UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2015
NUVASIVE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware |
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000-50744 |
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33-0768598 |
(State or Other Jurisdiction
of Incorporation) |
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(Commission
File Number) |
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(I.R.S. Employer
Identification Number) |
7475 Lusk Boulevard, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
(858) 909-1800
(Registrants telephone number, including area code)
n/a
(Former name or
former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions ( see General Instruction A.2. below):
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¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 |
Results of Operations and Financial Condition. |
On July 28, 2015, NuVasive, Inc.
(the Company) issued a press release announcing its financial results for the quarter ended June 30, 2015. A copy of this press release is furnished as Exhibit 99.1 hereto.
The information contained in this Current Report shall not be deemed filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a
filing.
On July 28, 2015, the Company issued a press release announcing that
it has entered into a definitive settlement agreement with the U.S. Department of Justice. The Company previously disclosed on April 29, 2015 that it had reached an agreement in principle to settle matters related to the subpoena issued to the
Company by the Office of Inspector General of the Department of Health and Human Services in 2013. Under the terms of the definitive settlement agreement, the Company will pay $13.5 million, plus fees and accrued interest. A copy of this press
release is furnished as Exhibit 99.2 hereto.
Item 9.01 |
Financial Statements and Exhibits. |
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99.1 |
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Press release issued by NuVasive, Inc. on July 28, 2015, announcing its financial results for the quarter ended June 30, 2015. |
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99.2 |
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Press release issued by NuVasive, Inc. on July 28, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
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NUVASIVE, INC. |
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By: |
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/s/ Jason Hannon |
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Jason Hannon |
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Executive Vice President, International & General Counsel |
Date: July 28, 2015
EXHIBIT INDEX
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Exhibit
Number |
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Description |
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99.1 |
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Press release issued by NuVasive, Inc. on July 28, 2015, announcing its financial results for the quarter ended June 30, 2015. |
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99.2 |
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Press release issued by NuVasive, Inc. on July 28, 2015. |
Exhibit 99.1
NEWS RELEASE
Investor/Media Contact:
Stacy Roughan
NuVasive, Inc.
1-858-909-1812
sroughan@nuvasive.com
NUVASIVE REPORTS SECOND QUARTER 2015 FINANCIAL RESULTS
Second Quarter 2015 Highlights:
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Revenue increased 6.4% to $202.9 million, or 8.5% on a constant currency basis; |
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Non-GAAP operating profit margin of 15.3%; GAAP operating profit margin of 12.7%; |
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Adjusted EBITDA margin of 24.9%; |
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Non-GAAP net income of $15.7 million; GAAP net income of $10.3 million; |
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Non-GAAP earnings per share of $0.31; GAAP earnings per share of $0.20; and |
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Company increases guidance for full year 2015 for non-GAAP operating margin, adjusted EBITDA and earnings per share. |
SAN DIEGO, CA July 28, 2015 - NuVasive, Inc. (Nasdaq: NUVA), a leading medical device company focused on transforming spine
surgery with minimally disruptive, procedurally-integrated solutions, announced today financial results for the quarter ended June 30, 2015.
We are pleased to report another strong quarter that resulted in revenue growth of more than 8% and an impressive 460 basis point
increase in profitability, as we continued to take market share and gain momentum in our efforts to improve operational efficiencies, said Gregory T. Lucier, Chairman and Chief Executive Officer of NuVasive. We are laser-focused on
increasing our market share by rapidly developing disruptive technologies and services for spine surgery, expanding our global footprint in existing and new markets, and positioning NuVasive as a commercial powerhouse with integrated sales, service
and specialized customer marketing programs. With these efforts underway, we look to move even faster to drive NuVasives next phase of growth and success, while generating enhanced long-term value for our shareholders.
A full reconciliation of non-GAAP to GAAP measures can be found in the tables of this news release.
Second Quarter 2015 Results
NuVasive reported second quarter 2015 total revenue of $202.9 million, a 6.4% increase compared to $190.7 million for the second quarter 2014.
On a constant currency basis, second quarter 2015 total revenue increased 8.5% compared to the same period last year.
GAAP gross profit
for the second quarter 2015 was $154.5 million and gross margin was 76.1% compared to a gross profit of $145.8 million and a gross margin of 76.5% for the second quarter 2014.
