- Increases 2009 Guidance for Revenue and Earnings per Share -
Third Quarter 2009 Highlights: - Total revenue of $94.9 million; up
41.8% from third quarter 2008 and up 7.3% from second quarter 2009
- Gross margin of 80.6% compared to 81.8% for third quarter 2008
and to 81.1% for second quarter 2009 - GAAP earnings of $5.1
million or $0.13 per share; Non-GAAP earnings of $11.0 million or
$0.28 per share SAN DIEGO, Oct. 20 /PRNewswire-FirstCall/ --
NuVasive, Inc. (NASDAQ: NUVA), a medical device company focused on
developing products for minimally disruptive surgical treatments
for the spine, announced today financial results for the quarter
ended September 30, 2009. NuVasive reported third quarter revenue
of $94.9 million, a 41.8% increase over the $66.9 million for the
third quarter 2008 and a 7.3% increase over the $88.5 million for
the second quarter 2009. Gross profit for the third quarter 2009
was $76.5 million and gross margin was 80.6%, compared to a gross
profit of $54.7 million and a gross margin of 81.8% for the third
quarter 2008. For the second quarter 2009, gross profit was $71.8
million and gross margin was 81.1%. Total operating expenses for
the third quarter 2009 were $70.4 million compared to $77.7 million
in the third quarter 2008 and $67.3 million in the second quarter
2009. Operating expenses include $0.6 million of acquisition
related costs, a $2.0 million reversal of a leasehold termination
charge and $0.8 million related to intellectual property
litigation. On a GAAP basis, the Company reported net income of
$5.1 million, or $0.13 per share, for the third quarter 2009. On a
Non-GAAP basis, the Company reported net income of $11.0 million,
or $0.28 per share, for the third quarter 2009. The Non-GAAP
earnings per share calculations for the third quarter exclude (i)
stock-based compensation of $5.2 million; (ii) amortization of
acquired intangible assets of $1.4 million; (iii) acquisition
related costs of $0.6 million; (iv) intellectual property
litigation costs of $0.8 million, and (v) the reversal of a
leasehold termination charge of $2.0 million. Cash, cash
equivalents and short and long-term marketable securities were
$200.2 million at September 30, 2009. Alex Lukianov, Chairman and
Chief Executive Officer, said, "NuVasive is pioneering the lateral
approach with our proprietary XLIF® procedure and MAS® platform. We
continue to take market share and expand our addressable market by
broadening the application of our technology throughout the spine.
We are the only company with the ability to laterally address a
wide range of applications in the lumbar and thoracic spine, from
single level procedures to complex multi level deformity
corrections. We are pleased with our financial performance in the
third quarter of 2009, and are confident in our strategy to become
the #4 global spine company." Updated 2009 Financial Guidance
NuVasive is updating its full year 2009 financial guidance as
follows: Revenue: -- $365 million to $367 million; up from previous
guidance of $360 million to $365 million Gross Margin: -- Gross
Margin of approximately 81% EPS: -- GAAP: earnings per share of
$0.11 to $0.14; up from previous guidance of $0.06 to $0.08 --
Earnings per share of $0.27 to $0.30 excluding adjustments per the
enclosed table; up from previous guidance of $0.25 to $0.27
Reconciliation of Non-GAAP Information Management uses certain
Non-GAAP financial measures such as Non-GAAP earnings per share,
which exclude intellectual property litigation expenses, the
reversal of leasehold termination charges, acquisition related
costs, stock-based compensation, and the amortization of acquired
intangible assets. Management does not consider these costs in
evaluating the continuing operations of the Company. Therefore,
management calculates the Non-GAAP financial measures provided in
this earnings release excluding these costs and uses these Non-GAAP
financial measures to enable it to analyze further, and more
consistently, the period-to-period financial performance of its
core business operations. Management believes that providing
