SAN DIEGO, CA--(Marketwire - May 04, 2011) - NuVasive, Inc. (NASDAQ: NUVA)
-- Total revenue of $124.5 million, up 14.1% over first quarter 2010 -- GAAP earnings of $2.4 million, or $0.06 per share, includes the benefit of a change in accounting estimate of $0.02 per share -- Non-GAAP earnings of $9.5 million, or $0.24 per share, includes the benefit of a change in accounting estimate of $0.02 per share -- Non-GAAP operating margin of 13.3% and GAAP operating margin of 3.7%, both include the benefit of a change in accounting estimate of 1.4% -- Operating cash flow of $14.5 million
NuVasive, Inc. (NASDAQ: NUVA), a medical device company focused on developing minimally disruptive surgical products and procedures for the spine, announced today financial results for the quarter ended March 31, 2011.
NuVasive reported first quarter 2011 revenue of $124.5 million, a 14.1% increase over the $109.1 million for the first quarter 2010 and a 3.7% decrease compared to $129.3 million for the fourth quarter 2010. The sequential deceleration was driven in part by the recognition of approximately $4.0 million in seasonal capital purchases and for back royalties related to a settlement in the fourth quarter 2010.
The financial results announced today reflect a change in accounting estimate for the useful life of certain loaned instrument sets placed into service prior to January 1, 2011. After a thorough review of its available history, the Company concluded that a four year useful life estimate is a more accurate assessment of the economic life of these fixed assets. Under existing accounting literature, this type of change is only adjusted prospectively in the financial statements.
Gross profit for the first quarter 2011 was $100.9 million and gross margin was 81.1%, compared to a gross profit of $89.6 million and a gross margin of 82.2% for the first quarter 2010. For the fourth quarter 2010, gross profit was $106.2 million and gross margin was 82.1%.
Total operating expenses for the first quarter 2011 were $96.3 million compared to $86.7 million in the first quarter 2010 and $94.9 million in the fourth quarter 2010. The higher operating expenses in the first quarter 2011 resulted primarily from additional costs associated with higher revenue and infrastructure expansion.
On a GAAP basis, the Company reported net income of $2.4 million, or $0.06 per share, for the first quarter 2011.
On a Non-GAAP basis, the Company reported net income of $9.5 million, or $0.24 per share, for the first quarter 2011. The Non-GAAP earnings per share calculations for the first quarter exclude (i) non-cash stock-based compensation of $7.9 million; (ii) certain intellectual property litigation expenses of $2.1 million; (iii) amortization of intangible assets of $1.3 million; and (iv) acquisition related items of $571 thousand.
Cash, cash equivalents and short and long-term marketable securities were $225.8 million at March 31, 2011.
Alex Lukianov, Chairman and Chief Executive Officer, said, "Our financial performance in the first quarter of 2011 was excellent across all our key sectors. We generated revenue growth of over 14% and better than expected operating margin improvement in view of challenging spine market growth dynamics. Our performance internationally was a highlight, and is well on track to double this year to approximately 8% of revenue. We are pleased to be able to raise revenue guidance today in light of a marginally improved outlook for our U.S. lumbar business this year. As our focus shifts toward the achievement of our next milestone, the evolution of NuVasive into a $1 billion revenue company, we are laser focused on maintaining the startup mentality that is the very source of NuVasive's success as a prolific new product innovator. With speed as our competitive edge, we expect to continue to sustain industry leading growth."