1
Total GAAP operating expenses for the second quarter 2015 were $128.6 million compared to $141.2
million in the second quarter 2014.
The Company reported a GAAP net income of $10.3 million, or $0.20 per share, for the second quarter
2015 compared to a GAAP net loss of $(4.1) million, or $(0.09) per share, for the second quarter 2014.
On a non-GAAP basis, the Company
reported net income of $15.7 million, or $0.31 per share, for the second quarter 2015 compared to net income of $7.6 million, or $0.15 per share, for the second quarter 2014.
Cash, cash equivalents and short and long-term marketable securities were approximately $306.6 million at June 30, 2015.
Annual Guidance for 2015
The Company provided the
following updated projections to its full year 2015 guidance:
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Revenue of approximately $810.0 million, which includes an approximate $13.0 million of currency headwinds, or approximately 6.2% growth compared
to revenue of $762.4 million for 2014; on a constant currency basis revenue is expected to grow approximately 7.9%; versus a prior expectation of 7.8% for 2015; |
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GAAP earnings per share of approximately $1.18 compared to GAAP loss per share of ($0.36) for 2014; versus a prior expectation of $1.12 for 2015;
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Non-GAAP earnings per share of approximately $1.17, an increase of approximately 74.2% compared to non-GAAP earnings of $0.67 for 2014; versus a
prior expectation of $1.10 for 2015; |
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Non-GAAP operating margin of approximately 15.0%, an increase of approximately 360 basis points compared to 11.4% for 2014; versus a prior
expectation of 14.4% for 2015; |
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Adjusted EBITDA margin of approximately 25.2%, an increase of approximately 330 basis points compared to 21.9% for 2014; versus a prior expectation
of 24.6% for 2015; |
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GAAP effective tax expense rate of approximately 45.0%; versus a prior expectation of 46.0% for 2015; and |
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Non-GAAP effective tax expense rate of approximately 45.0%; versus a prior expectation of 46.0% for 2015. |
Supplementary Financial Information
For additional financial detail, please visit the Investor Relations section of the Companys website at www.nuvasive.com to access
Supplementary Financial Information.
2
Reconciliation of Full Year EPS Guidance
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2015 Guidance |
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2014 Actuals |
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Prior 1 |
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Current 2 |
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GAAP earnings (loss) per share |
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$ |
(0.36 |
) |
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$ |
1.12 |
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$ |
1.18 |
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Impact of change from basic to diluted share count |
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0.02 |
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Impact of treasury method on convertible notes 3 |
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0.03 |
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0.03 |
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Adjusted GAAP earnings (loss) per share, adjusted to diluted share count |
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$ |
(0.34 |
) |
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$ |
1.15 |
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$ |
1.21 |
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Amortization of intangible assets |
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0.16 |
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0.14 |
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0.14 |
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Leasehold related charges |
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0.13 |
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0.03 |
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0.03 |
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Litigation liability |
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0.36 |
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(0.50 |
) |
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(0.49 |
) |
Intangible asset impairment |
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0.13 |
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CEO transition related costs |
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0.04 |
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0.04 |
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One-time and acquisition related items 4 |
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0.05 |
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0.05 |
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0.05 |
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Non-cash interest expense on convertible notes |
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0.18 |
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0.19 |
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0.19 |
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Non-GAAP earnings per share |
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$ |
0.67 |
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$ |
1.10 |
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$ |
1.17 |
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GAAP Weighted shares outstanding - basic |
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46,715 |
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48,593 |
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48,593 |
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GAAP Weighted shares outstanding - diluted |
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46,715 |
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52,607 |
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52,607 |
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Non-GAAP Weighted shares outstanding - diluted 3 |
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49,676 |
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51,431 |
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51,431 |
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1 |
Effective tax expense rate of ~46% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments |
2 |
Effective tax expense rate of ~45% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments |
3 |
Excludes the impact of share dilution of the convertible bond for which the Company has a hedge in place but is considered anti-dilutive under
US GAAP in weighted average shares outstanding |
4 |
Acquisition related items include expenses associated with M&A related activity and as incurred |
3
Reconciliation of Non-GAAP Operating Margin %
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2015 Guidance |
(in thousands, except %) |
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2014 Actuals |
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Prior |
|
Current |
Non-GAAP Gross Margin % [A] |
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76.1 |
% |
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77.3 |
% |
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76.7 |
% |
GAAP Gross Margin [D] |