investors with these Non-GAAP measures gives them additional
important information to enable them to assess, in the same way
management assesses, the Company's current and future continuing
operations. These Non-GAAP measures are not in accordance with, or
an alternative for, GAAP, and may be different from Non-GAAP
measures used by other companies. Set forth below are
reconciliations of the Non-GAAP financial measures to the
comparable GAAP financial measure. Reconciliation of Third Quarter
2009 Results (in thousands, except per share amounts) $ Per Share
----------- ----------- GAAP net income $5,064 $0.13 IP litigation
costs 780 0.02 Reversal of leasehold termination charge (1,997)
(0.05) Acquisition related costs 621 0.02 --- ---- Earnings
excluding other adjustments 4,468 0.11 Non-cash stock-based
compensation 5,166 0.13 Amortization of acquired intangible assets
1,364 0.04 ----- ---- Non-GAAP earnings $10,998 $0.28 ======= =====
Diluted weighted shares outstanding 39,216 ====== Reconciliation of
Year-to-Date 2009 Results (in thousands, except per share amounts)
$ Per Share ----------- ----------- GAAP net income $3,527 $0.09 IP
litigation costs 3,408 0.09 Reversal of leasehold termination
charge (1,997) (0.05) Acquisition related costs 3,096 0.08 -----
---- Earnings excluding other adjustments 8,034 0.21 Non-cash
stock-based compensation 18,165 0.47 Amortization of acquired
intangible assets 4,071 0.11 ----- ---- Non-GAAP earnings $30,270
$0.79 ======= ===== Diluted weighted shares outstanding 38,384
====== Reconciliation of Full Year 2009 Guidance Range for Year
Ending December 31, 2009 ------------- (in thousands, except per
share amounts) Low High GAAP net earnings per share $0.11 $0.14 IP
litigation costs 0.13 0.13 Reversal of leasehold termination charge
(0.05) (0.05) Acquisition related costs 0.08 0.08 ---- ----
Earnings per share excluding other adjustments 0.27 0.30 Non-cash
stock-based compensation 0.64 0.64 Amortization of acquired
intangible assets 0.13 0.13 ---- ---- Non-GAAP earnings per share
$1.04 $1.07 ===== ===== Diluted weighted shares outstanding 38,800
38,800 ====== ====== Conference Call NuVasive will hold a
conference call today at 5:30 p.m. ET / 2:30 p.m. PT to discuss the
results. The dial-in numbers are 1-877-407-4018 for domestic
callers and 1-201-689-8471 for international callers. A live
webcast of the conference call will be available online from the
investor relations page of the Company's corporate website at
http://www.nuvasive.com/. After the live webcast, the call will
remain available on NuVasive's website, http://www.nuvasive.com/,
through November 20, 2009. In addition, a telephonic replay of the
call will be available until November 3, 2009. The replay dial-in
numbers are 1-877-660-6853 for domestic callers and 1-201-612-7415
for international callers. Please use account number 3055 and
conference ID number 331825. About NuVasive NuVasive is a medical
device company focused on the design, development, and marketing of
products for the surgical treatment of spine disorders. The
Company's product portfolio is focused primarily on the $4.6
billion U.S. spine implant market. Additionally, the Company has
expanded into the $1.5 billion global biologics market, the $1.5
billion international market, and is developing products for the
emerging motion preservation market. NuVasive's principal product
offering is based on its Maximum Access Surgery, or MAS® platform.
The MAS platform combines four categories of products that
collectively minimize soft tissue disruption during spine surgery
with maximum visualization and safe, easy reproducibility for the
surgeon: NeuroVision®, a proprietary software-driven nerve
avoidance system; MaXcess®, a unique split-blade retractor system;
a wide variety of specialized implants; and several biologic fusion
enhancers. MAS significantly reduces surgery time and returns
patients to activities of daily living much faster than
conventional approaches. Having redefined spine surgery with the
MAS platform's lateral approach, known as eXtreme Lateral Interbody
Fusion, or XLIF®, NuVasive has built an entire spine franchise.
