Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 18, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | NUVASIVE INC | ||
Entity Central Index Key | 0001142596 | ||
Entity Current Reporting Status | Yes | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | NUVA | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock, Shares Outstanding | 52,148,804 | ||
Entity Shell Company | false | ||
Entity File Number | 000-50744 | ||
Entity Tax Identification Number | 33-0768598 | ||
Entity Address, Address Line One | 7475 Lusk Boulevard | ||
Entity Address, City or Town | San Diego | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92121 | ||
City Area Code | (858) | ||
Local Phone Number | 909-1800 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Entity Interactive Data Current | Yes | ||
Security Exchange Name | NASDAQ | ||
Entity Incorporation, State or Country Code | DE | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Public Float | $ 3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 213,034 | $ 117,840 |
Accounts receivable, net of allowances of $17,019 and $16,171, respectively | 211,532 | 196,487 |
Inventory, net | 312,419 | 273,244 |
Prepaid income taxes | 10,434 | 16,905 |
Prepaid expenses and other current assets | 16,917 | 13,733 |
Total current assets | 764,336 | 618,209 |
Property and equipment, net | 266,318 | 238,841 |
Intangible assets, net | 201,092 | 252,048 |
Goodwill | 561,064 | 561,366 |
Operating lease right-of-use assets | 66,932 | |
Deferred tax assets | 9,162 | 5,263 |
Restricted cash and investments | 1,494 | 2,395 |
Other assets | 14,892 | 29,737 |
Total assets | 1,885,290 | 1,707,859 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 97,160 | 107,292 |
Contingent consideration liabilities | 15,727 | 7,560 |
Accrued payroll and related expenses | 86,458 | 59,960 |
Operating lease liabilities | 5,567 | |
Income tax liabilities | 2,005 | 4,648 |
Total current liabilities | 206,917 | 179,460 |
Senior Convertible Notes | 623,298 | 602,526 |
Deferred and income tax liabilities | 14,655 | 4,964 |
Operating lease liabilities | 73,153 | |
Other long-term liabilities | 52,060 | 86,384 |
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 December 31, 2019 and December 31, 2018, 57,524,658 and 56,648,077 issued and outstanding at December 31, 2019 and December 31, 2018, respectively | 62 | 61 |
Additional paid-in capital | 1,429,854 | 1,397,829 |
Accumulated other comprehensive loss | (9,418) | (8,628) |
Retained earnings | 82,475 | 17,241 |
Treasury stock at cost; 5,379,536 shares and 5,116,496 shares at December 31, 2019 and December 31, 2018, respectively | (587,766) | (571,978) |
Total equity | 915,207 | 834,525 |
Total liabilities and equity | $ 1,885,290 | $ 1,707,859 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 17,019 | $ 16,171 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 57,524,658 | 56,648,077 |
Common stock, shares outstanding | 57,524,658 | 56,648,077 |
Treasury stock at cost, shares | 5,379,536 | 5,116,496 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | |||
Total revenue | $ 1,168,070 | $ 1,101,714 | $ 1,026,685 |
Cost of revenue (excluding below amortization of intangible assets) | |||
Total cost of revenue | 312,357 | 311,159 | 268,441 |
Gross profit | 855,713 | 790,555 | 758,244 |
Operating expenses: | |||
Sales, marketing and administrative | 611,181 | 575,836 | 539,507 |
Research and development | 72,380 | 61,695 | 50,425 |
Amortization of intangible assets | 51,097 | 50,670 | 48,039 |
Purchase of in-process research and development | 8,913 | ||
Litigation liability loss | 27,800 | 4,500 | |
Business transition costs | (1,995) | 11,473 | 4,287 |
Total operating expenses | 732,663 | 736,387 | 646,758 |
Interest and other expense, net: | |||
Interest income | 1,917 | 586 | 440 |
Interest expense | (38,525) | (37,857) | (38,021) |
Other (expense) income, net | (5,925) | (8,174) | (1,542) |
Total interest and other expense, net | (42,533) | (45,445) | (39,123) |
Income before income taxes | 80,517 | 8,723 | 72,363 |
Income tax (expense) benefit | (15,283) | 3,756 | 7,492 |
Consolidated net income | 65,234 | 12,479 | 79,855 |
Add back net loss attributable to non-controlling interests | (1,743) | ||
Net income attributable to NuVasive, Inc. | $ 65,234 | $ 12,479 | $ 81,598 |
Net income per share attributable to NuVasive, Inc.: | |||
Basic | $ 1.26 | $ 0.24 | $ 1.60 |
Diluted | $ 1.23 | $ 0.24 | $ 1.48 |
Weighted average shares outstanding: | |||
Basic | 51,956 | 51,382 | 50,874 |
Diluted | 53,160 | 52,355 | 55,193 |
Product [Member] | |||
Revenue | |||
Total revenue | $ 1,044,611 | $ 986,457 | $ 938,971 |
Cost of revenue (excluding below amortization of intangible assets) | |||
Total cost of revenue | 232,474 | 234,509 | 207,307 |
Service [Member] | |||
Revenue | |||
Total revenue | 123,459 | 115,257 | 87,714 |
Cost of revenue (excluding below amortization of intangible assets) | |||
Total cost of revenue | $ 79,883 | $ 76,650 | $ 61,134 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Consolidated net income | $ 65,234 | $ 12,479 | $ 79,855 |
Other comprehensive (loss) income: | |||
Unrealized loss on marketable securities, net of tax | (1) | ||
Translation adjustments, net of tax | (790) | (1,695) | 3,699 |
Other comprehensive (loss) income: | (790) | (1,695) | 3,698 |
Total consolidated comprehensive income | 64,444 | 10,784 | 83,553 |
Net loss attributable to non-controlling interests | 1,743 | ||
Comprehensive income attributable to NuVasive, Inc. | $ 64,444 | $ 10,784 | $ 85,296 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings (Accumulated Deficit) [Member] | Treasury Stock [Member] | Total Nuvasive, Inc. Stockholders' Equity [Member] | Non-controlling Interest [Member] |
Beginning Balance at Dec. 31, 2016 | $ 702,194 | $ 55 | $ 1,010,238 | $ (10,631) | $ (65,189) | $ (237,867) | $ 696,606 | $ 5,588 |
Beginning Balance, Shares at Dec. 31, 2016 | 55,185 | (4,759) | ||||||
Adjustment for modified retrospective adoption of accounting standard | (11,647) | (11,647) | (11,647) | |||||
Issuance of common stock under employee and director stock option and purchase plans | (1,877) | $ 1 | 15,569 | $ (17,447) | (1,877) | |||
Issuance of common stock under employee and director stock option and purchase plans, Shares | 743 | (243) | ||||||
Stock-based compensation expense | 22,062 | 22,062 | 22,062 | |||||
Issuance of common stock in connection with royalty milestone achievement | 5,131 | 5,131 | 5,131 | |||||
Issuance of common stock in connection with royalty milestone achievement, Shares | 90 | |||||||
Settlement of warrants | $ 3 | (3) | ||||||
Settlement of warrants, Shares | 3,657 | |||||||
Settlement of convertible note hedge | 310,553 | $ (310,553) | ||||||
Settlement of convertible note hedge, Shares | (4,161) | |||||||
Equity component of convertible note settlement | $ 1 | (1) | ||||||
Equity component of convertible note settlement, Shares | 650 | |||||||
Consolidated net income attributable to NuVasive, Inc. | 81,598 | 81,598 | 81,598 | |||||
Net loss attributable to non-controlling interests | (1,743) | (1,743) | ||||||
Other comprehensive income (loss) | 3,698 | 3,698 | 3,698 | |||||
Ending Balance at Dec. 31, 2017 | 799,416 | $ 60 | 1,363,549 | (6,933) | 4,762 | $ (565,867) | 795,571 | 3,845 |
Ending Balance, Shares at Dec. 31, 2017 | 56,164 | (5,002) | ||||||
Issuance of common stock under employee and director stock option and purchase plans | 5,199 | $ 1 | 11,309 | $ (6,111) | 5,199 | |||
Issuance of common stock under employee and director stock option and purchase plans, Shares | 466 | (114) | ||||||
Stock-based compensation expense | 27,353 | 27,353 | 27,353 | |||||
Issuance of common stock in connection with royalty milestone achievement | 4,719 | 4,719 | 4,719 | |||||
Issuance of common stock in connection with royalty milestone achievement, Shares | 18 | |||||||
Consolidated net income attributable to NuVasive, Inc. | 12,479 | 12,479 | 12,479 | |||||
Consideration paid in excess of non-controlling interests | (9,101) | (9,101) | (9,101) | |||||
Net loss attributable to non-controlling interests | (3,845) | $ (3,845) | ||||||
Other comprehensive income (loss) | (1,695) | (1,695) | (1,695) | |||||
Ending Balance at Dec. 31, 2018 | 834,525 | $ 61 | 1,397,829 | (8,628) | 17,241 | $ (571,978) | $ 834,525 | |
Ending Balance, Shares at Dec. 31, 2018 | 56,648 | (5,116) | ||||||
Issuance of common stock under employee and director stock option and purchase plans | (8,063) | $ 1 | 7,724 | $ (15,788) | ||||
Issuance of common stock under employee and director stock option and purchase plans, Shares | 805 | (264) | ||||||
Stock-based compensation expense | 24,096 | 24,096 | ||||||
Issuance of common stock in connection with royalty milestone achievement, Shares | 72 | |||||||
Consolidated net income attributable to NuVasive, Inc. | 65,234 | 65,234 | ||||||
Consideration paid in excess of non-controlling interests | 205 | 205 | ||||||
Other comprehensive income (loss) | (790) | (790) | ||||||
Ending Balance at Dec. 31, 2019 | $ 915,207 | $ 62 | $ 1,429,854 | $ (9,418) | $ 82,475 | $ (587,766) | ||
Ending Balance, Shares at Dec. 31, 2019 | 57,525 | (5,380) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | |||
Consolidated net income | $ 65,234 | $ 12,479 | $ 79,855 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 135,593 | 129,765 | 121,176 |
Purchase of in-process research and development | 8,913 | ||
Deferred income taxes | 5,844 | (11,396) | (12,838) |
Amortization of non-cash interest | 21,288 | 20,123 | 20,538 |
Stock-based compensation | 30,297 | 25,673 | 22,391 |
Net loss on strategic investments | 4,767 | 4,421 | |
Reserves on current assets | 18,382 | 14,834 | 5,622 |
Other non-cash adjustments | 5,650 | 22,186 | 15,266 |
Changes in operating assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable | (16,407) | 4,562 | (26,610) |
Inventory | (54,872) | (38,646) | (35,867) |
Prepaid expenses and other current assets | (4,622) | (1,280) | (12,681) |
Accounts payable and accrued liabilities | (3,253) | 22,035 | (4,263) |
Contingent consideration liabilities | (626) | (300) | (11,200) |
Accrued payroll and related expenses | 24,256 | 2,595 | 3,975 |
Litigation liability | (45) | 1,165 | 8,150 |
Income taxes | 3,804 | 2,054 | 3,455 |
Net cash provided by operating activities | 235,290 | 219,183 | 176,969 |
Investing activities: | |||
Acquisitions and investments | (4,100) | (55,266) | (62,370) |
Proceeds from other investments | 3,584 | ||
Purchases of intangible assets | (7,501) | (7,682) | (2,270) |
Purchases of property and equipment | (122,883) | (101,921) | (110,221) |
Net cash used in investing activities | (134,484) | (161,285) | (174,861) |
Financing activities: | |||
Proceeds from the issuance of common stock | 6,415 | 8,127 | 9,991 |
Payment of contingent consideration | (809) | (19,450) | (19,400) |
Purchase of treasury stock | (14,478) | (2,928) | (11,860) |
Repurchases of convertible notes | (63,317) | ||
Proceeds from revolving line of credit | 100,000 | 60,000 | |
Repayments on revolving line of credit | (100,000) | (60,000) | |
Other financing activities | 2,228 | (327) | (2,442) |
Net cash used in financing activities | (6,644) | (14,578) | (87,028) |
Effect of exchange rate changes on cash | 131 | (1,283) | 2,070 |
Increase (decrease) in cash, cash equivalents and restricted cash | 94,293 | 42,037 | (82,850) |
Cash, cash equivalents and restricted cash at beginning of period | 120,235 | 78,198 | 161,048 |
Cash, cash equivalents and restricted cash at end of period | 214,528 | 120,235 | 78,198 |
Supplemental disclosure of non-cash transactions: | |||
Issuance of common stock in connection with royalty milestone achievement | 4,719 | 5,131 | |
Supplemental cash flow information: | |||
Interest paid | 16,145 | 17,182 | 15,897 |
Income taxes paid | $ 5,828 | $ 5,510 | $ 1,459 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Statement Of Cash Flows [Abstract] | |||
Cash and cash equivalents | $ 213,034 | $ 117,840 | $ 72,803 |
Restricted cash, current | 3,901 | ||
Restricted cash, non-current | 1,494 | 2,395 | 1,494 |
Total cash, cash equivalents and restricted cash reported in the Consolidated Statements of Cash Flows | $ 214,528 | $ 120,235 | $ 78,198 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Significant Accounting Policies | 1. Organization and Significant Accounting Policies Description of Business NuVasive, Inc. (the “Company” or “NuVasive”) was incorporated in Delaware on July 21, 1997, and began commercializing its products in 2001. The Company’s principal product offering includes a minimally disruptive surgical platform called Maximum Access Surgery, or MAS. The MAS platform combines three categories of solutions that collectively minimize soft tissue disruption during spine fusion surgery, provide maximum visualization and are designed to enable safe and reproducible outcomes for the surgeon and the patient. The platform includes the Company’s proprietary software-driven nerve detection and avoidance systems and Intraoperative Monitoring (“IOM”) services and support; MaXcess, an integrated split-blade retractor system; and a wide variety of specialized implants and biologics. To assist with surgical procedures, the Company offers a technology platform called Integrated Global Alignment (“iGA”); in which products and computer assisted technology under the MAS platform help achieve more precise spinal alignment. The individual components of the MAS platform, and many of the Company’s products, can also be used in open or traditional spine surgery. The Company continues to focus research and development efforts to expand its MAS product platform and advance the applications of its unique technology into procedurally integrated surgical solutions. The Company dedicates significant resources toward training spine surgeons on its unique technology and products. The Company’s procedurally integrated solutions use innovative, technological advancements and the MAS platform to provide surgical efficiency, operative reliability, and procedural versatility. The Company offers a range of implants for spinal surgery, which include its porous titanium and polyetheretherketone (“PEEK”) implants under its Advanced Materials Science portfolio, fixation products such as customizable rods, plates and screws, bone allograft in patented saline packaging, allogeneic and synthetic biologics, and disposables used in IOM. The Company makes available MAS instrument sets, MaXcess and neuromonitoring systems to hospitals to facilitate surgeon access to the spine to perform restorative and fusion procedures using the Company’s implants and fixation products. The Company sells MAS instrument sets, MaXcess and neuromonitoring systems to hospitals, however, such sales are immaterial to the Company’s results of operations. The Company also designs and sells expandable growing rod implant systems that can be non-invasively lengthened following implantation with precise, incremental adjustments via an external remote controller using magnetic technology called MAGnetic External Control, or MAGEC, which allows for the minimally invasive treatment of early-onset and adolescent scoliosis. This technology is also the basis for the Company’s Precice limb lengthening system, which allows for the correction of long bone limb length discrepancy, as well as enhanced bone healing in patients that have experienced traumatic injury. The Company has developed a procedural solution for spine surgery that includes IOM services, iGA and hardware and software technology offerings. The Company has also invested in the development of capital equipment designed to further improve clinical and economic outcomes through proceduralization, including LessRay and Pulse. Revenue from the sale or lease of capital equipment does not make up a material portion of the Company’s total revenue. Basis of Presentation and Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned or controlled subsidiaries, collectively referred to as either NuVasive or the Company. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the respective parent entity, the Company records the fair value of the non-controlling interest at the acquisition date and classifies the amounts attributable to non-controlling interest separately in equity in the Company's Consolidated Financial Statements. Any subsequent changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has reclassified historically presented revenue and cost of revenue to conform to the current year presentation, which now reflects revenue and costs allocated to the Company’s product and service offerings. These reclassifications had no impact on previously reported results of operations. Additionally, as required by Accounting Standards Update 2014-09 Revenue from Contracts with Customers Revenue from Contracts with Customers Use of Estimates To prepare financial statements in conformity with generally accepted accounting principles (“GAAP”) accepted in the United States, management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement In September 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangible – Goodwill and Other – Internal-Use Software In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued Accounting Standards Update No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) Recently Adopted Accounting Standards In February 2016, the FASB issued Accounting Standards Update No. 2016-02 – Leases The Company adopted ASC 842 as of January 1, 2019, electing the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and did not restate prior periods. The Company elected the package of practical expedients permitted under the transition guidance. As a result of the adoption, the Company recorded right-of-use assets and liabilities of $62.8 million and $75.1 million, respectively, and their corresponding deferred tax assets and liabilities on its Consolidated Balance Sheet as of January 1, 2019. The adoption had no cumulative impact to retained earnings. See Note 6 to the Consolidated Financial Statements included in this Annual Report for further disclosure on the Company’s leasing arrangements. In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging Revenue Recognition In accordance with Accounting Standards Codification 606 Revenue from Contracts with Customers Revenue from IOM services is recognized in the period the service is performed for the amount of consideration expected to be received. Accounts Receivable and Related Valuation Accounts Accounts receivable in the accompanying Consolidated Balance Sheets are presented net of allowances for doubtful accounts. In addition, the Company establishes a liability for estimated sales returns and a reserve for price adjustments that are recorded as a reduction to revenue. The liability and reserve are maintained to account for the future product returns and price adjustments of products sold in the current period. Concentration of Credit Risk and Significant Customers Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, marketable securities and accounts receivable. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. The Company has a diverse customer base and no single customer represented greater than ten percent of sales or accounts receivable for any of the periods presented. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, restricted investments, derivatives, contingent consideration liabilities, accounts receivable, accounts payable, accrued expenses, and Senior Convertible Notes. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the years presented. Cash and Cash Equivalents The Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. Inventory Net inventory as of December 31, 2019 consisted of $298.7 million of finished goods, $6.4 million of work in progress and $7.3 million of raw materials. Net inventory as of December 31, 2018 consisted of $259.4 million of finished goods, $5.0 million of work in progress and $8.8 million of raw materials. Finished goods primarily consists of specialized implants, fixation products and disposables and are stated at the lower of cost or net realizable value determined by utilizing a standard cost method, which includes capitalized variances, which approximates the weighted average cost. Work in progress and raw materials represent the underlying material, and labor for work in progress, that ultimately yield finished goods upon completion and are subject to lower of cost or net realizable value. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary. Excess and Obsolete Inventory The Company provides an inventory reserve for estimated obsolescence and excess inventory based upon historical turnover and assumptions about future demand for its products and market conditions. The Company’s allograft products have shelf lives ranging from two to five years and are subject to demand fluctuations based on the availability and demand for alternative products. The Company’s inventory, which consists primarily of disposables, specialized implants and fixation products, is at risk of obsolescence following the introduction and development of new or enhanced products. The Company’s estimates and assumptions for excess and obsolete inventory are reviewed and updated on a quarterly basis. The estimates the Company uses for demand are also used for near-term capacity planning and inventory purchasing and are consistent with its revenue forecasts. Increases in the reserve for excess and obsolete inventory result in a corresponding charge to cost of products sold. Historically, the Company’s reserves have been adequate to cover losses. Goodwill and Intangible Assets The Company’s goodwill represents the excess of the cost over the fair value of net assets acquired from its business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including capitalized Intangible assets acquired in a business combination that are used for in-process research and development activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon reaching the end of the relevant research and development project, the Company will amortize the acquired IPR&D over its estimated useful life or expense the acquired in-process research and development should the research and development project be unsuccessful with no future alternative use. Goodwill and IPR&D are not amortized; however, they are assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. The goodwill or IPR&D are considered to be impaired if the Company determines that the carrying value of the reporting unit or IPR&D exceeds its respective fair value. The Company performs its goodwill impairment analysis at the reporting unit level, which aligns with the Company’s reporting structure and availability of discrete financial information. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections . Key assumptions for these projections include revenue growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The revenue and margin growth is based on increased sales of new and existing products as the Company maintains investments in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation, including timing and probability of regulatory approvals for Company products to be commercialized. The Company’s market capitalization is also considered as a part of its analysis. The Company’s annual evaluation for impairment of goodwill consists of one reporting unit. In accordance with the Company’s policy, the Company completed its most recent annual evaluation for impairment as of October 1, 2019 using the qualitative assessment and determined that no impairment existed. In addition, no indicators of impairments were noted through and consequently, no impairment charge has been recorded during the year. Intangible assets with a finite life, such as acquired technology, customer relationships, manufacturing know-how, licensed technology, supply agreements and certain trade names and trademarks, are amortized on a straight-line basis over their estimated useful life, ranging from 1 to 17 years. In determining the useful lives of intangible assets, the Company considers the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors. For technology based intangible assets, the Company considers the expected life cycles of products which incorporate the corresponding technology. Trademarks and trade names that are related to products are assigned lives consistent with the period in which the products bearing each brand are expected to be sold. The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company reduces the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. See Note 2 to the Consolidated Financial Statements included in this Annual Report for further disclosure on goodwill and intangible assets. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 2 to 20 years. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Leased property meeting certain financing lease criteria is capitalized under property and equipment, and the net present value of the related lease payments is recorded as a liability. Amortization of assets under financing leases is recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated future undiscounted cash flows relating to the asset are less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of an asset exceeds its fair value. Income Taxes The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. Based on the Company’s review, it concluded that it was more likely than not that it would be able to realize the future benefits of its domestic and foreign deferred tax assets, with the exceptions of California, Malta, Brazil and Colombia. This conclusion was based on historical and projected operating performance, as well as the Company’s expectation that its operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets well within the statutory carryover periods. Due to low state apportionment, large net operating losses and the generation of sizeable research credits in California, the Company concluded that it is not more likely than not that it will be able to utilize its California deferred tax assets. Therefore, the Company has maintained a full valuation allowance on its California deferred tax assets as of December 31, 2019. Due to a history of losses in Malta, Brazil and Colombia, and the lack of alternative sources of future taxable income, the Company has established a full valuation allowance against these entities’ deferred tax assets as of December 31, 2019. The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be required. See Note 8 to the Consolidated Financial Statements included in this Annual Report for further discussion on income taxes. Loss Contingencies An estimated loss contingency is accrued and disclosed in the Company’s financial statements if it is probable or disclosed if it is reasonably possible that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable and only discloses those matters it considers material to its overall financial position. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. The Company is involved in a number of legal actions arising in the normal course of business. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, that could require significant expenditures or result in lost revenues. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. See Note 10 and 11 to the Consolidated Financial Statements included in this Annual Report for further discussion on legal proceedings and investigations. Comprehensive Income Comprehensive income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income includes net of tax, unrealized gains or losses on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive loss were $9.4 million, $8.6 million, and $6.9 million at December 31, 2019, 2018, and 2017, respectively. Research and Development Research and development costs are expensed as incurred. To the extent the Company purchases research and development assets with a future alternative use the Company will capitalize and amortize the assets over its useful life. Product Shipment Costs Product shipment costs, included in sales, marketing and administrative expense in the accompanying Consolidated Statements of Operations, were $27.7 million, $25.4 million, and $24.0 million for the years ended December 31, 2019, 2018, and 2017, respectively. The majority of the Company’s shipping costs are associated with providing instrument sets to surgeons and hospitals for use in individual surgical procedures. Amounts billed to customers for shipping and handling of products are reflected in revenues and are not material for any period presented. Business Transition Costs The Company incurs which include severance, relocation, consulting, leasehold exit costs, third-party merger and acquisition costs, contingent consideration fair value adjustments and other costs directly associated with such activities. Contingent consideration is accrued based on the fair value of the expected payment, and such accruals are subject to increase or decrease based on assessment of the likelihood that the contingent consideration will be paid. If an accrual for contingent consideration decreases during a particular period, it results in a reduction of costs during such period. The Company incurred $(2.0) million of such costs during the year ended December 31, 2019 The Company incurred $11.5 million of such costs during the year ended December 31, 2018, which consisted primarily of various business transition activities, offset by $(1.5) million of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. During the year ended December 31, 2017, the Company incurred $4.3 million of such costs, which consisted primarily of acquisition and integration activities, offset by $(1.3) million of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. Stock-based Compensation Stock-based compensation expense for equity-classified awards, principally related to restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”), is measured at the grant date based on the estimated fair value of the award. The fair value of equity instruments that are expected to vest is recognized and amortized over the requisite service period. The Company has granted awards with up to five year graded or cliff vesting terms . The fair value of RSUs including PRSUs with pre-defined performance criteria pre-defined performance criteria is adjusted with the probability of achievement of such performance criteria at each period end Stock-based compensation expense is adjusted from the grant date to exclude expense for awards that are expected to be forfeited. The forfeiture estimate is adjusted as necessary through the vesting date so that full compensation cost is recognized only for awards that vest. The Company assesses the reasonableness of the estimated forfeiture rate at least annually, with any change to be made on a cumulative basis in the period the estimated forfeiture rates change. The Company considered its historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners as the basis to arrive at its estimated annual pre-vesting forfeiture rates. The Company estimates the fair value of stock options issued under its equity incentive plans and shares issued to shareowners under its employee stock purchase plan (“ESPP”) using a Black-Scholes option-pricing model on the date of grant. The Black-Scholes option-pricing model incorporates various and highly sensitive assumptions including expected volatility, expected term and risk-free interest rates. The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options and ESPP offering period which is derived from historical experience. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future . See Note 7 to the Consolidated Financial Statements included in this Annual Report for further discussion on stockholder equity and stock-based compensation. Net Income Per Share The Company computes basic net income per share using the weighted-average number of common shares outstanding during the period. Diluted net income per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, unvested RSUs, PRSUs (including those with performance and market conditions), warrants, and the shares to be issued upon the conversion of the Senior Convertible Notes. The contingently issuable shares are included in basic net income per share as of the date that all necessary conditions have been satisfied and are included in the denominator for dilutive calculation for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, ( in thousands, except per share data 2019 2018 2017 Numerator: Net income attributable to NuVasive, Inc. $ 65,234 $ 12,479 $ 81,598 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,956 51,382 50,874 Dilutive potential common stock outstanding: Stock options and ESPP 15 36 141 RSUs and PRSUs 658 760 1,083 Warrants — — 1,494 Senior Convertible Notes 531 177 1,601 Weighted average common shares outstanding for diluted 53,160 52,355 55,193 Basic net income per share attributable to NuVasive, Inc. $ 1.26 $ 0.24 $ 1.60 Diluted net income per share attributable to NuVasive, Inc. $ 1.23 $ 0.24 $ 1.48 The following weighted outstanding common stock equivalents were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Year Ended December 31, ( in thousands 2019 2018 2017 Stock options, ESPP, RSUs and PRSUs 115 162 147 Warrants 10,865 10,865 10,865 Senior Convertible Notes 5,433 5,433 2,716 Total 16,413 16,460 13,728 |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Details [Abstract] | |
Balance Sheet Details | 2. Balance Sheet Details Property and Equipment, net Property and equipment, net, consisted of the following: December 31, ( in thousands, except years Useful Life 2019 2018 Instrument sets 4 $ 381,310 $ 326,831 Machinery and equipment 5 to 7 66,482 58,585 Computer equipment and software 3 to 7 149,134 127,539 Leasehold improvements 2 to 15 29,542 32,973 Furniture and fixtures 3 to 7 8,931 8,961 Building and improvements 10 to 20 22,921 20,216 Land — 1,277 1,277 659,597 576,382 Less: accumulated depreciation and amortization (393,279 ) (337,541 ) $ 266,318 $ 238,841 Property and equipment mainly consisted of instrument sets, which surgeons and hospitals that purchase implants, biologics and disposables for use in individual surgical procedures. Depreciation expense was $80.8 million, $75.4 million, and $69.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Capitalized software costs include only those direct costs associated with the actual development or acquisition of computer software. At December 31, 2019 and 2018, the Company had $51.7 million and $40.6 million in unamortized capitalized software costs, respectively. Amortization expense related to capitalized software costs was $10.4 million, $10.6 million and $10.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. Goodwill and Intangible Assets Goodwill and intangible assets as of December 31, 2019 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (163,459 ) $ 108,289 Manufacturing know-how and trade secrets 13 30,798 (20,333 ) 10,465 Trade name and trademarks 9 25,500 (16,947 ) 8,553 Customer relationships 9 150,744 (76,959 ) 73,785 Total intangible assets subject to amortization 9 $ 478,790 $ (277,698 ) $ 201,092 Intangible assets not subject to amortization: Goodwill 561,064 Total goodwill and intangible assets, net $ 762,156 Goodwill and intangible assets as of December 31, 2018 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (131,730 ) $ 140,018 Manufacturing know-how and trade secrets 13 30,814 (17,926 ) 12,888 Trade name and trademarks 9 25,500 (13,901 ) 11,599 Customer relationships 9 147,021 (59,478 ) 87,543 Total intangible assets subject to amortization 9 $ 475,083 $ (223,035 ) $ 252,048 Intangible assets not subject to amortization: Goodwill 561,366 Total goodwill and intangible assets, net $ 813,414 Total expense related to the amortization of intangible assets which is recorded in either cost of goods sold or operating expenses in the Consolidated Statements of Operations depending on the functional nature of the intangible, was $54.8 million, $54.4 million and $51.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. The changes to goodwill are comprised of the following: ( in thousands December 31, 2018 Gross goodwill $ 569,666 Accumulated impairment loss (8,300 ) 561,366 Changes to gross goodwill Changes resulting from foreign currency fluctuations (302 ) (302 ) December 31, 2019 Gross goodwill 569,364 Accumulated impairment loss (8,300 ) $ 561,064 Total future amortization expense related to intangible assets subject to amortization at December 31, 2019 is set forth in the table below: ( in thousands 2020 $ 52,109 2021 50,222 2022 41,464 2023 17,708 2024 14,273 Thereafter through 2031 25,316 Total future amortization expense $ 201,092 Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: December 31, ( in thousands 2019 2018 Accrued expenses $ 63,163 $ 70,386 Accounts payable 11,827 8,799 Distributor commissions payable 7,983 8,194 Other taxes payable 6,501 9,359 Royalties payable 4,994 7,173 Other 2,692 3,381 Accounts payable and accrued liabilities $ 97,160 $ 107,292 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements The fair values of the Company’s assets and liabilities, including cash equivalents, marketable securities, restricted investments, derivatives, and contingent considerations are measured at fair value on a recurring basis. As of and , the Company held investments in securities classified as cash equivalents. During the periods presented, the Company did not hold any such investments that were in a significant unrealized loss position and no impairment charges were recorded on such investments. Realized gains and losses and interest income related to marketable securities were immaterial during all periods presented. Quoted Price in Significant Other Significant Active Market Observable Inputs Unobservable ( in thousands Total (Level 1) (Level 2) Inputs (Level 3) December 31, 2019 Cash equivalents: Money market funds $ 151,750 $ 151,750 $ — $ — Total cash equivalents $ 151,750 $ 151,750 $ — $ — December 31, 2018 Cash equivalents: Money market funds $ 56,000 $ 56,000 $ — $ — Total cash equivalents $ 56,000 $ 56,000 $ — $ — The carrying amounts of certain financial instruments such as cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other current liabilities as of December 31, 2019 and 2018 approximate their related fair values due to the short-term maturities of these instruments. The fair value of certain financial instruments was measured and classified within Level 1 of the fair value hierarchy based on quoted prices. Certain financial instruments classified within Level 2 of the fair value hierarchy include the types of instruments that trade in markets that are not considered to be active, but are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The Company did not hold any financial instruments classified within Level 2 of the fair value hierarchy during the periods presented. Foreign Currency and Derivative Financial Instruments To manage foreign currency exposure risks, the Company uses derivatives for activities in entities that have short-term intercompany receivables and payables denominated in a currency other than the entity’s functional currency. The fair value is based on a quoted market price (Level 1). The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. Some of the Company’s reporting entities conduct a portion of their business in currencies other than the entity’s functional currency. These transactions give rise to receivables and payables that are denominated in currencies other than the entity’s functional currency. The value of these receivables and payables is subject to changes in currency exchange rates from the point at which the transactions are originated until the settlement in cash. Both realized and unrealized gains and losses in the value of these receivables and payables are included in the determination of net income. Net currency exchange losses, which includes gains and losses from derivative instruments, were $0.8 million, $3.7 million and $0.9 million for the years ended December 31, 2019, 2018 and 2017, respectively, and are included in other (expense) income, net in the Consolidated Statements of Operations. A s of December 31, 2019, 2018, and 2017 a notional principal amount of $26.9 million, $26.8 million, and $14.3 million respectively, was outstanding to hedge currency risk relative to foreign receivables and payables. Derivative instrument net gains (losses) on the