EX-99.1 2 a56669exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(NUVASIVE LOGO)
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 SECOND QUARTER 2010 FINANCIAL RESULTS
-  Raises 2010 Guidance  -
    Total revenue of $119.6 million, up 35.2% over second quarter 2009     
 
    GAAP earnings of $6.7 million, or $0.17 per share; Non-GAAP earnings of $17.0 
million, or $0.42 per share
 
    Non-GAAP operating margin of 15.8%, up from 11.3% for first quarter 2010;
GAAP operating margin of 6.9%
SAN DIEGO, July 27, 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 June 30, 2010.
NuVasive reported second quarter revenue of $119.6 million, a 35.2% increase over the $88.5 million for the second quarter 2009 and a 9.6% increase over the $109.1 million for the first quarter 2010.
Gross profit for the second quarter 2010 was $98.6 million and gross margin was 82.4%, compared to a gross profit of $74.2 million and a gross margin of 83.9% for the second quarter 2009. For the first quarter 2010, gross profit was $89.6 million and gross margin was 82.2%.

 


 

Total GAAP operating expenses for the second quarter 2010 were $90.3 million compared to $69.8 million in the second quarter 2009 and $86.7 million in the first quarter 2010.
On a GAAP basis, the Company reported net income of $6.7 million, or $0.17 per share, for the second quarter 2010.
On a Non-GAAP basis, the Company reported net income of $17.0 million, or $0.42 per share, for the second quarter 2010. The Non-GAAP earnings per share calculations for the second quarter exclude on a pre-tax basis (i) intellectual property litigation costs of $1.1 million; (ii) acquisition related costs of $0.6 million; (iii) stock-based compensation of $7.5 million; and (iv) amortization of intangible assets of $1.4 million.
Earnings per share reflect a change in the expected full year effective tax rate equating to an impact of $0.04 on a GAAP basis and $0.13 on a Non-GAAP basis for the second quarter 2010.
Cash, cash equivalents and short and long-term marketable securities were $213.2 million at June 30, 2010. Operating cash flow was $16.3 million for the second quarter 2010.
Alex Lukianov, Chairman and Chief Executive Officer, said, “We had a very solid quarter, achieving revenue growth of over 35% and showing significant increases in profitability. Our Non-GAAP operating margins significantly increased to approximately 16%, putting us soundly on track for meeting our 2010 profitability targets. Our strong momentum driven by continued adoption of the XLIF® technology and increased traction from our biologics and international areas gives us the confidence to increase guidance. We are keenly 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 as we drive towards $1 billion in revenue with increasing profitability.”
Updated Full Year 2010 Financial Guidance:
    Revenue of $485 million to $500 million; up from previous guidance of $480 million to $500 million
 
    GAAP EPS, net of tax and “If-converted” method, of $1.77 to $1.91; up from previous guidance of $1.58 to $1.70
 
    Non-GAAP EPS, net of tax and “If-converted” method, of $1.50 to $1.64; up from previous guidance of $1.13 to $1.25
 
    Effective tax rate of ~15%; lowered from previous guidance of ~35% - excludes reversal of remaining valuation allowance
 
    Non-GAAP Operating Margin of ~17% remains unchanged

 


 

              Reconciliation of Non-GAAP Operating Margin %
     
    Guidance
    FY 10
Gross Margin % [A]
  ~ 82.5%
 
   
 
   
Non-GAAP Research and Development [B]
  ~ 8.5%
 
   
Non-cash stock-based compensation
  ~ 1%
 
   
Total research and development
  ~ 9.5%
 
   
 
   
Non-GAAP Sales, Marketing and Administrative [C]
  ~ 56% - 58%
Non-cash stock-based compensation
  ~ 5%
Intellectual property litigation expenses
  ~ 1%
Reversal of leasehold termination
 
Acquisition related items
  as incurred
 
   
Total sales, marketing and administrative
  ~ 62% - 64%
 
   
 
   
Amortization of intangible assets
  ~ 1%
 
   
 
   
Non-GAAP Operating Income % [A-B-C]
 
