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Nuvasive (NUVA)

Filed: 4 May 22, 4:12pm

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Exhibit 99.1
NEWS RELEASE


NuVasive Announces First Quarter 2022 Financial Results
Strong year-over-year net sales growth, driven by new product introductions and International sales –
Company raises lower end of full-year 2022 financial guidance range –

SAN DIEGO May 4, 2022 – NuVasive, Inc. (NASDAQ: NUVA), the leader in spine technology innovation, focused on transforming spine surgery with minimally disruptive, procedurally integrated solutions, today announced financial results for the quarter ended March 31, 2022.

First Quarter 2022
Net sales were $290.8 million, a 7.2% increase as reported and a 9.1% increase on a constant currency basis, compared to the prior year period;
GAAP operating margin of 4.1%; Non-GAAP operating margin of 11.7%; and
GAAP diluted earnings per share of $0.35; Non-GAAP diluted earnings per share of $0.54.

“I am pleased with our results during the first quarter, which exceeded our expectations,” said Chris Barry, chief executive officer of NuVasive. “Despite COVID-19 and macro-economic pressure in the first half of the quarter, our performance reflects the strong health of our business and positions us well for continued growth. Looking ahead to the remainder of the year, we expect our novel technology to drive further differentiation with our surgeon partners. Led by the X360 and C360 systems—including the Simplify Cervical Disc—and the Pulse platform, we are committed to executing on our near- and long-term strategic plan to drive value for our stakeholders.”

First Quarter 2022 Results
NuVasive reported total net sales of $290.8 million, a 7.2% increase as reported and a 9.1% increase on a constant currency basis, compared to $271.2 million in the prior year period. First quarter 2022 total net sales were driven by higher procedure volume in the U.S., and strong international performance.

For the first quarter of 2022, GAAP gross profit was $211.7 million, compared to $199.4 million in the prior year period. GAAP gross margin was 72.8%, compared to 73.5% in the prior year period. On a non-GAAP basis, gross profit was $212.2 million, compared to $199.6 million in the prior year period. Non-GAAP gross margin was 73.0%, compared to 73.6% in the prior year period.
The Company reported GAAP net income of $19.2 million, or diluted earnings per share of $0.35, compared to a GAAP net loss of ($7.5) million, or diluted loss per share of ($0.15) in the prior year period. On a non-GAAP basis, the Company reported net income of $28.2 million, or diluted earnings per share of $0.54, compared to non-GAAP net income of $19.0 million, or diluted earnings per share of $0.37 in the prior year period.

Cash and cash equivalents were $205.3 million as of March 31, 2022.



Updated Annual Financial Guidance for 2022
The Company updated its financial guidance for the full year 2022 based on the current business outlook to raise the lower end of its guidance range for net sales growth:

Prior guidance range **Current guidance range **
GAAPNon-GAAPGAAPNon-GAAP
Net sales growth (reported)*5.0%-8.0%5.0%-8.0%6.0%-8.0%6.0%-8.0%
Net sales growth (constant currency)*

6.0%-9.0%

7.5%-9.5%
Operating margin6.7%-8.2%13.0%-14.5%6.3%-7.8%13.0%-14.5%
Diluted earnings per share$0.71-$1.01$2.05-$2.35$1.05-$1.35***$2.15-$2.45
* Reflects expectations for net sales growth in 2022 compared to 2021. Net sales growth on a constant currency basis excludes year over year currency fluctuations, which the Company currently expects to create a negative impact of approximately 150 basis points in 2022.
** Prior guidance reflects the range provided February 23, 2022. Current guidance reflects the range provided May 4, 2022..
*** Reflects updated expectations for the impact on diluted EPS of applying the if-converted method to the Company’s convertible notes. Additionally, includes the impact of net unrealized foreign currency exchange gains incurred as of March 31, 2022, and does not assume future net unrealized gains or losses related to foreign currency exchange rates.

A full reconciliation of GAAP to non-GAAP financial measures can be found in the tables of this press release and on the Investor Relations section of our website.

Conference Call and Webcast
The Company will hold a conference call on Wednesday, May 4, 2022, at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its financial performance for the first quarter of 2022. 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 and supplemental financial information of our first quarter 2022 financial results will be available on the Investor Relations page of our website at www.nuvasive.com. An audio replay of the call will be available until May 11, 2022. The replay dial-in numbers are 1-844-512-2921 for domestic callers and 1-412-317-6671 for international callers. Please use pin number: 13728729. In addition, the webcast will be archived on NuVasive's website.