Company’s forward exchange contracts were $0.4 million, $0.5 million, and $(1.9) million for the years ended December 31, 2019, 2018 and 2017, respectively, and are included in other (expense) income, net in the Consolidated Statements of Operations. December 31, 2019 December 31, 2018 The Company’s currency exposures vary, but are primarily concentrated in the pound sterling the Australian dollar, the Brazilian real, the Singapore dollar, and the yen The Company does not use derivative financial instruments for speculation or trading purposes or for activities other than risk management. The Company does not require and is not required to pledge collateral for these financial instruments and does not carry any master netting arrangements to mitigate the credit risk. Fair Value of Senior Convertible Notes The fair value, based on a quoted market price (Level 1), of the Company’s outstanding Senior Convertible Notes due 2021 at December 31, 2019 and December 31, 2018 was approximately $869.3 million and $684.8 million, respectively. See Note 5 to the Consolidated Financial Statements included in this Annual Report for further discussion on the carrying value of the notes. Contingent Consideration Liabilities The fair value of contingent consideration liabilities assumed in business combinations is recorded as part of the purchase price consideration of the acquisition, and is determined using a discounted cash flow model or probability simulation model. The significant inputs of such models are not observable in the market, such as certain financial metric growth rates, volatility rates, projections associated with the applicable milestone, the interest rate, and the related probabilities and payment structure in the contingent consideration arrangement. Fair value adjustments to contingent consideration liabilities are recorded through operating expenses in the Consolidated Statement of Operations. Contingent consideration arrangements assumed by an asset purchase will be measured and accrued when such contingency is resolved. Contingent consideration liabilities were $42.6 million December 31, 2019 December 31, 2018 The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3): ( in thousands 2019 2018 Fair value measurement at January 1 $ 50,410 $ 67,941 Contingent consideration liability recorded upon acquisition — 3,543 Change in fair value measurement (6,297 ) (1,517 ) Changes resulting from foreign currency fluctuations (119 ) 193 Contingent consideration paid or settled (1,435 ) (19,750 ) Fair value measurement at December 31 $ 42,559 $ 50,410 During the year ended December 31, 2018, the Company paid $19.0 million in outstanding milestone obligations associated with the LessRay acquisition, of which $9.0 million related to the achievement of a commercial milestone, and $10.0 million related to the achievement of a regulatory approval milestone. Of the $19.0 million, $18.7 million represented the initial purchase price allocation and is presented as a cash outflow for financing activities on the Consolidated Statement of Cash Flows, and the remaining $0.3 million represented fair value adjustments and is presented as a cash outflow in operating activities. Non-financial assets and liabilities measured on a nonrecurring basis Certain non-financial assets and liabilities are measured at fair value, usually with Level 3 inputs including the discounted cash flow method or cost method, on a nonrecurring basis in accordance with authoritative guidance. These include items such as nonfinancial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived assets measured at fair value for an impairment assessment. In general, non-financial assets, including goodwill, intangible assets and property and equipment, are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. The carrying values of the Company’s capital lease obligations approximated their estimated fair value as of December 31, 2019 and 2018. During the year ended December 31, 2019, the Company recorded a loss of $4.8 million on a strategic investment. The loss was recorded in other (expense) income, net in the Consolidated Statement of Operations included in this Annual Report. During the year ended December 31, 2018, the Company expensed $8.9 million for a purchased in-process research and development asset which had no future alternative use. The Company also recorded a net loss of $3.8 million on strategic investments during the year ended December 31, 2018. The net loss was recorded in other (expense) income, net in the Consolidated Statement of Operations included in this Annual Report. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2019 | |
Business Combination Description [Abstract] | |
Business Combinations | 4. Business Combinations The Company recognizes the assets acquired, liabilities assumed, and any non-controlling interest at fair value at the date of acquisition. Certain acquisitions contained contingent consideration arrangements that required the Company to assess the acquisition date fair value of the contingent consideration liabilities, which was recorded as part of the purchase price allocation of the acquisition, with subsequent fair value adjustments to the contingent consideration recorded in the Consolidated Statements of Operations. See Note 3 to the Consolidated Financial Statements included in this Annual Report for further discussion on contingent consideration liabilities. Acquisitions The Company has completed acquisitions that were not considered material, individually or collectively, to the overall Consolidated Financial Statements during the periods presented. These acquisitions have been included in the Consolidated Financial Statements from the respective dates of acquisition. The Company does not believe that collectively the acquisitions made during the periods presented are material to the overall financial statements. The Company finalizes the purchase price allocation of the assets and liabilities subject to valuation obtained in business combinations within one year from the acquisition date. While the Company does not expect material changes from the initial outcome of the valuation, certain assumptions and findings made at the date of acquisition could result in changes in the purchase price allocation. Variable Interest Entities The Company provides IOM services through various subsidiaries, which conduct business as NuVasive Clinical Services. In providing IOM services to surgeons and healthcare facilities across the United States, the Company maintains contractual relationships with several physician practices (“PCs”). In accordance with authoritative guidance, the Company has determined that the PCs are variable interest entities and therefore, the accompanying Consolidated Financial Statements include the accounts of the PCs from the date of acquisition. During the periods presented, the results of the PCs were immaterial to the Company’s financial statements. The creditors of the PCs have claims only to the assets of the PCs, which are not material, and the assets of the PCs are not available to the Company. |
Indebtedness
Indebtedness | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Indebtedness | 5. Indebtedness The carrying values of the Company’s Senior Convertible Notes due 2021 are as follows: ( in thousands December 31, 2019 December 31, 2018 2.25% Principal amount $ 650,000 $ 650,000 Unamortized debt discount (22,501 ) (40,117 ) Unamortized debt issuance costs (4,201 ) (7,357 ) Total Senior Convertible Notes $ 623,298 $ 602,526 2.25% Senior Convertible Notes due 2021 In March 2016, the Company issued $650.0 million principal amount of unsecured Senior Convertible Notes with a stated interest rate of 2.25% and a maturity date of March 15, 2021 (the "2021 Notes"). The net proceeds from the offering, after deducting initial purchasers' discounts and costs directly related to the offering, were approximately $634.1 million. The 2021 Notes may be settled in cash, stock, or a combination thereof, solely at the Company's discretion. It is the Company's current intent and policy to settle all conversions through combination settlement, which involves satisfying the principal amount outstanding with cash and any note conversion value over the principal amount in shares of the Company's common stock. The initial conversion rate of the 2021 Notes is 16.7158 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $59.82 per share, subject to adjustments. The Company uses the treasury share method for assumed conversion of the 2021 Notes to compute the weighted average shares of common stock outstanding for diluted earnings per share. The Company also entered into transactions for a convertible notes hedge (the "2021 Hedge") and warrants (the "2021 Warrants") concurrently with the issuance of the 2021 Notes. The cash conversion feature of the 2021 Notes required bifurcation from the notes and was initially accounted for as an equity instrument classified to stockholders’ equity, which resulted in recognizing $84.8 million in additional paid-in-capital during 2016. The interest expense recognized on the 2021 Notes during the year ended December 31, 2019 Prior to September 15, 2020, holders may convert their 2021 Notes only under the following conditions: (a) during any calendar quarter beginning June 30, 2016, if the reported sale price of the Company's common stock for at least 20 days out of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (b) during the five business day period in which the trading price of the 2021 Notes falls below 98% of the product of (i) the last reported sale price of the Company's common stock and (ii) the conversion rate on that date; and (c) upon the occurrence of specified corporate events, as defined in the 2021 Notes. From September 15, 2020 and until the close of business on the second scheduled trading day immediately preceding March 15, 2021, holders may convert their 2021 Notes at any time (regardless of the foregoing circumstances). Prior to March 20, 2019, the Company could not redeem the 2021 Notes. The Company may redeem the 2021 Notes, at its option, in whole or in part on or after March 20, 2019 until the close of business on the business day immediately preceding September 15, 2020 if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company delivers written notice of a redemption. The redemption price will be equal to 100% of the principal amount of such 2021 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date 2021 Hedge In connection with the offering of the 2021 Notes, the Company entered into the hedge transaction with the initial purchasers of the 2021 Notes and/or their affiliates (the "2021 Counterparties") entitling the Company to purchase up to 10,865,270 shares of the Company's common stock at an initial stock price of $59.82 per share, each of which is subject to adjustment. The cost of the 2021 Hedge was $111.2 million and accounted for as an equity instrument by recognizing $111.2 million in additional paid-in-capital during 2016. The 2021 Hedge will expire on March 15, 2021. The 2021 Hedge is expected to reduce the potential equity dilution upon conversion of the 2021 Notes if the daily volume-weighted average price per share of the Company's common stock exceeds the strike price of the 2021 Hedge. An assumed exercise of the 2021 Hedge by the Company is considered anti-dilutive since the effect of the inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. 2021 Warrants The Company sold warrants to the 2021 Counterparties to acquire up to 10,865,270 shares of the Company’s common stock. The 2021 Warrants will expire on various dates from June 2021 through December 2021 and may be settled in cash or net shares. It is the Company's current intent and policy to settle all conversions in shares of the Company’s common stock. The Company received $44.9 million in cash proceeds from the sale of the 2021 Warrants, which was recorded in additional paid-in-capital. The 2021 Warrants could have a dilutive effect on the Company's earnings per share to the extent that the price of the Company's common stock during a given measurement period exceeds the strike price of the 2021 Warrants, which is $80.00 per share. The Company uses the treasury share method for assumed conversion of its 2021 Warrants to compute the weighted average common shares outstanding for diluted earnings per share. Revolving Senior Credit Facility In April 2017, the Company entered into an Amended and Restated Credit Agreement (the “2017 Credit Agreement”) for a revolving senior credit facility (the “2017 Facility”), which replaced the previous Credit Agreement the Company had entered into in February 2016. The 2017 Credit Agreement provides for secured revolving loans, multicurrency loan options and letters of credit in an aggregate amount of up to $500.0 million. The 2017 Credit Agreement also contains an expansion feature, which allows the Company to increase the aggregate principal amount of the 2017 Facility provided the Company remains in compliance with the underlying financial covenants, including but not limited to, compliance with the consolidated interest coverage ratio and certain consolidated leverage ratios. The 2017 Facility matures in April 2022 (subject to an earlier springing maturity date), and includes a sublimit of $100.0 million for multicurrency borrowings, a sublimit of $50.0 million for the issuance of standby letters of credit, and a sublimit of $5.0 million for swingline loans. All assets of the Company and its material domestic subsidiaries are pledged as collateral under the 2017 Facility (subject to customary exceptions) pursuant to the term set forth in the Amended and Restated Security and Pledge Agreement (the “2017 Security Agreement”) executed in favor of the administrative agent by the Company. Each of the Company’s material domestic subsidiaries guarantees the 2017 Facility. In connection with the 2017 Facility, the Company incurred issuance costs which will be amortized over the term of the 2017 Facility. Borrowings under the 2017 Facility are used by the Company to provide financing for working capital and other general corporate purposes, including potential mergers and acquisitions. Borrowings under the 2017 Facility bear interest, at the Company’s option, at a rate equal to an applicable margin plus: (a) the applicable Eurocurrency Rate (as defined in the 2017 Credit Agreement), or (b) a base rate determined by reference to the highest of (1) the federal funds effective rate plus 0.50%, (2) the Bank of America prime rate, and (3) LIBOR for an interest period of one month plus 1.00%. The margin for the 2017 Facility ranges, based on the Company’s consolidated leverage ratio, from 0.00% to 1.00% in the case of base rate loans and from 1.00% to 2.00% in the case of Eurocurrency Rate loans. The 2017 Facility includes an unused line fee ranging, based on the Company’s consolidated leverage ratio, from 0.20% to 0.35% per annum on the revolving commitment. The 2017 Credit Agreement contains affirmative, negative, permitted acquisition and financial covenants, and events of default customary for financings of this type. The financial covenants require the Company to maintain ratios of consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) in relation to consolidated interest expense and consolidated debt, respectively, as defined in the 2017 Credit Agreement. The 2017 Facility grants the lenders preferred first priority liens and security interests in capital stock, intercompany debt and all of the present and future property and assets of the Company and each guarantor. The Company is currently in compliance with the 2017 Credit Agreement covenants. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments | 6. Commitments Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use asset upon commencement of the lease using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets as long-term assets. Right-of-use assets for financing leases are recorded within property and equipment, net in the Consolidated Balance Sheet. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheet. The Company recognizes lease expense on a straight-line basis over the lease term. In connection with certain operating leases, the Company has security deposits recorded and maintained as restricted cash totaling $1.5 million and $2.4 million as of December 31, 2019 and 2018 The Company leases office and storage facilities and equipment under various operating and financing lease agreements. The initial terms of these leases range from 1 to 17 years and generally provide for periodic rent increases, and renewal and termination options The Company’s lease agreements do not contain any material variable lease payments, residual value guarantees or material restrictive covenants. Certain leases require the Company to pay taxes, insurance and maintenance. Payments for the transfer of goods or services such as common area maintenance and utilities represent non-lease components. The Company elected the package of practical expedients and therefore does not separate non-lease components from lease components. The Company has future lease payment obligations of approximately $ 58.0 The table below summarizes the Company’s right-of-use assets and lease liabilities as of December 31, 2019 (in thousands, except years and rates) December 31, 2019 Assets Operating $ 66,932 Financing 1,453 Total leased assets $ 68,385 Liabilities Current: Operating $ 5,567 Financing 672 Long-term: Operating 73,153 Financing 905 Total lease liabilities $ 80,297 Supplemental non-cash information: Weighted-average remaining lease term (years) - operating leases 12.4 Weighted-average remaining lease term (years) - finance leases 2.3 Weighted-average discount rate - operating leases 7.3 % Weighted-average discount rate - finance leases 5.4 % The table below summarizes the Company’s lease costs, cash payments, and operating lease liabilities arising from obtaining right-of-use assets under its operating and financing lease obligations during the year ended December 31, 2019 (in thousands) December 31, 2019 Lease expense: Operating lease expense $ 11,859 Finance lease expense: Depreciation of right-of-use assets 441 Interest expense on lease liabilities 56 Total lease expense $ 12,356 Consolidated Statements of Cash Flows information: Operating cash flows used for operating leases $ 12,140 Operating cash flows used for financing leases 56 Financing cash flows used for financing leases 420 Total cash paid for amounts included in the measurement of lease liabilities $ 12,616 Supplemental non-cash information: Operating lease liabilities arising from obtaining right-of-use assets $ 86,134 Rent expense, including costs directly associated with the facility leases, was approximately $12.8 million and $12.6 million for the years ended December 31, 2018 and 2017, respectively. The Company’s future minimum annual lease payments under operating and financing leases at December 31, 2019 Financing Operating (in thousands) Leases Leases 2020 $ 744 $ 11,024 2021 645 10,522 2022 283 10,090 2023 14 9,708 2024 9 8,645 Thereafter — 75,277 Total minimum lease payments $ 1,695 $ 125,266 Less: amount representing interest (118 ) (46,546 ) Present value of obligations under leases 1,577 78,720 Less: current portion (672 ) (5,567 ) Long-term lease obligations $ 905 $ 73,153 Prior to the adoption of ASC 842, the Company’s future minimum annual lease payments under capital and operating leases, including payments for costs directly associated with the facility leases, for years ending after December 31, 2018 were as follows: Capital Operating (in thousands) Leases Leases 2019 $ 534 $ 13,750 2020 507 13,007 2021 244 10,954 2022 24 10,578 2023 5 10,515 Thereafter — 116,684 Total minimum lease payments $ 1,314 $ 175,488 Less: amount representing interest (59 ) Present value of obligations under capital leases 1,255 Less: current portion (449 ) Long-term capital lease obligations $ 806 Licensing and Purchasing Agreements The Company has both minimum and contingent obligations to make payments of up to $74.0 if specified future events occur or conditions are met specify milestone payment timelines Executive Severance Plans The Company has employment contracts with key executives and maintains severance plans that provide for the payment of severance and other benefits if such executives are terminated for reasons other than cause, as defined in those agreements and plans. Certain agreements call for payments that are based on historical compensation, and accordingly, the amount of the contractual commitment will change over time commensurate with the executive’s applicable earnings. At December 31, 2019, future commitments for such key executives were approximately $15.6 million. In certain circumstances, the agreements call for the acceleration of equity vesting. Those figures are not reflected in the above information. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity Common Stock There were 120,000,000 shares of common stock authorized at December 31, 2019 and 2018. Preferred Stock There are 5,000,000 shares of preferred stock authorized and none issued or outstanding at December 31, 2019 and 2018. Stock-based Compensation In March 2014, the Compensation Committee (the "Compensation Committee") of the Board of Directors of the Company adopted the 2014 Equity Incentive Plan of NuVasive, Inc. (the "2014 EIP"), replacing the 2004 Amended and Restated Equity Incentive Plan (the “2004 EIP”). No further awards may be granted under the 2004 EIP; however, that plan continues to govern all awards previously issued under it (of which awards remain outstanding). The 2014 EIP provides the Company with the ability to grant various types of equity awards to its workforce (including, without limitation, restricted stock units (“RSUs”), restricted stock awards, performance awards, and deferred stock awards). The 2014 EIP also provides for the issuance of performance RSUs (“PRSUs”) to be granted subject to time- and/or performance-based vesting requirements. In addition, the award agreements under the 2014 EIP generally provide for the acceleration of 50% of the unvested equity awards of all shareowners upon a change in control and the vesting of the remaining unvested equity awards for those shareowners that are involuntarily terminated within a year of the change in control. Each of the 2004 EIP and the 2014 EIP allow for “net share settlement” of certain equity awards whereby, in lieu of (i) making cash payments in satisfaction of the exercise price owed respective to non-qualified stock option awards, or (ii) open market selling award shares to generate cash proceeds for use in satisfaction of statutory tax obligations respective to an award’s settlement or exercise, the company offsets the award shares being settled in a respective transaction by the number of shares of company stock with a value equal to the respective obligation, and, in the case of taxes, making a cash payment to the respective taxing authority on behalf of the shareowner using Company cash. The net share settlement is accounted for with the cost of any award shares that are net settled being included in treasury stock and reported as a reduction in total equity at the time of settlement. In connection with the acquisition of Ellipse Technologies in February 2016, the Company assumed the Ellipse Technologies, Inc. 2015 Incentive Award Plan and the shares thereunder, subject to an equity exchange adjustment, for future awards by the Company. The compensation cost that has been included in the Consolidated Statements of Operations for the Company’s stock-based compensation plans was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Sales, marketing and administrative expense $ 25,968 $ 22,190 $ 20,596 Research and development expense 3,798 3,052 1,445 Cost of goods sold 531 431 350 Stock-based compensation expense before taxes 30,297 25,673 22,391 Related income tax benefits (6,191 ) (6,418 ) (8,509 ) Stock-based compensation expense, net of taxes $ 24,106 $ 19,255 $ 13,882 As of December 31, 2019, there was $20.9 million and $17.1 million of unrecognized compensation expense for RSUs and PRSUs, respectively, which is expected to be recognized over a weighted-average period of approximately 1.7 years and 2.7 years, respectively. In addition, as of December 31, 2019, there was $0.8 million of unrecognized compensation expense for shares expected to be issued under the ESPP which is expected to be recognized through April 2020. There was no unamortized expense for stock options as of December 31, 2019. Restricted Stock Units The total fair value of RSUs that vested during the year ended December 31, 2019, 2018, and 2017 was $21.5 million, $8.8 million and $19.9 million, respectively. Following is a summary of RSU activity for the year ended December 31, 2019: Weighted Average Number of Grant Date ( in thousands, except per share amounts Shares Fair Value Outstanding at December 31, 2018 1,114 $ 55.25 Granted 373 59.01 Vested (366 ) 45.89 Forfeited (176 ) 60.10 Outstanding at December 31, 2019 945 $ 59.21 For the majority of RSUs, shares are issued on the vesting dates net of the amount of shares needed to satisfy statutory tax withholding requirements to be paid by the Company on behalf of the employees. The total shares withheld related to vested RSUs were approximately 122,000, 42,000, and 103,000 in 2019 2018 , and 2017 , respectively, and were based on the value of the awards on their vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities related to vesting RSUs were $7.2 million, $2.2 million and $7.2 million in 2019 , 2018 and 2017 , respectively. Performance-Based Restricted Stock Units The Company has granted PRSUs since 2012 for which the ultimate issuance amount is determined by the Company’s Compensation Committee upon its certification of Company performance against a pre-determined matrix, including targets for revenue, operating margin, earnings per share and total shareholder return over pre-determined periods of time. Share payout levels range from 0% to 312.5% depending on the respective terms of an award. Based upon the company’s actual performance against the performance conditions, approximately 276,000, 21,000 and 76,000 shares of common stock vested pursuant to PRSUs in 2019, 2018 and 2017, respectively. In 2015, the Company granted a PRSU award with a five-year subject to recurring fair value adjustments that affect stock-based compensation expense. The total fair value of PRSUs vested during 2019, 2018, 2017 and was $19.9 million, $2.1 million and $10.3 million, respectively. Following is a summary of PRSU activity for the year ended December 31, 2019: Maximum Number ( in thousands, except per share amounts Shares of Shares Eligible to be Issued Average Grant Date Fair Value Outstanding at December 31, 2018 987 1,658 $ 56.88 Awarded at target 227 309 52.77 Vested (276 ) (452 ) 45.24 Forfeited (207 ) (399 ) 52.78 Outstanding at December 31, 2019 731 1,116 $ 57.07 For the majority of PRSUs, shares are issued on the vesting dates net of the amount of shares needed to satisfy statutory tax withholding requirements to be paid by the Company on behalf of the employees. The total shares withheld related to vesting PRSUs were approximately 121,000, 8,000 and 35,000 in 2019 2018 and 2017 respectively, and were based on the value of the awards on their vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities related to vesting PRSUs were $7.2 million, $0.4 million, and 2.5 million in 2019 2018 , and 2017 respectively. Stock Options The Company has not granted any stock options since 2011. The stock options previously granted are exercisable for a period of up to ten years after the date of grant. The aggregate intrinsic value of outstanding stock options at December 31, 2019 is based on the Company’s closing stock price on December 31, 2019 of $77.34. Stock option exercises during the year ended December 31, 2019 were primarily all executed with net share settlements, for which the Company does not receive any cash proceeds. The Company received $1.3 million and $2.4 million in proceeds from the exercise of stock options during the years ended December 31, 2018 and 2017, respectively. The total intrinsic value of stock options exercised was $1.0 million, $2.5 million, and $8.3 million during the years ended December 31, 2019, 2018 and 2017, respectively. There were no stock options that vested during the years ended December 31, 2019, 2018 or 2017. Following is a summary of stock option activity for the year ended December 31, 2019 under all stock plans: Weighted-Average Remaining Weighted Contractual Aggregate Avg. Exercise Term Intrinsic ( in thousands, except years and per share amounts Shares Price (Years) Value Outstanding at December 31, 2018 49 $ 35.76 1.52 $ 680 Exercised (33 ) 38.79 Cancelled — — Outstanding at December 31, 2019 16 29.18 0.89 $ 747 Exercisable at December 31, 2019 16 $ 29.18 0.89 $ 747 Vested or expected to vest at December 31, 2019 16 $ 29.18 0.89 $ 747 For the majority of stock options, shares are issued on the exercise dates net of the amount of shares needed to satisfy each of the exercise price (in lieu of cash) and statutory tax withholding requirements, the latter to be paid by the Company on behalf of the employee. The total shares withheld related to exercised stock options were approximately 21,000, 65,000, and 105,000 in 2019 , 2018 , and 2017, respectively, and were based on the value of the stock options on their exercise dates as determined by the Company’s closing stock price. Total cash payments for the employees’ tax obligations to the taxing authorities related to exercised stock options were $0.1 million, $0.4 million, and $2.1 million in 2019 2018 , and 2017 , respectively. Employee Stock Purchase Plan The NuVasive, Inc. 2004 Amended and Restated Employee Stock Purchase Plan (the “ESPP”), provides eligible employees with a means of acquiring equity in the Company at a discounted purchase price using their own accumulated payroll deductions. Under the terms of the ESPP, employees can elect to have up to 15% of their annual compensation, up to a maximum of $21,250 per year, withheld to purchase shares of Company common stock for a purchase price equal to six-month 151,000 The weighted average assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows: Year Ended December 31, 2019 2018 2017 ESPP Volatility 35 % 33 % 26 % Expected term (years) 0.5 0.5 0.5 Risk free interest rate 2.3 % 1.8 % 0.9 % Expected dividend yield — % — % — % Common Stock Reserved for Future Issuance The following table summarizes common shares reserved for issuance on exercise or conversion at December 31, 2019 ( in thousands Issued and outstanding stock options 16 Issued and outstanding RSUs and PRSUs 1,692 Available for issuance under the ESPP 964 Available for future grant 3,762 2021 Notes 14,396 2021 Warrants 32,596 Total shares reserved for future issuance 53,426 Pursuant to the terms of the 2014 EIP, shares subject to awards granted under the 2004 EIP may be utilized for future grants of awards under the 2014 EIP, to the extent such awards are terminated, cancelled or they expire, or shares subject thereto are withheld to cover taxes. During the year ended December 31, 2016, the Company filed a registration statement with the Securities and Exchange Commission with respect to 2.2 million of such shares for future issuance under the 2014 EIP. These shares are reflected in the number of shares available for future grants. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes Total income before income taxes summarized by region was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 United States $ 74,721 $ 8,939 $ 76,480 Foreign 5,796 (216 ) (4,117 ) Total income before income taxes $ 80,517 $ 8,723 $ 72,363 The income tax provision (benefit) was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Current: Federal $ 4,802 $ (4,188 ) $ 5,972 State 4,638 2,043 776 Foreign 2,205 5,972 2,793 Total current provision 11,645 3,827 9,541 Deferred: Federal 5,873 (5,944 ) (1,565 ) State (4,565 ) (7,092 ) (4,276 ) Foreign (819 ) (98,795 ) (2,223 ) Total deferred provision 489 (111,831 ) (8,064 ) Changes in tax rate 606 258 (14,668 ) Changes in valuation allowance 2,543 103,990 5,699 Total provision (benefit) $ 15,283 $ (3,756 ) $ (7,492 ) The differences between the income tax provision at the United States federal statutory tax rate and the Company’s effective tax rate were as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Tax provision at federal statutory rate $ 16,909 $ 1,832 $ 25,327 Income tax credits and incentives (7,209 ) (5,525 ) (3,462 ) State income tax 3,763 90 3,553 Valuation allowance 2,543 103,990 5,703 Net tax benefit on international restructuring — (97,028 ) — Return to provision adjustments (2,323 ) (4,180 ) (2,443 ) Acquisition related charges (1,808 ) (221 ) (489 ) Compensation expense 1,643 2,008 (5,619 ) Income tax reserves (1,146 ) (6,717 ) 1,184 Nondeductible meals and entertainment 717 769 922 Foreign tax rate differences from federal statutory rate 716 576 684 Change in tax rates 606 258 (14,668 ) Recovery of tax basis in United States subsidiary — — (19,540 ) Other 872 392 1,356 Total provision (benefit) $ 15,283 $ (3,756 ) $ (7,492 ) Significant components of the Company’s deferred tax assets and liabilities were as follows: December 31, ( in thousands 2019 2018 Deferred tax assets: Amortization $ 87,296 $ 106,769 Net operating loss carryforwards 24,656 7,516 Inventory 24,069 12,385 General business and other credit carryforwards 23,168 25,846 Lease liability 17,636 — Stock-based compensation 11,562 14,914 Original issue discount 1,840 3,322 Other 22,591 27,869 Gross deferred tax assets 212,818 198,621 Less valuation allowance (122,534 ) (120,233 ) Net deferred tax assets 90,284 78,388 Deferred tax liabilities: Depreciation (37,045 ) (32,851 ) Acquired intangibles (34,799 ) (42,767 ) Right-of-use assets (14,891 ) — Other (6,260 ) (1,843 ) Total deferred tax liabilities (92,995 ) (77,461 ) Net deferred tax (liabilities) assets $ (2,711 ) $ 927 The following table summarizes the activity related to the Company’s unrecognized tax benefits: Year Ended December 31, ( in thousands 2019 2018 2017 Gross unrecognized tax benefits at January 1 $ 19,545 $ 25,356 $ 23,322 Increases in tax positions for prior years 62 499 1,692 Decreases in tax positions for prior years (112 ) (756 ) (24 ) Increases in tax positions for current year relating to ongoing operations 2,073 1,913 968 Decreases in tax positions as a result of a lapse of statute of limitations (616 ) (6,446 ) (402 ) Increases in tax positions for current year relating to acquisitions — 169 — Decreases in tax positions due to settlements with taxing authorities (624 ) (1,190 ) (200 ) Gross unrecognized tax benefits at December 31 $ 20,328 $ 19,545 $ 25,356 At December 31, 2019, 2018, and 2017, $18.7 million, $18.1 million, and $24.1 million, respectively, of the Company’s total unrecognized tax benefits, if recognized, would impact the effective income tax rate. In accordance with the disclosure requirements as described in ASC Topic 740, Income Taxes, the Company classified uncertain tax positions as non-current income tax liabilities unless expected to be paid in one year. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. For the years ended December 31, 2019, 2018, and 2017, the Company recognized approximately $0.1 million, $(0.5) million, and $(0.1) million, respectively, in interest and penalties as income tax expense (benefit) in the Consolidated Statements of Operations. The Company had approximately $0.1 million for the payment of interest and penalties accrued at both December 31, 2019 and 2018 in the Consolidated Balance Sheets. The Company believes it is reasonably possible that approximately $5.9 million of its remaining unrecognized tax positions may be recognized by the end of 2020 as certain statute of limitations expire, the amount of which is primarily attributable to tax positions involving the valuation of intercompany transactions. In November 2018, the Company completed a reorganization of its international intellectual property company structure. This international restructuring generated a step-up in local tax basis, which under ASC Topic 740-10-25-20 ASU 2016-16, The Company is subject to routine compliance reviews on various tax matters around the world in the ordinary course of business. Currently, the only active audit is with the U.S. Internal Revenue Service for 2014 – 2016 tax years. California is subject to examination in all years due to prior year net operating losses and research and development credits. Other major state and foreign jurisdictions remain subject to examination from 2015 and 2012 forward, respectively. The Company made the accounting policy election to treat taxes due on U.S. inclusions in taxable income related to Global Intangible Low-Taxed Income as a current period expense when incurred (the "period cost method"). The Company has approximately $1.5 million of undistributed earnings attributable to operations in its controlled foreign corporations as of December 31, 2019. Due to recent tax reform in the United States and favorable treaties between the United States and countries in which its controlled foreign corporations operate, the Company has the ability to repatriate earnings without incurring additional tax liabilities. Accordingly, the Company has not recorded a liability for taxes associated with any future distributions of these undistributed earnings. At December 31, 2019, the Company had $2.2 million, $48.6 million and $60.6 million of federal, state and foreign net operating loss carryforwards, respectively. Federal net operating loss carryforwards begin to expire in 2025, state net operating loss carryforwards begin to expire in 2021, and foreign net operating losses carry forward indefinitely. The Company also has federal and California income tax credit carryforwards of $14.0 million and $31.4 million, respectively. The federal credits will begin to expire in 2036, while the California credits can be carried forward indefinitely. Due to the “change of ownership” provision of the Tax Reform Act of 1986, utilization of the Company’s net operating loss and credit carryforwards may be subject to an annual limitation against taxable income in future periods. As a result of any future ownership changes, the annual limitation of loss and credit carryforwards may cause them to expire before ultimately becoming available to reduce future income tax liabilities. |
Business Segment, Product, and
Business Segment, Product, and Geographic Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Business Segment, Product and Geographic Information | 9. Business Segment, Product and Geographic Information The Company operates in one segment based upon the Company’s organizational structure, the way in which the operations and investments are managed and evaluated by the chief operating decision maker (“CODM”) as well as the lack of availability of discrete financial information at a lower level. The Company’s CODM reviews revenue at the product line offering level, and manufacturing, operating income and expenses, and net income at the Company wide level to allocate resources and assess the Company’s overall performance. The Company shares common, centralized support functions, including finance, human resources, legal, information technology, and corporate marketing, all of which report directly to the CODM. Accordingly, decision-making regarding the Company’s overall operating performance and allocation of Company resources is assessed on a consolidated basis. As such, the Company operates as one reporting segment. The Company has disclosed the revenues for each of its product line offerings to provide the reader of the financial statements transparency into the operations of the Company. The Company reports under two distinct product lines; spinal hardware and surgical support. The Company’s spinal hardware product line offerings include implants and fixation products. The Company’s surgical support product offerings include IOM services, disposables and biologics, and capital equipment, all of which are used to aid spinal surgery. Revenue by product line was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Spinal Hardware $ 851,440 $ 788,649 $ 737,524 Surgical Support 316,630 313,065 289,161 Total Revenue $ 1,168,070 $ 1,101,714 $ 1,026,685 Revenue and property and equipment, net, by geographic area were as follows: Revenue Property Year Ended December 31, December 31, ( in thousands 2019 2018 2017 2019 2018 United States $ 941,086 $ 896,152 $ 850,410 $ 218,771 $ 200,404 International (excludes Puerto Rico) 226,984 205,562 176,275 47,547 38,437 Total $ 1,168,070 $ 1,101,714 $ 1,026,685 $ 266,318 $ 238,841 |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Contingencies [Abstract] | |
