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|NuVasive Reports Third Quarter 2008 Financial Results|
- Increases 2008 Revenue Guidance to $245 Million to $247 Million -
Third Quarter 2008 Highlights:
-- Total revenues of $66.9 million; up 73.7% from the third quarter of 2007
-- Gross profit of $54.7 million; up 73.2% from the third quarter of 2007
-- Gross margin of 81.8% compared to 82.0% in the third quarter of 2007
-- GAAP loss per share for the quarter was $(0.64)
-- Non-GAAP earnings per share was $0.21
-- Completed enrollment of NeoDisc(R) clinical trial
-- Launched next generation NeuroVision(R) M5(TM), extended the line of CoRoent(R) interbody spacers and introduced XLIF(R) TDR revision instrumentation
SAN DIEGO, Oct. 22 /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, 2008.
NuVasive reported third quarter revenues of $66.9 million, including $4.4 million of Osteocel revenue, a 73.7% increase over the $38.5 million for the third quarter of 2007 and a 16.5% increase over the $57.4 million for the second quarter of 2008.
Gross profit for the third quarter of 2008 was $54.7 million and gross margin was 81.8%, compared to a gross profit of $31.6 million and a gross margin of 82.0% in the third quarter of 2007. For the second quarter of 2008, gross profit was $47.8 million and gross margin was 83.3%. Gross margin on Osteocel revenues was 36.4%.
Total operating expenses for the third quarter of 2008 were $77.7 million compared to $35.2 million in the third quarter of 2007 and $48.5 million in the second quarter of 2008. On a GAAP basis, the Company reported a net loss of $23.1 million or $(0.64) per share for the third quarter of 2008.
On a non-GAAP basis, the Company reported net income of $8.0 million, or $0.21 per share, for the third quarter of 2008. The non-GAAP earnings per share calculations exclude (i) stock based compensation of $5.4 million; (ii) a charge for in-process research and development costs of $16.7 million; (iii) a charge related to transitional support costs for the Company's ERP system of $2.6 million; (iv) a one-time leasehold charge of $4.8 million related to vacating the Company's previous headquarters; (v) amortization of acquired intangible assets of $0.9 million; and (vi) intellectual property litigation expenses of $0.6 million.
Cash, cash equivalents and short and long-term investments were $221.7 million at September 30, 2008.
Alex Lukianov, Chairman and Chief Executive Officer, said, "Our robust third quarter results reflect our growing expertise in leveraging our unique XLIF procedure to drive greater pull through of our comprehensive suite of spinal products. Our recent introductions, including those that address the thoracic and cervical spine, have further enhanced our product depth, allowing us to capture a greater market share. At NASS we unveiled NeuroVision M5, which represents a significant upgrade to our core MAS platform, further distancing our innovative lateral approach from the competition and providing our surgeon customers with an even more intuitive and user friendly system."
Mr. Lukianov concluded, "We have established a strong corporate infrastructure with the implementation of our ERP system and transition to our new headquarters, which is reinforced by the dedication of our shareowners and their commitment to making NuVasive a major force in the spine industry. Our exclusive sales force, which has grown to 300 sales professionals, has considerable momentum in the marketplace and the opportunity to gain additional market share by selling the full mix of our expanding product portfolio and through geographic expansion. We believe this will lead to revenue growth in 2009 approaching 40% over our revised 2008 revenue guidance with improving operating margins. Overall, we are extremely well positioned to achieve our goals and reach our interim target of $500 million in sales over the next several years."
