SAN DIEGO, CA --(Marketwired - July 26, 2016) - NuVasive, Inc. (
Second Quarter 2016 Highlights
- Revenue increased 16.4% to $236.2 million, or 16.1% on a constant currency basis;
- GAAP operating profit margin of 25.4%; Non-GAAP operating profit margin up 60 basis points from prior year to 15.9%;
- GAAP diluted earnings per share of $0.57; Non-GAAP diluted earnings per share up 28% from prior year to $0.40; and
- Acquired Biotronic NeuroNetwork to support spine service line partnership offerings.
"NuVasive delivered another strong quarter, outperforming the spine market to deliver double-digit revenue growth, expanding our operating profitability year-over-year and delivering earnings growth of 28%," said Gregory T. Lucier, chairman and chief executive officer of NuVasive. "Our results were driven by strong growth in our international business, which benefitted from our continued revitalization efforts, and strength in our U.S. spinal hardware business, where adoption of our integrated Global Alignment platform drove momentum in sales of our procedurally integrated solutions. With this growth in our geographies and businesses for the first half of the year, and the addition of the Biotronic NeuroNetwork business, we are raising our full year guidance for 2016."
NuVasive achieved several strategic milestones in the second quarter. The Company completed the acquisition of Biotronic NeuroNetwork on July 1, and combined the service offerings of Biotronic with its Impulse Monitoring business to form NuVasive Clinical Services. This new division doubles the Company's service line footprint and will provide intraoperative neurophysiological monitoring services to surgeons and healthcare facilities in more than 75,000 U.S. cases annually. Also, the Company reached a definitive agreement with Medtronic to settle more than eight years of ongoing patent litigation between the two companies, removing the associated expense of legal proceedings and providing a clear protocol for resolution of potential patent disputes in the future.
A full reconciliation of GAAP to non-GAAP measures can be found in the tables of this news release.
Second Quarter 2016 Results NuVasive's financial results for the second quarter 2016 are inclusive of results from Ellipse Technologies, Inc. and Mega Surgical, as both of these previously disclosed acquisitions were completed in the first quarter 2016. Ellipse Technologies now operates as a wholly owned subsidiary under the renamed legal entity NuVasive Specialized Orthopedics, Inc. (NSO).
NuVasive reported second quarter 2016 total revenue of $236.2 million, a 16.4% increase compared to $202.9 million for the second quarter 2015. On a constant currency basis, second quarter 2016 total revenue increased 16.1% compared to the same period last year.
For the second quarter 2016, GAAP and non-GAAP gross profit was $176.5 million and $183.8 million, respectively, while GAAP and non-GAAP gross margin was 74.7% and 77.8%, respectively. These results compared to GAAP and non-GAAP gross profit of $154.5 million and GAAP and non-GAAP gross margin of 76.1% for the second quarter 2015. Total GAAP and non-GAAP operating expenses were $116.4 million and $146.4 million, respectively, for the second quarter of 2016. These results compared to GAAP and non-GAAP operating expenses of $128.6 million and $123.5 million, respectively, for the second quarter 2015.
During the second quarter, the Company elected to early adopt the new FASB Accounting Standards Update (ASU) for employee share-based payment accounting ahead of the mandatory 2017 effective date for all U.S. public companies. The Company adopted the ASU in the second quarter 2016, effective from January 1, 2016. In connection with the adoption, the Company recast its first quarter 2016 results. The impact of the adoption had a favorable impact to the first and second quarter results, and will be favorable for full year 2016. The adoption of the ASU, together with the Company's ongoing tax planning initiatives, are expected to drive significant improvements in the Company's effective tax rate over time.
NuVasive reported a GAAP net income of $30.2 million, or $0.57 per share, for the second quarter 2016 compared to $10.3 million, or $0.20 per share, for the second quarter 2015.
On a non-GAAP basis, the Company reported net income of $20.6 million, or $0.40 per share for the second quarter 2016 compared to $15.7 million, or $0.31 per share, for the second quarter 2015.
Cash, cash equivalents and short and long-term marketable securities were approximately $331.0 million at June 30, 2016.
Annual Guidance for 2016 The Company provided the following updated projections to its full year 2016 guidance, which contemplates the impact of the Company's performance for the first half of 2016, the acquisition of Biotronic NeuroNetwork and the impact from the adoption of the ASU for employee share-based payment accounting, as well as expected changes in foreign currency rates:
- Revenue of approximately $962.0 million, which includes a $1 million benefit from currency or approximately 18.6% growth compared to revenue of $811.1 million for 2015; versus a prior expectation of $928.0 million for 2016;
- Non-GAAP diluted earnings per share of approximately $1.64, an increase of approximately 25.0% compared to non-GAAP diluted earnings per share of $1.31 for 2015; versus a prior expectation of $1.48 for 2016;
- Non-GAAP operating profit margin of approximately 16.0%, an increase of 60 basis points compared to 15.4% for 2015; versus a prior expectation of approximately 15.8% for 2016;
- Adjusted EBITDA margin of approximately 25.4%, an increase of approximately 20 basis points, in line with the prior expectation, compared to 25.2% for 2015; and
- Non-GAAP effective tax expense rate of approximately 37%; versus a prior expectation of approximately 41% for 2016.