Contingencies | 10. Contingencies The Company is subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted from time-to-time. These matters arise in the ordinary course and conduct of the Company’s business and include, for example, commercial, intellectual property, environmental, securities and employment matters. The Company intends to continue to defend itself vigorously in such matters and when warranted, take legal action against others. Furthermore, the Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. During the year ended December 31, 2018 During the year ended December 31, 2017, the Company paid $4.5 million for the settlement of fees associated with the outcome of the litigation matter with An estimated loss contingency is accrued in the Company’s financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2019 | |
Regulatory Matter [Abstract] | |
Regulatory Matters | 11. Regulatory Matters On August 31, 2015, the Company received a civil investigative demand (“CID”) issued by the U.S. Department of Justice (“DOJ”) pursuant to the federal False Claims Act. The CID requires the delivery of a wide range of documents and information related to an investigation by the DOJ concerning allegations that the Company assisted a physician group customer in submitting improper claims for reimbursement and made improper payments to the physician group in violation of the Anti-Kickback Statute. The Company is cooperating with the DOJ in regards to this matter. No assurance can be given as to the timing or outcome of this investigation. As of December 31, 2019, the probable outcome of this matter cannot be determined, nor can the Company estimate a range of potential loss. In accordance with authoritative guidance on the evaluation of loss contingencies, the Company has not recorded an accrual related to this matter. |
Quarterly Data (unaudited)
Quarterly Data (unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Data (unaudited) | 12. Quarterly Data (unaudited) The following quarterly financial data, in the opinion of management, reflects all adjustments, consisting of normal recurring adjustments necessary, for a fair presentation of results for the periods presented: Year Ended December 31, 2019 ( in thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 274,776 $ 292,105 $ 290,835 $ 310,354 Gross profit 200,282 214,526 213,807 227,098 Consolidated net income 9,386 14,962 11,010 29,876 Basic net income per common 0.18 0.29 0.21 0.57 Diluted net income per common share 0.18 0.29 0.21 0.55 Year Ended December 31, 2018 (1) (2) First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 260,522 $ 281,564 $ 271,301 $ 288,327 Gross profit 186,708 204,508 197,141 202,198 Consolidated net (loss) income (27,132 ) 11,531 15,923 12,157 Basic net (loss) income per common (0.53 ) 0.22 0.31 0.24 Diluted net (loss) income per common share (0.53 ) 0.22 0.30 0.23 (1) The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. ( 2 ) Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc . |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business | Description of Business NuVasive, Inc. (the “Company” or “NuVasive”) was incorporated in Delaware on July 21, 1997, and began commercializing its products in 2001. The Company’s principal product offering includes a minimally disruptive surgical platform called Maximum Access Surgery, or MAS. The MAS platform combines three categories of solutions that collectively minimize soft tissue disruption during spine fusion surgery, provide maximum visualization and are designed to enable safe and reproducible outcomes for the surgeon and the patient. The platform includes the Company’s proprietary software-driven nerve detection and avoidance systems and Intraoperative Monitoring (“IOM”) services and support; MaXcess, an integrated split-blade retractor system; and a wide variety of specialized implants and biologics. To assist with surgical procedures, the Company offers a technology platform called Integrated Global Alignment (“iGA”); in which products and computer assisted technology under the MAS platform help achieve more precise spinal alignment. The individual components of the MAS platform, and many of the Company’s products, can also be used in open or traditional spine surgery. The Company continues to focus research and development efforts to expand its MAS product platform and advance the applications of its unique technology into procedurally integrated surgical solutions. The Company dedicates significant resources toward training spine surgeons on its unique technology and products. The Company’s procedurally integrated solutions use innovative, technological advancements and the MAS platform to provide surgical efficiency, operative reliability, and procedural versatility. The Company offers a range of implants for spinal surgery, which include its porous titanium and polyetheretherketone (“PEEK”) implants under its Advanced Materials Science portfolio, fixation products such as customizable rods, plates and screws, bone allograft in patented saline packaging, allogeneic and synthetic biologics, and disposables used in IOM. The Company makes available MAS instrument sets, MaXcess and neuromonitoring systems to hospitals to facilitate surgeon access to the spine to perform restorative and fusion procedures using the Company’s implants and fixation products. The Company sells MAS instrument sets, MaXcess and neuromonitoring systems to hospitals, however, such sales are immaterial to the Company’s results of operations. The Company also designs and sells expandable growing rod implant systems that can be non-invasively lengthened following implantation with precise, incremental adjustments via an external remote controller using magnetic technology called MAGnetic External Control, or MAGEC, which allows for the minimally invasive treatment of early-onset and adolescent scoliosis. This technology is also the basis for the Company’s Precice limb lengthening system, which allows for the correction of long bone limb length discrepancy, as well as enhanced bone healing in patients that have experienced traumatic injury. The Company has developed a procedural solution for spine surgery that includes IOM services, iGA and hardware and software technology offerings. The Company has also invested in the development of capital equipment designed to further improve clinical and economic outcomes through proceduralization, including LessRay and Pulse. Revenue from the sale or lease of capital equipment does not make up a material portion of the Company’s total revenue. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned or controlled subsidiaries, collectively referred to as either NuVasive or the Company. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the respective parent entity, the Company records the fair value of the non-controlling interest at the acquisition date and classifies the amounts attributable to non-controlling interest separately in equity in the Company's Consolidated Financial Statements. Any subsequent changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has reclassified historically presented revenue and cost of revenue to conform to the current year presentation, which now reflects revenue and costs allocated to the Company’s product and service offerings. These reclassifications had no impact on previously reported results of operations. Additionally, as required by Accounting Standards Update 2014-09 Revenue from Contracts with Customers Revenue from Contracts with Customers |
Use of Estimates | Use of Estimates To prepare financial statements in conformity with generally accepted accounting principles (“GAAP”) accepted in the United States, management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Recently Accounting Pronouncements Not Yet Adopted And Recently Adopted Accounting Standards | Recent Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement In September 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangible – Goodwill and Other – Internal-Use Software In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued Accounting Standards Update No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) Recently Adopted Accounting Standards In February 2016, the FASB issued Accounting Standards Update No. 2016-02 – Leases The Company adopted ASC 842 as of January 1, 2019, electing the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and did not restate prior periods. The Company elected the package of practical expedients permitted under the transition guidance. As a result of the adoption, the Company recorded right-of-use assets and liabilities of $62.8 million and $75.1 million, respectively, and their corresponding deferred tax assets and liabilities on its Consolidated Balance Sheet as of January 1, 2019. The adoption had no cumulative impact to retained earnings. See Note 6 to the Consolidated Financial Statements included in this Annual Report for further disclosure on the Company’s leasing arrangements. In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging |
Revenue Recognition | Revenue Recognition In accordance with Accounting Standards Codification 606 Revenue from Contracts with Customers Revenue from IOM services is recognized in the period the service is performed for the amount of consideration expected to be received. |
Accounts Receivable and Related Valuation Accounts | Accounts Receivable and Related Valuation Accounts Accounts receivable in the accompanying Consolidated Balance Sheets are presented net of allowances for doubtful accounts. In addition, the Company establishes a liability for estimated sales returns and a reserve for price adjustments that are recorded as a reduction to revenue. The liability and reserve are maintained to account for the future product returns and price adjustments of products sold in the current period. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, marketable securities and accounts receivable. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. The Company has a diverse customer base and no single customer represented greater than ten percent of sales or accounts receivable for any of the periods presented. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, restricted investments, derivatives, contingent consideration liabilities, accounts receivable, accounts payable, accrued expenses, and Senior Convertible Notes. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the years presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. |
Inventory | Inventory Net inventory as of December 31, 2019 consisted of $298.7 million of finished goods, $6.4 million of work in progress and $7.3 million of raw materials. Net inventory as of December 31, 2018 consisted of $259.4 million of finished goods, $5.0 million of work in progress and $8.8 million of raw materials. Finished goods primarily consists of specialized implants, fixation products and disposables and are stated at the lower of cost or net realizable value determined by utilizing a standard cost method, which includes capitalized variances, which approximates the weighted average cost. Work in progress and raw materials represent the underlying material, and labor for work in progress, that ultimately yield finished goods upon completion and are subject to lower of cost or net realizable value. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary. Excess and Obsolete Inventory The Company provides an inventory reserve for estimated obsolescence and excess inventory based upon historical turnover and assumptions about future demand for its products and market conditions. The Company’s allograft products have shelf lives ranging from two to five years and are subject to demand fluctuations based on the availability and demand for alternative products. The Company’s inventory, which consists primarily of disposables, specialized implants and fixation products, is at risk of obsolescence following the introduction and development of new or enhanced products. The Company’s estimates and assumptions for excess and obsolete inventory are reviewed and updated on a quarterly basis. The estimates the Company uses for demand are also used for near-term capacity planning and inventory purchasing and are consistent with its revenue forecasts. Increases in the reserve for excess and obsolete inventory result in a corresponding charge to cost of products sold. Historically, the Company’s reserves have been adequate to cover losses. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company’s goodwill represents the excess of the cost over the fair value of net assets acquired from its business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including capitalized Intangible assets acquired in a business combination that are used for in-process research and development activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon reaching the end of the relevant research and development project, the Company will amortize the acquired IPR&D over its estimated useful life or expense the acquired in-process research and development should the research and development project be unsuccessful with no future alternative use. Goodwill and IPR&D are not amortized; however, they are assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. The goodwill or IPR&D are considered to be impaired if the Company determines that the carrying value of the reporting unit or IPR&D exceeds its respective fair value. The Company performs its goodwill impairment analysis at the reporting unit level, which aligns with the Company’s reporting structure and availability of discrete financial information. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections . Key assumptions for these projections include revenue growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The revenue and margin growth is based on increased sales of new and existing products as the Company maintains investments in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation, including timing and probability of regulatory approvals for Company products to be commercialized. The Company’s market capitalization is also considered as a part of its analysis. The Company’s annual evaluation for impairment of goodwill consists of one reporting unit. In accordance with the Company’s policy, the Company completed its most recent annual evaluation for impairment as of October 1, 2019 using the qualitative assessment and determined that no impairment existed. In addition, no indicators of impairments were noted through and consequently, no impairment charge has been recorded during the year. Intangible assets with a finite life, such as acquired technology, customer relationships, manufacturing know-how, licensed technology, supply agreements and certain trade names and trademarks, are amortized on a straight-line basis over their estimated useful life, ranging from 1 to 17 years. In determining the useful lives of intangible assets, the Company considers the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors. For technology based intangible assets, the Company considers the expected life cycles of products which incorporate the corresponding technology. Trademarks and trade names that are related to products are assigned lives consistent with the period in which the products bearing each brand are expected to be sold. The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company reduces the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. See Note 2 to the Consolidated Financial Statements included in this Annual Report for further disclosure on goodwill and intangible assets. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 2 to 20 years. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Leased property meeting certain financing lease criteria is capitalized under property and equipment, and the net present value of the related lease payments is recorded as a liability. Amortization of assets under financing leases is recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated future undiscounted cash flows relating to the asset are less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of an asset exceeds its fair value. |
Income Taxes | Income Taxes The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. Based on the Company’s review, it concluded that it was more likely than not that it would be able to realize the future benefits of its domestic and foreign deferred tax assets, with the exceptions of California, Malta, Brazil and Colombia. This conclusion was based on historical and projected operating performance, as well as the Company’s expectation that its operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets well within the statutory carryover periods. Due to low state apportionment, large net operating losses and the generation of sizeable research credits in California, the Company concluded that it is not more likely than not that it will be able to utilize its California deferred tax assets. Therefore, the Company has maintained a full valuation allowance on its California deferred tax assets as of December 31, 2019. Due to a history of losses in Malta, Brazil and Colombia, and the lack of alternative sources of future taxable income, the Company has established a full valuation allowance against these entities’ deferred tax assets as of December 31, 2019. The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be required. See Note 8 to the Consolidated Financial Statements included in this Annual Report for further discussion on income taxes. |
Loss Contingencies | Loss Contingencies An estimated loss contingency is accrued and disclosed in the Company’s financial statements if it is probable or disclosed if it is reasonably possible that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable and only discloses those matters it considers material to its overall financial position. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. The Company is involved in a number of legal actions arising in the normal course of business. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, that could require significant expenditures or result in lost revenues. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. See Note 10 and 11 to the Consolidated Financial Statements included in this Annual Report for further discussion on legal proceedings and investigations. |
Comprehensive Income | Comprehensive Income Comprehensive income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income includes net of tax, unrealized gains or losses on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive loss were $9.4 million, $8.6 million, and $6.9 million at December 31, 2019, 2018, and 2017, respectively. |
Research and Development | Research and Development Research and development costs are expensed as incurred. To the extent the Company purchases research and development assets with a future alternative use the Company will capitalize and amortize the assets over its useful life. |
Product Shipment Costs | Product Shipment Costs Product shipment costs, included in sales, marketing and administrative expense in the accompanying Consolidated Statements of Operations, were $27.7 million, $25.4 million, and $24.0 million for the years ended December 31, 2019, 2018, and 2017, respectively. The majority of the Company’s shipping costs are associated with providing instrument sets to surgeons and hospitals for use in individual surgical procedures. Amounts billed to customers for shipping and handling of products are reflected in revenues and are not material for any period presented. |