Updated 2008 Financial Guidance
NuVasive is updating its full year 2008 financial guidance as follows:
-- $245 million to $247 million, including $9 million in Osteocel; up from previous guidance of $238 million to $240 million, including $15 million in Osteocel
-- GAAP: $(0.80) to $(0.82)
Reconciliation of Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, which exclude stock based compensation and charges directly related to acquisition transactions such as in-process research and development, milestone payments, amortization of the acquired technology assets and certain other charges. In 2008, these charges include in-process research and development, a one-time charge related to vacating the Company's previous headquarters, amortization of acquired intangible assets, transitional support costs for the Company's ERP system, and intellectual property litigation expenses. 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 2008 Results (in thousands, except per share amounts) $ Per Share GAAP net loss per share (A) $(23,079) $(0.64) In-process research and development (IPR&D) (C) 16,700 0.46 Other adjustments (E) 7,991 0.22 Earnings per share excluding IPR&D and other adjustments 1,612 0.04 Stock-based compensation (B) 5,421 0.14 Amortization of acquired intangible assets (D) 931 0.03 Non-GAAP earnings per share (A) $7,964 $0.21 Shares used in computing GAAP net loss per share (A) 35,931 Shares used in computing non-GAAP net loss per share (A) 37,927
Reconciliation of Full Year 2008 Guidance Range for Year Ending (in thousands, except per share amounts) December 31, 2008 Low High GAAP net loss per share (A) $(0.82) $(0.80) In-process research and development (IPR&D) (C) 0.58 0.58 Other adjustments (F) 0.29 0.29 Earnings per share excluding IPR&D and other adjustments 0.05 0.07 Stock-based compensation (B) 0.56 0.56 Amortization of acquired intangible assets (D) 0.09 0.09 Non-GAAP earnings per share (A) $0.70 $0.72 Shares used in computing GAAP net loss per share (A) 35,800 35,800 Shares used in computing non-GAAP net loss per share (A) 37,600 37,600
A -- GAAP net loss per share is calculated using basic weighted shares outstanding; Non-GAAP earnings per share is calculated using diluted weighted shares outstanding.
B -- Non-cash stock-based compensation.
C -- Charges related to the acquisition of the pedicle screw technology in the first quarter of 2008 and the acquisition of the Osteocel Business Unit in the third quarter of 2008.
D -- Amortization of purchased technology assets.
E -- Other adjustments related to the one-time leasehold termination charge of $4.8 million, transitional support costs of $2.6 million related to the Company's ERP system and $0.6 million for intellectual property litigation expenses.
F -- Other adjustments related to the one-time leasehold termination charge of $4.8 million, transitional support costs of $4.1 million related to the Company's ERP system and $1.6 million for intellectual property litigation expenses.
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. A live Web cast of the conference call will be available online from the investor relations page of the Company's corporate Web site at www.nuvasive.com.
After the live Web cast, the call will remain available on NuVasive's Web site, www.nuvasive.com, through November 22, 2008. In addition, a telephonic replay of the call will be available until November 5, 2008. 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 298534.
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 on applications in the over $4.2 billion U.S. spine fusion market. The Company's current principal product offering includes a minimally disruptive surgical platform called Maximum Access Surgery, or MAS(R), as well as a growing offering of cervical and motion preservation products.
The MAS platform offers advantages for both patients and surgeons such as reduced surgery and hospitalization time and faster recovery. MAS combines three categories of current product offerings: NeuroVision(R) a proprietary software-driven nerve avoidance system; MaXcess(R) a unique split-blade design retraction system; and specialized implants, like SpheRx(R) and CoRoent(R), that collectively minimize soft tissue disruption during spine surgery while allowing maximum visualization and surgical reproducibility. NuVasive's product offering is also focused on cervical internal fixation products and its R&D pipeline emphasizes both MAS and motion preservation.
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 Company'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 risk that Company may encounter unanticipated difficulty integrating the Osteocel product into its product line and may be unable to generate expected revenues or profitability from Osteocel; the uncertain process of seeking regulatory approval or clearance for Company's products or devices, including risks that devices currently under development or in clinical studies (such as NeoDisc(R)) may not be approved for commercial sale; the risk that the ongoing patent litigation with Medtronic could result in a substantial judgment or settlement obligation; the possibility that the FDA may require significant changes to Company'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 Company's products to patients, hospitals and surgeons; and other risks and uncertainties more fully described in Company's press releases and periodic filings with the Securities and Exchange Commission. Company's public filings with the Securities and Exchange Commission are available at www.sec.gov. Company assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.