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76.1 |
% |
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77.3 |
% |
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76.7 |
% |
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Non-GAAP Sales, Marketing & Administrative Expense [B] |
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59.9 |
% |
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57.9 |
% |
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56.9 |
% |
Leasehold related charges |
|
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1.4 |
% |
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|
0.4 |
% |
|
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|
0.4 |
% |
CEO transition related costs |
|
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0.4 |
% |
|
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0.4 |
% |
One-time and acquisition related items 1 |
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0.3 |
% |
|
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0.5 |
% |
|
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0.5 |
% |
|
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|
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|
|
|
|
|
|
|
|
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|
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|
GAAP Sales, Marketing & Administrative Expense [E] |
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61.6 |
% |
|
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59.2 |
% |
|
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58.2 |
% |
|
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|
Non-GAAP Research & Development Expense [C] |
|
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4.8 |
% |
|
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5.0 |
% |
|
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4.8 |
% |
One-time and acquisition related items 1 |
|
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0.2 |
% |
|
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|
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|
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|
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|
GAAP Research & Development Expense [F] |
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5.0 |
% |
|
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|
5.0 |
% |
|
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4.8 |
% |
|
|
|
|
Litigation liability [G] |
|
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3.9 |
% |
|
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|
-5.3 |
% |
|
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|
-5.2 |
% |
Intangible asset impairment [H] |
|
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1.4 |
% |
|
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|
|
|
|
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|
Amortization of intangible assets [I] |
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1.8 |
% |
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1.5 |
% |
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1.5 |
% |
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Non-GAAP Operating Margin % [A-B-C] |
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11.4 |
% |
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14.4 |
% |
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15.0 |
% |
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GAAP Operating Margin % [D-E-F-G-H-I] |
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2.4 |
% |
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16.9 |
% |
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17.4 |
% |
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1 |
Acquisition related items include expenses associated with M&A related activity and as incurred |
4
Reconciliation of EBITDA %
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2015 Guidance |
(in thousands, except %) |
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2014 Actuals |
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Prior |
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Current |
Net Income / (Loss) |
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-2.2 |
% |
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7.3 |
% |
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7.7 |
% |
Interest (income) / expense, net |
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3.5 |
% |
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3.5 |
% |
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3.6 |
% |
Provision for income taxes |
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0.8 |
% |
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6.0 |
% |
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6.1 |
% |
Depreciation and amortization 1 |
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8.1 |
% |
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7.5 |
% |
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7.8 |
% |
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EBITDA |
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10.2 |
% |
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24.3 |
% |
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25.2 |
% |
Non-cash stock based compensation |
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4.4 |
% |
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4.2 |
% |
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3.9 |
% |
Leasehold related charges |
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1.4 |
% |
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0.4 |
% |
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0.4 |
% |
Litigation liability |
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3.9 |
% |
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-5.3 |
% |
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-5.2 |
% |
Intangible asset impairment |
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1.4 |
% |
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CEO transition related costs 2 |
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0.4 |
% |
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0.4 |
% |
One-time and acquisition related items 3 |
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0.5 |
% |
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0.5 |
% |
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0.5 |
% |
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Adjusted EBITDA |
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21.9 |
% |
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24.6 |
% |
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25.2 |
% |
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1 |
Included in leasehold related charges are accelerated depreciation as a result of early leasehold terminations, which thereby were excluded from
the depreciation line |
2 |
Included in CEO transition related costs are $1.2m of stock based compensation charges, which thereby were excluded from the non-cash stock
based compensation line |
3 |
Acquisition related items include expenses associated with M&A related activity and as incurred |
Reconciliation of Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, non-GAAP net income, non-GAAP operating expenses and
non-GAAP operating margin, which exclude amortization of intangible assets, leasehold related charges, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges and non-cash interest expense on
convertible notes. Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency is the use of an exchange rate that eliminates fluctuations when
calculating financial performance numbers.