Business Transition Costs | Business Transition Costs The Company incurs which include severance, relocation, consulting, leasehold exit costs, third-party merger and acquisition costs, contingent consideration fair value adjustments and other costs directly associated with such activities. Contingent consideration is accrued based on the fair value of the expected payment, and such accruals are subject to increase or decrease based on assessment of the likelihood that the contingent consideration will be paid. If an accrual for contingent consideration decreases during a particular period, it results in a reduction of costs during such period. The Company incurred $(2.0) million of such costs during the year ended December 31, 2019 The Company incurred $11.5 million of such costs during the year ended December 31, 2018, which consisted primarily of various business transition activities, offset by $(1.5) million of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. During the year ended December 31, 2017, the Company incurred $4.3 million of such costs, which consisted primarily of acquisition and integration activities, offset by $(1.3) million of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. |
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense for equity-classified awards, principally related to restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”), is measured at the grant date based on the estimated fair value of the award. The fair value of equity instruments that are expected to vest is recognized and amortized over the requisite service period. The Company has granted awards with up to five year graded or cliff vesting terms . The fair value of RSUs including PRSUs with pre-defined performance criteria pre-defined performance criteria is adjusted with the probability of achievement of such performance criteria at each period end Stock-based compensation expense is adjusted from the grant date to exclude expense for awards that are expected to be forfeited. The forfeiture estimate is adjusted as necessary through the vesting date so that full compensation cost is recognized only for awards that vest. The Company assesses the reasonableness of the estimated forfeiture rate at least annually, with any change to be made on a cumulative basis in the period the estimated forfeiture rates change. The Company considered its historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners as the basis to arrive at its estimated annual pre-vesting forfeiture rates. The Company estimates the fair value of stock options issued under its equity incentive plans and shares issued to shareowners under its employee stock purchase plan (“ESPP”) using a Black-Scholes option-pricing model on the date of grant. The Black-Scholes option-pricing model incorporates various and highly sensitive assumptions including expected volatility, expected term and risk-free interest rates. The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options and ESPP offering period which is derived from historical experience. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future . See Note 7 to the Consolidated Financial Statements included in this Annual Report for further discussion on stockholder equity and stock-based compensation. |
Net Income Per Share | Net Income Per Share The Company computes basic net income per share using the weighted-average number of common shares outstanding during the period. Diluted net income per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, unvested RSUs, PRSUs (including those with performance and market conditions), warrants, and the shares to be issued upon the conversion of the Senior Convertible Notes. The contingently issuable shares are included in basic net income per share as of the date that all necessary conditions have been satisfied and are included in the denominator for dilutive calculation for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, ( in thousands, except per share data 2019 2018 2017 Numerator: Net income attributable to NuVasive, Inc. $ 65,234 $ 12,479 $ 81,598 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,956 51,382 50,874 Dilutive potential common stock outstanding: Stock options and ESPP 15 36 141 RSUs and PRSUs 658 760 1,083 Warrants — — 1,494 Senior Convertible Notes 531 177 1,601 Weighted average common shares outstanding for diluted 53,160 52,355 55,193 Basic net income per share attributable to NuVasive, Inc. $ 1.26 $ 0.24 $ 1.60 Diluted net income per share attributable to NuVasive, Inc. $ 1.23 $ 0.24 $ 1.48 The following weighted outstanding common stock equivalents were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Year Ended December 31, ( in thousands 2019 2018 2017 Stock options, ESPP, RSUs and PRSUs 115 162 147 Warrants 10,865 10,865 10,865 Senior Convertible Notes 5,433 5,433 2,716 Total 16,413 16,460 13,728 |
Organization and Significant _3
Organization and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, ( in thousands, except per share data 2019 2018 2017 Numerator: Net income attributable to NuVasive, Inc. $ 65,234 $ 12,479 $ 81,598 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,956 51,382 50,874 Dilutive potential common stock outstanding: Stock options and ESPP 15 36 141 RSUs and PRSUs 658 760 1,083 Warrants — — 1,494 Senior Convertible Notes 531 177 1,601 Weighted average common shares outstanding for diluted 53,160 52,355 55,193 Basic net income per share attributable to NuVasive, Inc. $ 1.26 $ 0.24 $ 1.60 Diluted net income per share attributable to NuVasive, Inc. $ 1.23 $ 0.24 $ 1.48 |
Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share | The following weighted outstanding common stock equivalents were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Year Ended December 31, ( in thousands 2019 2018 2017 Stock options, ESPP, RSUs and PRSUs 115 162 147 Warrants 10,865 10,865 10,865 Senior Convertible Notes 5,433 5,433 2,716 Total 16,413 16,460 13,728 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Details [Abstract] | |
Property and Equipment Net | Property and Equipment, net Property and equipment, net, consisted of the following: December 31, ( in thousands, except years Useful Life 2019 2018 Instrument sets 4 $ 381,310 $ 326,831 Machinery and equipment 5 to 7 66,482 58,585 Computer equipment and software 3 to 7 149,134 127,539 Leasehold improvements 2 to 15 29,542 32,973 Furniture and fixtures 3 to 7 8,931 8,961 Building and improvements 10 to 20 22,921 20,216 Land — 1,277 1,277 659,597 576,382 Less: accumulated depreciation and amortization (393,279 ) (337,541 ) $ 266,318 $ 238,841 |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill and intangible assets as of December 31, 2019 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (163,459 ) $ 108,289 Manufacturing know-how and trade secrets 13 30,798 (20,333 ) 10,465 Trade name and trademarks 9 25,500 (16,947 ) 8,553 Customer relationships 9 150,744 (76,959 ) 73,785 Total intangible assets subject to amortization 9 $ 478,790 $ (277,698 ) $ 201,092 Intangible assets not subject to amortization: Goodwill 561,064 Total goodwill and intangible assets, net $ 762,156 Goodwill and intangible assets as of December 31, 2018 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (131,730 ) $ 140,018 Manufacturing know-how and trade secrets 13 30,814 (17,926 ) 12,888 Trade name and trademarks 9 25,500 (13,901 ) 11,599 Customer relationships 9 147,021 (59,478 ) 87,543 Total intangible assets subject to amortization 9 $ 475,083 $ (223,035 ) $ 252,048 Intangible assets not subject to amortization: Goodwill 561,366 Total goodwill and intangible assets, net $ 813,414 |
Changes to Goodwill | The changes to goodwill are comprised of the following: ( in thousands December 31, 2018 Gross goodwill $ 569,666 Accumulated impairment loss (8,300 ) 561,366 Changes to gross goodwill Changes resulting from foreign currency fluctuations (302 ) (302 ) December 31, 2019 Gross goodwill 569,364 Accumulated impairment loss (8,300 ) $ 561,064 |
Future Amortization Expense Related to Intangible Assets | Total future amortization expense related to intangible assets subject to amortization at December 31, 2019 is set forth in the table below: ( in thousands 2020 $ 52,109 2021 50,222 2022 41,464 2023 17,708 2024 14,273 Thereafter through 2031 25,316 Total future amortization expense $ 201,092 |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: December 31, ( in thousands 2019 2018 Accrued expenses $ 63,163 $ 70,386 Accounts payable 11,827 8,799 Distributor commissions payable 7,983 8,194 Other taxes payable 6,501 9,359 Royalties payable 4,994 7,173 Other 2,692 3,381 Accounts payable and accrued liabilities $ 97,160 $ 107,292 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis | Cash equivalents are determined under the fair value categories as follows: Quoted Price in Significant Other Significant Active Market Observable Inputs Unobservable ( in thousands Total (Level 1) (Level 2) Inputs (Level 3) December 31, 2019 Cash equivalents: Money market funds $ 151,750 $ 151,750 $ — $ — Total cash equivalents $ 151,750 $ 151,750 $ — $ — December 31, 2018 Cash equivalents: Money market funds $ 56,000 $ 56,000 $ — $ — Total cash equivalents $ 56,000 $ 56,000 $ — $ — |
Schedule of Fair Value of Liabilities Measured on Recurring Basis Using Unobservable Inputs | The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3): ( in thousands 2019 2018 Fair value measurement at January 1 $ 50,410 $ 67,941 Contingent consideration liability recorded upon acquisition — 3,543 Change in fair value measurement (6,297 ) (1,517 ) Changes resulting from foreign currency fluctuations (119 ) 193 Contingent consideration paid or settled (1,435 ) (19,750 ) Fair value measurement at December 31 $ 42,559 $ 50,410 |
Indebtedness (Tables)
Indebtedness (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Carrying Value of Senior Convertible Notes | The carrying values of the Company’s Senior Convertible Notes due 2021 are as follows: ( in thousands December 31, 2019 December 31, 2018 2.25% Principal amount $ 650,000 $ 650,000 Unamortized debt discount (22,501 ) (40,117 ) Unamortized debt issuance costs (4,201 ) (7,357 ) Total Senior Convertible Notes $ 623,298 $ 602,526 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Right-of-use Assets and Lease Liabilities | The table below summarizes the Company’s right-of-use assets and lease liabilities as of December 31, 2019 (in thousands, except years and rates) December 31, 2019 Assets Operating $ 66,932 Financing 1,453 Total leased assets $ 68,385 Liabilities Current: Operating $ 5,567 Financing 672 Long-term: Operating 73,153 Financing 905 Total lease liabilities $ 80,297 Supplemental non-cash information: Weighted-average remaining lease term (years) - operating leases 12.4 Weighted-average remaining lease term (years) - finance leases 2.3 Weighted-average discount rate - operating leases 7.3 % Weighted-average discount rate - finance leases 5.4 % |
Lease Costs, Cash Payments and Operating Lease Liabilities Arising From Obtaining Right-of-use Assets under Operating and Financing Lease Obligations | The table below summarizes the Company’s lease costs, cash payments, and operating lease liabilities arising from obtaining right-of-use assets under its operating and financing lease obligations during the year ended December 31, 2019 (in thousands) December 31, 2019 Lease expense: Operating lease expense $ 11,859 Finance lease expense: Depreciation of right-of-use assets 441 Interest expense on lease liabilities 56 Total lease expense $ 12,356 Consolidated Statements of Cash Flows information: Operating cash flows used for operating leases $ 12,140 Operating cash flows used for financing leases 56 Financing cash flows used for financing leases 420 Total cash paid for amounts included in the measurement of lease liabilities $ 12,616 Supplemental non-cash information: Operating lease liabilities arising from obtaining right-of-use assets $ 86,134 |
Future Minimum Annual Lease Payments under Capital, Operating and Financing Leases | The Company’s future minimum annual lease payments under operating and financing leases at December 31, 2019 Financing Operating (in thousands) Leases Leases 2020 $ 744 $ 11,024 2021 645 10,522 2022 283 10,090 2023 14 9,708 2024 9 8,645 Thereafter — 75,277 Total minimum lease payments $ 1,695 $ 125,266 Less: amount representing interest (118 ) (46,546 ) Present value of obligations under leases 1,577 78,720 Less: current portion (672 ) (5,567 ) Long-term lease obligations $ 905 $ 73,153 Prior to the adoption of ASC 842, the Company’s future minimum annual lease payments under capital and operating leases, including payments for costs directly associated with the facility leases, for years ending after December 31, 2018 were as follows: Capital Operating (in thousands) Leases Leases 2019 $ 534 $ 13,750 2020 507 13,007 2021 244 10,954 2022 24 10,578 2023 5 10,515 Thereafter — 116,684 Total minimum lease payments $ 1,314 $ 175,488 Less: amount representing interest (59 ) Present value of obligations under capital leases 1,255 Less: current portion (449 ) Long-term capital lease obligations $ 806 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Compensation Costs Included in Consolidated Statement of Operations for All Stock-based Compensation Arrangements | The compensation cost that has been included in the Consolidated Statements of Operations for the Company’s stock-based compensation plans was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Sales, marketing and administrative expense $ 25,968 $ 22,190 $ 20,596 Research and development expense 3,798 3,052 1,445 Cost of goods sold 531 431 350 Stock-based compensation expense before taxes 30,297 25,673 22,391 Related income tax benefits (6,191 ) (6,418 ) (8,509 ) Stock-based compensation expense, net of taxes $ 24,106 $ 19,255 $ 13,882 |
Summary of Restricted Stock Units | Following is a summary of RSU activity for the year ended December 31, 2019: Weighted Average Number of Grant Date ( in thousands, except per share amounts Shares Fair Value Outstanding at December 31, 2018 1,114 $ 55.25 Granted 373 59.01 Vested (366 ) 45.89 Forfeited (176 ) 60.10 Outstanding at December 31, 2019 945 $ 59.21 |
Schedule of Performance-Based Restricted Stock Units | Following is a summary of PRSU activity for the year ended December 31, 2019: Maximum Number ( in thousands, except per share amounts Shares of Shares Eligible to be Issued Average Grant Date Fair Value Outstanding at December 31, 2018 987 1,658 $ 56.88 Awarded at target 227 309 52.77 Vested (276 ) (452 ) 45.24 Forfeited (207 ) (399 ) 52.78 Outstanding at December 31, 2019 731 1,116 $ 57.07 |
Summary of Stock Option Activity under All Stock Plans | Following is a summary of stock option activity for the year ended December 31, 2019 under all stock plans: Weighted-Average Remaining Weighted Contractual Aggregate Avg. Exercise Term Intrinsic ( in thousands, except years and per share amounts Shares Price (Years) Value Outstanding at December 31, 2018 49 $ 35.76 1.52 $ 680 Exercised (33 ) 38.79 Cancelled — — Outstanding at December 31, 2019 16 29.18 0.89 $ 747 Exercisable at December 31, 2019 16 $ 29.18 0.89 $ 747 Vested or expected to vest at December 31, 2019 16 $ 29.18 0.89 $ 747 |
Weighted Average Assumptions Used to Estimate Fair Value of Stock Options Granted and Stock Purchase Rights under ESPP | The weighted average assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows: Year Ended December 31, 2019 2018 2017 ESPP Volatility 35 % 33 % 26 % Expected term (years) 0.5 0.5 0.5 Risk free interest rate 2.3 % 1.8 % 0.9 % Expected dividend yield — % — % — % |
Common Stock Reserved for Future Issuance | Common Stock Reserved for Future Issuance The following table summarizes common shares reserved for issuance on exercise or conversion at December 31, 2019 ( in thousands Issued and outstanding stock options 16 Issued and outstanding RSUs and PRSUs 1,692 Available for issuance under the ESPP 964 Available for future grant 3,762 2021 Notes 14,396 2021 Warrants 32,596 Total shares reserved for future issuance 53,426 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Before Income Taxes By Region | Total income before income taxes summarized by region was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 United States $ 74,721 $ 8,939 $ 76,480 Foreign 5,796 (216 ) (4,117 ) Total income before income taxes $ 80,517 $ 8,723 $ 72,363 |
Components of Income Tax Provision (Benefit) | The income tax provision (benefit) was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Current: Federal $ 4,802 $ (4,188 ) $ 5,972 State 4,638 2,043 776 Foreign 2,205 5,972 2,793 Total current provision 11,645 3,827 9,541 Deferred: Federal 5,873 (5,944 ) (1,565 ) State (4,565 ) (7,092 ) (4,276 ) Foreign (819 ) (98,795 ) (2,223 ) Total deferred provision 489 (111,831 ) (8,064 ) Changes in tax rate 606 258 (14,668 ) Changes in valuation allowance 2,543 103,990 5,699 Total provision (benefit) $ 15,283 $ (3,756 ) $ (7,492 ) |
Reconciliation of Income Tax from Statutory Tax Rate to Effective Income Tax Rate | The differences between the income tax provision at the United States federal statutory tax rate and the Company’s effective tax rate were as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Tax provision at federal statutory rate $ 16,909 $ 1,832 $ 25,327 Income tax credits and incentives (7,209 ) (5,525 ) (3,462 ) State income tax 3,763 90 3,553 Valuation allowance 2,543 103,990 5,703 Net tax benefit on international restructuring — (97,028 ) — Return to provision adjustments (2,323 ) (4,180 ) (2,443 ) Acquisition related charges (1,808 ) (221 ) (489 ) Compensation expense 1,643 2,008 (5,619 ) Income tax reserves (1,146 ) (6,717 ) 1,184 Nondeductible meals and entertainment 717 769 922 Foreign tax rate differences from federal statutory rate 716 576 684 Change in tax rates 606 258 (14,668 ) Recovery of tax basis in United States subsidiary — — (19,540 ) Other 872 392 1,356 Total provision (benefit) $ 15,283 $ (3,756 ) $ (7,492 ) |
Significant Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities were as follows: December 31, ( in thousands 2019 2018 Deferred tax assets: Amortization $ 87,296 $ 106,769 Net operating loss carryforwards 24,656 7,516 Inventory 24,069 12,385 General business and other credit carryforwards 23,168 25,846 Lease liability 17,636 — Stock-based compensation 11,562 14,914 Original issue discount 1,840 3,322 Other 22,591 27,869 Gross deferred tax assets 212,818 198,621 Less valuation allowance (122,534 ) (120,233 ) Net deferred tax assets 90,284 78,388 Deferred tax liabilities: Depreciation (37,045 ) (32,851 ) Acquired intangibles (34,799 ) (42,767 ) Right-of-use assets (14,891 ) — Other (6,260 ) (1,843 ) Total deferred tax liabilities (92,995 ) (77,461 ) Net deferred tax (liabilities) assets $ (2,711 ) $ 927 |
Summary of Unrecognized Tax Benefits | The following table summarizes the activity related to the Company’s unrecognized tax benefits: Year Ended December 31, ( in thousands 2019 2018 2017 Gross unrecognized tax benefits at January 1 $ 19,545 $ 25,356 $ 23,322 Increases in tax positions for prior years 62 499 1,692 Decreases in tax positions for prior years (112 ) (756 ) (24 ) Increases in tax positions for current year relating to ongoing operations 2,073 1,913 968 Decreases in tax positions as a result of a lapse of statute of limitations (616 ) (6,446 ) (402 ) Increases in tax positions for current year relating to acquisitions — 169 — Decreases in tax positions due to settlements with taxing authorities (624 ) (1,190 ) (200 ) Gross unrecognized tax benefits at December 31 $ 20,328 $ 19,545 $ 25,356 |
Business Segment, Product and G
Business Segment, Product and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Product Lines | Revenue by product line was as follows: Year Ended December 31, ( in thousands 2019 2018 2017 Spinal Hardware $ 851,440 $ 788,649 $ 737,524 Surgical Support 316,630 313,065 289,161 Total Revenue $ 1,168,070 $ 1,101,714 $ 1,026,685 |
Schedule of Revenue and Net Property and Equipment by Geographical Area | Revenue and property and equipment, net, by geographic area were as follows: Revenue Property Year Ended December 31, December 31, ( in thousands 2019 2018 2017 2019 2018 United States $ 941,086 $ 896,152 $ 850,410 $ 218,771 $ 200,404 International (excludes Puerto Rico) 226,984 205,562 176,275 47,547 38,437 Total $ 1,168,070 $ 1,101,714 $ 1,026,685 $ 266,318 $ 238,841 |