About NuVasive
NuVasive, Inc. (NASDAQ: NUVA) is the leader in spine technology innovation, with a mission to transform surgery, advance care, and change lives. The Company's less-invasive, procedurally integrated surgical solutions are designed to deliver reproducible and clinically proven outcomes. The Company's comprehensive procedural portfolio includes surgical access instruments, spinal implants, fixation systems, biologics, software for surgical planning, navigation and imaging solutions, magnetically adjustable implant systems for spine and orthopedics, and intraoperative neuromonitoring technology and service offerings. With more than $1 billion in net sales, NuVasive operates in more than 50 countries serving surgeons, hospitals, and patients. For more information, please visit www.nuvasive.com.

Reconciliation of GAAP to Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP net income (loss), and non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures exclude amortization of intangible assets, business transition costs, purchased in-process research and development, one-time restructuring charges, non-cash purchase accounting adjustments, inventory charges associated with product withdrawals, certain foreign currency impacts and related items in connection with acquisitions, investments and divestitures, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses from strategic investments, gains and losses from changes in fair value of derivatives, non-cash interest expense (excluding debt issuance cost) and other significant one-time items. Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency utilizes 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, business transition costs, purchased in-process research and development, one-time restructuring charges, non-cash purchase accounting adjustments, inventory charges associated with product withdrawals, certain foreign currency impacts and related items in connection with acquisitions, investments and divestitures, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses on strategic investments, gains and losses from changes in fair value of derivatives 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 in the financial tables accompanying this press release are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measure.

Forward-Looking Statements
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 2022, as well as projections for 2022 financial guidance and expectations regarding longer-term financial performance. The Company’s results for the first quarter of 2022 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 2022 financial guidance and expectations regarding longer-term financial performance represent 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 which contribute to the uncertain nature of these statements include, among others, the impact of the COVID-19 pandemic on the Company's business and financial results; the Company’s ability to maintain operations to support its customers and patients in the near-term and to capitalize on future growth opportunities; risks associated with acceptance of the Company's surgical products and procedures by spine surgeons and hospitals, development and acceptance of new products or product enhancements, clinical and statistical verification of the benefits achieved via the use of NuVasive's products, the Company's ability to adequately manage inventory as it continues to release new products, its ability to recruit and retain management and key personnel, and the 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.
# # #

Investor contact:
Juliet C. Cunningham
NuVasive, Inc.
858-210-2129
investorrelations@nuvasive.com

Media contact:
Michael Farrington
NuVasive, Inc.
858-909-1940
media@nuvasive.com




NuVasive, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended March 31, 2022
(unaudited)20222021
Net sales:
Products$265,973 $245,451 
Services24,789 25,798 
Total net sales290,762 271,249 
Cost of sales (excluding below amortization of intangible assets):
Products57,183 53,302 
Services21,914 18,509 
Total cost of sales79,097 71,811 
Gross profit211,665 199,438 
Operating expenses:
Selling, general and administrative160,281 145,954 
Research and development23,358 22,224 
Amortization of intangible assets13,032 13,337 
Business transition costs3,060 5,584 
Total operating expenses199,731 187,099 
Interest and other income (expense), net:
Interest income43 87 
Interest expense(4,379)(8,030)
Other income (expense), net16,244 (12,526)
Total interest and other income (expense), net11,908 (20,469)
Income (loss) before income taxes23,842 (8,130)
Income tax (expense) benefit(4,641)620 
Consolidated net income (loss)$19,201 $(7,510)
Net income (loss) per share:
Basic$0.37 $(0.15)
Diluted$0.35 $(0.15)
Weighted average shares outstanding:
Basic51,829 51,379 
Diluted62,579 51,379 




