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8-K/A - 8-K/A - NUVASIVE INC | a57672e8vkza.htm |
Exhibit 99.1
PRESS RELEASE
Contact:
|
Investors: | |
Michael J. Lambert
|
Patrick F. Williams | |
EVP & Chief Financial Officer
|
Vice President, Finance & Investor Relations | |
NuVasive, Inc.
|
NuVasive, Inc. | |
858-909-1998
|
858-638-5511 | |
investorrelations@nuvasive.com
|
investorrelations@nuvasive.com | |
Media: | ||
Jason Rando | ||
The Ruth Group | ||
646-536-7025 | ||
jrando@theruthgroup.com |
NUVASIVE REPORTS THIRD QUARTER 2010 FINANCIAL RESULTS
| Total revenue of $120.3 million, up 27% over third quarter 2009 | ||
| GAAP earnings of $8.5 million, or $0.21 per share; Non-GAAP earnings of $18.4 million, or $0.46 per share | ||
| Non-GAAP operating margin of 16.6%, up from 15.8% for second quarter 2010 |
SAN DIEGO, October 28, 2010 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 September 30, 2010.
NuVasive reported third quarter revenue of $120.3 million, a 26.7% increase over the $94.9
million for the third quarter 2009 and a 0.6% increase over the $119.6 million for the
second quarter 2010.
Gross profit for the third quarter 2010 was $98.7 million and gross margin was 82.1%,
compared to a gross profit of $79.0 million and a gross margin of 83.3% for the third
quarter 2009. For the second quarter 2010, gross profit was $98.6 million and gross margin
was 82.4%.
Total GAAP operating expenses for the third quarter 2010 were $89.1 million compared to
$73.0 million in the third quarter 2009 and $90.3 million in the second quarter 2010.
On a GAAP basis, the Company reported net income of $8.5 million, or $0.21 per share, for
the third quarter 2010.
On a Non-GAAP basis, the Company reported net income of $18.4 million, or $0.46 per share,
for the third quarter 2010. The Non-GAAP earnings per share calculations for the third
quarter exclude on a pre-tax basis (i) intellectual property litigation costs of $1.2
million; (ii) acquisition related costs of $0.6 million; (iii) stock-based compensation of
$7.3 million; and (iv) amortization of intangible assets of $1.3 million.
Cash, cash equivalents and short and long-term marketable securities were $216.8 million at
September 30, 2010. Operating cash flow was $18.5 million for the third quarter 2010.
Alex Lukianov, Chairman and Chief Executive Officer, said, We achieved revenue growth of
over 25% and excellent profit margin expansion in spite of very challenging conditions in
the spine market. Although the procedural slowdown in the spine market had a greater impact on our results than we anticipated, we are optimistic that the factors pressuring volumes will be
transitory in nature, and that the procedures being delayed will ultimately be performed. As
we navigate through this downturn, we will continue to grow at multiples of the market by
remaining laser focused on being the most creative spine technology company in the world and
achieving exceptional results through speed of innovation, Absolute
Responsiveness®, and superior clinical outcomes. We have the team, the vision,
and the determination to achieve our goal of $1 billion in revenue with increasing
profitability.
Updated Full Year 2010 Financial Guidance:
| Revenue of $470 to $475 million; down from $485 to $495 million previously | ||
| GAAP EPS, net of tax and If-converted method, of $1.61 to $1.64; down from $1.77 to $1.87 previously | ||
| Non-GAAP EPS, net of tax and If-converted method, of $1.42 to $1.45; down from $1.50 to $1.60 previously | ||
| Non-GAAP Operating Margin of approximately 15.5%; down from approximately 17% previously |
Reconciliation of Full Year 2010 Guidance
(Net of Tax, If Converted method)
(Net of Tax, If Converted method)
Range for Year Ending | ||||||||
December 31, 2010 | ||||||||
(in thousands, except per share amounts) | Low | High | ||||||
GAAP earnings per share |
$ | 1.61 | $ | 1.64 | ||||
Non-cash stock-based compensation |
0.55 | 0.55 | ||||||
Intellectual property litigation expenses |
0.10 | 0.10 | ||||||
Acquisition related items |
0.03 | 0.03 | ||||||
Amortization of intangible assets |
0.11 | 0.11 | ||||||
Reversal of remaining valuation allowance |
(0.98 | ) | (0.98 | ) | ||||
Non-GAAP earnings per share |
$ | 1.42 | $ | 1.45 | ||||
Weighted shares outstanding Diluted |
46,000 | 46,000 | ||||||
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, intellectual property litigation expenses,
acquisition related items, and the amortization of intangible 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 Companys 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 Third Quarter 2010 Results
pre-tax | ||||||||||||
