SAN DIEGO, CA--(Marketwire - July 25, 2012) - NuVasive, Inc. (NASDAQ: NUVA)
- Second quarter 2012 total revenue of $154.4 million; up 16.1% from second quarter 2011
- GAAP net income of $2.9 million, or $0.06 per share
- Non-GAAP net income of $12.0 million, or $0.27 per share
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 June 30, 2012.
Alex Lukianov, Chairman and Chief Executive Officer, said, "Our financial performance in the second quarter and first half of 2012 attests to excellent execution of our market-share taking strategy, and gives us confidence to raise our full year revenue and profitability guidance. We made strong improvements in profitability and will continue to balance the necessary investments into NuVasive's differentiation and share taking strategy. Looking forward, we expect our top line to grow in conjunction with an improving profitability profile and continual improvements in free cash flow. We are laying the groundwork today to become the #3 spine company in the world."
NuVasive reported second quarter 2012 revenue of $154.4 million, a 16.1% increase over the $133.0 million for the second quarter 2011 and a 1.8% increase over the $151.7 million reported for the first quarter 2012.
Gross profit for the second quarter 2012 was $117.9 million and gross margin was 76.3%, compared to a gross profit of $107.5 million and a gross margin of 80.8% for the second quarter 2011. For the first quarter 2012, gross profit was $114.8 million and gross margin was 75.7%.
Total operating expenses for the second quarter 2012 were $104.9 million compared to $96.0 million in the second quarter 2011 and $107.5 million in the first quarter 2012. The higher operating expenses in the second quarter 2012 compared to the prior year resulted primarily from additional costs associated with higher revenue and infrastructure expansion.
On a GAAP basis, the Company reported net income of $2.9 million, or $0.06 per share, for the second quarter 2012.
On a Non-GAAP basis, the Company reported net income of $12.0 million, or $0.27 per share, for the second quarter 2012. The Non-GAAP earnings per share calculation for the second quarter excludes, (i) non-cash stock-based compensation of $8.3 million; (ii) certain intellectual property litigation expenses of $0.3 million; (iii) amortization of intangible assets of $2.9 million; (iv) acquisition related items of $0.6 million; and (v) non-cash interest expense on convertible notes of $3.1 million.
Cash, cash equivalents and short and long-term marketable securities were $265.5 million at June 30, 2012.
Updated 2012 Full Year Financial Guidance
- Revenue of approximately $625 million; up from previous guidance of approximately $615 million
- GAAP EPS of approximately $0.16; up from previous guidance of approximately $0.09
- Non-GAAP EPS of approximately $0.97; up from previous guidance of approximately $0.93
- Non-GAAP Operating Margin of approximately 14.5%; up from previous guidance of approximately 14.0%
- GAAP effective tax rate of approximately 55%; down from previous guidance of approximately 60%
- Non-GAAP effective tax rate of approximately 40% remains unchanged
2012 Reconciliation of Full Year EPS Guidance
Prior Revised
Guidance Guidance
(1) (2)
----------- -----------
GAAP earnings per share guidance $ 0.09 $ 0.16
Non-cash stock based compensation 0.46 0.43
Certain intellectual property litigation expenses 0.03 0.03
Amortization of intangible assets 0.16 0.16
Acquisition related items (3) 0.02 0.02
Non-cash interest expense on convertible notes 0.17 0.17
----------- -----------
Non-GAAP earnings per share guidance $ 0.93 $ 0.97
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Weighted shares outstanding - basic (4) 43,500 43,500
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Weighted shares outstanding - diluted (4) 45,000 45,000
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(1) Effective tax rate of ~60% applied to GAAP earnings and ~40% applied to
Non-GAAP adjustments
(2) Effective tax rate of ~55% applied to GAAP earnings and ~40% applied to
Non-GAAP adjustments
(3) Acquisition related items include expenses associated with prior M&A
activity and as incurred
(4) Weighted shares outstanding shown as pre "if-converted" method
2012 Guidance Reconciliation of Non-GAAP Operating Margin %
Prior Revised
Guidance Guidance
Gross Margin % [A] ~76.0% ~75.5%
Non-GAAP Operating Expenses [B] ~62.0% ~61.0%
Non-cash stock-based compensation ~5.5% ~5.0%