The Company also uses measures such as free cash flow, which represents cash flow from
operations less cash used in the acquisition and disposition of capital. Additionally, the Company uses an adjusted EBITDA measure which represents earnings before interest, taxes, depreciation and amortization and excludes the impact of stock-based
compensation, leasehold related charges, CEO transition related costs, certain litigation liabilities, acquisition related items and other significant one-time items. Management calculates the non-GAAP financial measures provided in this earnings
release excluding these costs and uses these non-GAAP financial measures to enable it to further and more consistently analyze the period-to-period financial performance of its core business operations. Management believes that providing investors
with these non-GAAP measures gives them additional information to enable them to assess, in the same way management assesses, the Companys current and future
5
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 Second Quarter 2015
Results
GAAP Earnings per Share to Non-GAAP Earnings per Share
|
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|
(in thousands, except per share data) |
|
Pre-Tax Adjustments |
|
|
Net of Tax |
|
|
Earnings Per Share |
|
GAAP net income |
|
|
|
|
|
$ |
10,268 |
|
|
$ |
0.21 |
|
GAAP impact of change from basic to diluted share count |
|
|
|
|
|
|
|
|
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
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|
GAAP net income, adjusted to diluted share count |
|
|
|
|
|
|
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0.20 |
|
|
|
|
|
Impact of treasury method on convertible notes 1 |
|
|
|
|
|
|
|
|
|
|
0.00 |
|
Amortization of intangible assets |
|
|
2,974 |
|
|
|
1,784 |
|
|
|
0.04 |
|
Leasehold related charges |
|
|
159 |
|
|
|
95 |
|
|
|
0.00 |
|
Litigation liability |
|
|
568 |
|
|
|
341 |
|
|
|
0.01 |
|
CEO transition related costs |
|
|
110 |
|
|
|
66 |
|
|
|
0.00 |
|
One-time and acquisition related items 2 |
|
|
1,366 |
|
|
|
820 |
|
|
|
0.02 |
|
Non-cash interest expense on convertible notes |
|
|
3,912 |
|
|
|
2,347 |
|
|
|
0.05 |
|
|
|
|
|
|
|
|
|
|
|
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|
Non-GAAP earnings |
|
|
|
|
|
$ |
15,721 |
|
|
|
0.31 |
|
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|
|
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|
GAAP weighted shares outstanding - basic |
|
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|
|
|
|
|
|
|
|
48,545 |
|
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|
|
|
|
|
|
|
|
|
|
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|
GAAP weighted shares outstanding - diluted |
|
|
|
|
|
|
|
|
|
|
51,681 |
|
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|
|
|
|
|
|
|
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|
Non-GAAP weighted shares outstanding - diluted 1 |
|
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|
|
|
|
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50,740 |
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|
1 |
Excludes the impact of share dilution of the convertible bond for which the Company has a hedge in place but is considered anti-dilutive under US GAAP in weighted average shares outstanding (941k shares) |
2 |
Acquisition related items include expenses associated with M&A related activity and as incurred |
6
Reconciliation of Year To Date 2015 Results
GAAP Earnings per Share to Non-GAAP Earnings per Share
|
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|
|
|
|
|
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|
|
|
(in thousands, except per share data) |
|
Pre-Tax Adjustments |
|
|
Net of Tax |
|
|
Earnings Per Share |
|
GAAP net income |
|
|
|
|
|
|
41,828 |
|
|
$ |
0.87 |
|
GAAP impact of change from basic to diluted share count |
|
|
|
|
|
|
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|
|
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income, adjusted to diluted share count |
|
|
|
|
|
|
|
|
|
|
0.81 |
|
|
|
|
|
Impact of treasury method on convertible notes 1 |
|
|
|
|
|
|
|
|
|
|
0.01 |
|
Amortization of intangible assets |
|
|
5,970 |
|
|
|
3,582 |
|
|
|
0.07 |
|
Leasehold related charges |
|
|
3,040 |
|
|
|
1,824 |
|
|
|
0.04 |
|
Litigation liability |
|
|
(42,007 |
) |
|
|
(25,204 |
) |
|
|
(0.50 |
) |
CEO transition related costs |
|
|
3,470 |
|
|
|
2,082 |
|
|
|
0.04 |
|
One-time and acquisition related items 2 |
|
|
3,385 |
|
|
|
2,031 |
|
|
|
0.04 |
|
Non-cash interest expense on convertible notes |
|
|
7,754 |
|
|
|
4,652 |
|
|
|
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP earnings |
|
|
|
|
|
$ |
30,795 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|
48,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted shares outstanding - diluted |
|
|
|
|
|
|
|
|
|
|
51,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP weighted shares outstanding - diluted 1 |
|
|
|
|
|
|
|
|
|
|