~ 17%
 
   
2010 Tax Adjustments & WASO Guidance (millions)
                     
    Q1 - Q3   Q4   FY10
Effective Tax Rate (ETR)*
  ~ 15%     ~ 15%       ~ 15%  
Reversal of remaining valution allowance
        ~($47.0 )     ~($47.0 )
 
                   
Weighted avereage shares - Diluted
  41.0     ~ 46.0       ~ 46.0  
   * ETR to be used on a pre-tax income prior to reversal of remaining valuation allowance
Reconciliation of Non-GAAP Information
Management uses certain Non-GAAP financial measures such as Non-GAAP earnings per share, which exclude intellectual property litigation expenses, acquisition related items, non-cash stock-based compensation, 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 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 2010 Results
                         
    pre-tax              
(in thousands, except per share data)   adjustments     $ (net of tax)     per share  
GAAP net income
          $ 6,723     $ 0.17  
Intellectual property litigation expenses
    1,104       1,076       0.03  
Acquisition related items
    558       544       0.01  
Non-cash stock-based compensation
    7,549       7,361       0.18  
Amortization of intangible assets
    1,355       1,322       0.03  
 
               
Non-GAAP earnings
          $ 17,026     $ 0.42  
 
               
Weighted average shares - Diluted
                    40,694  
 
                   
Reconciliation of Full Year 2010 Guidance
(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
  $ 1.77     $ 1.91  
Intellectual property litigation expenses
    0.09       0.09  
Non-cash stock-based compensation
    0.55       0.55  
Amortization of intangible assets
    0.11       0.11  
Reversal of remaining valuation allowance
    (1.02 )     (1.02 )
 
       
Non-GAAP earnings per share
  $ 1.50     $ 1.64  
 
       
 
               
Weighted shares outstanding - Diluted
    46,000       46,000  
 
       
 
               
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 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 27, 2010. In addition, a telephonic replay of the call will be available until August 10, 2010. The replay dial-in numbers are 1-877-660-6853 for domestic callers and 1-201-612-7415 for international callers. Please use account number 3055 and conference ID number 350903.

 


 

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 Company’s 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.
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: 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 platform’s lateral approach, known as eXtreme Lateral Interbody Fusion, or XLIF®, NuVasive has built an entire spine franchise. With over 55 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     Six Months Ended  
    June 30,     June 30,  
    2010   2009   2010   2009
 
                               
Revenue
  $ 119,584     $ 88,481     $ 228,671     $ 168,490  
Cost of goods sold (excluding amortization of purchased technology)
    21,014       14,235       40,457       27,234  
 
                       
Gross profit
    98,570       74,246       188,214       141,256  
 
                               
Operating expenses:
                               
Sales, marketing and administrative
    77,726       60,274       152,387       120,801  
Research and development
    11,205       8,178       21,904       16,764  
Amortization of intangible assets
    1,355       1,372       2,705       2,708  
 
                       
Total operating expenses
    90,286       69,824       176,996       140,273  
 
                               
Interest and other income (expense), net:
                               
Interest income
    178       383       367       1,115  
Interest expense
    (1,668 )     (2,060 )     (3,337 )     (3,830 )
Other income (expense), net
    (30 )     93       87       135  
 
                       
Total interest and other income (expense), net
    (1,520 )     (1,584 )     (2,883 )     (2,580 )
 
                       
 
Income (loss) before income taxes
    6,764       2,838       8,335       (1,597 )
Income tax expense
    574       526       1,439       623  
 
                       
Consolidated net income (loss)
  $ 6,190     $ 2,312     $ 6,896     $ (2,220 )
 
                       
Net loss attributable to noncontrolling interests
  $ (533 )   $ (453 )   $ (915 )   $ (683 )
 
                       
Net income (loss) attributable to NuVasive, Inc.
  $ 6,723     $ 2,765     $ 7,811     $ (1,537 )
 
                       
 
                               
Net income (loss) per share attributable to NuVasive, Inc.:
                               
Basic
  $ 0.17     $ 0.07     $ 0.20     $ (0.04 )
 