(in thousands, except per share data) | adjustments | $ (net of tax) | per share | |||||||||
GAAP net income |
$ | 8,542 | $ | 0.21 | ||||||||
Non-cash stock-based compensation |
$ | 7,321 | 6,882 | 0.17 | ||||||||
Intellectual property litigation expenses |
1,175 | 1,105 | 0.03 | |||||||||
Acquisition related items |
629 | 591 | 0.01 | |||||||||
Amortization of intangible assets |
1,342 | 1,261 | 0.03 | |||||||||
Non-GAAP earnings |
$ | 18,381 | $ | 0.46 | ||||||||
Weighted average shares Diluted |
40,396 | |||||||||||
Reconciliation Non-GAAP Operating Margin %
Guidance | ||||
FY 10 | ||||
Gross Margin % [A] |
~ 82 | % | ||
Non-GAAP Research and Development [B] |
~ 8 | % | ||
Non-cash stock-based compensation |
~ 1 | % | ||
Total research and development |
~ 9 | % | ||
Non-GAAP Sales, Marketing and Administrative [C] |
~ 58.5 | % | ||
Non-cash stock-based compensation |
~ 5 | % | ||
Intellectual property litigation expenses |
~ 1 | % | ||
Acquisition related items |
as incurred |
|||
Total sales, marketing and administrative |
~ 64 | % | ||
Amortization of intangible assets |
~ 1 | % | ||
Non-GAAP Operating Income % [A-B-C] |
~ 15.5 | % | ||
2010 Tax Adjustments & WASO Guidance (millions)
Q1 - Q3 | Q4 | FY10 | ||||||||||
Effective Tax Rate (ETR)* |
~ 8.5 | % | ~ 15.5 | % | ~ 12 | % | ||||||
Reversal of remaining valution allowance |
~ $ (45.0 | ) | ~ $ (45.0 | ) | ||||||||
Weighted average shares Diluted |
41.0 | ~ 46.0 | ~ 46.0 |
* | ETR to be used on a pre-tax income prior to reversal of remaining valuation allowance |
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 callers. A live webcast of the conference call will be available online from
the investor relations page of the Companys corporate website at www.nuvasive.com.
After the live webcast, the call will remain available on NuVasives website,
www.nuvasive.com, through November 27, 2010. In addition, a telephonic replay of the call
will be available until November 11, 2010. The replay dial-in numbers are 1-877-870-5176
for domestic callers and 1-858-384-5517 for international callers. Please use replay pin
number 357132.
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 Companys product portfolio is
focused primarily on the $5.1 billion U.S. spine implant market. Additionally, the Company
has expanded into the $1.7 billion global biologics market, the $1.7 billion international
market, and is developing products for the emerging motion preservation market.
NuVasives 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: NeuroVision®, 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 platforms
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 NuVasives 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 NuVasives 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 risk that NuVasive may not be successful appealing the verdict related to
the brand name NeuroVision; the uncertain process of seeking regulatory approval or
clearance for NuVasives products or devices, including risks
that such process could be significantly delayed; the possibility that the FDA may require
significant changes to NuVasives 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 NuVasives products to patients, hospitals and surgeons; and other
risks and uncertainties more fully described in NuVasives press releases and periodic
filings with the Securities and Exchange Commission. NuVasives 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)
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenue |
$ | 120,262 | $ | 94,916 | $ | 348,933 | $ | 263,405 | ||||||||
Cost of goods sold (excluding amortization of purchased technology) |
21,580 | 15,874 | 62,037 | 43,108 | ||||||||||||
Gross profit |
98,682 | 79,042 | 286,896 | 220,297 | ||||||||||||
Operating expenses: |
||||||||||||||||
Sales, marketing and administrative |
77,717 | 61,720 | 230,104 | 182,521 | ||||||||||||
Research and development |
10,085 | 9,874 | 31,989 | 26,638 | ||||||||||||
Amortization of intangible assets |
1,342 | 1,364 | 4,047 | 4,072 | ||||||||||||
Total operating expenses |
89,144 | 72,958 | 266,140 | 213,231 | ||||||||||||
Interest and other income (expense), net: |
||||||||||||||||
Interest income |
200 | 203 | 567 | 1,318 | ||||||||||||
Interest expense |
(1,668 | ) | (1,609 | ) | (5,005 | ) | (5,439 | ) | ||||||||
Other income (expense), net |
(6 | ) | 188 | 81 | 324 | |||||||||||
Total interest and other income (expense), net |
(1,474 | ) | (1,218 | ) | (4,357 | ) | (3,797 | ) | ||||||||
Income (loss) before income taxes |
8,064 | 4,866 | 16,399 | 3,269 | ||||||||||||
Income tax (benefit) expense |
(40 | ) | 430 | 1,399 | 1,053 | |||||||||||
Consolidated net income |
$ | 8,104 | $ | 4,436 | $ | 15,000 | $ | 2,216 | ||||||||
