Attached files
| file | filename |
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| EX-10.1 - EX-10.1 - NUVASIVE INC | d131680dex101.htm |
| EX-10.2 - EX-10.2 - NUVASIVE INC | d131680dex102.htm |
| EX-99.1 - EX-99.1 - NUVASIVE INC | d131680dex991.htm |
| EX-99.2 - EX-99.2 - NUVASIVE INC | d131680dex992.htm |
| 8-K - FORM 8-K - NUVASIVE INC | d131680d8k.htm |
 NuVasive, Inc.
Fourth Quarter and Full Year 2015 Results
February 11, 2016
Exhibit 99.3 |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Forward-Looking Statements
NuVasive cautions you that statements included in this presentation 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. In addition, this presentation contains selected financial results from the fourth quarter and full year 2015, as well as projections for 2016 financial guidance and longer-term financial performance goals. The numbers for the fourth quarter and full year 2015 are prior to the completion of review and audit procedures by the Company’s external auditors and are subject to adjustment. In addition, the Company’s projections for 2016 financial guidance and longer-term financial performance goals represent current estimates, including initial estimates of the potential benefits, synergies and cost savings associated with the acquisition of Ellipse Technologies, which are subject to the risk of being inaccurate because of the preliminary nature of the forecasts, the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability. 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; the risk of further adjustment to financial results or future financial expectations; unanticipated difficulty in selling products, generating revenue or producing expected profitability; the risk that Ellipse Technologies will not be integrated successfully or that the benefits and synergies from the acquisition may not be fully realized or may take longer to realize than expected; and those other risks and uncertainties more fully described in the Company’s news 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.
The forward-looking statements contained herein are based on the current expectations and assumptions of NuVasive and not on historical facts. NuVasive assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made. 2 |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Non-GAAP Financial Measures
Management uses certain financial measures in this presentation that are not calculated in accordance with GAAP. Non-GAAP financial measures include non-GAAP earnings per share, non-GAAP net income, non- GAAP operating expenses and non-GAAP operating profit margin, which exclude amortization of intangible assets, leasehold related charges, integration related expenses associated with acquired businesses, one- time restructuring and acquisition related items, CEO transition related costs, certain litigation charges and non-cash interest expense and or losses on convertible notes. Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency is the use of an exchange rate that eliminates fluctuations when calculating financial performance numbers. The Company also uses measures such as free cash flow, which represents cash flow from operations less cash used in the acquisition and disposition of capital. Additionally, the Company uses an adjusted EBITDA measure which represents earnings before interest, taxes, depreciation and amortization and excludes the impact of stock-based compensation, leasehold related charges, integration related expenses associated with acquired businesses, CEO transition related costs, certain litigation liabilities, acquisition related items and other significant one-time items. Management calculates the non-GAAP financial measures provided in this presentation excluding these costs and uses these non-GAAP financial measures to enable it to further and more consistently analyze the period-to-period financial performance of its core business operations. Management believes that providing investors with these non-GAAP financial measures gives them additional information to enable them to assess, in the same way management assesses, the Company’s current and future continuing operations. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP, and may be different from non-GAAP financial measures used by other companies. For reconciliations of non-GAAP financial measures to the comparable GAAP financial measure, please visit the Investor Relations section of the Company’s corporate website at www.nuvasive.com.