50,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Excludes the impact of share dilution of the convertible bond for which the Company has a hedge in place but is considered anti-dilutive under US GAAP in weighted average shares outstanding (916k shares) |
2 |
Acquisition related items include expenses associated with M&A related activity and as incurred |
Reconciliation of Second Quarter and Six Months 2015 Results
GAAP net income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
Three months ended June 30, 2015 |
|
|
Six months ended June 30, 2015 |
|
|
|
|
GAAP net income |
|
$ |
10,268 |
|
|
$ |
41,828 |
|
Interest (income) / expense, net |
|
|
6,897 |
|
|
|
13,604 |
|
Provision for income taxes |
|
|
8,644 |
|
|
|
26,529 |
|
Depreciation and amortization |
|
|
16,553 |
|
|
|
32,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
42,362 |
|
|
$ |
114,591 |
|
|
|
|
|
|
|
|
|
|
Non-cash stock based compensation 1 |
|
|
5,883 |
|
|
|
12,261 |
|
Leasehold related charges |
|
|
159 |
|
|
|
3,040 |
|
Litigation liability |
|
|
568 |
|
|
|
(42,007 |
) |
CEO related transition costs |
|
|
110 |
|
|
|
3,470 |
|
One-time and acquisition related items |
|
|
1,366 |
|
|
|
3,385 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
50,448 |
|
|
$ |
94,740 |
|
|
|
|
|
|
|
|
|
|
As a percentage of revenue |
|
|
24.9 |
% |
|
|
24.0 |
% |
1 |
Included in CEO related transition costs are $1.2m of stock based compensation charges, which thereby were excluded from the non-cash stock
based compensation line in the six months ended |
7
Investor Conference Call
The Company will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its second quarter 2015 financial
performance. The dial-in numbers are 1-877-407-9039 for domestic callers and 1-201-689-8470 for international callers. A live webcast of the conference call will be available online from the Investor Relations page of the Companys website at
www.nuvasive.com.
After the live webcast, the call will remain available on NuVasives website through August 28, 2015.
In addition, a telephone replay of the call will be available until August 4, 2015. The replay dial-in numbers are 1-877-870-5176 for domestic callers and 1-858-384-5517 for international callers. Please use pin number: 13612991.
About NuVasive
NuVasive is an innovative global medical device company that is changing spine surgery with minimally disruptive surgical products
and procedurally-integrated solutions for the spine. NuVasive has emerged from a small startup to become the #3 player in the $9 billion global spine market and remains focused on market share-taking strategies as the Company continues on its path
to become the industrys leading spine company. NuVasive offers a comprehensive spine portfolio of more than 90 unique products developed to improve spine surgery and patient outcomes. The Companys principal procedural solution is its
Maximum Access Surgery, or MAS®, platform for lateral spine fusion. MAS was designed to provide safe, reproducible, and clinically proven outcomes, and is a highly differentiated solution with
fully integrated neuromonitoring, customizable exposure, and a broad offering of application-specific implants and fixation devices designed to address a variety of pathologies.
NuVasive cautions you that statements included in this news release or made on the investor conference call referenced herein that are not
a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause NuVasives results to differ materially from
historical results or those expressed or implied by such forward-looking statements. In addition, this news release contains selected financial results from the second quarter 2015, as well as financial projections for 2015. The numbers for second
quarter 2015 are prior to the completion of review and audit procedures by the Companys external auditors and are subject to adjustment. In addition, the Companys projections for 2015 represent its initial estimates, and are subject to
the risk of being inaccurate because of the preliminary nature of the forecasts, the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability. The potential risks and uncertainties that could
cause actual growth and results to differ materially include, but are not limited to: the risk that NuVasives revenue or earnings projections may turn out to be inaccurate because of the preliminary nature of the forecasts; the risk of further
adjustment to financial results or future financial expectations; unanticipated difficulty in selling products, generating revenue or producing expected profitability; and those other risks and uncertainties more fully described in the
Companys news releases and periodic filings with the Securities and Exchange Commission. NuVasives public filings with the Securities and Exchange Commission are available at www.sec.gov. NuVasive assumes no obligation to update
any forward-looking statement to reflect events or circumstances arising after the date on which it was made.
