NuVasive Reports Third Quarter 2015 Financial Results
SAN DIEGO, CA--(Marketwired - October 27, 2015) -
Third Quarter 2015 Highlights:
- Revenue increased 5.6% to $200.5 million, or 7.8% on a constant currency basis;
- Non-GAAP operating profit margin increased 460 basis points to 16.3%; GAAP operating profit margin of 14.0%;
- Adjusted EBITDA margin increased 540 basis points to 26.7%;
- Non-GAAP net income of $18.1 million; GAAP net income of $13.0 million;
- Non-GAAP diluted earnings per share of $0.35; GAAP diluted earnings per share of $0.24; and
- Company reiterates 2015 revenue outlook and increases non-GAAP operating profit margin, adjusted EBITDA and EPS guidance
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 ended September 30, 2015.
"We are pleased to report another strong quarter in which we achieved revenue growth of nearly 8% on a constant currency basis in line with our mid to high single-digit growth goal and profitability that once again significantly outperformed our expectations," said Gregory T. Lucier, Chairman and Chief Executive Officer of NuVasive. "By remaining focused on our margin expansion initiatives across the Company, we delivered incredibly strong year-over-year growth in non-GAAP operating profit margin and adjusted EBITDA margin, improving 460 and 540 basis points, respectively, while non-GAAP EPS increased nearly three and a half times compared to the same quarter last year.
"Our performance for the quarter was driven by continued strength in the United States and robust growth in certain international geographies where NuVasive is leading with our competitive XLIF® technology and differentiated offerings. We remain confident that our unrelenting focus on innovation and technology, increased operational efficiencies, international scalability and our commitment to increased self-manufacturing position NuVasive to be the leader in transforming spine and improving patient outcomes," said Mr. Lucier.
A full reconciliation of non-GAAP to GAAP measures can be found in the tables of this news release.
Third Quarter 2015 Results
NuVasive reported third quarter 2015 total revenue of $200.5 million, a 5.6% increase compared to $189.9 million for the third quarter 2014. On a constant currency basis, third quarter 2015 total revenue increased 7.8% compared to the same period last year.
GAAP gross profit for the third quarter 2015 was $151.4 million and gross margin was 75.5% compared to a gross profit of $142.2 million and a gross margin of 74.9% for the third quarter 2014. Total GAAP operating expenses for the third quarter 2015 were $123.3 million compared to $125.9 million in the third quarter 2014.
The Company reported a GAAP net income of $13.0 million, or $0.24 per share, for the third quarter 2015 compared to a GAAP net loss of $(1.8) million, or $(0.04) per share, for the third quarter 2014.
On a non-GAAP basis, the Company reported net income of $18.1 million, or $0.35 per share, for the third quarter 2015 compared to net income of $3.9 million, or $0.08 per share, for the third quarter 2014.
Cash, cash equivalents and short and long-term marketable securities were approximately $451.2 million at September 30, 2015.
Annual Guidance for 2015
The Company provided the following updated projections to its full year 2015 guidance:
- Revenue of approximately $810.0 million, which includes an approximate $13.0 million of currency headwinds, or approximately 6.2% growth compared to revenue of $762.4 million for 2014; on a constant currency basis revenue is expected to grow approximately 7.9%;
- GAAP diluted earnings per share of approximately $1.24 compared to GAAP loss per diluted share of $(0.36) for 2014; versus a prior expectation of $1.18 for 2015;
- Non-GAAP diluted earnings per share of approximately $1.25, an increase of approximately 86.6% compared to non-GAAP diluted earnings of $0.67 for 2014; versus a prior expectation of $1.17 for 2015;
- Non-GAAP operating profit margin of approximately 15.2%, an increase of approximately 380 basis points compared to 11.4% for 2014; versus a prior expectation of 15.0% for 2015;
- Adjusted EBITDA margin of approximately 25.4%, an increase of approximately 350 basis points compared to 21.9% for 2014; versus a prior expectation of 25.2% for 2015;
- GAAP effective tax expense rate of approximately 43.0%; versus a prior expectation of approximately 45.0% for 2015; and
- Non-GAAP effective tax expense rate of approximately 43.0%; versus a prior expectation of approximately 45.0% for 2015.