NuVasive, Inc. Unaudited Condensed Consolidated Statement of Operations (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007
Revenues $66,915 $38,522 $175,501 $107,360 Cost of goods sold 12,195 6,925 30,845 19,342 Gross Profit 54,720 31,597 144,656 88,018 Operating expenses: Sales, marketing and administrative 54,557 29,480 135,975 86,463 Research and development 6,396 5,702 19,797 16,463 In-process research and development 16,700 - 20,876 - Total operating expenses 77,653 35,182 176,648 102,926 Interest and other income (expense), net (146) 1,302 764 4,789 Net loss $(23,079) $(2,283) $(31,228) $(10,119) Net loss per share: Basic and diluted $(0.64) $(0.07) $(0.88) $(0.29) Weighted average shares - basic and diluted 35,931 34,940 35,674 34,638
NuVasive, Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2008 2007 Assets Current assets: Cash and cash equivalents $104,388 $61,915 Short-term investments 72,157 19,247 Accounts receivable, net 46,072 27,496 Inventory, net 58,418 36,280 Prepaid expenses and other current assets 3,352 1,240 Total current assets 284,387 146,178 Property and equipment, net of accumulated depreciation 73,159 43,538 Intangible assets, net of accumulated amortization 57,041 24,496 Long-term marketable securities 45,148 8,536 Other assets 8,892 2,939 Total assets $468,627 $225,687 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $20,078 $13,839 Accrued payroll and related expenses 13,853 12,075 Royalties payable 2,310 2,076 Total current liabilities 36,241 27,990 Senior convertible notes 230,000 - Long-term liabilities 27,226 1,119 Commitments and contingencies Stockholders' equity: Common stock 36 35 Additional paid-in capital 374,695 364,469 Accumulated other comprehensive income (loss) (363) 54 Accumulated deficit (199,208) (167,980) Total stockholders' equity 175,160 196,578 Total liabilities and stockholders' equity $468,627 $225,687
NuVasive, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2008 2007 Operating activities: Net loss $(31,228) $(10,119) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 15,671 9,619 Stock-based compensation 15,719 9,977 In-process research and development 20,876 - Leasehold abandonment 4,486 - Other non-cash adjustments 1,109 1,124 Changes in operating assets and liabilities: Accounts receivable (18,986) (5,871) Inventory (22,136) (11,041) Prepaid expenses and other current assets (941) (28) Accounts payable and accrued liabilities 3,898 2,537 Accrued payroll and related expenses 1,778 2,230 Net cash used in operating activities (9,754) (1,572) Investing activities: Cash paid for pedicle screw technology (6,256) - Cash paid for acquisition of Radius Medical LLC - (6,970) Cash paid for acquisition of Osteocel Business Unit (35,000) - Purchases of property and equipment (34,161) (14,103) Sales of short-term investments 30,159 98,218 Purchases of short-term investments (83,069) (56,131) Sales of long-term investments 14,778 7,500 Purchases of long-term investments (51,390) (16,003) Other assets 544 (167) Net cash provided by (used in) investing activities (164,395) 12,344 Financing activities: Payment of long-term liabilities (300) (300) Issuance of Senior Convertible Notes 222,414 - Purchase of convertible note hedges (45,758) - Sale of warrants 31,786 - Issuance of common stock 8,480 4,392 Net cash provided by financing activities 216,622 4,092 Increase in cash and cash equivalents 42,473 14,864 Cash and cash equivalents at beginning of period 61,915 41,476 Cash and cash equivalents at end of period $104,388 $56,340
Contact: Investors: Kevin C. O'Boyle Nick Laudico/Zack Kubow EVP & Chief Financial Officer The Ruth Group NuVasive, Inc. 646-536-7030/7020 858-909-1800 email@example.com firstname.lastname@example.org email@example.com Media: Jason Rando The Ruth Group 646-536-7025 firstname.lastname@example.org
SOURCE NuVasive, Inc.