SAN DIEGO, Feb. 9, 2017 /PRNewswire/ -- NuVasive, Inc. (NASDAQ: NUVA), a leading medical device company focused on transforming spine surgery with minimally disruptive, procedurally-integrated solutions, announced today financial results for the quarter and full year ended December 31, 2016. Key performance highlights included:
Fourth Quarter 2016 Highlights:
- Revenue increased 25.9% to $271.1 million, or 25.5% on a constant currency basis;
- GAAP operating profit margin of 11.1%; Non-GAAP operating profit margin up 90 basis points to 18.0%; and
- GAAP diluted earnings per share of $0.11; Non-GAAP diluted earnings per share increase of 51.4% to $0.53.
Full Year 2016 Highlights:
- Revenue increased 18.6% to $962.1 million, or 18.4% on a constant currency basis;
- GAAP operating profit margin of 12.8%; Non-GAAP operating profit margin up 70 basis points to 16.1%; and
- GAAP diluted earnings per share of $0.69; Non-GAAP diluted earnings per share increase of 26.7% to $1.66.
"NuVasive delivered record fourth quarter results and exceeded expectations for the full year 2016. By all measures, the Company had a tremendous year executing against our market-share taking initiatives, delivering strong revenue growth, including a return to 20% year-over-year growth in our core International markets. We exceeded our profitability targets and integrated strategic acquisitions to augment our leadership in spine and deliver the substantial growth we forecasted as part of the deal models," said Gregory T. Lucier, chairman and chief executive officer of NuVasive. "In 2017, we are committed to driving further market expansion, especially in the spine deformity area, while significantly increasing our in-sourced manufacturing capabilities and focusing on streamlining our operations to drive scale and profitability in our business."
A full reconciliation of non-GAAP to GAAP measures can be found in the tables of this news release.
Fourth Quarter 2016 Results
NuVasive reported fourth quarter 2016 total revenue of $271.1 million, a 25.9% increase compared to $215.3 million for the fourth quarter 2015. On a constant currency basis, fourth quarter 2016 total revenue increased 25.5% compared to the same period last year.
Gross profit for the fourth quarter 2016 was $204.2 million on a GAAP and non-GAAP basis, while GAAP and non-GAAP gross margin was 75.3%. These results compared to gross profit of $164.0 million on a GAAP and non-GAAP basis, and GAAP and non-GAAP gross margin of 76.2% for the fourth quarter 2015. Total GAAP and non-GAAP operating expenses for the fourth quarter 2016 were $174.1 million and $155.4 million, respectively. These results compared to GAAP and non-GAAP operating expenses of $134.5 million and $127.3 million, respectively, for the fourth quarter 2015.
The Company reported a GAAP net income of $6.4 million, or $0.11 per share, for the fourth quarter 2016 compared to a GAAP net income of $11.5 million, or $0.22 per share, for the fourth quarter 2015. On a non-GAAP basis, the Company reported net income of $27.6 million, or $0.53 per share, for the fourth quarter 2016 compared to net income of $18.0 million, or $0.35 per share, for the fourth quarter 2015.
Full Year 2016 Results
NuVasive reported full year 2016 total revenue of $962.1 million, an 18.6% increase compared to $811.1 million for the full year 2015. On a constant currency basis, full year 2016 total revenue increased 18.4% compared to the same period last year.
Total GAAP and non-GAAP gross profit for the full year 2016 was $722.0 million and $736.7 million, respectively, while GAAP and non-GAAP gross margin of 75.0% and 76.6%, respectively. These results compared to gross profit of $616.6 million on a GAAP and non-GAAP basis and a GAAP and non-GAAP gross margin of 76.0% for the full year 2015. Total GAAP and non-GAAP operating expenses for the full year 2016 were $598.5 million and $581.6 million, respectively. These results compared to $477.6 million and $492.0 million, respectively, for the full year 2015.
The Company reported a GAAP net income of $37.1 million, or $0.69 per share, for the full year 2016 compared to a GAAP net income of $66.3 million, or $1.26 per share, for the full year 2015. On a non-GAAP basis, the Company reported net income of $86.5 million, or $1.66 per share, for the full year 2016 compared to net income of $66.9 million, or $1.31 per share, for the full year 2015.
Cash, cash equivalents and short and long-term marketable securities were approximately $153.6 million at December 31, 2016.
Annual Financial Guidance for 2017
The Company provided the following updated projections to its full year 2017 guidance:
2017 Guidance 1 | ||||||
(in Million's; except %'s and EPS) | GAAP | Non-GAAP | ||||
Revenue | $ 1,065 | $ 1,065 | ||||
% Growth - Reported | 10.7% | 10.7% | ||||
% Growth - Constant Currency 2 | 11.7% | |||||
Operating margin | 12.6% | 17.1% | ||||
Earnings per share | $ 1.16 | $ 2.00 | ||||
EBITDA | 23.6% | 26.7% | ||||
Tax Rate | ~35% | ~35% | ||||
1 | Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency. | |||||
2 | Constant currency is a measure that adjusts US GAAP revenue for the impact of currency over the same period in the prior year. | |||||
- Revenue of $1.065 billion, which includes approximately $10 million in year-over-year currency headwinds, and reflects 10.7% growth on a reported basis and 11.7% growth on a constant currency basis compared to revenue of $962.1 million for 2016;
- Non-GAAP diluted earnings per share of $2.00, an increase of 20% compared to non-GAAP diluted earnings per share of $1.66 for 2016;
- Non-GAAP operating profit margin of 17.1%, an increase of 100 basis points compared to 16.1% for 2016; and
- Adjusted EBITDA margin of 26.7%, an increase of 150 basis points compared to 25.2% for 2016.
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 | |||||
2016 | 2017 | ||||
GAAP net income per share | $ 0.69 | $ 1.16 | |||
Impact of change to diluted share count | 0.02 | 0.07 | |||
GAAP net income per share, adjusted to diluted Non-GAAP share count | $ 0.71 | $ 1.23 | |||
Litigation liability gain | (0.83) | - | |||
Business transition costs 2 | 0.35 | 0.05 | |||
Non-cash interest expense on convertible notes | 0.38 | 0.33 | |||
Non-cash purchase accounting adjustments on acquisitions 3 | 0.28 | - | |||
Loss on repurchase of convertible notes | 0.37 | - | |||
Amortization of intangible assets 4 | 0.78 | 0.83 | |||
Tax effect of adjustments 5 | (0.38) | (0.44) | |||
Non-GAAP earnings per share | $ 1.66 | $ 2.00 | |||
GAAP Weighted shares outstanding - basic | 50,077 | 50,967 | |||
GAAP Weighted shares outstanding - diluted | 54,102 | 56,269 | |||
Non-GAAP Weighted shares outstanding - diluted | 51,981 | 53,069 | |||
1 | Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency. Effective tax expense rate of ~35% applied to GAAP earnings and ~35% applied to Non-GAAP earnings. | ||||
2 | Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs 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 | 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 as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. 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 ~35% on a non-GAAP basis.
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