NuVasive, Inc.
Consolidated Balance Sheets
(in thousands, except par value data)
March 31, 2022December 31, 2021
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$205,312 $246,091 
Accounts receivable, net of allowances of $20,707 and $21,064, respectively231,425 214,398 
Inventory, net324,403 315,845 
Prepaid income taxes5,536 5,425 
Prepaid expenses and other current assets25,538 20,665 
Total current assets792,214 802,424 
Property and equipment, net313,689 303,664 
Intangible assets, net233,301 242,675 
Goodwill636,703 633,467 
Operating lease right-of-use assets100,656 102,987 
Deferred tax assets61,294 48,003 
Restricted cash and investments1,494 1,494 
Other assets21,150 19,361 
Total assets$2,160,501 $2,154,075 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities$115,674 $115,614 
Contingent consideration liabilities66,054 7,986 
Accrued payroll and related expenses55,848 66,596 
Operating lease liabilities10,043 9,867 
Income tax liabilities1,110 828 
Total current liabilities248,729 200,891 
Long-term senior convertible notes886,793 884,984 
Deferred tax liabilities12,807 3,049 
Operating lease liabilities109,093 111,592 
Contingent consideration liabilities73,762 139,824 
Other long-term liabilities17,396 18,528 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000 shares authorized, none outstanding— — 
Common stock, $0.001 par value; 150,000 shares authorized at March 31, 2022 and December 31, 2021; 58,747 shares issued and 51,949 outstanding at March 31, 2022; 58,469 shares issued and 51,769 outstanding at December 31, 202163 63 
Additional paid-in capital1,441,783 1,434,976 
Accumulated other comprehensive loss(11,741)(7,792)
Retained earnings64,909 45,708 
Treasury stock at cost; 6,798 shares and 6,700 shares at March 31, 2022 and December 31, 2021, respectively(683,093)(677,748)
Total equity811,921 795,207 
Total liabilities and equity$2,160,501 $2,154,075 



NuVasive, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Three Months ended March 31,
(unaudited)20222021
Operating activities:
Consolidated net income (loss)$19,201 $(7,510)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization36,801 36,432 
Deferred income taxes(3,891)(3,535)
Amortization of non-cash interest1,963 2,660 
Stock-based compensation6,807 7,709 
Net (gain) loss from foreign currency adjustments(15,988)12,547 
Reserves on current assets(1,864)4,002 
Other non-cash adjustments1,365 6,397 
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable(17,216)(1,544)
Inventory(3,215)(12,464)
Prepaid expenses and other current assets805 (2,057)
Accounts payable and accrued liabilities(7,956)(5,663)
Accrued payroll and related expenses(10,491)(4,271)
Income taxes218 (1,064)
Net cash provided by operating activities6,539 31,639 
Investing activities:
Acquisition of Simplify Medical, net of cash acquired— (149,408)
Purchases of intangible assets— (1,200)
Purchases of property and equipment(33,223)(25,070)
Proceeds from sales of marketable securities— 127,023 
Proceeds from maturities of marketable securities— 46,000 
Other investing activities— — 
Other investing activities(947)— 
Net cash used in investing activities(34,170)(2,655)
Financing activities:
Proceeds from the issuance of common stock— — 
Payment of contingent consideration(6,839)(3)
Purchases of treasury stock(5,345)(55)
Payments upon settlement of senior convertible notes— (649,426)
Other financing activities(521)(341)
Net cash used in financing activities(12,705)(649,825)
Effect of exchange rate changes on cash(443)(2,171)
Decrease in cash, cash equivalents and restricted cash(40,779)(623,012)
Cash, cash equivalents and restricted cash at beginning of period247,585 858,363 
Cash, cash equivalents and restricted cash at end of period$206,806 $235,351 



For the Three Months Ended March 31, 2022
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited - in thousands, except per share data)
Gross ProfitOperating ProfitNet Income
Diluted EPS 7
Diluted WASO 7
Net Income to Adjusted EBITDA
Reported GAAP$211,665 $11,934 $19,201 $0.35 $62,579 $19,201 
% of net sales72.8 %4.1 %
Non-cash purchase accounting adjustments on acquisitions 1
557 557 557 557 
Amortization of intangible assets13,032 13,032 
Litigation related expenses and settlements 2
3,201 3,201 3,201 
Business transition costs 3
3,060 3,060 3,060 
European medical device regulation 4
2,191 2,191 2,191 
Non-cash acquisition-related foreign currency impacts 5
(9,318)(9,318)
Tax effect of adjustments 6
(3,768)
Interest expense/(income), net4,336 
Income tax expense4,641 
Depreciation and amortization36,801 
Non-cash stock-based compensation6,807 
Adjusted Non-GAAP$212,222 $33,975 $28,156 $0.54 $52,410 $71,477 
% of net sales73.0 %11.7 %24.6 %
1Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.
2Represents expenses associated with certain ongoing litigation matters, including infringement of the Company’s intellectual property.
3Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.
4Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.
5Represents non-cash adjustments to acquisition-related intercompany balances and contingent consideration liabilities held in a foreign currency.
6Represents the impact from tax affecting the adjustments above at their statutory tax rate.
7GAAP diluted EPS includes the dilutive impact of applying the if-converted method to the Company's convertible notes. Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.