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
2015 Guidance
-------------------------
2014
Actuals Prior (1) Current (2)
------------ ------------ ------------
GAAP earnings (loss) per share $ (0.36) $ 1.18 $ 1.24
Impact of change from basic to
diluted share count 0.02 - -
Impact of treasury method on
convertible notes (3) - 0.03 0.03
------------ ------------ ------------
Adjusted GAAP earnings (loss) per
share, adjusted to diluted share
count $ (0.34) $ 1.21 $ 1.27
Amortization of intangible assets 0.16 0.14 0.14
Leasehold related charges 0.13 0.03 0.04
Litigation liability 0.36 (0.49) (0.49)
Intangible asset impairment 0.13 - -
CEO transition related costs - 0.04 0.04
One-time and acquisition related
items (4) 0.05 0.05 0.06
Non-cash interest expense on
convertible notes 0.18 0.19 0.19
------------ ------------ ------------
Non-GAAP earnings per share $ 0.67 $ 1.17 $ 1.25
===========- ===========- ===========-
GAAP Weighted shares outstanding -
basic 46,715 48,593 48,593
============ ============ ============
GAAP Weighted shares outstanding -
diluted 46,715 52,607 52,607
============ ============ ============
Non-GAAP Weighted shares outstanding
- diluted (3) 49,676 51,431 51,431
============ ============ ============
/EINPresswire.com/ --
Reconciliation of Non-GAAP Operating Margin %
2015 Guidance
-----------------------
2014
(in thousands, except %) Actuals Prior Current
---------- ----------- -----------
Non-GAAP Gross Margin % [A] 76.1% 76.7% 76.3%
GAAP Gross Margin [D] 76.1% 76.7% 76.3%
Non-GAAP Sales, Marketing &
Administrative Expense [B] 59.9% 56.9% 56.6%
Leasehold related charges 1.4% 0.4% 0.4%
CEO transition related costs 0.0% 0.4% 0.4%
One-time and acquisition related items
(1) 0.3% 0.5% 0.7%
---------- ----------- -----------
GAAP Sales, Marketing & Administrative
Expense [E] 61.6% 58.2% 58.1%
Non-GAAP Research & Development Expense
[C] 4.8% 4.8% 4.5%
One-time and acquisition related items
(1) 0.2% 0.0% 0.0%
---------- ----------- -----------
GAAP Research & Development Expense [F] 5.0% 4.8% 4.5%
Litigation liability [G] 3.9% (5.2%) (5.2%)
Intangible asset impairment [H] 1.4% 0.0% 0.0%
Amortization of intangible assets [I] 1.8% 1.5% 1.5%
---------- ----------- -----------
Non-GAAP Operating Margin % [A-B-C] 11.4% 15.0% 15.2%
========== =========== ===========
---------- ----------- -----------
GAAP Operating Margin % [D-E-F-G-H-I] 2.4% 17.4% 17.4%
========== =========== ===========
Reconciliation of EBITDA %
2015 Guidance
---------------------
2014
(in thousands, except %) Actuals Prior Current
---------- ---------- ----------
Net Income / (Loss) (2.2%) 7.7% 8.2%
Interest (income) / expense, net 3.5% 3.6% 3.5%
Provision for income taxes 0.8% 6.1% 5.8%
Depreciation and amortization (1) 8.1% 7.8% 8.0%
---------- ---------- ----------
EBITDA 10.2% 25.2% 25.6%
Non-cash stock based compensation 4.4% 3.9% 3.6%
Leasehold related charges 1.4% 0.4% 0.4%
Litigation liability 3.9% (5.2%) (5.2%)
Intangible asset impairment 1.4% 0.0% 0.0%
CEO transition related costs (2) 0.0% 0.4% 0.4%
One-time and acquisition related items
(3) 0.5% 0.5% 0.7%
---------- ---------- ----------
Adjusted EBITDA 21.9% 25.2% 25.4%
========== ========== ==========
Reconciliation of Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, non-GAAP net income, non-GAAP operating expenses and non-GAAP operating margin, which exclude amortization of intangible assets, leasehold related charges, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges and non-cash interest expense 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, 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 earnings release 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 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 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 2015 Results
