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NuVasive Reports First Quarter 2009 Financial Results

- Increases 2009 Guidance for Revenue and Earnings per Share -

- Announces the Acquisition of Cervitech(R) -

First Quarter 2009 Highlights:

- Total revenue of $80.0 million; up 56.3% from the first quarter 2008 and up sequentially 7.3% from fourth quarter 2008

- Gross margin of 81.5% compared to 82.2% for first quarter 2008

- GAAP loss per share was $(0.12); favorable to prior guidance of $(0.27) - $(0.25)

- First quarter loss per share was $(0.02), excluding intellectual property litigation and acquisition related costs; favorable to prior guidance of $(0.21) - $(0.19)

SAN DIEGO, April 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 March 31, 2009.

NuVasive reported first quarter revenue of $80.0 million, a 56.3% increase over the $51.2 million for the first quarter 2008 and a 7.3% increase over the $74.6 million for the fourth quarter 2008.

Gross profit for the first quarter 2009 was $65.2 million and gross margin was 81.5%, compared to a gross profit of $42.1 million and a gross margin of 82.2% for the first quarter 2008. For fourth quarter 2008, gross profit was $61.1 million and gross margin was 82.0%.

Total operating expenses for the first quarter 2009 were $68.7 million compared to $50.5 million in the first quarter 2008 and $57.0 million in the fourth quarter 2008. Operating expenses include $1.9 million for Progentix and Cervitech acquisition costs and $1.6 million related to intellectual property litigation.

On a GAAP basis, the Company reported a net loss of $4.3 million, or $(0.12) per share, for the first quarter 2009.

On a non-GAAP basis, the Company reported net income of $7.3 million, or $0.19 per share, for the first quarter 2009. The non-GAAP earnings per share calculations for the first quarter exclude (i) stock based compensation of $6.7 million; (ii) amortization of acquired intangible assets of $1.3 million; (iii) acquisition related costs of $1.9 million; and (iv) intellectual property litigation costs of $1.6 million.

Cash, cash equivalents and short and long-term marketable securities were $203.5 million at March 31, 2009.

Today, the Company announced the acquisition of Cervitech Inc., a New Jersey based company focused on clinical approval of its PCM(R) cervical disc system, a motion preserving total disc replacement device. This strategic acquisition provides NuVasive the potential to significantly accelerate its entry into the growing cervical disc replacement market.

Alex Lukianov, Chairman and Chief Executive Officer, said, "We are exceptionally pleased with our financial performance in the first quarter of 2009, specifically our increased profitability, which shows how NuVasive's continued revenue growth translates to earnings growth. We believe this dynamic is sustainable and we expect continued profitability improvements as the company grows. We have the strategy, the talent, and the infrastructure in place to drive toward our goal of being the #4 spine company in the world and we will get there by adhering to our core values of Absolute Responsiveness(R), outstanding customer service, and Cheetah Speed."

Mr. Lukianov continued, "Today, we are excited to announce the acquisition of Cervitech, which gives NuVasive the potential of rapid entry into the high growth segment of cervical disc replacement with the PCM investigational device. The PCM IDE clinical study is fully enrolled with two year follow-up data complete later this year. With that timing, we anticipate submission for FDA approval in the first quarter of 2010, which is significantly ahead of our current motion preservation R&D pipeline. The acquisition further strengthens our cervical product offering. We expect product revenue of $100 million annually within three years of U.S. commercialization."

Updated 2009 Financial Guidance

NuVasive is updating its full year 2009 financial guidance as follows:


  • $355 million to $360 million, including $30 million in Osteocel(R) Plus; up from previous guidance of $345 million to $350 million, including $28 million in Osteocel Plus

Gross Margin:

  • Gross Margin of 81% to 82%, consistent with previous guidance


  • GAAP: loss per share of $(0.07) to $(0.05); compared to previous guidance of $(0.14) to $(0.12)
  • Non-GAAP: earnings per share of $0.94 to $0.96; up from previous guidance of $0.83 to $0.85 per enclosed table
  • Earnings per share of $0.11 to $0.13 excluding intellectual property litigation and acquisition related costs per enclosed table; up from previous guidance of $0.02 to $0.04

Reconciliation of Non-GAAP Information

Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, which exclude stock-based compensation, amortization of acquired intangible assets, intellectual property litigation expenses, and acquisition related costs. 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 First Quarter 2009 Results