With nearly 50 products today spanning lumbar, thoracic and
cervical applications, the Company will continue to expand and
evolve its offering predicated on its R&D focus and dedication
to outstanding service levels supported by a culture of Absolute
Responsiveness®. NuVasive cautions you that statements included in
this press release that are not a description of historical facts
are forward-looking statements that involve risks, uncertainties,
assumptions and other factors which, if they do not materialize or
prove correct, could cause NuVasive's results to differ materially
from historical results or those expressed or implied by such
forward-looking statements. The potential risks and uncertainties
that could cause actual growth and results to differ materially
include, but are not limited to: the risk that the Company's
revenue or profitability projections may prove incorrect because of
unexpected difficulty in generating sales or achieving anticipated
profitability; the uncertain process of seeking regulatory approval
or clearance for NuVasive's products or devices, including risks
that such process could be significantly delayed; the possibility
that the FDA may require significant changes to NuVasive's products
or clinical studies; the risk that products may not perform as
intended and may therefore not achieve commercial success; the risk
that competitors may develop superior products or may have a
greater market position enabling more successful commercialization;
the risk that additional clinical data may call into question the
benefits of NuVasive's products to patients, hospitals and
surgeons; and other risks and uncertainties more fully described in
NuVasive's press releases and periodic filings with the Securities
and Exchange Commission. NuVasive's public filings with the
Securities and Exchange Commission are available at
http://www.sec.gov/. NuVasive assumes no obligation to update any
forward-looking statement to reflect events or circumstances
arising after the date on which it was made. Contact: Kevin C.
O'Boyle EVP & Chief Financial Officer NuVasive, Inc.
858-909-1998 Investors: Patrick F. Williams Vice President, Finance
& Investor Relations NuVasive, Inc. 858-638-5511 Media: Jason
Rando The Ruth Group 646-536-7025 NuVasive, Inc. Unaudited
Condensed Consolidated Statement of Operations (in thousands,
except per share data) Three Months Ended Nine Months Ended
September 30, September 30, ------------------ -----------------
2009 2008 2009 2008 ---- ---- ---- ---- Revenues $94,916 $66,915
$263,405 $175,501 Cost of goods sold 18,417 12,195 49,901 30,845
------ ------ ------ ------ Gross profit 76,499 54,720 213,504
144,656 Operating expenses: Sales, marketing and administrative
59,761 54,557 176,391 135,975 Research and development 10,654 6,396
30,047 19,797 In-process research and development - 16,700 - 20,876
- ------ - ------ Total operating expenses 70,415 77,653 206,438
176,648 Interest income (expense) and other, net (1,648) (146)
(4,850) 764 Net loss attributable to noncontrolling interests 628 -
1,311 - --- - ----- - Total other income (expense) (1,020) (146)
(3,539) 764 ------ -------- ------ -------- Net income (loss)
attributable to NuVasive, Inc. $5,064 $(23,079) $3,527 $(31,228)
====== ======== ====== ======== Net income (loss) per share
attributable to NuVasive, Inc.: Basic net income (loss) per share
$0.13 $(0.64) $0.10 $(0.88) ===== ====== ===== ====== Diluted net
income (loss) per share $0.13 $(0.64) $0.09 $(0.88) ===== ======
===== ====== Weighted average shares - basic 37,733 35,931 37,008
35,674 ====== ====== ====== ====== Weighted average shares -
diluted 39,216 35,931 38,384 35,674 ====== ====== ====== ======
Stock-based compensation is included in operating expenses in the
following categories: Sales, marketing and administrative $4,265
$4,499 $14,748 $13,541 Research and development 901 922 3,417 2,178
--- --- ----- ----- $5,166 $5,421 $18,165 $15,719 ====== ======