For the Three Months Ended March 31, 2021
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited - in thousands, except per share data)
Gross ProfitOperating ProfitNet (Loss) Income
Diluted EPS 7
Diluted WASO 7
Net (Loss) to Adjusted EBITDA
Reported GAAP$199,438 $12,339 $(7,510)$(0.15)$51,379 $(7,510)
% of net sales73.5 %4.5 %
Non-cash purchase accounting adjustments on acquisitions 1
186 186 186 186 
Amortization of intangible assets13,337 13,337 
Litigation related expenses and settlements 2
1,961 1,961 1,961 
Business transition costs 3
5,584 5,584 5,584 
European medical device regulation 4
1,875 1,875 1,875 
Non-cash acquisition-related foreign currency impacts 5
9,848 9,848 
Tax effect of adjustments 6
(6,251)
Interest expense/(income), net7,943 
Income tax benefit(620)
Depreciation and amortization36,432 
Non-cash stock-based compensation7,709 
Adjusted Non-GAAP$199,624 $35,282 $19,030 $0.37 $52,069 $63,408 
% of net sales73.6 %13.0 %23.4 %
1Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold.
2Represents expenses associated with certain ongoing litigation matters, including infringement of the Company’s intellectual property.
3Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities.
4Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.
5Represents non-cash adjustments to acquisition-related intercompany balances and contingent consideration liabilities held in a foreign currency.
6Represents the impact from tax affecting the adjustments above at their statutory tax rate.
7GAAP diluted EPS includes the dilutive impact of applying the if-converted method to the Company's convertible notes. Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.



Full Year 2022 Financial Guidance
Reconciliation of GAAP to Non-GAAP EPS
2022 Guidance Range 1, 2
2021 Actuals 1
PriorCurrent
GAAP diluted earnings (loss) per share$(1.24) $0.71-1.01 $1.05-1.35
Impact of dilution 3
0.02 ~0.15 ~0.05
Amortization of intangible assets1.10 ~1.05 ~1.00
European medical device regulation 4
0.16 ~0.30 ~0.30
Inventory charges associated with product withdrawal 5
0.27— — 
Other 6
1.83 ~0.14 ~0.05
Tax effect of adjustments 7
(0.45) ~(0.30) ~(0.30)
Non-GAAP diluted earnings per share$1.68 $2.05-2.35 $2.15-2.45
1Data has been intentionally rounded and may not sum.
2Prior guidance reflects the range provided February 23, 2022. Current guidance reflects the range provided May 4, 2022.
3GAAP diluted EPS includes the dilutive impact of applying the if-converted method to the Company's convertible notes. Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements.
4Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.
5Represents charges for inventory write-offs associated with the Company’s product withdrawals. During the third quarter of 2021, the Company made a determination to withdraw certain products marketed and sold by its wholly-owned subsidiary, NuVasive Specialized Orthopedics.
6Includes costs primarily associated with litigation related expenses and settlements, non-cash acquisition-related foreign currency impacts, non-cash purchase accounting adjustments on acquisitions, net gain on strategic investments and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables within respective earnings releases for further detail.
7Represents the impact from tax affecting the adjustments above at their statutory tax rate.
Full Year 2022 Financial Guidance
Reconciliation of GAAP to Non-GAAP Operating Margin %
2022 Guidance Range 1, 2
2021 Actuals 1
PriorCurrent
GAAP Operating Margin %(1.1)%6.7%-8.2%6.3%-7.8%
Amortization of intangible assets5.0 %~4.5%~4.4%
European medical device regulation 3
0.7 %~1.3%~1.3%
Inventory charges associated with product withdrawal 4
1.3 %— — 
Other 5
6.8 %~0.5%~1.0%
Non-GAAP Operating Margin %12.8 %13.0%-14.5%13.0%-14.5%
1Data has been intentionally rounded and may not sum.
2Prior guidance reflects the range provided February 23, 2022. Current guidance reflects the range provided May 4, 2022.
3Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation.
4Represents charges for inventory write-offs associated with the Company’s product withdrawals. During the third quarter of 2021, the Company made a determination to withdraw certain products marketed and sold by its wholly-owned subsidiary, NuVasive Specialized Orthopedics.
5Includes costs primarily associated with litigation related expenses and settlements, non-cash purchase accounting adjustments on acquisitions, and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables within respective earnings releases for further detail.