Quarterly Data (unaudited) (Tab
Quarterly Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly financial data | The following quarterly financial data, in the opinion of management, reflects all adjustments, consisting of normal recurring adjustments necessary, for a fair presentation of results for the periods presented: Year Ended December 31, 2019 ( in thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 274,776 $ 292,105 $ 290,835 $ 310,354 Gross profit 200,282 214,526 213,807 227,098 Consolidated net income 9,386 14,962 11,010 29,876 Basic net income per common 0.18 0.29 0.21 0.57 Diluted net income per common share 0.18 0.29 0.21 0.55 Year Ended December 31, 2018 (1) (2) First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 260,522 $ 281,564 $ 271,301 $ 288,327 Gross profit 186,708 204,508 197,141 202,198 Consolidated net (loss) income (27,132 ) 11,531 15,923 12,157 Basic net (loss) income per common (0.53 ) 0.22 0.31 0.24 Diluted net (loss) income per common share (0.53 ) 0.22 0.30 0.23 (1) The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. ( 2 ) Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc . |
Organization and Significant _4
Organization and Significant Accounting Policies (Details Textual) | Oct. 01, 2018USD ($) | Dec. 31, 2019USD ($)Customersegment | Dec. 31, 2018USD ($)Customer | Dec. 31, 2017USD ($)Customer | Dec. 31, 2015 |
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||
Right-of-use assets | $ 66,932,000 | ||||
Right-of-use liabilities | $ 78,720,000 | ||||
Customer represented greater than 10 percent | Customer | 0 | 0 | 0 | ||
Inventory, finished goods | $ 298,700,000 | $ 259,400,000 | |||
Inventory, work in progress | 6,400,000 | 5,000,000 | |||
Inventory, raw materials | $ 7,300,000 | 8,800,000 | |||
Number of Reportable Units | segment | 1 | ||||
Impairment of goodwill and intangible assets | $ 0 | ||||
Impairment charges related to goodwill | $ 0 | ||||
Translation Adjustment Functional to Reporting Currency, Net of Tax | 9,400,000 | 8,600,000 | $ 6,900,000 | ||
Product shipment costs | 312,357,000 | 311,159,000 | 268,441,000 | ||
Business transition costs (recoveries) | $ (1,995,000) | 11,473,000 | 4,287,000 | ||
Performance Based Restricted Stock Units (PRSUs) [Member] | |||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||
Vesting period for the award | 5 years | 5 years | |||
2017 and 2016 Acquisitions [Member] | |||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||
Business transition costs (recoveries) | $ (6,300,000) | (1,500,000) | (1,300,000) | ||
Product Shipment [Member] | |||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||
Product shipment costs | $ 27,700,000 | $ 25,400,000 | $ 24,000,000 | ||
Minimum [Member] | |||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||
Finite-Lived intangible assets, useful life | 1 year | ||||
Property and equipment, useful life | 2 years | ||||
Maximum [Member] | |||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||
Finite-Lived intangible assets, useful life | 17 years | ||||
Property and equipment, useful life | 20 years | ||||
ASU 2016-02 [Member] | |||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||
Right-of-use assets | $ 62,800,000 | ||||
Right-of-use liabilities | 75,100,000 | ||||
Cumulative impact of new accounting principle towards retained earnings | $ 0 |
Organization and Significant _5
Organization and Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | [1],[2] | Sep. 30, 2018 | [1],[2] | Jun. 30, 2018 | [1],[2] | Mar. 31, 2018 | [1],[2] | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | |||||||||||||||
Net income attributable to NuVasive, Inc. | $ 65,234 | $ 12,479 | $ 81,598 | ||||||||||||
Denominator for basic and diluted net income per share: | |||||||||||||||
Weighted average common shares outstanding for basic | 51,956 | 51,382 | 50,874 | ||||||||||||
Dilutive potential common stock outstanding: | |||||||||||||||
Warrants | 1,494 | ||||||||||||||
Weighted average common shares outstanding for diluted | 53,160 | 52,355 | 55,193 | ||||||||||||
Basic net income per share attributable to NuVasive, Inc. | $ 0.57 | $ 0.21 | $ 0.29 | $ 0.18 | $ 0.24 | $ 0.31 | $ 0.22 | $ (0.53) | $ 1.26 | $ 0.24 | $ 1.60 | ||||
Diluted net income per share attributable to NuVasive, Inc. | $ 0.55 | $ 0.21 | $ 0.29 | $ 0.18 | $ 0.23 | $ 0.30 | $ 0.22 | $ (0.53) | $ 1.23 | $ 0.24 | $ 1.48 | ||||
Stock Options and Employee Stock Purchase Plan [Member] | |||||||||||||||
Dilutive potential common stock outstanding: | |||||||||||||||
Incremental common shares from sharebased payments | 15 | 36 | 141 | ||||||||||||
Restricted Stock Units and Performance Restricted Stock Units [Member] | |||||||||||||||
Dilutive potential common stock outstanding: | |||||||||||||||
Incremental common shares from sharebased payments | 658 | 760 | 1,083 | ||||||||||||
Senior Convertible Notes [Member] | |||||||||||||||
Dilutive potential common stock outstanding: | |||||||||||||||
Incremental common shares from sharebased payments | 531 | 177 | 1,601 | ||||||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc . | ||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. |
Organization and Significant _6
Organization and Significant Accounting Policies - Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share | 16,413 | 16,460 | 13,728 |
Stock Options ESPP Restricted Stock Units and Performance Restricted Stock Units [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share | 115 | 162 | 147 |
Warrants [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share | 10,865 | 10,865 | 10,865 |
Senior Convertible Notes [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share | 5,433 | 5,433 | 2,716 |
Balance Sheet Details - Propert
Balance Sheet Details - Property and Equipment Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and equipment net | ||
Property and equipment, gross | $ 659,597 | $ 576,382 |
Less: accumulated depreciation and amortization | (393,279) | (337,541) |
Property and equipment, net | $ 266,318 | 238,841 |
Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 2 years | |
Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 20 years | |
Instrument sets [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 4 years | |
Property and equipment, gross | $ 381,310 | 326,831 |
Machinery and equipment [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 66,482 | 58,585 |
Machinery and equipment [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 5 years | |
Machinery and equipment [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Computer equipment and software [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 149,134 | 127,539 |
Computer equipment and software [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 3 years | |
Computer equipment and software [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Leasehold improvements [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 29,542 | 32,973 |
Leasehold improvements [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 2 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 15 years | |
Furniture and fixtures [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 8,931 | 8,961 |
Furniture and fixtures [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 3 years | |
Furniture and fixtures [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Building and improvements [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 22,921 | 20,216 |
Building and improvements [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 10 years | |
Building and improvements [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 20 years | |
Land [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 1,277 | $ 1,277 |
Balance Sheet Details (Details
Balance Sheet Details (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Balance Sheet Details [Abstract] | |||
Depreciation expense | $ 80.8 | $ 75.4 | $ 69.5 |
Capitalized internal use software development costs | 51.7 | 40.6 | |
Capitalized internal use software amortization | 10.4 | 10.6 | 10.1 |
Amortization expense related to intangible assets | $ 54.8 | $ 54.4 | $ 51.7 |
Balance Sheet Details - Goodwil
Balance Sheet Details - Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 478,790 | $ 475,083 |
Accumulated Amortization | (277,698) | (223,035) |
Intangible Assets, net | 201,092 | 252,048 |
Intangible assets not subject to amortization: | ||
Goodwill | 561,064 | 561,366 |
Total goodwill and intangible assets, net | $ 762,156 | $ 813,414 |
Developed Technology [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 8 years | 8 years |
Gross Amount | $ 271,748 | $ 271,748 |
Accumulated Amortization | (163,459) | (131,730) |
Intangible Assets, net | $ 108,289 | $ 140,018 |
Manufacturing know-how and trade secrets [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 13 years | 13 years |
Gross Amount | $ 30,798 | $ 30,814 |
Accumulated Amortization | (20,333) | (17,926) |
Intangible Assets, net | $ 10,465 | $ 12,888 |
Trade name and trademarks [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 25,500 | $ 25,500 |
Accumulated Amortization | (16,947) | (13,901) |
Intangible Assets, net | $ 8,553 | $ 11,599 |
Customer relationships [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 150,744 | $ 147,021 |
Accumulated Amortization | (76,959) | (59,478) |
Intangible Assets, net | $ 73,785 | $ 87,543 |
Balance Sheet Details - Changes
Balance Sheet Details - Changes to Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Gross goodwill | $ 569,364 | $ 569,666 |
Accumulated impairment loss | (8,300) | (8,300) |
Goodwill | 561,064 | $ 561,366 |
Changes to gross goodwill | ||
Changes resulting from foreign currency fluctuations | (302) | |
Goodwill period increase (decrease) | $ (302) |
Balance Sheet Details - Future
Balance Sheet Details - Future Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Future amortization expense related to intangible assets | ||
2020 | $ 52,109 | |
2021 | 50,222 | |
2022 | 41,464 | |
2023 | 17,708 | |
2024 | 14,273 | |
Thereafter through 2031 | 25,316 | |
Intangible Assets, net | $ 201,092 | $ 252,048 |
Balance Sheet Details - Account
Balance Sheet Details - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts payable and accrued liabilities | ||
Accrued expenses | $ 63,163 | $ 70,386 |
Accounts payable | 11,827 | 8,799 |
Distributor commissions payable | 7,983 | 8,194 |
Other taxes payable | 6,501 | 9,359 |
Royalties payable | 4,994 | 7,173 |
Other | 2,692 | 3,381 |
Accounts payable and accrued liabilities | $ 97,160 | $ 107,292 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Textual) | 12 Months Ended | ||
Dec. 31, 2019USD ($)investment | Dec. 31, 2018USD ($)investment | Dec. 31, 2017USD ($) | |
Business Acquisition [Line Items] | |||
Unrealized loss position investment | investment | 0 | 0 | |
Impairment charges recorded for earnings | $ 0 | $ 0 | |
Net currency exchange losses from derivatives instruments | 800,000 | 3,700,000 | $ 900,000 |
Contingent consideration liabilities | 15,727,000 | 7,560,000 | |
Fair value adjustments | (626,000) | (300,000) | (11,200,000) |
Net loss on strategic investments | 4,800,000 | 3,800,000 | |
Purchased in-process research and development asset | 8,913,000 | ||
LessRay Software Technology Inc [Member] | |||
Business Acquisition [Line Items] | |||
Payments of outstanding milestone obligation | 19,000,000 | ||
Payments of outstanding milestone related to achievement of commercial milestone | 9,000,000 | ||
Payments of outstanding milestone related to achievement of regulatory approval milestone | 10,000,000 | ||
Payments for initial purchase price allocation | 18,700,000 | ||
Fair value adjustments | (300,000) | ||
Contingent Consideration Liabilities [Member] | |||
Business Acquisition [Line Items] | |||
Contingent consideration liabilities | 42,600,000 | 50,400,000 | |
Quoted Price in Active Market (Level 1) [Member] | Convertible Notes due 2021 [Member] | |||
Business Acquisition [Line Items] | |||
Debt instrument, fair value disclosure | 869,300,000 | 684,800,000 | |
Foreign Exchange Forward [Member] | |||
Business Acquisition [Line Items] | |||
Notional principal amount | 26,900,000 | 26,800,000 | 14,300,000 |
Foreign Exchange Forward [Member] | Other Current Assets or Other Current Liabilities [Member] | |||
Business Acquisition [Line Items] | |||
Fair value of derivative instrument asset (liability) | 100,000 | 300,000 | |
Foreign Exchange Forward [Member] | Other (Expense) Income [Member] | |||
Business Acquisition [Line Items] | |||
Net (losses) gains recognized on derivative instruments | $ 400,000 | $ 500,000 | $ (1,900,000) |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value Measurements on Recurring Basis [Member] - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | $ 151,750 | $ 56,000 |
Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | 151,750 | 56,000 |
Quoted Price in Active Market (Level 1) [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | 151,750 | 56,000 |
Quoted Price in Active Market (Level 1) [Member] | Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | $ 151,750 | $ 56,000 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Fair Value of Liabilities Measured on Recurring Basis Using Unobservable Inputs (Details) - Contingent Consideration Liabilities [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value measurement at beginning of period | $ 50,410 | $ 67,941 |
Contingent consideration liability recorded upon acquisition | 3,543 | |
Change in fair value measurement | (6,297) | (1,517) |
Changes resulting from foreign currency fluctuations | (119) | 193 |
Contingent consideration paid or settled | (1,435) | (19,750) |
Fair value measurement at end of period | $ 42,559 | $ 50,410 |
Carrying Value of Senior Conver
Carrying Value of Senior Convertible Notes (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2016 |
Debt Instrument [Line Items] | |||
Total Senior Convertible Notes | $ 623,298,000 | $ 602,526,000 | |
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | 650,000,000 | 650,000,000 | $ 650,000,000 |
Unamortized debt discount | (22,501,000) | (40,117,000) | |
Unamortized debt issuance costs | $ (4,201,000) | $ (7,357,000) |
Carrying Value of Senior Conv_2
Carrying Value of Senior Convertible Notes (Parenthetical) (Details) | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2016 |
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate on convertible notes | 2.25% | 2.25% | 2.25% |
Indebtedness (Details Textual)
Indebtedness (Details Textual) | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2017USD ($) | Mar. 31, 2016USD ($)$ / shares | Dec. 31, 2019USD ($)d$ / sharesshares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Debt Instrument [Line Items] | ||||||
Stock price | $ / shares | $ 77.34 | |||||
Revolving Senior Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility, maximum borrowing capacity | $ 500,000,000 | |||||
Credit facility, expiration date | 2022-04 | |||||
Loan outstanding | $ 0 | $ 0 | ||||
Revolving Senior Credit Facility [Member] | Federal Funds Effective Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility bear interest rate | 0.50% | |||||
Revolving Senior Credit Facility [Member] | LIBOR [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility bear interest rate | 1.00% | |||||
Multicurrency Borrowings [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility, maximum borrowing capacity | $ 100,000,000 | |||||
Standby Letters of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility, maximum borrowing capacity | 50,000,000 | |||||
Swing Line Loans [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility, maximum borrowing capacity | $ 5,000,000 | |||||
2021 Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Cash proceeds from the sale of warrants | $ 44,900,000 | |||||
Warrant strike price | $ / shares | $ 80 | |||||
2021 Hedge [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Number of common stock to be purchased | shares | 10,865,270 | |||||
Stock price | $ / shares | $ 59.82 | |||||
Derivative, maturity date | Mar. 15, 2021 | |||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Unused line fee | 0.20% | |||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | Base Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility bear interest rate | 0.00% | |||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | Eurocurrency [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility bear interest rate | 1.00% | |||||
Minimum [Member] | 2021 Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Class of warrant or rights expiry month and year | 2021-06 | |||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Unused line fee | 0.35% | |||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | Base Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility bear interest rate | 1.00% | |||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | Eurocurrency [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility bear interest rate | 2.00% | |||||
Maximum [Member] | 2021 Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Class of warrant or rights expiry month and year | 2021-12 | |||||
Additional Paid-in Capital [Member] | 2021 Hedge [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Cost of hedge transaction | $ 111,200,000 | |||||
Common Stock [Member] | Maximum [Member] | 2021 Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Number of preferred or common stock into which the warrants is converted | shares | 10,865,270 | |||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | |||
Proceeds from issuance of convertible debt, net of issuance costs | $ 634,100,000 | |||||
Interest rate on convertible notes | 2.25% | 2.25% | 2.25% | |||
Debt instrument, maturity date | Mar. 15, 2021 | |||||
Initial conversion rate adjustment, shares | 16.7158 | |||||
Principal amount of debt considered for conversion rate | $ 1,000 | |||||
Initial conversion price of convertible notes | $ / shares | $ 59.82 | |||||
Contractual coupon interest expense | $ 14,600,000 | $ 14,600,000 | $ 14,600,000 | |||
Amortization of debt discount (premium) | 17,600,000 | 16,700,000 | 15,900,000 | |||
Amortization of debt issuance costs | $ 3,200,000 | $ 2,900,000 | $ 2,600,000 | |||
Effective interest rate | 5.80% | |||||
Debt redemption price percentage | 100.00% | |||||
Principal payments due | $ 0 | |||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Scenario Two [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Consecutive trading days considered for debt conversion | d | 5 | |||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of conversion price | 130.00% | |||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Minimum [Member] | Scenario One [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Consecutive trading days considered for debt conversion | d | 20 | |||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of conversion price | 98.00% | |||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Maximum [Member] | Scenario One [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Consecutive trading days considered for debt conversion | d | 30 | |||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Additional Paid-in Capital [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Amount reclassified to stockholders' equity | $ 84,800,000 |
Commitments (Details Textual)
Commitments (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments And Contingencies Disclosure [Line Items] | |||
Restricted cash for security deposit | $ 1.5 | $ 2.4 | |
Lease, practical expedients, package | true | ||
Rent expense | $ 12.8 | $ 12.6 | |
Licensing and Purchasing Agreements [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Maximum payment the company has minimum and contingent obligations to make due to several purchase agreements | $ 74 | ||
Executive Severance Plans [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Other commitments, future minimum payments, remainder of fiscal year | 15.6 | ||
Corporate Office Facilities [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Future lease payment obligations | $ 58 | ||
Minimum [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Initial terms of lease | 1 year | ||
Maximum [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Initial terms of lease | 17 years |
