Financial

NuVasive Announces Fourth Quarter and Full Year 2020 Financial Results

SAN DIEGO, Feb. 25, 2021 /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 and full year ended Dec. 31, 2020.

Fourth Quarter 2020

  • Net sales decreased 6.0% to $291.8 million, or 6.7% on a constant currency basis;
  • GAAP operating margin of 6.9%; Non-GAAP operating margin of 15.8%; and
  • GAAP diluted earnings per share of $0.03; Non-GAAP diluted earnings per share of $0.59.

Full Year 2020

  • Net sales decreased 10.1% to $1.051 billion, or 10.2% on a constant currency basis;
  • GAAP operating margin of 3.7%; Non-GAAP operating margin of 11.1%; and
  • GAAP diluted loss per share of $0.72; Non-GAAP diluted earnings per share of $1.23.

“NuVasive continues to see significant impact from COVID-19 on elective surgical procedures and patient sentiment, particularly within the U.S. market, which increased late in the fourth quarter,” said J. Christopher Barry, chief executive officer of NuVasive. “Against a challenging 2020, we made key investments in infrastructure, talent, and innovation to unlock our ability to fulfill our long-term strategy. We are excited about the acquisition of Simplify Medical to advance our C360 portfolio and the 510(k) submission for the Pulse platform. We remain committed to delivering enhanced value to shareholders, surgeons, and employees, while helping change the lives of patients around the globe.”

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

Fourth Quarter 2020 Results
NuVasive reported fourth quarter 2020 total net sales of $291.8 million, a 6.0% decrease compared to $310.4 million for the fourth quarter 2019. On a constant currency basis, fourth quarter 2020 total net sales decreased 6.7% compared to the same period last year driven by the impact of COVID-19 on elective surgeries.

For the fourth quarter 2020, GAAP and non-GAAP gross profit was $207.2 million and $208.9 million, respectively, and GAAP and non-GAAP gross margin was 71.0% and 71.6%, respectively. These results compared to GAAP and non-GAAP gross profit of $227.1 million and GAAP and non-GAAP gross margin of 73.2%, for the fourth quarter 2019. The decline in GAAP and non-GAAP gross margin was primarily due to the decrease in net sales and incremental reserves for inventory.

The Company reported GAAP net income of $1.7 million, or diluted earnings per share of $0.03, for the fourth quarter 2020 compared to GAAP net income of $29.9 million, or diluted earnings per share of $0.55, for the fourth quarter 2019. On a non-GAAP basis, the Company reported net income of $30.4 million, or diluted earnings per share of $0.59, for the fourth quarter 2020 compared to non-GAAP net income of $38.5 million, or diluted earnings per share of $0.73, for the fourth quarter 2019.

Free cash flow for the quarter ended Dec. 31, 2020, was $44.8 million compared to $46.3 million in the prior year period.

Full Year 2020 Results
NuVasive reported full year 2020 total net sales of $1.051 billion, a 10.1% decrease compared to $1.168 billion for the full year 2019. On a constant currency basis, full year 2020 total net sales decreased 10.2% compared to the full year 2019, which reflects the impact of the COVID-19 pandemic.

For the full year 2020, GAAP and non-GAAP gross profit was $729.0 million and $730.7 million, respectively, and GAAP and non-GAAP gross margin was 69.4% and 69.5%, respectively. These results compared to GAAP and non-GAAP gross profit of $855.7 million, and GAAP and non-GAAP gross margin of 73.3% for the full year 2019. The decrease in GAAP and non-GAAP gross margin was primarily a result of incremental reserves for inventory attributed to projected demand for certain spinal hardware products impacted by COVID-19.

The Company reported GAAP net loss of $37.2 million, or diluted loss per share of $0.72, for the full year 2020 compared to GAAP net income of $65.2 million, or diluted earnings per share of $1.23, for the full year 2019. On a non-GAAP basis, the Company reported net income of $63.8 million, or diluted earnings per share of $1.23, for the full year 2020 compared to non-GAAP net income of $129.8 million, or diluted earnings per share of $2.47, for the full year 2019. See the “Reconciliation of GAAP to Non-GAAP Financial Measures” table for a reconciliation of these GAAP and non-GAAP financial measures.

Cash, cash equivalents, and investments were $1.030 billion as of Dec. 31, 2020, compared to $213 million reported as of Dec. 31, 2019.

Simplify Medical
In a separate news release, NuVasive announced it has acquired Simplify Medical, a privately held company and developer of the Simplify® Cervical Artificial Disc for cervical total disc replacement (cTDR), as of Feb. 24, 2021. The transaction provides NuVasive with the most clinically effective technology in the cTDR procedure segment and further distinguishes NuVasive’s C360 cervical portfolio in the market.

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 (loss) 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, gains and losses from changes in fair value of derivatives 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, gains and losses from changes in fair value of derivatives 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.

SEE FINANCIALS HERE

Chris J. Stewart

Chris currently serves as President and CEO of Surgio Health. Chris has close to 20 years of healthcare management experience, with an infinity to improve healthcare delivery through the development and implementation of innovative solutions that result in improved efficiencies, reduction of unnecessary financial & clinical variation, and help achieve better patient outcomes. Previously, Chris was assistant vice president and business unit leader for HPG/HCA. He has presented at numerous healthcare forums on topics that include disruptive innovation, physician engagement, shifting reimbursement models, cost per clinical episode and the future of supply chain delivery.

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