Certain intellectual property litigation expenses ~0.5% ~0.5%
Amortization of intangible assets ~2.0% ~2.0%
Acquisition related items* ~0.2% ~0.2%
----------- -----------
GAAP Operating Expenses ~70.2% ~68.7%
Non-GAAP Operating Margin % [A-B] ~14.0% ~14.5%
----------- -----------
* Acquisition related items include 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 operating margin and Non-GAAP earnings per share, which exclude such items as non-cash stock-based compensation, certain intellectual property litigation expenses, amortization of intangible assets, acquisition related items, and non-cash interest expense on convertible notes. 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 2012 Results
Pre-Tax Earnings
(in thousands, except per share data) Adjustments Net of Tax Per Share
----------- ----------- -----------
GAAP net income $ 2,863 $ 0.06
Non-cash stock-based compensation $ 8,345 5,007 0.11
Certain intellectual property
litigation expenses 292 175 0.00
Amortization of intangible assets 2,903 1,741 0.04
Acquisition related items 585 351 0.01
Non-cash interest expense on
convertible notes 3,145 1,887 0.04
----------- -----------
Non-GAAP earnings $ 12,024 $ 0.27
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Weighted shares outstanding - diluted 44,318
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Reconciliation of Year To Date 2012 Results
Pre-Tax Earnings
(in thousands, except per share data) Adjustments Net of Tax Per Share
----------- ----------- -----------
GAAP net income $ 3,536 $ 0.08
Non-cash stock-based compensation $ 14,966 8,980 0.20
Certain intellectual property
litigation expenses 816 490 0.01
Amortization of intangible assets 5,749 3,449 0.08
Acquisition related items 1,033 620 0.01
Non-cash interest expense on
convertible notes 6,233 3,740 0.09
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Non-GAAP earnings $ 20,814 $ 0.47
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Weighted shares outstanding - diluted 43,857
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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 August 26, 2012. In addition, a telephonic replay of the call will be available until August 8, 2012. 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 394522.
About NuVasive
NuVasive is a medical device company focused on developing minimally disruptive surgical products and procedurally integrated solutions for the spine. The Company is the 4th largest player in the $7.6 billion global spine market.
NuVasive's principal product offering is based on its Maximum Access Surgery, or MAS® platform. The MAS platform combines several categories of solutions 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 and intra-operative monitoring support; 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 75 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 Statements of Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended June
June 30, 30,
---------------------- ----------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
Revenue $ 154,419 $ 132,966 $ 306,110 $ 257,432
Cost of goods sold
(excluding amortization of
purchased technology) 36,534 25,508 73,467 49,034
---------- ---------- ---------- ----------
Gross profit 117,885 107,458 232,643 208,398
Operating expenses:
Sales, marketing and
administrative 92,346 84,323 186,617 168,543
Research and development 9,604 10,258 19,999 21,027
Amortization of intangible
assets 2,903 1,395 5,749 2,737
---------- ---------- ---------- ----------
Total operating expenses 104,853 95,976 212,365 192,307
Interest and other expense,
net:
Interest income 204 151 412 334
Interest expense (6,972) (1,915) (13,797) (3,686)
Other (expense) income,
net (551) 80 (114) 577
---------- ---------- ---------- ----------
Total interest and other
expense, net (7,319) (1,684) (13,499) (2,775)
---------- ---------- ---------- ----------
Income before income taxes 5,713 9,798 6,779 13,316
Income tax expense 3,103 4,776 3,700 6,316
---------- ---------- ---------- ----------
Consolidated net income $ 2,610 $ 5,022 $ 3,079 $ 7,000
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Net loss attributable to
noncontrolling interests $ (253) $ (358) $ (457) $ (739)
========== ========== ========== ==========
Net income attributable to
NuVasive, Inc. $ 2,863 $ 5,380 $ 3,536 $ 7,739
========== ========== ========== ==========
Net income per share
attributable to NuVasive,
Inc.:
Basic $ 0.07 $ 0.14 $ 0.08 $ 0.19
