Company Delivers Double-Digit Revenue Growth of 11.8% and
Profitability Expansion of 150 Basis Points
SAN DIEGO, CA – April 26, 2016 – 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 March 31, 2016.
First Quarter 2016 Highlights
- Revenue increased 11.8% to $215.1 million, or 12.3% on a constant currency basis;
- Non-GAAP operating profit margin up 150 basis points to 14.1%; GAAP operating profit margin of 5.7%;
- Non-GAAP diluted earnings per share of $0.31; GAAP diluted loss per share of $0.18
- Free cash flow generation of $39.1 million;
- Completed acquisitions of Ellipse Technologies and Mega Surgical; and
- Enhanced capital structure with convertible notes issuance
Gregory T. Lucier, Chairman and Chief Executive Officer of NuVasive, said, “NuVasive is off to a strong start to 2016 as we continue to drive innovation, growth and profitability. Our revenue performance was driven by the fifth consecutive quarter of increasing growth for our U.S. spinal hardware business which reached double-digits during the quarter, improved international growth as our targeted re-acceleration plans take hold, and the benefit of our newly acquired MAGEC® and PRECICE® technologies. At the same time, we delivered an impressive operating profit margin expansion of 150 basis points, reflecting our commitment to drive operational excellence.”
A full reconciliation of GAAP to non-GAAP measures can be found in the tables of this news release.
First Quarter 2016 Results
NuVasive’s financial results for the first quarter 2016 are inclusive of the completion of the acquisition of Ellipse Technologies, Inc. on February 11, 2016 and Mega Surgical on March 18, 2016. The Company’s first quarter 2016 financial performance also was impacted by the issuance of $650 million in convertible senior notes on March 16, 2016, which provided enhanced financial flexibility with a more attractive debt structure and extended maturities to 2021. The Company used the net proceeds from the notes offering to put in place a bond hedge to raise the effective conversion price of the convertible notes due 2021 to $80.00 and for repurchases of existing convertible notes due 2017. During the three months ended March 31, 2016, the Company repurchased $277 million principal amount of its convertible notes due 2017.
NuVasive reported first quarter 2016 total revenue of $215.1 million, an 11.8% increase compared to $192.4 million for the first quarter 2015. On a constant currency basis, first quarter 2016 total revenue increased 12.3% compared to the same period last year.
For the first quarter 2016, GAAP and non-GAAP gross profit was $160.9 million and $165.8 million, respectively, while GAAP and non-GAAP gross margin was 74.8% and 77.1%, respectively. These results compared to GAAP and non-GAAP gross profit of $146.7 million and GAAP and non-GAAP gross margin of 76.3% for the first quarter 2015. Total GAAP and non-GAAP operating expenses were $148.6 million and $135.5 million, respectively, for the first quarter of 2016. These results compared to GAAP and non-GAAP operating expenses of $91.2 million and $122.5 million, respectively, for the first quarter 2015.
The Company reported a GAAP net loss of $8.9 million, or $0.18 per share, for the first quarter 2016 compared to a GAAP net income of $31.6 million, or $0.61 per share, for the first quarter 2015. This decrease was primarily the result of the new convertible notes issuance and repurchases of existing convertible notes during the first quarter 2016 and the net litigation gains during the first quarter of 2015.
On a non-GAAP basis, the Company reported net income of $16.0 million, or $0.31 per share, for the first quarter 2016 compared to net income of $15.1 million, or $0.30 per share, for the first quarter 2015.
Cash, cash equivalents and short and long-term marketable securities were approximately $331.0 million at March 31, 2016.
Annual Guidance for 2016
The Company provided the following updated projections to its full year 2016 guidance, which contemplates the impact of the Ellipse Technologies and Mega Surgical acquisitions, its new convertible notes issuance and existing convertible notes repurchases, as well as expected changes in foreign currency rates:
- Revenue of approximately $928.0 million, or approximately 14.4% growth compared to revenue of $811.1 million for 2015, which includes approximately $53 million of revenue contribution from Ellipse Technologies;
- Non-GAAP diluted earnings per share of approximately $1.48, an increase of approximately 12.7% compared to non-GAAP diluted earnings per share of $1.31 for 2015;
- Non-GAAP operating profit margin of approximately 15.8%, an increase of approximately 40 basis points compared to 15.4% for 2015;
- Adjusted EBITDA margin of approximately 25.4%, an increase of approximately 20 basis points compared to 25.2% for 2015; and
- Non-GAAP effective tax expense rate of approximately 41.0%.
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 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 profit margin, which exclude amortization of intangible assets, purchase accounting related charges, leasehold related charges, integration related expenses associated with acquired businesses, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges, non-cash interest expense and/or losses on convertible notes, and the impact from taxes related to these items, including those taxes that would have occurred in lieu of these items. 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, purchase accounting related changes, 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 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.
Investor Conference Call
NuVasive will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its financial performance for the first quarter 2016. 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 May 26, 2016. In addition, a telephone replay of the call will be available until May 3, 2016. 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: 13634226.
About NuVasive
NuVasive is a global medical device company focused on transforming spine surgery by empowering surgeons with technology to approach procedures in the least disruptive way possible and restore the vitality of life for those that suffer from debilitating spinal conditions. Through its minimally invasive, procedurally-integrated solutions, the Company is expanding the boundaries of modern healthcare with technologies and surgeon training designed to provide reproducible and clinically-proven surgical outcomes that are redefining the success factors of spine surgery like never before. Addressing a variety of pathologies up and down the spine, from complex spinal deformity to degenerative spinal conditions, NuVasive’s highly differentiated solutions include access instruments, implantable hardware and increasingly expert software systems like its game-changing iGA™ surgical planning and reconciliation technology that centers on achieving the global alignment of the spine. NuVasive believes its integrated approach and expertise can fundamentally evolve spine care by delivering improved patient experiences, and better economics for healthcare systems. With $811 million in revenues as of the end of 2015, NuVasive has an approximate 1,600 person workforce in more than 40 countries around the world. For more information on the Company, please visit www.nuvasive.com.
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 first quarter 2016, as well as projections for 2016 financial guidance and longer-term financial performance goals. The numbers for the first quarter 2016 are prior to the completion of review 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 acquisitions, 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 acquisitions 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.
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Investor Contact:
Stacy Roughan
NuVasive, Inc.
1-858-909-1812
[email protected]
Media Contact:
Michael Farrington
NuVasive, Inc.
1-858-909-1940
[email protected]