SAN DIEGO, May 6, 2020 /PRNewswire/ — NuVasive, Inc. (NASDAQ: NUVA), the leader in spine technology innovation, focused on transforming spine surgery with minimally disruptive, procedurally integrated solutions, today announced financial results for the quarter ended March 31, 2020.
First Quarter 2020 Highlights
- Revenue decreased -5.4% to $259.9 million, or -5.1% on a constant currency basis;
- GAAP operating margin of 10.9%; Non-GAAP operating margin of 16.9%; and
- GAAP diluted earnings per share of $0.10; Non-GAAP diluted earnings per share of $0.48.
“First and foremost, I want to recognize the healthcare professionals who are battling COVID-19 on the front lines and whose work is truly heroic during this global healthcare crisis,” said J. Christopher Barry, chief executive officer of NuVasive. “Additionally, I am proud of the resiliency demonstrated by NuVasive employees, as the Company remains committed to supporting our surgeon partners and their patients during this time.
“NuVasive’s first quarter performance was consistent with the preliminary revenue results provided in the business update shared last month,” Barry continued. “The Company began the quarter positioned to build upon the financial momentum delivered last year, but faced a decline in elective procedure volumes due to the COVID-19 pandemic. However, with a strong cash position, dedicated team and innovative technology in our pipeline, we are confident in the long-term trajectory of the business and our purpose to transform surgery, advance care and change lives.”
A full reconciliation of GAAP to non-GAAP financial measures can be found in the tables of this news release.
First Quarter 2020 Results
NuVasive reported first quarter 2020 total revenue of $259.9 million, a -5.4% decrease compared to $274.8 million for the first quarter 2019. On a constant currency basis, first quarter 2020 total revenue decreased -5.1% compared to the same period last year.
For the first quarter 2020, both GAAP and non-GAAP gross profit was $188.0 million and GAAP and non-GAAP gross margin was 72.3%. These results compared to GAAP and non-GAAP gross profit of $200.3 million and GAAP and non-GAAP gross margin of 72.9%, for the first quarter 2019.
The Company reported GAAP net income of $5.3 million, or diluted earnings per share of $0.10, for the first quarter 2020 compared to GAAP net income of $9.4 million, or diluted earnings per share of $0.18, for the first quarter 2019. On a non-GAAP basis, the Company reported net income of $25.4 million, or diluted earnings per share of $0.48, for the first quarter 2020 compared to non-GAAP net income of $27.6 million, or diluted earnings per share of $0.53, for the first quarter 2019.
Expense Control Measures and 2020 Financial Guidance
On April 14, 2020, NuVasive provided a business update related to COVID-19, including the following temporary actions to reduce operating expenses:
- Implementing compensation reductions for its board of directors and executive officers;
- Controlling discretionary spend across the organization; and
- Adjusting manufacturing capacity based on certain government directives and demand, while ensuring sufficient inventory levels to support current procedure volumes.
Additionally, on April 14, 2020, NuVasive withdrew its annual financial guidance for 2020. The COVID-19 pandemic has had a significant negative impact on elective procedure volumes. As visibility for spine surgery volumes for the remainder of the year is limited, and the Company is not able to predict when or how quickly elective surgery volumes will recover, the Company is not providing further financial guidance for 2020 at this time.
Supplementary Financial Information
For additional financial detail, please visit the Investor Relations section of the Company’s website at www.nuvasive.com to access Supplementary Financial Information.
Reconciliation of GAAP to Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP diluted earnings per share, non-GAAP net income, non-GAAP operating expenses and non-GAAP operating margin, which exclude amortization of intangible assets, business transition costs, purchased in-process research and development, one-time restructuring and related items in connection with acquisitions, investments and divestitures, non-recurring consulting fees, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses from strategic investments, and non-cash interest expense (excluding debt issuance cost). Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency utilizes an exchange rate that eliminates fluctuations when calculating financial performance numbers. The Company also uses measures such as free cash flow, which represents cash flow from operations less cash used in the acquisition and disposition of capital. Additionally, the Company uses an adjusted EBITDA measure which represents earnings before interest, taxes, depreciation and amortization and excludes the impact of stock-based compensation, business transition costs, purchased in-process research and development, one-time restructuring and related items in connection with acquisitions, investments and divestitures, non-recurring consulting fees, certain litigation expenses and settlements, certain European medical device regulation costs, gains and losses on strategic investments, and other significant one-time items.
Management calculates the non-GAAP financial measures provided in this earnings release excluding these costs and uses these non-GAAP financial measures to enable it to further and more consistently analyze the period-to-period financial performance of its core business operations. Management believes that providing investors with these non-GAAP measures gives them additional information to enable them to assess, in the same way management assesses, the Company’s current and future continuing operations. These non-GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different from non-GAAP measures used by other companies. Set forth below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measure.