8
NuVasive, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(unaudited) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Revenue |
|
$ |
202,910 |
|
|
$ |
190,677 |
|
|
$ |
395,293 |
|
|
$ |
368,172 |
|
Cost of goods sold (excluding below amortization of intangible assets) |
|
|
48,415 |
|
|
|
44,836 |
|
|
|
94,079 |
|
|
|
88,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
154,495 |
|
|
|
145,841 |
|
|
|
301,214 |
|
|
|
280,042 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales, marketing and administrative |
|
|
115,317 |
|
|
|
116,970 |
|
|
|
231,413 |
|
|
|
235,074 |
|
Research and development |
|
|
8,782 |
|
|
|
10,067 |
|
|
|
18,046 |
|
|
|
19,522 |
|
Amortization of intangible assets |
|
|
2,974 |
|
|
|
3,473 |
|
|
|
5,970 |
|
|
|
7,470 |
|
Impairment of intangible assets |
|
|
|
|
|
|
10,708 |
|
|
|
|
|
|
|
10,708 |
|
Litigation liability (gain) loss |
|
|
568 |
|
|
|
|
|
|
|
(42,007 |
) |
|
|
30,000 |
|
Business transition costs |
|
|
991 |
|
|
|
|
|
|
|
6,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
128,632 |
|
|
|
141,218 |
|
|
|
219,786 |
|
|
|
302,774 |
|
Interest and other expense, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
344 |
|
|
|
233 |
|
|
|
763 |
|
|
|
450 |
|
Interest expense |
|
|
(7,242 |
) |
|
|
(6,979 |
) |
|
|
(14,368 |
) |
|
|
(13,844 |
) |
Other income (expense), net |
|
|
(281 |
) |
|
|
(205 |
) |
|
|
143 |
|
|
|
171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and other expense, net |
|
|
(7,179 |
) |
|
|
(6,951 |
) |
|
|
(13,462 |
) |
|
|
(13,223 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
18,684 |
|
|
|
(2,328 |
) |
|
|
67,966 |
|
|
|
(35,955 |
) |
Income tax (expense) benefit |
|
|
(8,644 |
) |
|
|
(1,942 |
) |
|
|
(26,529 |
) |
|
|
13,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income (loss) |
|
$ |
10,040 |
|
|
$ |
(4,270 |
) |
|
$ |
41,437 |
|
|
$ |
(22,802 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back net loss attributable to non-controlling interests |
|
$ |
(228 |
) |
|
$ |
(182 |
) |
|
$ |
(391 |
) |
|
$ |
(438 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to NuVasive, Inc. |
|
$ |
10,268 |
|
|
$ |
(4,088 |
) |
|
$ |
41,828 |
|
|
$ |
(22,364 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to NuVasive, Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.21 |
|
|
$ |
(0.09 |
) |
|
$ |
0.87 |
|
|
$ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.20 |
|
|
$ |
(0.09 |
) |
|
$ |
0.81 |
|
|
$ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
48,545 |
|
|
|
46,832 |
|
|
|
48,269 |
|
|
|
46,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
51,681 |
|
|
|
46,832 |
|
|
|
51,700 |
|
|
|
46,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
NuVasive, Inc.