GAAP Earnings per Share to Non-GAAP Earnings per Share
Pre-Tax Earnings
(in thousands, except per share data) Adjustments Net of Tax Per Share
------------ ----------- -----------
GAAP net income 12,960 $ 0.26
GAAP impact of change from basic to
diluted share count (0.02)
-----------
GAAP net income, adjusted to diluted
share count 0.24
Impact of treasury method on
convertible notes (1) 0.01
Amortization of intangible assets 3,067 1,840 0.04
Leasehold related charges (5) (3) (0.00)
Litigation liability (500) (300) (0.01)
CEO transition related costs 93 56 0.00
One-time and acquisition related
items (2) 1,862 1,117 0.02
Non-cash interest expense on
convertible notes 3,984 2,390 0.05
----------- -----------
Non-GAAP earnings $ 18,061 0.35
=========== ===========
GAAP weighted shares outstanding -
basic 48,993
===========
GAAP weighted shares outstanding -
diluted 53,199
===========
Non-GAAP weighted shares outstanding -
diluted (1) 51,434
===========
Reconciliation of Year To Date 2015 Results
GAAP Earnings per Share to Non-GAAP Earnings per Share
Pre-Tax Earnings
(in thousands, except per share data) Adjustments Net of Tax Per Share
------------ ----------- -----------
GAAP net income 54,788 $ 1.13
GAAP impact of change from basic to
diluted share count (0.08)
-----------
GAAP net income, adjusted to diluted
share count 1.05
Impact of treasury method on
convertible notes (1) 0.02
Amortization of intangible assets 9,037 5,422 0.11
Leasehold related charges 3,035 1,821 0.04
Litigation liability (42,507) (25,504) (0.50)
CEO transition related costs 3,563 2,138 0.04
One-time and acquisition related
items (2) 5,247 3,148 0.06
Non-cash interest expense on
convertible notes 11,738 7,043 0.14
----------- -----------
Non-GAAP earnings $ 48,856 $ 0.96
=========== ===========
GAAP weighted shares outstanding -
basic 48,513
===========
GAAP weighted shares outstanding -
diluted 52,202
===========
Non-GAAP weighted shares outstanding -
diluted (1) 51,003
===========
Reconciliation of Third Quarter and Nine Months 2015 Results
GAAP net income to Adjusted EBITDA
Three months Nine months
ended ended
September 30, September 30,
(in thousands, except per share data) 2015 2015
GAAP net income $ 12,960 $ 54,788
Interest (income) / expense, net 6,946 20,550
Provision for income taxes 8,803 35,332
Depreciation and amortization 16,375 49,005
-------------------------------
EBITDA $ 45,084 $ 159,675
===============================
Non-cash stock based compensation (1) 7,076 19,337
Leasehold related charges (5) 3,035
Litigation liability (500) (42,507)
CEO related transition costs 93 3,563
One-time and acquisition related items 1,862 5,247
-------------------------------
Adjusted EBITDA $ 53,610 $ 148,350
===============================
As a percentage of revenue 26.7% 24.9%
Investor Conference Call
The Company will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its third quarter 2015 financial performance. 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 website at www.nuvasive.com.
After the live webcast, the call will remain available on NuVasive's website through November 27, 2015. In addition, a telephone replay of the call will be available until November 3, 2015. 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: 13621771.