    (in thousands, except per share amounts)             $           Per Share

    GAAP net loss (A)                                $(4,302)         $(0.12)
    IP litigation costs                                1,629            0.04
    Acquisition related costs                          1,912            0.05
    Earnings excluding other adjustments                (761)          (0.02)
    Non-cash stock-based compensation                  6,682            0.18
    Amortization of acquired intangible assets         1,336            0.04
    Non-GAAP earnings (A)                             $7,257           $0.19
    Basic weighted shares outstanding                                 36,365
    Diluted weighted shares outstanding                               37,744

    A- GAAP loss per share is calculated using basic weighted shares outstanding;
       Non-GAAP earnings per share is calculated using diluted weighted shares

                        Reconciliation of Full Year 2009 Guidance

                                                      Range for Year Ending
                                                        December 31, 2009
    (in thousands, except per share amounts)            Low           High

    GAAP net loss per share (A)                       $(0.07)        $(0.05)
    IP litigation costs                                 0.13           0.13
    Acquisition related costs                           0.05           0.05
    Earnings per share excluding other adjustments      0.11           0.13
    Non-cash stock-based compensation                   0.70           0.70
    Amortization of acquired intangible assets          0.13           0.13
    Non-GAAP earnings per share (A)                    $0.94          $0.96
    Basic weighted shares outstanding                 37,200         37,200
    Diluted weighted shares outstanding               38,750         38,750

    A- GAAP loss per share is calculated using basic weighted shares outstanding;
       Non-GAAP earnings per share is calculated using diluted weighted shares

Conference Call

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 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 May 22, 2009. In addition, a telephonic replay of the call will be available until May 6, 2009. 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 320044.

About NuVasive

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 primarily on the $4.6 billion U.S. spine implant market. Additionally, the Company has expanded into the $1.5 billion global biologics market, the $1.5 billion international market, and is developing products for the emerging motion preservation market.

NuVasive's principal product offering is based on its Maximum Access Surgery, or MAS(R) platform. The MAS platform combines four categories of products that collectively minimize soft tissue disruption during spine surgery with maximum visualization and safe, easy reproducibility for the surgeon: NeuroVision(R), a proprietary software-driven nerve avoidance system; MaXcess(R), a unique split-blade retractor system; a wide variety of specialized implants; and several biologic fusion enhancers. MAS significantly reduces surgery time and returns patients to activities of daily living much faster than conventional approaches. Having redefined spine surgery with the MAS platform's lateral approach, known as eXtreme Lateral Interbody Fusion, or XLIF(R), NuVasive has built an entire spine franchise. With nearly 50 products today spanning lumbar, thoracic and cervical applications, the Company will continue to expand and evolve its offering predicated on its R&D focus and dedication to outstanding service levels supported by a culture of Absolute Responsiveness(R).

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 NuVasive's results to differ materially from historical results or those expressed or implied by such forward-looking statements. The potential risks and uncertainties, relative to the proposed acquisition, include, but are not limited to: the risk that the parties may not consummate the transaction in the expected timeframe or that intervening factors may cause the parties to alter the terms (financial or otherwise)of the transaction; the risk that NuVasive may not be able to achieve expected synergies and strategic benefits from the technology owned by the acquired company; and the risk that NuVasive will not be able to successfully integrate the operations of the acquired company. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to: the uncertain process of seeking regulatory approval or clearance for NuVasive's products or devices, including risks that such process could be significantly delayed; the risk that the Company may not be successful in integrating acquired technology or products; the possibility that the FDA may require significant changes to NuVasive's products or clinical studies; 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 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 NuVasive's products to patients, hospitals and surgeons; and 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.

    Contact:                           Investors:
    Kevin C. O'Boyle                   Patrick F. Williams
    EVP & Chief Financial Officer      Vice President, Finance
    NuVasive, Inc.                      & Investor Relations
    858-909-1998                       NuVasive, Inc.     858-638-5511

                                       Jason Rando
                                       The Ruth Group

                                     NuVasive, Inc.
                 Unaudited Condensed Consolidated Statement of Operations
                         (in thousands, except per share data)

                                                  Three Months Ended March 31,
                                                       2009           2008

    Revenues                                         $80,008        $51,184
    Cost of goods sold                                14,774          9,095
    Gross profit                                      65,234         42,089

    Operating expenses:
       Sales, marketing and administrative            58,481         39,317
       Research and development                       10,193          6,976
       In-process research and development                 -          4,176
    Total operating expenses                          68,674         50,469

