) 35,663 Share used in computing non-GAAP net loss per
share (A) 37,425 Reconciliation of Full Year 2008 Guidance Range
for Year Ending December 31, 2008 (in thousands, except per share
amounts) Low High GAAP net loss per share (A) $(0.61) $(0.45)
One-time charges (D) 0.66 0.52 Earnings per share excluding
one-time charges 0.05 0.07 Stock-based compensation (B) 0.56 0.52
Amortization of acquired intangible assets (D) 0.09 0.09 Non-GAAP
earnings per share (A) $0.70 $0.68 Shares used in computing GAAP
net loss per share (A) 35,808 35,808 Share used in computing
non-GAAP net loss per share (A) 37,641 37,641 A - GAAP net loss per
share is calculated using basic weighted shares outstanding;
Non-GAAP earnings per share is calculated using diluted weighted
shares outstanding. B - Non-cash stock-based compensation C -
Amortization of purchased technology assets. D - One-time charges
related to the acquisition of pedicle screw technology in the first
quarter of 2008 and the pending acquisition of the Osteocel
business. Conference Call NuVasive will hold a conference call
today at 5:30 p.m. ET / 2:30 p.m. PT to discuss the results. The
dial-in numbers are 1-877-407-4018 for domestic callers and
1-201-689-8471 for international. A live Web cast of the conference
call will be available online from the investor relations page of
the Company's corporate Web site at http://www.nuvasive.com/. After
the live Web cast, the call will remain available on NuVasive's Web
site, http://www.nuvasive.com/, through August 24, 2008. In
addition, a telephonic replay of the call will be available until
August 14, 2008. The replay dial-in numbers are 1-877-660-6853 for
domestic callers and 1-201-612-7415 for international callers.
Please use account number 3055 and conference ID number 289122.
About NuVasive NuVasive is a medical device company focused on the
design, development and marketing of products for the surgical
treatment of spine disorders. The Company's product portfolio is
focused on applications in the over $4.2 billion U.S. spine fusion
market. The Company's current principal product offering includes a
minimally disruptive surgical platform called Maximum Access
Surgery, or MAS(R), as well as a growing offering of cervical and
motion preservation products. The MAS platform offers advantages
for both patients and surgeons such as reduced surgery and
hospitalization time and faster recovery. MAS combines three
categories of current product offerings: NeuroVision(R) a
proprietary software-driven nerve avoidance system; MaXcess(R) a
unique split-blade design retraction system; and specialized
implants, like SpheRx(R) and CoRoent(R), that collectively minimize
soft tissue disruption during spine surgery while allowing maximum
visualization and surgical reproducibility. NuVasive's product
offering is also focused on cervical internal fixation products and
its R&D pipeline emphasizes both MAS and motion preservation.
NuVasive cautions you that statements included in this press
release 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 Company's results to differ materially
from historical results or those expressed or implied by such
forward-looking statements. The potential risks and uncertainties
that could cause actual growth and results to differ materially
include, but are not limited to: the risk that the Company's
revenue or profitability projections may prove incorrect because of
unexpected difficulty in generating sales or achieving anticipated
profitability; the risk that Company may encounter unanticipated
difficulty integrating the Osteocel product into its product line;
the risk that the Company may be unable to generate expected
revenues or profitability from Osteocel; the uncertain process of
seeking regulatory approval or clearance for Company's products or
devices, including risks that such process could be significantly
delayed; the possibility that the FDA may require significant
changes to Company's products or clinical studies; the risk that
products may not perform as intended and may therefore not achieve
commercial success; the risk that competitors may develop superior
products or may have a greater market position enabling more
successful commercialization; the risk that additional clinical
data may call into question the benefits of Company's products to
patients, hospitals and surgeons; and other risks and uncertainties
more fully described in Company's press releases and periodic
filings with the Securities and Exchange Commission. Company's
public filings with the Securities and Exchange Commission are
