News: NUVASIVE REPORTS THIRD QUARTER 2016 FINANCIAL RESULTS
SAN DIEGO, CA – Oct. 25, 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 September 30, 2016.
Third Quarter 2016 Highlights
Revenue increased 19.5% to $239.6 million, or 18.9% on a constant currency basis
GAAP operating profit margin of 8.8%; Non-GAAP operating profit margin of 16.1%
GAAP diluted earnings per share of $0.07; Non-GAAP diluted earnings per share up 14.3% from prior year to $0.40
“Our results for the third quarter reflect continued strength in procedural volumes across the United States, as well as strong performances in our European and Australian markets,” said Gregory T. Lucier, NuVasive’s chairman and chief executive officer. “While our revenue results for the quarter were lower than our expectations due to capital and stocking orders in the United States that did not come through late in the quarter as planned, we believe this minor disruption is temporary. During the quarter, we continued to experience positive trends, including domestic procedural volumes in line with prior quarters and the conversion of surgeons at an increasingly faster pace, signaling stable market trends and competitive dynamics that favor our innovation and spine-only focused strategy.
“As anticipated, our results were also impacted by our dilator being off the market in Japan for a large portion of the quarter, which resulted in lower XLIF revenues. If XLIF procedures in Japan had been performed at their normal pace, the underlying revenue growth rate of our core business would have been in the mid-to-high single digits. We have resubmitted our dilator for approval with the Japanese Ministry of Health, and to be prudent, we have updated our financial guidance to reflect the removal of XLIF revenues in Japan for the fourth quarter.
Lucier continued, “Our intense focus on operational excellence is paying off as we delivered profitability and earnings that were significantly higher than our internal expectations, while continuing to invest in a broader innovation agenda and our new manufacturing facility in Ohio to drive long-term shareholder value creation. Based on these dynamics, we are reiterating our full year 2016 financial guidance in line with prior expectations, with the exception of revenue.”
A full reconciliation of GAAP to non-GAAP measures can be found in the tables of this news release.
Third Quarter 2016 Results
NuVasive’s financial results for the third quarter 2016 are inclusive of results from Ellipse Technologies, Inc. Mega Surgical and Biotronic NeuroNetwork, as these previously disclosed acquisitions were completed earlier in the year. Ellipse Technologies now operates as the renamed division NuVasive Specialized
Orthopedics (NSO). Biotronic NeuroNetwork now operates alongside the Company’s existing Impulse Monitoring business under the renamed division NuVasive Clinical Services (NCS).
NuVasive reported third quarter 2016 total revenue of $239.6 million, a 19.5% increase compared to $200.5 million for the third quarter 2015. On a constant currency basis, third quarter 2016 total revenue increased 18.9% compared to the same period last year.
For the third quarter 2016, GAAP and non-GAAP gross profit was $180.5 million and $182.9 million, respectively, while GAAP and non-GAAP gross margin was 75.3% and 76.3%, respectively. These results compared to GAAP and non-GAAP gross profit of $151.4 million and GAAP and non-GAAP gross margin of 75.5% for the third quarter 2015. Total GAAP and non-GAAP operating expenses were $159.3 million and $144.4 million, respectively, for the third quarter of 2016. These results compared to GAAP and non-GAAP operating expenses of $123.3 million and $118.7 million, respectively, for the third quarter 2015.
NuVasive reported a GAAP net income of $3.9 million, or $0.07 per diluted share, for the third quarter 2016 compared to $13.0 million, or $0.24 per diluted share, for the third quarter 2015.
On a non-GAAP basis, the Company reported net income of $21.1 million, or $0.40 per diluted share for the third quarter 2016 compared to $18.1 million, or $0.35 per diluted share, for the third quarter 2015.
Cash, cash equivalents and short and long-term marketable securities were approximately $204 million at September 30, 2016.
Updated Guidance for 2016
The Company reiterated full year 2016 financial guidance in line with prior expectations, with the exception of revenue. The Company expects full year 2016 revenue to be lower than prior expectations based on the Company’s third quarter 2016 revenue results and the Company’s revised forecast for fourth quarter 2016 revenue in Japan.
Revenue of approximately $952.0 million for 2016, which includes a $1 million benefit from currency or approximately 17.4% growth compared to revenue of $811.1 million for 2015; versus a prior expectation of $962.0 million for 2016;
Non-GAAP diluted earnings per share of approximately $1.64, an increase of approximately 25% and in line with the prior expectation of $1.64, compared to non-GAAP diluted earnings per share of $1.31 for 2015;
Non-GAAP operating profit margin of approximately 16.0%, an increase of 60 basis points compared to 15.4% for 2015; in line with the prior expectation of approximately 16.0% for 2016;
Adjusted EBITDA margin of approximately 25.4% for 2016; in line with the prior expectation of approximately 25.4% for 2016, compared to 25.2% for 2015; and
Non-GAAP effective tax expense rate of approximately 37%; in line with the prior expectation of approximately 37% for 2016.
Supplementary Financial Information
For additional financial detail, please visit the Investor Relations section at www.nuvasive.com to access Supplementary Financial Information.