3 |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Year dominated by category-focused innovation
2015 Financial Performance Highlights
4 Innovation Growth Profitability • Biggest launch since XLIF with introduction of Integrated Global Alignment (iGA™) platform to help address proper alignment • Entered adult deformity market with posterior fixation system ReLine® • Introduced differentiated Archon® anterior cervical plating system and posterior cervical fixation offering VuePoint® II • Introduced new products, including X-Core® Mini Cervical Corpectomy System, Propel DBM biologic, as well as additional implant and line extension innovation • Delivered 8.2% constant currency full year 2015 revenue growth to $811.1 million • Strong lumbar performance following iGA launch resulting in sequential quarterly improvements • Resurgence in cervical business driven by differentiated offerings • Localized improvement plans for key International markets in Western Europe showing initial improved results • Delivered record 400 basis points of profitability expansion for full year 2015 • Full year 2015 non-GAAP operating profit margin of 15.4% • Full year 2015 non-GAAP EPS of $1.31, doubling vs. 2014 and growing at rate well ahead of revenue • Capturing well-identified operating efficiencies • Optimizing scale and globalization efforts • Acquired facility in West Carrollton, OH to support ~100% self-manufacturing goal |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Demonstrating clinical and economic benefit to drive
share-taking Rapidly Evolving, Complex Healthcare
Landscape •
Increasing number of market influencers
• Ability to clearly demonstrate clinical and economic value never more relevant • Take advantage of the continued lack of focus from the larger players in spine • Strengthen competitive stance with more dynamic peers • Look to partner with customers not only on technology, but also entire service continuum Strategically moving from a vendor focused on transactions to true partner focused on transformation Surgeon Conversion Service Line Partnership Service Integration and Expansion NuVasive’s Differentiated Commercial Approach 5 |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Operational excellence
delivering significant
margin expansion
Driving organic growth
with numerous inorganic
opportunities Industry disruptor adding value and addressing unmet needs NuVasive’s Formula for Success Fueling 2016 strategic agenda with proven approach to win 6 Profitability |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Highly scalable platform with exceptional growth prospects
Ellipse Technologies Acquisition Complete
7 Initial addressable market opportunity of ~$570 million* for the MAGEC technology alone –incremental upside with pull-through of NuVasive hardware ~$700 million* PRECICE market opportunity with potential partnerships to drive market share with highly differentiated orthopedic technology Strong full year 2015 Ellipse Technologies results at ~$44 million in revenue Delivering ~$53 million in revenue on reported basis, and ~$60 million in revenue on pro forma basis for 2016 MAGEC® SPINAL BRACING AND DISTRACTION SYSTEM PRECICE® LIMB LENGTHENING TECHNOLOGY Before After *Company estimates |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Fourth Quarter 2015 Revenue Highlights
U.S. IMPLANTS & SERVICES
Includes Lumbar, Cervical, NVM5 and Service
Up 9.9% in 4Q15
Key Performance Factors:
Fourth Consecutive Quarter of Growth
& Highest of Year
Strong Lumbar & Cervical Results
Driven by ReLine, Increased
Adoption of iGA
U.S. BIOLOGICS
Down 2.7% in 4Q15
Key Performance Factors:
Challenged by cyclicality
and surgeon trialing in prior
period INTERNATIONAL Up 1.9% * in 4Q15 Includes Puerto Rico Key Performance Factors: Japan, Italy & Australia Remain Strong Performers Localized XLIF/MIS Focus Working Resurgence in Germany Latin America Weakness Strong revenue performance in key growth areas *Constant currency basis 8 |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Non-GAAP Measures
4Q15 Actuals 4Q15 YoY Performance Factors FY15 Actuals FY15 YoY Performance Factors Gross Margin 76.2% 100 bps driven by mix, higher E&O 76.0% 10 bps driven by product transition costs, non-repeat of one-time benefits Sales, Marketing & Admin. 55.2% 280 bps driven by expense reduction efforts, increased asset efficiencies 56.4% 350 bps driven by asset and sales force efficiencies Research & Development 4.0% 60 bps driven by timing of development projects 4.3% 50 bps driven by timing of development projects Operating Profit Margin 17.1% 240 bps driven by better overall OpEx management 15.4% 400 bps driven by better overall OpEx management EPS $0.35 37% $1.31 95% Adjusted EBITDA Margin 25.9% 80 bps 25.2% 330 bps Operating leverage story continues to play out Fourth Quarter and Full Year 2015 P&L Performance 9 |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Change to better align with the way NuVasive manages business
