NuVasive Reports Third Quarter 2014 Financial Results and Increases Full Year Guidance

NuVasive, Inc. (NASDAQ: NUVA)

NuVasive, Inc. (NASDAQ: NUVA) (“NuVasive” or the “Company”), a medical device company focused on developing minimally disruptive surgical products and procedures for the spine, today announced financial results for the quarter ended September 30, 2014.

“We are pleased to report results for the third quarter 2014 that exceeded revenue expectations, generated record free cash flow and demonstrated strong progress toward our commitment to increase operating profitability,” said Alex Lukianov, Chairman and Chief Executive Officer of NuVasive. “Last quarter we announced our position as the #3 spine player globally. That is an incredible accomplishment for the entire NUVA family and we are proud that our strategy delivered continued market share gains in the third quarter. We are laser focused on delivering on our updated full year performance expectations with a strong finish to 2014. The combination of our dynamic share taking strategy with our well-defined levers for improving profitability is set to drive our growth this year and improve shareholder value over the next several years.”

A full reconciliation of non-GAAP to GAAP measures can be found in the tables of this press release.

Third Quarter 2014

NuVasive reported third quarter 2014 revenue of $189.9 million, a 12.3% increase compared to $169.2 million for the third quarter 2013.

GAAP gross profit for the third quarter 2014 was $142.2 million and gross margin was 74.9% compared to a gross profit of $125.9 million and a gross margin of 74.4% for the third quarter 2013.

Total GAAP operating expenses for the third quarter 2014 were $125.9 million compared to $114.3 million in the third quarter 2013. The increase in operating costs for the third quarter 2014 resulted primarily from investment to support international expansion.

The Company reported a GAAP net loss of $(1.8) million, or $(0.04) per share, for the third quarter 2014. GAAP net loss for the quarter included a tax rate of 128%, which was higher than anticipated primarily due to the mix of earnings. The higher than anticipated tax rate negatively impacted results by approximately $(0.08), all of which the Company expects to recover in the fourth quarter 2014 and is reflected in the revised increase to full year 2014 EPS guidance.

On a non-GAAP basis, the Company reported net income of $9.6 million, or $0.19 per share, for the third quarter 2014. The Non-GAAP earnings per share calculations for the third quarter 2014 exclude the following amounts pre-tax: (i) non-cash stock-based compensation of $8.2 million; (ii) certain intellectual property litigation expenses of $1.2 million; (iii) amortization of intangible assets of $3.1 million; (iv) a leasehold related charge of $2.2 million; (v) one-time and acquisition related items of $0.6 million; and (vi) non-cash interest expense on convertible notes of $3.7 million.

Cash, cash equivalents and short and long-term marketable securities were approximately $384.2 million at September 30, 2014. The Company generated $48.2 million in cash flows from operations and invested $13.1 million in capital expenditures, yielding $35.1 million for the third quarter 2014 in free cash flow, defined as operating cash flow less capital expenditures.

Annual Guidance for 2014

The Company provided the following updated projections to its full year 2014 guidance:

Supplementary Financial Information

For additional financial detail, please visit the Investor Relations section of the Company’s website at to access Supplementary Financial Information.

Reconciliation of Non-GAAP Information

Management uses certain Non-GAAP financial measures such as Non-GAAP earnings per share, Non-GAAP gross margin, Non-GAAP operating expenses, and Non-GAAP operating margin, which exclude non-cash stock-based compensation, certain intellectual property litigation expenses, amortization of intangible assets, a leasehold related charge, acquisition related items, non-cash interest expense on convertible notes, a litigation liability expense, an out-of-period royalty expense charge, and an intangible asset impairment charge. 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 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 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.

Conference Call

NuVasive will hold a conference call today at 5:30 p.m. ET / 2:30 p.m. PT to discuss these results. 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 Company’s corporate website at

After the live webcast, the call will remain available on NuVasive’s website, through November 28, 2014. In addition, a telephone replay of the call will be available until November 13, 2014. 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: 13593345.

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. The Company is the third largest player in the $8.7 billion global spine market. NuVasive offers a comprehensive spine portfolio of more than 90 unique products developed to improve spine surgery and patient outcomes. The Company’s 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 press release or made on the earnings call referenced herein that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause NuVasive’s results to differ materially from historical results or those expressed or implied by such forward-looking statements. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to: the risk that NuVasive’s 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 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 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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Josh Sandberg

Josh Sandberg is the President and CEO of Ortho Spine Partners and sits on several company and industry related Boards. He also is the Creator and Editor of OrthoSpineNews.

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