Consolidated Balance Sheets
(in thousands, except par values and share amounts)
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2015 |
|
|
2014 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
78,637 |
|
|
$ |
142,387 |
|
Short-term marketable securities |
|
|
200,052 |
|
|
|
220,329 |
|
Restricted cash and investments |
|
|
32,755 |
|
|
|
|
|
Accounts receivable, net of allowances of $6,251 and $5,844, respectively |
|
|
116,835 |
|
|
|
118,959 |
|
Inventory, net |
|
|
163,651 |
|
|
|
154,638 |
|
Deferred and prepaid taxes |
|
|
83,978 |
|
|
|
59,233 |
|
Prepaid expenses and other current assets |
|
|
8,423 |
|
|
|
10,325 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
684,331 |
|
|
|
705,871 |
|
Property and equipment, net |
|
|
142,076 |
|
|
|
128,565 |
|
Long-term marketable securities |
|
|
27,921 |
|
|
|
43,042 |
|
Intangible assets, net |
|
|
89,978 |
|
|
|
96,555 |
|
Goodwill |
|
|
154,305 |
|
|
|
154,443 |
|
Deferred tax assets, non-current |
|
|
42,035 |
|
|
|
65,330 |
|
Restricted cash and investments |
|
|
119,731 |
|
|
|
123,233 |
|
Other assets |
|
|
25,388 |
|
|
|
26,420 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,285,765 |
|
|
$ |
1,343,459 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
61,099 |
|
|
$ |
133,324 |
|
Accrued payroll and related expenses |
|
|
29,490 |
|
|
|
38,032 |
|
Litigation liabilities |
|
|
41,065 |
|
|
|
30,000 |
|
Deferred and income tax liabilities |
|
|
785 |
|
|
|
13,543 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
132,439 |
|
|
|
214,899 |
|
Senior Convertible Notes |
|
|
368,501 |
|
|
|
360,746 |
|
Deferred and income tax liabilities, non-current |
|
|
9,289 |
|
|
|
12,526 |
|
Non-current litigation liabilities |
|
|
87,495 |
|
|
|
93,700 |
|
Other long-term liabilities |
|
|
12,679 |
|
|
|
13,230 |
|
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 June 30, 2015 and December 31, 2014, 51,299,463 and
47,691,744 issued and outstanding at June 30, 2015 and December 31, 2014, respectively |
|
|
51 |
|
|
|
48 |
|
Additional paid-in capital |
|
|
940,765 |
|
|
|
847,145 |
|
Accumulated other comprehensive loss |
|
|
(10,970 |
) |
|
|
(9,670 |
) |
Accumulated deficit |
|
|
(145,110 |
) |
|
|
(186,938 |
) |
Treasury stock at cost; 2,468,592 shares and 233,369 shares at June 30, 2015 and December 31, 2014, respectively |
|
|
(117,293 |
) |
|
|
(10,537 |
) |
|
|
|
|
|
|
|
|
|
Total NuVasive, Inc. stockholders equity |
|
|
667,443 |
|
|
|
640,048 |
|
Non-controlling interests |
|
|
7,919 |
|
|
|
8,310 |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
$ |
675,362 |
|
|
$ |
648,358 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
1,285,765 |
|
|
$ |
1,343,459 |
|
|
|
|
|
|
|
|
|
|
10
NuVasive, Inc.
Consolidated Statements of Cash Flows
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
(Unaudited) |
|
2015 |
|
|
2014 |
|
Operating activities: |
|
|
|
|
|
|
|
|
Consolidated net income (loss) |
|
$ |
41,437 |
|
|
$ |
(22,802 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
32,630 |
|
|
|
31,043 |
|
Amortization of non-cash interest |
|
|
8,749 |
|
|
|
8,081 |
|
Stock-based compensation |
|
|
13,493 |
|
|
|
16,549 |
|
Impairment of intangible assets |
|
|
|
|
|
|
10,708 |
|
Deferred income taxes |
|
|
19,996 |
|
|
|
|
|
Reserves on current assets |
|
|
4,083 |
|
|
|
2,383 |
|
Other non-cash adjustments |
|
|
10,669 |
|
|
|
4,114 |
|
Changes in operating assets and liabilities, net of effects from acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
637 |
|
|
|
(8,603 |
) |
Inventory |
|
|
(15,181 |
) |
|
|
(20,930 |
) |
Prepaid expenses and other current assets |
|
|
1,182 |
|
|
|
(2,839 |
) |
Accounts payable and accrued liabilities |
|
|
6,841 |
|
|
|
12,999 |
|
Income taxes |
|
|
(38,666 |
) |
|
|
(15,111 |
) |
Accrued royalties |
|
|
(47,112 |
) |
|
|
7,192 |
|
Litigation liability |
|
|
4,795 |
|
|
|
30,000 |
|
Accrued payroll and related expenses |
|
|
(8,370 |
) |
|
|
(4,473 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
35,183 |
|
|
|
48,311 |
|
Investing activities: |
|
|
|
|
|
|
|
|
Cash paid for acquisitions and investments |
|
|
(1,357 |
) |
|
|
(59 |
) |
Purchase of intangible assets |
|
|
(28,589 |
) |
|
|
|
|
Purchases of property and equipment |
|
|
(47,976 |
) |
|
|
(32,560 |
) |
Purchases of marketable securities |
|
|
(129,549 |
) |
|
|
(129,080 |
) |
Sales of marketable securities |
|
|
164,147 |
|
|
|
103,650 |
|
Purchases of restricted investments |
|
|
(62,625 |
) |
|
|
|
|
Sales of restricted investments |
|
|
33,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(72,140 |
) |
|
|
(58,049 |
) |
Financing activities: |
|
|
|
|
|
|
|
|
Incremental tax benefits related to stock-based compensation awards |
|
|
9,928 |
|
|
|
|
|
Proceeds from the issuance of common stock |
|
|
8,360 |
|
|
|
14,193 |
|
Payment of contingent consideration |
|
|
(514 |
) |
|
|
(498 |
) |
Purchase of treasury stock |
|
|
(43,937 |
) |
|
|
(44 |
) |
Other financing activities |
|
|
(87 |
) |
|
|
(644 |
) |
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(26,250 |
) |
|
|
13,007 |
|
Effect of exchange rate changes on cash |
|
|
(543 |
) |
|
|
367 |
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents |
|
|
(63,750 |
) |
|
|
3,636 |
|
Cash and cash equivalents at beginning of period |
|
|
142,387 |
|
|
|
102,825 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
78,637 |
|
|
$ |
106,461 |
|
|
|
|
|
|
|
|
|
|
11
Exhibit 99.2
NEWS RELEASE
Investor/Media Contact:
Stacy Roughan
NuVasive, Inc.