About NuVasive
NuVasive is an innovative global medical device company that is changing spine surgery with minimally disruptive surgical products and procedurally-integrated solutions for the spine. NuVasive has emerged from a small startup to become the #3 player in the $9 billion global spine market and remains focused on market share-taking strategies as the Company continues on its path to become the industry's leading spine company. NuVasive offers a comprehensive spine portfolio of more than 90 unique products developed to improve spine surgery and patient outcomes. The Company's principal procedural solution is its Maximum Access Surgery, or MAS®, platform for lateral spine fusion. MAS was designed to provide safer, reproducible, and clinically proven outcomes, and is a highly differentiated solution with fully integrated neuromonitoring, customizable exposure, and a broad offering of application-specific implants and fixation devices designed to address a variety of pathologies.
NuVasive cautions you that statements included in this news release or made on the investor conference call referenced herein 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 news release contains selected financial results from the third quarter 2015, as well as financial projections for 2015. The numbers for third quarter 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 2015 represent its initial estimates, and 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; 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. 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.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
(unaudited) 2015 2014 2015 2014
------------ ------------ ------------ ------------
Revenue $ 200,538 $ 189,918 $ 595,831 $ 558,090
Cost of goods sold
(excluding below
amortization of
intangible assets) 49,167 47,719 143,246 135,849
------------ ------------ ------------ ------------
Gross profit 151,371 142,199 452,585 422,241
Operating expenses:
Sales, marketing and
administrative 111,384 113,746 342,797 348,820
Research and
development 9,199 9,068 27,245 28,590
Amortization of
intangible assets 3,067 3,071 9,037 10,541
Impairment of
intangible assets - - - 10,708
Litigation liability
(gain) loss (500) - (42,507) 30,000
Business transition
costs 110 - 6,474 -
------------ ------------ ------------ ------------
Total operating expenses 123,260 125,885 343,046 428,659
Interest and other
expense, net:
Interest income 362 241 1,125 691
Interest expense (7,307) (6,965) (21,675) (20,809)
Other income (expense),
net 387 (2,489) 530 (2,318)
------------ ------------ ------------ ------------
Total interest and other
expense, net (6,558) (9,213) (20,020) (22,436)
------------ ------------ ------------ ------------
Income (loss) before
income taxes 21,553 7,101 89,519 (28,854)
Income tax (expense)
benefit (8,803) (9,088) (35,332) 4,065
------------ ------------ ------------ ------------
Consolidated net income
(loss) $ 12,750 $ (1,987) $ 54,187 $ (24,789)
============ ============ ============ ============
Add back net loss
attributable to non-
controlling interests $ (210) $ (157) $ (601) $ (595)
============ ============ ============ ============
Net income (loss)
attributable to
NuVasive, Inc. $ 12,960 $ (1,830) $ 54,788 $ (24,194)
============ ============ ============ ============
Net income (loss) per
share attributable to
NuVasive, Inc.:
Basic $ 0.26 $ (0.04) $ 1.13 $ (0.52)
============ ============ ============ ============
Diluted $ 0.24 $ (0.04) $ 1.05 $ (0.52)
============ ============ ============ ============
Weighted average shares
outstanding:
Basic 48,993 46,990 48,513 46,546
============ ============ ============ ============
Diluted 53,199 46,990 52,202 46,546
============ ============ ============ ============
NuVasive, Inc.