2011 Full Year Financial Guidance
-- Revenue of $530 million to $540 million; up from previous guidance
of $525 million to $535 million
-- GAAP EPS of $0.52 to $0.55; up from previous guidance of $0.39 to $0.42
-- Non-GAAP EPS of $1.20 to $1.23; up from previous guidance of $1.07
to $1.10
-- Non-GAAP Operating Margin of ~17.5%, up from previous guidance
of ~16.5%
-- GAAP effective tax rate of ~45%, down from previous guidance
of ~49%
2011 Non-GAAP Earnings Per Share Full Year Guidance Bridge
Change in
Prior Revenue Accounting Tax Rate Revised
Guidance Increase Estimate Change Guidance
----------- ----------- ----------- ----------- -----------
Low Range $ 1.07 $ 0.01 $ 0.08 $ 0.04 $ 1.20
High Range $ 1.10 $ 0.01 $ 0.08 $ 0.04 $ 1.23
Reconciliation of Full Year EPS Guidance
2010 2011 2011
Pre Tax Pre Tax Net of Tax*
-------- ----------------- -----------------
Low High Low High
Actual Range Range Range Range
-------- -------- -------- -------- --------
GAAP earnings per share** $ 0.64 $ 0.94 $ 1.00 $ 0.52 $ 0.55
Non-cash stock-based
compensation 0.70 0.79 0.79 0.47 0.47
Certain intellectual
property litigation
expenses 0.13 0.13 0.13 0.08 0.08
Amortization of intangible
assets 0.13 0.18 0.18 0.11 0.11
Acquisition related items 0.07 0.04 0.04 0.02 0.02
-------- -------- -------- -------- --------
Non-GAAP earnings per share $ 1.68 $ 2.07 $ 2.13 $ 1.20 $ 1.23
======== ======== ======== ======== ========
Weighted shares outstanding -
Diluted*** 40,373 42,000 42,000 42,000 42,000
======== ======== ======== ======== ========
* Effective Tax Rate of ~45% applied to GAAP earnings and ~40% applied to
Non-GAAP adjustments
** GAAP earnings per share calculated based on consolidated net income
*** 2010 weighted shares outstanding shown as pre "if-converted" method
2011 Guidance Reconciliation of Non-GAAP Operating Margin %
FY 11
Estimate
------------------------------
FY 10
Actual Prior Revised
------- -------------- --------------
Gross Margin % [A] 82.2% ~ 81% ~ 81%
Non-GAAP Research and
Development [B] 8.0% ~ 8% ~ 8%
Non-cash stock-based compensation 0.7% ~ 1% ~ 1%
Acquisition related items* 0.4% as incurred as incurred
------- -------------- --------------
GAAP research and development 9.1% ~ 9% ~ 9%
Non-GAAP Sales, Marketing and
Administrative [C] 58.8% ~ 56.5% ~ 55.5%
Non-cash stock-based compensation 5.2% ~ 5% ~ 5%
Certain intellectual property
litigation expenses 1.1% ~ 1% ~ 1%
~ 0.5% & as ~ 0.5% & as
Acquisition related items* 0.2% incurred incurred
------- -------------- --------------
GAAP sales, marketing and
administrative 65.3% ~ 63% ~ 62%
Amortization of intangible assets 1.1% ~ 1.5% ~ 1.5%
------- -------------- --------------
Non-GAAP Operating Margin %
[A-B-C] 15.4% ~ 16.5% ~ 17.5%
------- -------------- --------------
* Acquisition related items include ~0.5% of revenue for expenses
associated with prior M&A activity and as incurred
Reconciliation of Non-GAAP Information
Management uses certain Non-GAAP financial measures such as Non-GAAP earnings per share, which exclude non-cash stock-based compensation, certain intellectual property litigation expenses, amortization of intangible assets, and acquisition related items. 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 First Quarter 2011 Results
Pre-Tax Net of Earnings
(in thousands, except per share data) adjustments Tax Per Share
------------ --------- ---------
GAAP net income $ 2,359 $ 0.06
Non-cash stock-based compensation $ 7,946 4,768 0.12
Certain intellectual property litigation
expenses 2,081 1,249 0.03
Amortization of intangible assets 1,342 805 0.02
Acquisition related items 571 343 0.01
--------- ---------
Non-GAAP earnings $ 9,524 $ 0.24
========= =========
Weighted shares outstanding - Diluted 40,511
=========
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 1-877-407-9039 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 corporate website at www.nuvasive.com.
After the live webcast, the call will remain available on NuVasive's website, www.nuvasive.com, through June 3, 2011. In addition, a telephonic replay of the call will be available until May 18, 2011. The replay dial-in numbers are 1-877-870-5176 for domestic callers and 1-858-384-5517 for international callers. Please use pin number 369959.
About NuVasive
NuVasive is a medical device company focused on developing minimally disruptive surgical products and procedures for the spine. The Company is the 5th largest player in the $7.7 billion global spine market.
NuVasive's principal product offering is based on its Maximum Access Surgery, or MAS® platform. The MAS platform combines four categories of products that collectively minimize soft tissue disruption during spine surgery with maximum visualization and safe, easy reproducibility for the surgeon: a proprietary software-driven nerve avoidance system; MaXcess®, a unique split-blade retractor system; a wide variety of specialized implants; and several biologic fusion enhancers. MAS significantly reduces surgery time and returns patients to activities of daily living much faster than conventional approaches. Having redefined spine surgery with the MAS platform's lateral approach, known as eXtreme Lateral Interbody Fusion, or XLIF®, NuVasive has built an entire spine franchise. With over 65 products today spanning lumbar, thoracic and cervical applications, the Company will continue to expand and evolve its offering predicated on its R&D focus and dedication to outstanding service levels supported by a culture of Absolute Responsiveness®.
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 NuVasive'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 NuVasive's revenue or earnings projections may turn out to be inaccurate because of the preliminary nature of the forecasts and the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability; the uncertain process of seeking regulatory approval or clearance for NuVasive's products or devices, including risks that such process could be significantly delayed; the possibility that the FDA may require significant changes to NuVasive'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 NuVasive's products to patients, hospitals and surgeons; and other risks and uncertainties more fully described in NuVasive's press 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.