1-858-909-1812
sroughan@nuvasive.com
NUVASIVE ANNOUNCES DEFINITIVE SETTLEMENT WITH UNITED STATES
SAN DIEGO, CA July 28, 2015 NuVasive, Inc. (NASDAQ: NUVA), a leading medical device company focused on transforming
spine surgery with minimally disruptive, procedurally-integrated solutions, announced today that it has reached a definitive settlement with the U.S. Department of Justice (DOJ) related to the subpoena issued to the Company by the Office
of Inspector General of the Department of Health and Human Services (OIG) in 2013. NuVasive admits no wrongdoing as part of the settlement.
On April 29, 2015, the Company announced that it had reached an agreement in principle to settle the investigation with the DOJ. The
Company has now entered into a definitive settlement agreement with the United States, acting through DOJ and on behalf of OIG, the Defense Health Agency, the Office of Personnel Management, and the U.S. Department of Veteran Affairs.
Under the terms of the settlement agreement, the Company will pay $13.5 million, plus fees and accrued interest. The settlement is neither an
admission of liability or wrongdoing by the Company nor a concession by the United States that its claims are not well founded.
Recognizing the governments responsibility to ensure the appropriateness of industry practices, the Company cooperated fully with the
inquiry and has continued to work hard to create and sustain a culture of compliance throughout its operations. Resolution of the matter avoids the time and expense of a potentially lengthy litigation process. The Company was not required to enter
into a corporate integrity agreement by the OIG as part of the settlement.
About NuVasive
NuVasive is an innovative global medical device company that is changing spine surgery with minimally disruptive surgical products and
procedurally-integrated solutions for the spine. NuVasive has emerged from a small startup to become the #3 player in the $9 billion global spine market and remains focused on market share-taking strategies as the Company continues on its path to
become the industrys leading spine company. NuVasive offers a comprehensive spine portfolio of more than 90 unique products developed to improve spine surgery and patient outcomes. The Companys principal
procedural solution is its Maximum Access Surgery, or MAS®, platform for lateral spine
fusion. MAS was designed to provide safe, reproducible, and clinically proven outcomes, and is a highly differentiated solution with fully integrated neuromonitoring, customizable exposure, and a broad offering of application-specific implants and
fixation devices designed to address a variety of pathologies.
NuVasive cautions you that statements included in this news 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 NuVasives results to differ
materially from historical results or those expressed or implied by such forward-looking statements. The potential risks and uncertainties which contribute to the uncertain nature of these statements include, among others, risks associated with
litigation and/or regulatory enforcement actions which could cause the Company to incur significant legal expenses and/or prevent it from making, using or selling certain of the Companys products, risks associated with acceptance of the
Companys minimally disruptive surgical products by spine surgeons, development and acceptance of new products or product enhancements, expansion of the Companys network of sales representatives, and the other risks and uncertainties
described in NuVasives news releases and periodic filings with the Securities and Exchange Commission. NuVasives public filings with the Securities and Exchange Commission are available at www.sec.gov. NuVasive assumes no obligation to
update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.
# # #
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