Commitments - Right-of-use Asse
Commitments - Right-of-use Assets and Lease Liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Assets | |
Right-of-use assets | $ 66,932 |
Financing | 1,453 |
Total leased assets | 68,385 |
Current: | |
Operating | 5,567 |
Financing | 672 |
Long-term: | |
Operating | 73,153 |
Financing | 905 |
Total lease liabilities | $ 80,297 |
Weighted-average remaining lease term (years) - operating leases | 12 years 4 months 24 days |
Weighted-average remaining lease term (years) - finance leases | 2 years 3 months 18 days |
Weighted-average discount rate - operating leases | 7.30% |
Weighted-average discount rate - finance leases | 5.40% |
Commitments - Lease Costs, Cash
Commitments - Lease Costs, Cash Payments and Operating Lease Liabilities Arising From Obtaining Right-of-use Assets under Operating and Financing Lease Obligations (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease expense: | |
Operating lease expense | $ 11,859 |
Finance lease expense: | |
Depreciation of right-of-use assets | 441 |
Interest expense on lease liabilities | 56 |
Total lease expense | 12,356 |
Operating cash flows used for operating leases | 12,140 |
Operating cash flows used for financing leases | 56 |
Financing cash flows used for financing leases | 420 |
Total cash paid for amounts included in the measurement of lease liabilities | 12,616 |
Operating lease liabilities arising from obtaining right-of-use assets | $ 86,134 |
Commitments - Future Minimum An
Commitments - Future Minimum Annual Lease Payments under Capital, Operating and Financing Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financing Leases | ||
2020 | $ 744 | |
2021 | 645 | |
2022 | 283 | |
2023 | 14 | |
2024 | 9 | |
Total minimum lease payments | 1,695 | |
Less: amount representing interest | (118) | |
Present value of obligations under leases | 1,577 | |
Less: current portion | (672) | |
Long-term lease obligations | 905 | |
Operating Leases | ||
2020 | 11,024 | |
2021 | 10,522 | |
2022 | 10,090 | |
2023 | 9,708 | |
2024 | 8,645 | |
Thereafter | 75,277 | |
Total minimum lease payments | 125,266 | |
Less: amount representing interest | (46,546) | |
Present value of obligations under leases | 78,720 | |
Less: current portion | (5,567) | |
Long-term lease obligations | $ 73,153 | |
2019 | $ 13,750 | |
2020 | 13,007 | |
2021 | 10,954 | |
2022 | 10,578 | |
2023 | 10,515 | |
Thereafter | 116,684 | |
Total minimum lease payments | 175,488 | |
Capital Leases | ||
2019 | 534 | |
2020 | 507 | |
2021 | 244 | |
2022 | 24 | |
2023 | 5 | |
Total minimum lease payments | 1,314 | |
Less: amount representing interest | (59) | |
Present value of obligations under capital leases | 1,255 | |
Less: current portion | (449) | |
Long-term capital lease obligations | $ 806 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock, shares authorized | 120,000,000 | 120,000,000 | |||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | |||
Preferred stock, shares issued | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | |||
Closing price of stock | $ 77.34 | ||||
Proceeds from exercise of stock options | $ 0 | $ 1,300,000 | $ 2,400,000 | ||
Total intrinsic value | $ 1,000,000 | $ 2,500,000 | $ 8,300,000 | ||
Total stock options vested | 0 | 0 | 0 | ||
Total shares reserved for future issuance | 53,426,000 | ||||
ESPP [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 800,000 | ||||
Maximum percentage of annual compensation | 15.00% | ||||
Maximum amount withheld to purchase shares of the company | $ 21,250 | ||||
Percentage of issuance price of stock under the stock issuance program | 85.00% | ||||
ESPP offering period | 6 months | ||||
Number of share purchased under ESPP | 129,000 | 151,000 | 154,000 | ||
Total shares reserved for future issuance | 964,000 | ||||
2014 Equity Incentive Plan [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Percentage of acceleration of stock options in case of change in control | 50.00% | ||||
Total shares reserved for future issuance | 2,200,000 | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 20,900,000 | ||||
Weighted average contractual term | 1 year 8 months 12 days | ||||
Fair value of restricted stock units vested | $ 21,500,000 | $ 8,800,000 | $ 19,900,000 | ||
Total shares withheld related to statutory tax | 122,000 | 42,000 | 103,000 | ||
Payments of employees tax obligations | $ 7,200,000 | $ 2,200,000 | $ 7,200,000 | ||
Vested during the period | 366,000 | ||||
Performance Based Restricted Stock Units (PRSUs) [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 17,100,000 | ||||
Weighted average contractual term | 2 years 8 months 12 days | ||||
Fair value of restricted stock units vested | $ 19,900,000 | $ 2,100,000 | $ 10,300,000 | ||
Total shares withheld related to statutory tax | 121,000 | 8,000 | 35,000 | ||
Payments of employees tax obligations | $ 7,200,000 | $ 400,000 | $ 2,500,000 | ||
Vested during the period | 276,000 | 21,000 | 76,000 | ||
Vesting period for the awards | 5 years | 5 years | |||
Performance Based Restricted Stock Units (PRSUs) [Member] | Minimum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Share payout levels | 0.00% | ||||
Performance Based Restricted Stock Units (PRSUs) [Member] | Maximum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Share payout levels | 312.50% | ||||
Stock Options [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 0 | ||||
Total shares withheld related to statutory tax | 21,000 | 65,000 | 105,000 | ||
Payments of employees tax obligations | $ 100,000 | $ 400,000 | $ 2,100,000 | ||
Total shares reserved for future issuance | 16,000 |
Stockholders' Equity - Compensa
Stockholders' Equity - Compensation Costs Included in Consolidated Statement of Operations for All Stock-based Compensation Arrangements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | $ 30,297 | $ 25,673 | $ 22,391 |
Related income tax benefits | (6,191) | (6,418) | (8,509) |
Stock-based compensation expense, net of taxes | 24,106 | 19,255 | 13,882 |
Sales, Marketing and Administrative Expense [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | 25,968 | 22,190 | 20,596 |
Research and Development Expense [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | 3,798 | 3,052 | 1,445 |
Cost of Goods Sold [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | $ 531 | $ 431 | $ 350 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Award Activity (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Weighted average grant date fair value outstanding, Beginning balance | $ / shares | $ 55.25 |
Weighted average grant date fair value, Granted | $ / shares | 59.01 |
Weighted average grant date fair value, Vested | $ / shares | 45.89 |
Weighted average grant date fair value, Forfeited | $ / shares | 60.10 |
Weighted average grant date fair value outstanding, Ending balance | $ / shares | $ 59.21 |
Restricted Stock Units | |
Number of shares outstanding, Beginning balance | shares | 1,114 |
Number of shares, Granted | shares | 373 |
Number of shares, Vested | shares | (366) |
Number of shares, Forfeited | shares | (176) |
Number of shares outstanding, Ending balance | shares | 945 |
Stockholders' Equity - Performa
Stockholders' Equity - Performance-Based Restricted Stock Award Activity (Details) - Performance Based Restricted Stock Units (PRSUs) [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of shares outstanding, Beginning balance | 987,000 | ||
Shares, Awarded at target | 227,000 | ||
Number of shares, Vested | (276,000) | (21,000) | (76,000) |
Number of shares, Forfeited | (207,000) | ||
Number of shares outstanding, Ending balance | 731,000 | 987,000 | |
Maximum Number of Shares Eligible to be Issued, Outstanding, Beginning balance | 1,658,000 | ||
Maximum Number of Shares Eligible to be Issued, Awarded at target | 309,000 | ||
Maximum Number of Shares Eligible to be Issued, Vested | (452,000) | ||
Maximum Number of Shares Eligible to be Issued, Forfeited | (399,000) | ||
Maximum Number of Shares Eligible to be Issued, Outstanding, Ending balance | 1,116,000 | 1,658,000 | |
Weighted average grant date fair value outstanding, Beginning balance | $ 56.88 | ||
Average Grant Date Fair Value, Awarded at target | 52.77 | ||
Average Grant Date Fair Value, Vested | 45.24 | ||
Average Grant Date Fair Value, Forfeited | 52.78 | ||
Weighted average grant date fair value outstanding, Ending balance | $ 57.07 | $ 56.88 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of stock option activity under all stock plans | ||
Underlying shares outstanding, Beginning balance | 49 | |
Underlying shares, exercised | (33) | |
Underlying shares outstanding, Ending balance | 16 | 49 |
Underlying shares exercisable, Ending balance | 16 | |
Underlying shares vested or expected to vest, Ending balance | 16 | |
Weighted average exercise price outstanding, Beginning balance | $ 35.76 | |
Weighted Average Exercise Price, exercised | 38.79 | |
Weighted Average Exercise Price outstanding, Ending balance | 29.18 | $ 35.76 |
Weighted Average Exercise Price option exercisable, Ending balance | 29.18 | |
Weighted Average Exercise price vested or expected to vest, Ending balance | $ 29.18 | |
Weighted Average Remaining Contractual Term outstanding, Beginning balance | 10 months 20 days | 1 year 6 months 7 days |
Weighted Average Remaining Contractual Term exercisable, Ending balance | 10 months 20 days | |
Weighted Average Remaining Contractual Term vested or expected to vest, Ending balance | 10 months 20 days | |
Aggregate Intrinsic Value outstanding | $ 747 | $ 680 |
Aggregate intrinsic value exercisable | 747 | |
Aggregate intrinsic value vested or expected to vest | $ 747 |
Stockholders' Equity - Weighted
Stockholders' Equity - Weighted Average Assumptions Used to Estimate Fair Value of Stock Options Granted and Stock Purchase Rights under ESPP (Details) - ESPP [Member] | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted average assumptions used to estimate fair value of stock options granted and stock purchase rights under ESPP | |||
Volatility | 35.00% | 33.00% | 26.00% |
Expected term (years) | 6 months | 6 months | 6 months |
Risk free interest rate | 2.30% | 1.80% | 0.90% |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Reserved for Future Issuance (Details) shares in Thousands | Dec. 31, 2019shares |
Common stock options: | |
Shares reserved for future issuance | 53,426 |
Stock Options [Member] | |
Common stock options: | |
Shares reserved for future issuance | 16 |
Restricted Stock Units And Performance-Based Restricted Stock Units [Member] | |
Common stock options: | |
Shares reserved for future issuance | 1,692 |
Available for Future Grant [Member] | |
Common stock options: | |
Shares reserved for future issuance | 3,762 |
ESPP [Member] | |
Common stock options: | |
Shares reserved for future issuance | 964 |
2.25% Senior Convertible Notes due 2021 [Member] | |
Common stock options: | |
Shares reserved for future issuance | 14,396 |
Senior Convertible Warrants Due 2021 [Member] | |
Common stock options: | |
Shares reserved for future issuance | 32,596 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Before Income Taxes By Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Summarized details of income before income taxes by region | |||
United States | $ 74,721 | $ 8,939 | $ 76,480 |
Foreign | 5,796 | (216) | (4,117) |
Income before income taxes | $ 80,517 | $ 8,723 | $ 72,363 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
Federal | $ 4,802 | $ (4,188) | $ 5,972 |
State | 4,638 | 2,043 | 776 |
Foreign | 2,205 | 5,972 | 2,793 |
Total current provision | 11,645 | 3,827 | 9,541 |
Deferred: | |||
Federal | 5,873 | (5,944) | (1,565) |
State | (4,565) | (7,092) | (4,276) |
Foreign | (819) | (98,795) | (2,223) |
Total deferred provision | 489 | (111,831) | (8,064) |
Changes in tax rate | 606 | 258 | (14,668) |
Changes in valuation allowance | 2,543 | 103,990 | 5,699 |
Total provision (benefit) | $ 15,283 | $ (3,756) | $ (7,492) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax from Statutory Tax Rate to Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Tax provision at federal statutory rate | $ 16,909 | $ 1,832 | $ 25,327 |
Income tax credits and incentives | (7,209) | (5,525) | (3,462) |
State income tax | 3,763 | 90 | 3,553 |
Valuation allowance | 2,543 | 103,990 | 5,703 |
Net tax benefit on international restructuring | (97,028) | ||
Return to provision adjustments | (2,323) | (4,180) | (2,443) |
Acquisition related charges | (1,808) | (221) | (489) |
Compensation expense | 1,643 | 2,008 | (5,619) |
Income tax reserves | (1,146) | (6,717) | 1,184 |
Nondeductible meals and entertainment | 717 | 769 | 922 |
Foreign tax rate differences from federal statutory rate | 716 | 576 | 684 |
Changes in tax rate | 606 | 258 | (14,668) |
Recovery of tax basis in United States subsidiary | (19,540) | ||
Other | 872 | 392 | 1,356 |
Total provision (benefit) | $ 15,283 | $ (3,756) | $ (7,492) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Amortization | $ 87,296 | $ 106,769 |
Net operating loss carryforwards | 24,656 | 7,516 |
Inventory | 24,069 | 12,385 |
General business and other credit carryforwards | 23,168 | 25,846 |
Lease liability | 17,636 | |
Stock-based compensation | 11,562 | 14,914 |
Original issue discount | 1,840 | 3,322 |
Other | 22,591 | 27,869 |
Gross deferred tax assets | 212,818 | 198,621 |
Less valuation allowance | (122,534) | (120,233) |
Net deferred tax assets | 90,284 | 78,388 |
Deferred tax liabilities: | ||
Depreciation | (37,045) | (32,851) |
Acquired intangibles | (34,799) | (42,767) |
Right-of-use assets | (14,891) | |
Other | (6,260) | (1,843) |
Total deferred tax liabilities | (92,995) | (77,461) |
Net deferred tax liabilities | $ (2,711) | |
Net deferred tax assets | $ 927 |
Income Taxes - Summary of Unrec
Income Taxes - Summary of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation Of Unrecognized Tax Benefits Excluding Amounts Pertaining To Examined Tax Returns Roll Forward | |||
Gross unrecognized tax benefits at beginning of period | $ 19,545 | $ 25,356 | $ 23,322 |
Increases in tax positions for prior years | 62 | 499 | 1,692 |
Decreases in tax positions for prior years | (112) | (756) | (24) |
Increases in tax positions for current year relating to ongoing operations | 2,073 | 1,913 | 968 |
Decreases in tax positions as a result of a lapse of statute of limitations | (616) | (6,446) | (402) |
Increases in tax positions for current year relating to acquisitions | 169 | ||
Decreases in tax positions due to settlements with taxing authorities | (624) | (1,190) | (200) |
Gross unrecognized tax benefits period end | $ 20,328 | $ 19,545 | $ 25,356 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 30, 2018 | |
Income Taxes [Line Items] | ||||
Unrecognized tax benefits that would impact effective tax | $ 18,700 | $ 18,100 | $ 24,100 | |
Income tax, penalties and interest expense (benefit) | 100 | (500) | $ (100) | |
Income tax, penalties and interest accrued | 100 | 100 | ||
Remaining unrecognized tax positions | 5,900 | |||
Deferred tax assets | 212,818 | 198,621 | ||
Valuation allowance for deferred tax assets | 122,534 | $ 120,233 | ||
Undistributed earnings attributable to operations | 1,500 | |||
California Tax Authority [Member] | ||||
Income Taxes [Line Items] | ||||
Net research and development carryforwards | 31,400 | |||
Federal Tax Authority [Member] | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 2,200 | |||
Operating loss carryforwards expiration year | 2025 | |||
Net research and development carryforwards | $ 14,000 | |||
Federal tax credit carryforwards, expiration year | 2036 | |||
State and Local Jurisdiction [Member] | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 48,600 | |||
Operating loss carryforwards expiration year | 2021 | |||
Foreign Tax Authority [Member] | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 60,600 | |||
ASU 2016-16 [Member] | ||||
Income Taxes [Line Items] | ||||
Deferred tax assets | $ 100,800 | |||
Valuation allowance for deferred tax assets | $ 96,700 |
Business Segment, Product and_2
Business Segment, Product and Geographic Information (Details Textual) | 12 Months Ended |
Dec. 31, 2019segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Business Segment, Product and_3
Business Segment, Product and Geographic Information - Schedule of Revenue by Product Lines (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | [1],[2] | Sep. 30, 2018 | [1],[2] | Jun. 30, 2018 | [1],[2] | Mar. 31, 2018 | [1],[2] | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Entity Wide Information Revenue From External Customer [Line Items] | |||||||||||||||
Total revenue | $ 310,354 | $ 290,835 | $ 292,105 | $ 274,776 | $ 288,327 | $ 271,301 | $ 281,564 | $ 260,522 | $ 1,168,070 | $ 1,101,714 | $ 1,026,685 | ||||
Spinal Hardware [Member] | |||||||||||||||
Entity Wide Information Revenue From External Customer [Line Items] | |||||||||||||||
Total revenue | 851,440 | 788,649 | 737,524 | ||||||||||||
Surgical Support [Member] | |||||||||||||||
Entity Wide Information Revenue From External Customer [Line Items] | |||||||||||||||
Total revenue | $ 316,630 | $ 313,065 | $ 289,161 | ||||||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc . | ||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. |
Business Segment, Product and_4
Business Segment, Product and Geographic Information - Schedule of Revenue and Net Property and Equipment by Geographical Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | [1],[2] | Jun. 30, 2018 | [1],[2] | Mar. 31, 2018 | [1],[2] | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||||||||||||
Revenue | $ 310,354 | $ 290,835 | $ 292,105 | $ 274,776 | $ 288,327 | [1],[2] | $ 271,301 | $ 281,564 | $ 260,522 | $ 1,168,070 | $ 1,101,714 | $ 1,026,685 | |||
Property and Equipment, Net | 266,318 | 238,841 | 266,318 | 238,841 | |||||||||||
United States | |||||||||||||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||||||||||||
Revenue | 941,086 | 896,152 | 850,410 | ||||||||||||
Property and Equipment, Net | 218,771 | 200,404 | 218,771 | 200,404 | |||||||||||
International [Member] | |||||||||||||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||||||||||||
Revenue | 226,984 | 205,562 | $ 176,275 | ||||||||||||
Property and Equipment, Net | $ 47,547 | $ 38,437 | $ 47,547 | $ 38,437 | |||||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc . | ||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. |
Contingencies (Details)
Contingencies (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Madsen Medical, Inc. Litigation [Member] | ||
Loss Contingencies [Line Items] | ||
Settlement agreement, consideration | $ 27.8 | |
Medtronic Litigation [Member] | ||
Loss Contingencies [Line Items] | ||
Settlement agreement, consideration | $ 4.5 |
Quarterly Data (unaudited) (Det
Quarterly Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | [1],[2] | Sep. 30, 2018 | [1],[2] | Jun. 30, 2018 | [1],[2] | Mar. 31, 2018 | [1],[2] | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||
Revenue | $ 310,354 | $ 290,835 | $ 292,105 | $ 274,776 | $ 288,327 | $ 271,301 | $ 281,564 | $ 260,522 | $ 1,168,070 | $ 1,101,714 | $ 1,026,685 | ||||
Gross profit | 227,098 | 213,807 | 214,526 | 200,282 | 202,198 | 197,141 | 204,508 | 186,708 | 855,713 | 790,555 | 758,244 | ||||
Consolidated net income | $ 29,876 | $ 11,010 | $ 14,962 | $ 9,386 | $ 12,157 | $ 15,923 | $ 11,531 | $ (27,132) | $ 65,234 | $ 12,479 | $ 79,855 | ||||
Basic net income per share attributable to NuVasive, Inc. | $ 0.57 | $ 0.21 | $ 0.29 | $ 0.18 | $ 0.24 | $ 0.31 | $ 0.22 | $ (0.53) | $ 1.26 | $ 0.24 | $ 1.60 | ||||
Diluted net income per share attributable to NuVasive, Inc. | $ 0.55 | $ 0.21 | $ 0.29 | $ 0.18 | $ 0.23 | $ 0.30 | $ 0.22 | $ (0.53) | $ 1.23 | $ 0.24 | $ 1.48 | ||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc . | ||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. |
Quarterly Data (unaudited) (Par
Quarterly Data (unaudited) (Paranthetical) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information [Line Items] | |||
Litigation charge in connection with settlement | $ (27,800) | $ (4,500) | |
Madsen Medical, Inc. Litigation [Member] | |||
Quarterly Financial Information [Line Items] | |||
Litigation charge in connection with settlement | $ 27,800 |