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Diluted $ 0.06 $ 0.13 $ 0.08 $ 0.19
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic 43,347 39,786 43,095 39,701
========== ========== ========== ==========
Diluted 44,318 40,868 43,857 40,691
========== ========== ========== ==========
Stock-based compensation is included in
expenses in the following categories:
Sales, marketing and
administrative $ 7,737 $ 7,124 $ 13,879 $ 14,459
Research and development 592 601 1,057 1,212
Cost of goods sold 16 - 30 -
---------- ---------- ---------- ----------
$ 8,345 $ 7,725 $ 14,966 $ 15,671
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NuVasive, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2012 2011
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 121,156 $ 163,492
Short-term marketable securities 120,656 146,228
Accounts receivable, net 85,749 87,736
Inventory 128,559 119,313
Deferred tax assets, current 54,550 54,550
Prepaid expenses and other current assets 8,130 20,518
------------ ------------
Total current assets 518,800 591,837
Property and equipment, net 129,435 124,754
Long-term marketable securities 23,707 32,503
Intangible assets, net 105,128 108,140
Goodwill 160,745 159,349
Deferred tax assets 19,857 19,857
Restricted cash and investments 181,815 68,600
Other assets 27,756 18,522
------------ ------------
Total assets $ 1,167,243 $ 1,123,562
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 61,232 $ 51,744
Accrued payroll and related expenses 20,746 22,215
Litigation liability - 101,200
Acquisition-related liabilities 32,290 32,221
Senior Convertible Notes, current 74,311 -
------------ ------------
Total current liabilities 188,579 207,380
Senior Convertible Notes 325,941 394,019
Deferred tax liabilities 3,952 3,952
Litigation liability 101,200 -
Other long-term liabilities 14,564 13,461
Commitments and contingencies
Noncontrolling interests 10,248 10,705
Stockholders' equity:
Preferred stock - -
Common stock 43 42
Additional paid-in capital 700,409 674,790
Accumulated other comprehensive income 35 477
Accumulated deficit (177,728) (181,264)
------------ ------------
Total stockholders' equity 522,759 494,045
------------ ------------
Total liabilities and stockholders' equity $ 1,167,243 $ 1,123,562
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NuVasive, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Six Months Ended June 30,
--------------------------
2012 2011
------------ ------------
Operating activities:
Consolidated net income $ 3,079 $ 7,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,313 15,888
Amortization of debt discount 6,233 99
Amortization of debt issuance costs 912 756
Stock-based compensation 14,966 15,671
Allowance for excess and obsolete inventory,
net of write-offs 1,275 2,341
Allowance for doubtful accounts and sales
return reserve 1,622 529
Accretion of contingent consideration 599 914
Other non-cash adjustments 2,942 2,038
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable 671 (5,351)
Inventory (10,967) (12,146)
Prepaid expenses and other current assets 12,185 (791)
Accounts payable and accrued liabilities 7,099 (2,300)
Accrued payroll and related expenses (1,973) (1,997)
Income taxes payable 1,803 5,043
------------ ------------
Net cash provided by operating activities 65,759 27,694
Investing activities:
Cash paid for business and asset
acquisitions (7,917) -
Purchases of property and equipment (23,930) (27,944)
Purchases of marketable securities (110,915) (54,317)
Sales of marketable securities 144,427 113,559
Purchases of restricted investments (113,126) (4,701)
Payment for specific rights in connection
with supply agreement, net of refund
received - (5,000)
------------ ------------
Net cash (used in) provided by investing
activities (111,461) 21,597
Financing activities:
Proceeds from the sale of warrants - 47,898
Proceeds from the issuance of convertible
debt, net of issuance costs - 391,548
Purchase of convertible note hedges - (80,097)
Proceeds from the issuance of common stock 3,094 4,334
Other assets 242 (557)
------------ ------------
Net cash provided by financing activities 3,336 363,126
Effect of exchange rate changes on cash 30 70
------------ ------------
(Decrease) increase in cash and cash equivalents (42,336) 412,487
Cash and cash equivalents at beginning of period 163,492 92,597
------------ ------------
Cash and cash equivalents at end of period $ 121,156 $ 505,084
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Contact:
Michael J. L