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share data)
Three Months Ended
March 31,
------------------------
2011 2010
----------- -----------
Revenue $ 124,466 $ 109,087
Cost of goods sold (excluding amortization of
purchased technology) 23,526 19,443
----------- -----------
Gross profit 100,940 89,644
Operating expenses:
Sales, marketing and administrative 84,220 74,661
Research and development 10,769 10,699
Amortization of intangible assets 1,342 1,350
----------- -----------
Total operating expenses 96,331 86,710
Interest and other expense, net:
Interest income 183 189
Interest expense (1,771) (1,669)
Other income, net 497 117
----------- -----------
Total interest and other expense, net (1,091) (1,363)
----------- -----------
Income before income taxes 3,518 1,571
Income tax expense 1,540 865
----------- -----------
Consolidated net income $ 1,978 $ 706
=========== ===========
Net loss attributable to noncontrolling interests $ (381) $ (382)
=========== ===========
Net income attributable to NuVasive, Inc. $ 2,359 $ 1,088
=========== ===========
Net income per share attributable to
NuVasive, Inc.:
Basic and diluted $ 0.06 $ 0.03
=========== ===========
Weighted average shares outstanding:
Basic 39,616 38,898
=========== ===========
Diluted 40,511 40,061
=========== ===========
Stock-based compensation is included in operating
expenses in the following categories:
Sales, marketing and administrative $ 7,335 $ 5,680
Research and development 611 754
----------- -----------
$ 7,946 $ 6,434
=========== ===========
NuVasive, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2011 2010
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 134,101 $ 92,597
Short-term marketable securities 58,876 86,458
Accounts receivable, net 75,952 76,632
Inventory 114,388 107,577
Deferred tax assets 4,425 4,425
Prepaid expenses and other current assets 4,750 4,082
----------- -----------
Total current assets 392,492 371,771
Property and equipment, net 105,066 102,165
Long-term marketable securities 32,814 50,635
Intangible assets, net 105,817 107,121
Goodwill 103,070 103,070
Deferred tax assets, non-current 52,033 52,033
Other assets 15,438 15,234
----------- -----------
Total assets $ 806,730 $ 802,029
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 54,899 $ 58,995
Accrued payroll and related expenses 14,643 17,266
Acquisition-related liabilities 33,155 32,715
----------- -----------
Total current liabilities 102,697 108,976
Senior convertible notes 230,000 230,000
Long-term acquisition-related liabilities 339 326
Deferred tax liabilities 3,685 3,685
Other long-term liabilities 12,729 12,810
Commitments and contingencies
Noncontrolling interests 11,496 11,877
Stockholders' equity:
Common stock 40 40
Additional paid-in capital 553,484 545,114
Accumulated other comprehensive income 1,316 616
Accumulated deficit (109,056) (111,415)
----------- -----------
Total stockholders' equity 445,784 434,355
----------- -----------
Total liabilities and stockholders' equity $ 806,730 $ 802,029
=========== ===========
NuVasive, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended
March 31,
------------------------
2011 2010
----------- -----------
Operating activities:
Consolidated net income $ 1,978 $ 706
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,781 8,104
Stock-based compensation 7,946 6,434
Allowance for excess and obsolete inventory 216 736
Allowance for doubtful accounts and sales
return reserve, net of write-offs 6 (657)
Other non-cash adjustments 1,795 1,454
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable 942 (3,100)
Inventory (6,658) (1,237)
Prepaid expenses and other current assets (751) (1,570)
Accounts payable and accrued liabilities 3,959 4,780
Accrued payroll and related expenses (2,670) (6,512)
----------- -----------
Net cash provided by operating activities 14,544 9,138
Investing activities:
Purchases of property and equipment (10,000) (8,402)
Purchases of marketable securities (26,018) (45,525)
Sales of marketable securities 71,185 54,016
Payment for specific rights in connection with
supply agreement (8,000) -
----------- -----------
Net cash provided by investing activities 27,167 89
Financing activities:
Issuance of common stock 425 6,628
Other assets (709) (4,408)
Tax benefits related to stock-based
compensation awards - 882
----------- -----------
Net cash (used in) provided by financing
activities (284) 3,102
Effect of exchange rate changes on cash 77 (78)
----------- -----------
Increase in cash and cash equivalents 41,504 12,251
Cash and cash equivalents at beginning of period 92,597 65,413
----------- -----------
Cash and cash equivalents at end of period $ 134,101 $ 77,664
=========== ===========
Contact:
Michael J. Lambert
EVP & Chief Financial Officer
NuVasive, Inc.
858-909-3394
Email Contact
Investors:
Patrick F. Williams
Vice President, Industry & Investor Relations
NuVasive, Inc.
858-638-5511
Email Contact
Media:
Jason Rando
The Ruth Group
646-536-7025
Email Contact
