SAN DIEGO, Feb. 20, 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 and full year ended Dec. 31, 2019.
Fourth Quarter 2019
- Revenue increased 7.6% to $310.4 million, or 7.8% on a constant currency basis;
- GAAP operating margin of 13.6%; Non-GAAP operating margin of 16.4%; and
- GAAP diluted earnings per share of $0.55; Non-GAAP diluted earnings per share of $0.73.
Full Year 2019
- Revenue increased 6.0% to $1.168 billion, or 6.6% on a constant currency basis;
- GAAP operating margin of 10.5%; Non-GAAP operating margin of 15.8%; and
- GAAP diluted earnings per share of $1.23; Non-GAAP diluted earnings per share of $2.47.
“NuVasive delivered strong financial results in 2019 with consistent, above-market growth of 6.0% over prior year,” said J. Christopher Barry, chief executive officer of NuVasive. “In 2020, our primary growth drivers include continuing to lead in lateral spine surgery, further innovation in targeted spine segments and achieving scale in key global markets to drive value and deliver on our long-term commitments.”
A full reconciliation of GAAP to non-GAAP financial measures can be found in the tables of this news release.
Fourth Quarter 2019 Results
NuVasive reported fourth quarter 2019 total revenue of $310.4 million, a 7.6% increase compared to $288.3 million for the fourth quarter 2018. On a constant currency basis, fourth quarter 2019 total revenue increased 7.8% compared to the same period last year.
For the fourth quarter 2019, both GAAP and non-GAAP gross profit was $227.1 million and GAAP and non-GAAP gross margin was 73.2%. These results compared to GAAP and non-GAAP gross profit of $202.2 million and GAAP and non-GAAP gross margin of 70.1%, for the fourth quarter 2018.
The Company reported GAAP net income of $29.9 million, or diluted earnings per share of $0.55, for the fourth quarter 2019 compared to GAAP net income of $12.2 million, or diluted earnings per share of $0.23, for the fourth quarter 2018. On a non-GAAP basis, the Company reported net income of $38.5 million, or diluted earnings per share of $0.73, for the fourth quarter 2019 compared to non-GAAP net income of $36.1 million, or diluted earnings per share of $0.69, for the fourth quarter 2018.
Full Year 2019 Results
NuVasive reported full year 2019 total revenue of $1.168 billion, a 6.0% increase compared to $1.102 billion for the full year 2018. On a constant currency basis, full year 2019 total revenue increased 6.6% compared to the full year 2018.
For the full year 2019, both GAAP and non-GAAP gross profit was $855.7 million and GAAP and non-GAAP gross margin was 73.3%. These results compared to GAAP and non-GAAP gross profit of $790.6 million and $791.6 million, respectively, and GAAP and non-GAAP gross margin of 71.8% and 71.9%, respectively, for the full year 2018. For the full year 2019, GAAP and non-GAAP operating expenses were $732.7 million and $670.7 million, respectively. These results compared to GAAP and non-GAAP operating expenses of $736.4 million and $624.8 million, respectively, for the full year 2018.
The Company reported GAAP net income of $65.2 million, or diluted earnings per share of $1.23, for the full year 2019 compared to GAAP net income of $12.5 million, or diluted earnings per share of $0.24, for the full year 2018. On a non-GAAP basis, the Company reported net income of $129.8 million, or diluted earnings per share of $2.47, for the full year 2019 compared to non-GAAP net income of $116.6 million, or diluted earnings per share of $2.23, for the full year 2018.
Annual Financial Guidance for 2020
The company estimates full year 2020 revenue growth to be in the range of 4.0% to 6.0%, GAAP diluted earnings per share in the range of $1.15 to $1.25 and non-GAAP diluted earnings per share in the range of $2.55 to $2.65.
| 2020 Guidance Range 1 | |||
| GAAP | Non-GAAP | ||
| Total Revenue Growth | 4.0% – 6.0% | 4.0% – 6.0% | |
| U.S. Spinal Hardware | 5.0% – 7.0% | 5.0% – 7.0% | |
| U.S. Surgical Support | (3.0%) – 1.0% | (3.0%) – 1.0% | |
| International | 10.0% – 12.0% | 10.0% – 12.0% | |
| Operating margin | 10.1% – 10.5% | 15.8% – 16.2% | |
| Diluted earnings per share | $1.15 – 1.25 | $2.55 – 2.65 |
| 1 | Guidance reflects the range provided February 20, 2020. |
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 Full Year EPS | ||||
| 2019 Actuals 1 | 2020 Guidance Range 1, 2 | |||
| GAAP diluted earnings per share | $1.23 | $1.15 – 1.25 | ||
| Impact of change to diluted share count 3 | 0.01 | 0.05 – 0.10 | ||
| Amortization of intangible assets | 0.97 | 0.95 – 1.00 | ||
| Non-cash interest expense on convertible notes | 0.33 | 0.30 – 0.35 | ||
| European medical device regulation 4 | 0.10 | 0.15 – 0.20 | ||
| Other 5 | 0.20 | 0.15 – 0.20 | ||
| Tax effect of adjustments 6 | (0.38) | (0.30) – (0.35) | ||
| Non-GAAP diluted earnings per share | $2.47 | $2.55 – 2.65 |
| 1 | Items may not foot due to rounding. |
| 2 | Guidance reflects the range provided February 20, 2020. |
| 3 | Adjusted non-GAAP diluted WASO excludes the impact of dilutive convertible notes for which the Company is economically hedged through its anti-dilutive bond hedge arrangements. |
| 4 | Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
| 5 | Includes costs associated with certain ongoing litigation related expenses and settlements, net losses on strategic investments and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables for further detail. |
| 6 | Represents the impact from tax affecting the adjustments above at their statutory tax rate. |
| Reconciliation of Full Year Operating Margin % | ||||
| 2019 Actuals 1 | 2020 Guidance Range 1, 2 | |||
| GAAP operating margin % | 10.5% | 10.1% – 10.5% | ||
| Amortization of intangible assets | 4.4% | 4.2% – 4.3% | ||
| European medical device regulation 3 | 0.4% | 0.7% – 0.9% | ||
| Other 4 | 0.5% | 0.7% – 0.9% | ||
| Non-GAAP operating margin % | 15.8% | 15.8% – 16.2% |
| 1 | Items may not foot due to rounding. |
| 2 | Guidance reflects the range provided February 20, 2020. |
| 3 | Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
| 4 | Includes costs associated with certain ongoing litigation related expenses and settlements and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables for further detail. |
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.