    Interest income and other, net                       776          1,160
    Interest expense                                  (1,868)          (434)
    Net loss attributable to noncontrolling interests    230              -
    Total other income/ (expenses)                      (862)           726

    Net loss attributable to NuVasive, Inc.          $(4,302)       $(7,654)

    Net loss per share:
       Basic and diluted                              $(0.12)        $(0.22)
       Weighted average shares - basic and diluted    36,365         35,411

    Stock-based compensation is included in operating
     expenses in the following categories:
       Sales, marketing and administrative            $5,241         $4,504
       Research and development                        1,441            646
                                                      $6,682         $5,150

                                   NuVasive, Inc.
                     Unaudited Condensed Consolidated Balance Sheets
                                   (in thousands)

                                                      March 31,   December 31,
                                                        2009          2008
    Current assets:
      Cash and cash equivalents                      $144,761        $132,318
      Short-term marketable securities                 40,330          45,738
      Accounts receivable, net                         50,032          51,622
      Inventory, net                                   82,236          68,834
      Prepaid expenses and other current assets         2,675           3,466
    Total current assets                              320,034         301,978
    Property and equipment, net                        75,399          73,686
    Long-term marketable securities                    18,430          45,305
    Goodwill                                           32,194           2,332
    Intangible assets, net                             70,550          54,767
    Other assets                                        8,491           9,338
    Total assets                                     $525,098        $487,406

    Current liabilities:
      Accounts payable and accrued liabilities        $31,096         $26,633
      Accrued payroll and related expenses             15,372          17,132
      Acquisition related milestone liabilities        24,653               -
      Royalties payable                                 2,204           1,722
    Total current liabilities                          73,325          45,487
    Senior convertible notes                          230,000         230,000
    Other long-term liabilities                        16,550          24,288

    Commitments and contingencies

    Noncontrolling interests                           14,770               -

    Stockholders' equity:
        Common stock                                       36              36
        Additional paid-in capital                    391,122         383,293
        Accumulated other comprehensive (loss)
         income                                          (665)           (190)
        Accumulated deficit                          (200,040)       (195,508)
    Total stockholders' equity                        190,453         187,631
    Total liabilities and stockholders' equity       $525,098        $487,406

                                  NuVasive, Inc.
             Unaudited Condensed Consolidated Statements of Cash Flows
                                  (in thousands)

                                                              Three Months
                                                             Ended March 31,
                                                             2009      2008

    Operating activities:
    Net loss                                              $(4,302)  $(7,654)
    Adjustments to reconcile net loss to net cash
     used in operating activities:
      Depreciation and amortization                         5,488     3,883
      In-process research and development                       -     4,176
      Stock-based compensation                              6,682     5,150
      Other non-cash adjustments                              842       (47)
      Noncontrolling interests                               (230)        -
      Changes in operating assets and liabilities:
        Accounts receivable                                 1,361    (2,929)
        Inventory                                         (14,100)   (9,306)
        Prepaid expenses and other current assets             609    (1,040)
        Accounts payable and accrued liabilities           10,052     5,260
        Accrued payroll and related expenses               (1,777)   (1,728)
    Net cash provided by/(used in) operating activities     4,625    (4,235)
    Investing activities:
    Cash paid for acquisitions                                  -    (6,256)
    Investment in Progentix                               (10,000)        -
    Acquisition related milestone payments                (10,000)        -
    Purchases of property and equipment                    (5,567)  (11,369)
    Purchases of short-term marketable securities          (7,658)   (3,005)
    Sales of short-term marketable securities              27,725    17,300
    Purchases of long-term marketable securities           (6,758)   (8,582)
    Sales of long-term marketable securities               18,975     2,000
    Other assets                                                -       740
    Net cash provided by/(used in) investing activities     6,717    (9,172)
    Financing activities:
    Payments of long-term liabilities                           -         -
    Issuance of convertible debt,  net of costs                 -   222,414
    Purchase of convertible note hedges                         -   (45,758)
    Sale of warrants                                            -    31,786
    Issuance of common stock                                1,160     1,579
    Net cash provided by financing activities               1,160   210,021
    Effect of exchange rate changes on cash                   (59)        -
    Increase in cash and cash equivalents                  12,443   196,614
    Cash and cash equivalents at beginning of year        132,318    61,915
    Cash and cash equivalents at end of year             $144,761  $258,529
    Supplemental disclosure of non-cash transactions:
    Leasehold improvements paid by lessor                            $2,848

SOURCE NuVasive, Inc.
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All rights reserved

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