Revenue Disclosure & Guidance Practices
• Beginning in 1Q16, refining disclosed revenue grouping to three key areas:
1) U.S. Spinal Hardware & Other
2) U.S. Surgical Support & Other
3) International
Better reflects how NuVasive manages the business and in line with peer
practices Better communicate the underlying performance of the
Company Best structure to incorporate acquisition of Ellipse
Technology in revenue disclosure Provides flexible go-forward
reporting structure for integration of future acquisitions
• Two-Year Recast of Historical Performance to New Revenue Grouping: 10 Q114 A Q214 A Q314 A Q414 A 2014 FY A Q115 A Q215 A Q315 A Q415 A 2015 FY A % Growth U.S. Spinal Hardware & Other 104,363 108,697 107,039 115,710 435,809 110,248 116,456 116,180 126,376 469,260 8% U.S. Surgical Support & Other 52,111 56,057 55,936 59,705 223,809 57,533 58,612 58,082 62,299 236,526 6% International (inc. Puerto Rico) 21,022 25,923 26,943 28,909 102,797 24,602 27,842 26,276 26,607 105,327 2% Total Revenue 177,496 190,677 189,918 204,324 762,415 192,383 202,910 200,538 215,282 811,113 6% ($ in thousands) |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
FY16 Guidance Performance Drivers Revenues • As reported • Full year pro forma ~$923.0M, ~14% YoY growth^ $930M, ~9% growth ~$53M Ellipse Technologies contribution; ~$2M currency impact $~870 core business revenue; ~$60M Ellipse Technologies revenue • U.S. Spinal Hardware & Other • U.S. Surgical Support & Other • International ~14% YoY growth ~3% YoY growth ~36% YoY growth Strong expected lumbar, cervical and Ellipse product performance Slower growth expectations for biologics and services ~38% excluding currency impact; comprised of core NuVasive growth of ~20%, Ellipse product growth of ~18% Non-GAAP Gross Margin ~76.9% ~90 bps increase due to 2-year suspension of medical device tax, favorable product mix from lumbar and cervical portfolios Non-GAAP Sales, Marketing & Admin. ~55.5% ~90 bps improvement driven by core NuVasive asset and sales force efficiencies, support function management, International scale Non-GAAP Research & Development ~5.6% ~130 bps increase in organic and inorganic investment in innovation Non-GAAP Operating Profit Margin ~15.8% ~140 bps of core NuVasive margin improvement, primarily offset by increase in R&D investments Non-GAAP Earnings Per Share ~$1.48 ~13% YoY growth Adjusted EBITDA Margin ~25.4% ~20 bps increase Non-GAAP Effective Tax Rate ~41.0% Benefited from discrete items that drove rate lower in 2015 & well
ahead of expectations, which will not repeat in 2016
Includes Ellipse Technologies acquisition and reflects new revenue
groupings Full Year 2016 Financial Performance Guidance*
11 *NuVasive financial performance guidance as of February 11, 2016; ^Constant currency as reported |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Performance expectations for modeling purposes
First Quarter 2016 Performance Guidance*
• Providing guidance for first quarter of 2016 as it will include a partial quarter of results from the Ellipse Technologies acquisition • Expect
revenue to approximate $205
million for the first quarter of 2016, inclusive of
Ellipse Technologies revenue •
Expect non-GAAP operating
profit margin for the first quarter 2016 to be in line with the prior year at approximately
12.6% • Focused on quickly integrating Ellipse Technologies acquisition 12 *NuVasive financial performance guidance as of February 11, 2016 |
 ©2016 NuVasive®, Inc.
©2016 NuVasive®, Inc.
Relentless focus on driving shareholder value
Why Invest in NuVasive
13 Industry-leading innovation and integrated procedural solutions enables share-taking and premium pricing Drive surgeon conversion, increase service line partnerships and expand services integration Double International revenue contribution in coming years Competitively positioned in large and growing global spine market with favorable transformative dynamics playing to NuVasive strengths Grow revenues at multiples of market in high single-digit range* Achieve ~25% long-term non- GAAP operating profit margin and ~32% adjusted EBITDA goals* Optimize tax structure to help drive EPS growth 2x the rate of revenue growth* Disciplined capital deployment for strategic M&A and partnerships Set to generate significant increases in free cash flow *NuVasive financial performance guidance as of February 11, 2016 |