                       
Diluted
  $ 0.17     $ 0.07     $ 0.19     $ (0.04 )
 
                       
Weighted average shares:
                               
Basic
    39,242       36,910       39,071       36,639  
 
                       
Diluted
    40,694       38,301       40,383       36,639  
 
                       
 
                               
Stock-based compensation is included in operating expenses in the following categories:                        
Sales, marketing and administrative
  $ 6,672     $ 5,243     $ 12,352     $ 10,484  
Research and development
    877       1,074       1,631       2,515  
 
                       
 
  $ 7,549     $ 6,317     $ 13,983     $ 12,999  
 
                       

 


 

NuVasive, Inc.
Condensed Consolidated Balance Sheets
(
in thousands)
                 
    June 30, 2010   December 31, 2009
ASSETS   Unaudited        
Current assets:
               
Cash and cash equivalents
  $ 67,513     $ 65,413  
Short-term marketable securities
    111,666       99,279  
Accounts receivable, net
    68,230       58,462  
Inventory
    93,106       90,191  
Prepaid expenses and other current assets
    3,768       3,757  
 
           
Total current assets
    344,283       317,102  
Property and equipment, net
    89,801       82,602  
Long-term marketable securities
    34,046       39,968  
Intangible assets, net
    100,833       103,338  
Goodwill
    101,938       101,938  
Other assets
    14,781       7,872  
 
           
Total assets
  $ 685,682     $ 652,820  
 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable and accrued liabilities
  $ 38,337     $ 33,302  
Accrued payroll and related expenses
    13,088       19,111  
Royalties payable
    2,484       2,334  
 
           
Total current liabilities
    53,909       54,747  
Senior convertible notes
    230,000       230,000  
Long-term acquisition related liabilities
    30,876       30,694  
Other long-term liabilities
    27,810       27,528  
Commitments and contingencies
               
 
               
Noncontrolling interests
    12,714       13,629  
 
               
Stockholders’ equity:
               
Common stock
    39       39  
Additional paid-in capital
    513,072       485,757  
Accumulated other comprehensive income (loss)
    (849)     126  
Accumulated deficit
    (181,889)     (189,700)
 
           
Total stockholders’ equity
    330,373       296,222  
 
           
Total liabilities and stockholders’ equity
  $ 685,682     $ 652,820  
 
           

 


 

NuVasive, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)
                 
    Six Months Ended June 30,
         
    2010   2009
Operating activities:
               
Consolidated net income (loss)
  $ 6,896     $ (2,220 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    17,065       12,811  
Stock-based compensation
    13,983       12,999  
Allowance for doubtful accounts and sales return reserve, net of write offs
    (1,007 )     1,290  
Allowance for excess and obsolete inventory
    906       2,038  
Other non-cash adjustments
    2,773       -  
Changes in operating assets and liabilities, net of effects from acquisitions:
               
Accounts receivable
    (8,514 )     2,221  
Inventory
    (4,258 )     (19,939 )
Prepaid expenses and other current assets
    (1,397 )     (694 )
Accounts payable and accrued liabilities
    4,588       332  
Accrued payroll and related expenses
    (5,574 )     (1,272 )
 
           
Net cash provided by operating activities
    25,461       7,566  
Investing activities:
               
Cash paid for acquisitions and investments
    -       (44,055 )
Purchases of property and equipment
    (22,059 )     (12,440 )
Purchases of marketable securities
    (95,015 )     (29,678 )
Sales of marketable securities
    88,028       76,270  
 
       
Net cash used in investing activities
    (29,046 )     (9,903 )
Financing activities:
               
Issuance of common stock
    11,963       6,297  
Other assets
    (7,481 )     -  
Tax benefits related to stock based compensation awards
    1,369       -  
 
       
Net cash provided by financing activities
    5,851       6,297  
Effect of exchange rate changes on cash
    (166 )     48  
 
       
Increase in cash and cash equivalents
    2,100       4,008  
Cash and cash equivalents at beginning of period
    65,413       132,318  
 
       
Cash and cash equivalents at end of period
  $ 67,513     $ 136,326