Consolidated Balance Sheets
(in thousands, except par values and share amounts)
September 30, December 31,
2015 2014
-------------- --------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 141,328 $ 142,387
Short-term marketable securities 196,037 220,329
Accounts receivable, net of allowances of
$5,849 and $5,844, respectively 115,579 118,959
Inventory, net 164,867 154,638
Deferred and prepaid taxes 73,420 59,233
Prepaid expenses and other current assets 7,279 10,325
-------------- --------------
Total current assets 698,510 705,871
Property and equipment, net 140,474 128,565
Long-term marketable securities 113,793 43,042
Intangible assets, net 86,190 96,555
Goodwill 154,324 154,443
Deferred tax assets, non-current 49,614 65,330
Restricted cash and investments 5,615 123,233
Other assets 23,444 26,420
-------------- --------------
Total assets $ 1,271,964 $ 1,343,459
============== ==============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 63,545 $ 133,324
Accrued payroll and related expenses 32,767 38,032
Litigation liabilities 937 30,000
Deferred and income tax liabilities 2,066 13,543
-------------- --------------
Total current liabilities 99,315 214,899
Senior Convertible Notes 372,485 360,746
Deferred and income tax liabilities, non-
current 8,177 12,526
Non-current litigation liabilities 87,553 93,700
Other long-term liabilities 12,742 13,230
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000
shares authorized, none outstanding - -
Common stock, $0.001 par value; 120,000,000
shares authorized at September 30, 2015 and
December 31, 2014, 52,099,475 and
47,691,744 issued and outstanding at
September 30, 2015 and December 31, 2014,
respectively 52 48
Additional paid-in capital 973,481 847,145
Accumulated other comprehensive loss (11,323) (9,670)
Accumulated deficit (132,150) (186,938)
Treasury stock at cost; 3,015,033 shares and
233,369 shares at September 30, 2015 and
December 31, 2014, respectively (146,077) (10,537)
-------------- --------------
Total NuVasive, Inc. stockholders' equity 683,983 640,048
Non-controlling interests 7,709 8,310
-------------- --------------
Total equity $ 691,692 $ 648,358
-------------- --------------
Total liabilities and equity $ 1,271,964 $ 1,343,459
============== ==============
NuVasive, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended
September 30,
---------------------------
(Unaudited) 2015 2014
------------- -------------
Operating activities:
Consolidated net income (loss) $ 54,187 $ (24,789)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 49,006 46,521
Amortization of non-cash interest 13,255 12,244
Stock-based compensation 20,570 24,779
Impairment of intangible assets - 10,708
Deferred income taxes 37,047 -
Reserves on current assets 7,232 4,062
Other non-cash adjustments 13,127 11,317
Changes in operating assets and liabilities, net
of effects from acquisitions:
Accounts receivable 2,163 (5,519)
Inventory (19,768) (27,190)
Prepaid expenses and other current assets 2,512 (1,837)
Accounts payable and accrued liabilities 8,828 11,485
Income taxes (52,739) (7,898)
Accrued royalties (46,999) 12,450
Litigation liability (35,333) 30,000
Accrued payroll and related expenses (5,080) 151
------------- -------------
Net cash provided by operating activities 48,008 96,484
Investing activities:
Acquisitions and other investments (1,357) (59)
Purchases of intangible assets (28,589) -
Purchases of property and equipment (59,905) (45,692)
Proceeds from sales of property and equipment 40 -
Purchases of marketable securities (320,177) (177,850)
Proceeds from sales of marketable securities 272,666 142,051
Purchases of restricted investments (62,625) -
Proceeds from sales of restricted investments 180,694 -
------------- -------------
Net cash used in investing activities (19,253) (81,550)
Financing activities:
Incremental tax benefits related to stock-based
compensation awards 15,185 -
Proceeds from the issuance of common stock 9,040 15,341
Payment of contingent consideration (514) (498)
Purchase of treasury stock (52,532) (664)
Other financing activities (131) (668)
------------- -------------
Net cash (used in) provided by financing
activities (28,952) 13,511
Effect of exchange rate changes on cash (862) (613)
------------- -------------
(Decrease) increase in cash and cash equivalents (1,059) 27,832
Cash and cash equivalents at beginning of period 142,387 102,825
------------- -------------
Cash and cash equivalents at end of period $ 141,328 $ 130,657
============= =============
Investor/Media Contact:
Stacy Roughan
NuVasive, Inc.
1-858-909-1812
Email contact
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