Net loss attributable to noncontrolling interests |
$ | (438 | ) | $ | (628 | ) | $ | (1,353 | ) | $ | (1,311 | ) | ||||
Net income attributable to NuVasive, Inc. |
$ | 8,542 | $ | 5,064 | $ | 16,353 | $ | 3,527 | ||||||||
Net income per share attributable to NuVasive, Inc.: |
||||||||||||||||
Basic |
$ | 0.22 | $ | 0.13 | $ | 0.42 | $ | 0.10 | ||||||||
Diluted |
$ | 0.21 | $ | 0.13 | $ | 0.40 | $ | 0.09 | ||||||||
Weighted average shares: |
||||||||||||||||
Basic |
39,394 | 37,733 | 39,180 | 37,008 | ||||||||||||
Diluted |
40,396 | 39,216 | 40,389 | 38,384 | ||||||||||||
Stock-based compensation is included in operating
expenses in the following categories: |
$ | 6,494 | $ | 4,265 | $ | 18,846 | $ | 14,748 | ||||||||
Sales, marketing and administrative |
827 | 901 | 2,458 | 3,417 | ||||||||||||
Research and development |
$ | 7,321 | $ | 5,166 | $ | 21,304 | $ | 18,165 | ||||||||
NuVasive, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Condensed Consolidated Balance Sheets
(in thousands)
September 30, 2010 | December 31, 2009 | |||||||
Unaudited | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 70,590 | $ | 65,413 | ||||
Short-term marketable securities |
106,546 | 99,279 | ||||||
Accounts receivable, net |
71,617 | 58,462 | ||||||
Inventory |
98,789 | 90,191 | ||||||
Prepaid expenses and other current assets |
4,520 | 3,757 | ||||||
Total current assets |
352,062 | 317,102 | ||||||
Property and equipment, net |
101,120 | 82,602 | ||||||
Long-term marketable securities |
39,629 | 39,968 | ||||||
Intangible assets, net |
101,670 | 103,338 | ||||||
Goodwill |
101,938 | 101,938 | ||||||
Other assets |
14,470 | 7,872 | ||||||
Total assets |
$ | 710,889 | $ | 652,820 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 43,798 | $ | 33,302 | ||||
Accrued payroll and related expenses |
13,191 | 19,111 | ||||||
Royalties payable |
2,619 | 2,334 | ||||||
Total current liabilities |
59,608 | 54,747 | ||||||
Senior convertible notes |
230,000 | 230,000 | ||||||
Long-term acquisition related liabilities |
31,264 | 30,694 | ||||||
Other long-term liabilities |
29,480 | 27,528 | ||||||
Commitments and contingencies |
||||||||
Noncontrolling interests |
12,276 | 13,629 | ||||||
Stockholders equity: |
||||||||
Common stock |
39 | 39 | ||||||
Additional paid-in capital |
520,948 | 485,757 | ||||||
Accumulated other comprehensive income |
621 | 126 | ||||||
Accumulated deficit |
(173,347 | ) | (189,700 | ) | ||||
Total stockholders equity |
348,261 | 296,222 | ||||||
Total liabilities and stockholders equity |
$ | 710,889 | $ | 652,820 | ||||
NuVasive, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30, | ||||||||
2010 | 2009 | |||||||
Operating activities: |
||||||||
Consolidated net income |
$ | 15,000 | $ | 2,216 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
27,404 | 22,005 | ||||||
Stock-based compensation |
21,304 | 18,165 | ||||||
Lease abandonment charge reversal |
| (1,997 | ) | |||||
Amotization of debt issuance costs |
1,120 | 1,065 | ||||||
Allowance for doubtful accounts and sales return reserve, net of write offs |
(1,039 | ) | 1,175 | |||||
Allowance for excess and obsolete inventory |
1,682 | 2,470 | ||||||
Amortization of premium/discount on marketable securities |
890 | 62 | ||||||
Other non-cash adjustments |
2,604 | 1,121 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
Accounts receivable |
(11,465 | ) | (329 | ) | ||||
Inventory |
(10,043 | ) | (19,027 | ) | ||||
Prepaid expenses and other current assets |
(3,878 | ) | 788 | |||||
Accounts payable and accrued liabilities |
6,316 | 7,361 | ||||||
Accrued payroll and related expenses |
(5,973 | ) | (2,209 | ) | ||||
Net cash provided by operating activities |
43,922 | 32,866 | ||||||
Investing activities: |
||||||||
Cash paid for acquisitions and investments |
| (44,055 | ) | |||||
Purchases of property and equipment |
(36,622 | ) | (21,250 | ) | ||||
Purchases of marketable securities |
(150,045 | ) | (64,642 | ) | ||||
Sales of marketable securities |
142,313 | 89,336 | ||||||
Other assets |
(659 | ) | | |||||
Net cash used in investing activities |
(45,013 | ) | (40,611 | ) | ||||
Financing activities: |
||||||||
Issuance of common stock |
12,768 | 9,618 | ||||||
Other assets |
(7,722 | ) | | |||||
Tax benefits related to stock based compensation awards |
1,118 | | ||||||
Net cash provided by financing activities |
6,164 | 9,618 | ||||||
Effect of exchange rate changes on cash |
104 | 85 | ||||||
Increase in cash and cash equivalents |
5,177 | 1,958 | ||||||
Cash and cash equivalents at beginning of period |
65,413 | 132,318 | ||||||
Cash and cash equivalents at end of period |
$ | 70,590 | $ | 134,276 | ||||