available at http://www.sec.gov/. Company 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. Unaudited Condensed Consolidated Statement of
Operations (in thousands, except per share data) Three Months Ended
Six Months Ended June 30, June 30, 2008 2007 2008 2007 Revenues
$57,417 $35,618 $108,601 $68,838 Cost of goods sold 9,571 6,710
18,666 12,417 Gross Profit 47,846 28,908 89,935 56,421 Operating
expenses: Sales, marketing and administrative 42,099 28,027 81,416
56,067 Research and development 6,426 5,925 13,402 11,677
In-process research and development - - 4,176 - Total operating
expenses 48,525 33,952 98,994 67,744 Interest and other income, net
184 1,628 910 3,487 Net loss $(495) $(3,416) $(8,149) $(7,836) Net
loss per share: Basic and diluted $(0.01) $(0.10) $(0.23) $(0.23)
Weighted average shares - basic and diluted 35,663 34,654 35,543
34,485 Stock-based compensation is included in operating expenses
in the following categories: Sales, marketing and administrative
$4,538 $2,894 $9,042 $5,522 Research and development 610 575 1,256
1,091 $5,148 $3,469 $10,298 $6,613 NuVasive, Inc. Condensed
Consolidated Balance Sheets (in thousands) June 30, December 31,
2008 2007 Assets (unaudited) Current assets: Cash and cash
equivalents $136,224 $61,915 Short-term investments 72,746 19,247
Accounts receivable, net 32,528 27,496 Inventory, net 52,185 36,280
Prepaid expenses and other current assets 2,947 1,240 Total current
assets 296,630 146,178 Property and equipment, net of accumulated
depreciation 64,876 43,538 Intangible assets, net of accumulated
amortization 25,955 24,496 Long-term marketable securities 56,745
8,536 Other assets 9,254 2,939 Total assets $453,460 $225,687
Liabilities and Stockholders' Equity Current liabilities: Accounts
payable and accrued liabilities $20,012 $13,839 Accrued payroll and
related expenses 10,793 12,075 Royalties payable 2,092 2,076 Total
current liabilities 32,897 27,990 Senior convertible notes 230,000
- Long-term liabilities 590 1,119 Commitments and contingencies
Stockholders' equity: Common stock, 70,000 shares authorized 35,794
and 35,330 issued and outstanding at June 30, 2008 and December 31,
2007, respectively 36 35 Additional paid-in capital 366,150 364,469
Accumulated other comprehensive loss (84) 54 Accumulated deficit
(176,129) (167,980) Total stockholders' equity 189,973 196,578
Total liabilities and stockholders' equity $453,460 $225,687
NuVasive, Inc. Condensed Consolidated Statements of Cash Flows
(unaudited and in thousands) Six Months Ended June 30, 2008 2007
Operating activities: Net loss $(8,149) $(7,836) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization 8,449 5,933 Stock-based compensation
10,298 6,613 In-process research and development 4,176 - Other
non-cash adjustments 312 1,179 Changes in operating assets and
liabilities: Accounts receivable (5,044) (4,621) Inventory (16,496)
(8,868) Prepaid expenses and other current assets (1,707) (39)
Accounts payable and accrued liabilities 3,361 1,926 Accrued
payroll and related expenses (1,282) (421) Net cash used in
operating activities (6,082) (6,134) Investing activities: Cash
paid for pedicle screw technology (6,256) Cash paid for acquisition
of Radius Medical LLC - (6,970) Purchases of property and equipment
(25,686) (8,527) Sales of short-term investments 19,300 79,050
Purchases of short-term investments (72,799) (49,580) Sales of
long-term investments 3,500 6,000 Purchases of long-term
investments (51,709) (13,991) Other assets 543 5 Net cash provided
by (used in) investing activities (133,107) 5,987 Financing
activities: Payment of long-term liabilities (300) (300) Issuance
of Senior Convertible Notes 222,414 - Purchase of convertible note
hedges (45,758) - Sale of warrants 31,786 - Issuance of common
stock 5,356 3,189 Net cash provided by financing activities 213,498
2,889 Increase in cash and cash equivalents 74,309 2,742 Cash and
cash equivalents at beginning of period 61,915 41,476 Cash and cash
equivalents at end of period $136,224 $44,218 Contact: Investors:
Kevin C. O'Boyle Nick Laudico/Zack Kubow EVP & Chief Financial
Officer The Ruth Group NuVasive, Inc. 646-536-7030/7020
858-909-1800 Media: Jason Rando The Ruth Group 646-536-7025
DATASOURCE: NuVasive, Inc. CONTACT: Kevin C. O'Boyle, EVP &
Chief Financial Officer, NuVasive, Inc., +1-858-909-1800, ;
Investors: Nick Laudico, +1-646-536-7030, , or Zack Kubow, +1-646-
536-7020, , Media: Jason Rando, +1-646-536-7025, , all of The Ruth
Group Web site: http://www.nuvasive.com/
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