======= ======= NuVasive, Inc. Unaudited Condensed Consolidated
Balance Sheets (in thousands) September 30, December 31, 2009 2008
-------------- ------------- ASSETS (In thousands, except par
value) Current assets: Cash and cash equivalents $134,276 $132,318
Short-term marketable securities 55,915 45,738 Accounts receivable,
net 51,245 51,622 Inventory 85,892 68,834 Prepaid expenses and
other current assets 3,925 3,466 ----- ----- Total current assets
331,253 301,978 Property and equipment, net 77,543 73,686 Long-term
marketable securities 10,032 45,305 Goodwill 102,264 2,332
Intangible assets, net 104,601 54,767 Other assets 7,337 9,338
----- ----- Total assets $633,030 $487,406 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable and accrued liabilities $23,183 $26,633 Accrued payroll and
related expenses 20,568 17,132 Acquisition related liabilities
15,414 - Royalties payable 2,201 1,722 ----- ----- Total current
liabilities 61,366 45,487 Senior convertible notes 230,000 230,000
Long-term acquisition related liabilities 30,318 12,111 Other
long-term liabilities 29,099 12,177 Commitments and contingencies
Noncontrolling interests 13,689 - Stockholders' equity: Common
stock 38 36 Additional paid-in capital 460,290 383,293 Accumulated
other comprehensive income (loss) 211 (190) Accumulated deficit
(191,981) (195,508) -------- -------- Total stockholders' equity
268,558 187,631 ------- ------- Total liabilities and stockholders'
equity $633,030 $487,406 ======== ======== NuVasive, Inc. Unaudited
Condensed Consolidated Statements of Cash Flows (in thousands) Nine
Months Ended September 30, ----------------- 2009 2008 ---- ----
Operating activities: Net income (loss) $3,527 $(31,228)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: Depreciation and amortization
22,005 15,671 In-process research and development - 20,876
Stock-based compensation 18,165 15,719 Leasehold abandonment
(1,997) 4,486 Noncontrolling interest (1,311) - Allowance for
doubtful accounts 1,175 410 Allowance for excess and obsolete
inventory 2,470 (3) Other non-cash adjustments 2,248 1,019 Changes
in operating assets and liabilities: Accounts receivable (329)
(18,986) Inventory (19,027) (22,136) Prepaid expenses and other
current assets 788 (941) Accounts payable and accrued liabilities
2,410 3,898 Accrued payroll and related expenses 2,742 1,778 -----
----- Net cash provided by (used in) operating activities 32,866
(9,437) Investing activities: Cash paid for acquisitions (24,055)
(41,256) Investment in Progentix (10,000) - Acquisition related
milestone payments (10,000) - Purchases of property and equipment
(21,250) (34,161) Purchases of short-term marketable securities
(46,678) (83,069) Sales of short-term marketable securities 56,365
29,842 Purchases of long-term marketable securities (17,964)
(51,390) Sales of long-term marketable securities 32,971 14,778
Other assets - 544 - --- Net cash provided by (used in) investing
activities (40,611) (164,712) Financing activities: Payments of
long-term liabilities - (300) Issuance of convertible debt, net of
costs - 222,414 Purchase of convertible note hedges - (45,758) Sale
of warrants - 31,786 Issuance of common stock 9,618 8,480 -----
----- Net cash provided by financing activities 9,618 216,622
Effect of exchange rate changes on cash 85 - -- - Increase in cash
and cash equivalents 1,958 42,473 Cash and cash equivalents at
beginning of year 132,318 61,915 ------- ------ Cash and cash
equivalents at end of year $134,276 $104,388 ======== ========
DATASOURCE: NuVasive, Inc. CONTACT: Kevin C. O'Boyle, EVP &
Chief Financial Officer of NuVasive, Inc., +1-858-909-1998, ; or
Investors: Patrick F. Williams, Vice President, Finance &
Investor Relations of NuVasive, Inc., +1-858-638-5511, ; or Media:
Jason Rando of The Ruth Group, +1-646-536-7025, Web Site:
http://www.nuvasive.com/
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