Supplementary Financial Information For additional financial detail, please visit the Investor Relations section at www.nuvasive.com to access Supplementary Financial Information.
| Reconciliation of Full Year EPS Guidance | |||||||||||||
| 2016 Guidance | |||||||||||||
| 2015 Actuals | Prior 1, 2 | Current 1, 3 | |||||||||||
| GAAP net income per share | $ | 1.26 | $ | 0.20 | $ | 0.84 | |||||||
| Impact of change from basic to diluted share count | 0.03 | - | 0.03 | ||||||||||
| GAAP net income per share, adjusted to diluted Non-GAAP share count | $ | 1.30 | $ | 0.20 | $ | 0.88 | |||||||
| Litigation liability gain | (0.82 | ) | - | (0.83 | ) | ||||||||
| Business transition costs 4 | 0.27 | 0.19 | 0.20 | ||||||||||
| Non-cash interest expense on convertible notes | 0.31 | 0.38 | 0.38 | ||||||||||
| Non-cash purchase accounting adjustments on acquisitions 5 | - | 0.29 | 0.28 | ||||||||||
| Loss on repurchase of convertible notes | - | 0.34 | 0.34 | ||||||||||
| Amortization of intangible assets | 0.24 | 0.76 | 0.73 | ||||||||||
| In-process research & development | 0.02 | - | - | ||||||||||
| Tax effect of adjustments 6 | (0.01 | ) | (0.69 | ) | (0.34 | ) | |||||||
| Non-GAAP earnings per share | $ | 1.31 | $ | 1.48 | $ | 1.64 | |||||||
| GAAP Weighted shares outstanding - basic | 48,687 | 49,984 | 50,004 | ||||||||||
| Non-GAAP Weighted shares outstanding - diluted | 51,110 | 51,335 | 52,000 | ||||||||||
| 1 Prior guidance provided April 26, 2016. Current guidance reflects guidance provided July 26, 2016, as updated for the anticipated impact of the Biotronic Neuronetwork acquisition, the adoption of ASU 2016-09 Stock Compensation, as well as expected changes in currency. | |||||||||||||
| 2 Effective tax expense rate of ~63% applied to GAAP earnings and ~41% applied to Non-GAAP earnings. | |||||||||||||
| 3 Effective tax expense rate of ~41% applied to GAAP earnings and ~37% applied to Non-GAAP earnings. | |||||||||||||
| 4 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | |||||||||||||
| 5 Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | |||||||||||||
| 6 The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company's tax filings. The impact of the changes to the tax rate results in an annual estimated rate of ~37% on a non-GAAP basis. The Company adopted ASU 2016-09 Stock Compensation in Q2 2016 which was effective as of January 1, 2016 with retrospective adjustment. The result of the retrospective adjustment resulted in a change in the Q1 2016 quarterly effective tax rate on a non-GAAP basis from 41% to 36%. | |||||||||||||
| Reconciliation of Non-GAAP Operating Margin % | |||||||||
| 2016 Guidance | |||||||||
| (in thousands, except %) | 2015 Actuals | Prior 1 | Current 1 | ||||||
| Non-GAAP Gross Margin % [A] | 76.0% | 77.4% | 76.4% | ||||||
| Non-cash purchase accounting adjustments on acquisitions 2 | 0.0% | (1.6% | ) | (1.5% | ) | ||||
| GAAP Gross Margin [B] | 76.0% | 75.8% | 74.9% | ||||||
| GAAP & Non-GAAP Sales, Marketing & Administrative Expense [C] | 56.4% | 56.0% | 55.4% | ||||||
| Non-GAAP Research & Development Expense [D] | 4.3% | 5.6% | 5.1% | ||||||
| In-process research & development | 0.1% | 0.0% | 0.0% | ||||||
| GAAP Research & Development Expense [E] | 4.4% | 5.6% | 5.1% | ||||||
| Litigation liability [F] | (5.2% | ) | 0.0% | (4.5% | ) | ||||
| Amortization of intangible assets [G] | 1.5% | 4.2% | 4.0% | ||||||
| Business transition costs [H] 3 | 1.7% | 1.3% | 1.2% | ||||||
| Non-GAAP Operating Margin % [A - C - D] | 15.4% | 15.8% | 16.0% | ||||||
| GAAP Operating Margin % [B - C - E - F - G - H] | 17.1% | 8.7% | 13.7% | ||||||
| 1 Prior guidance provided April 26, 2016. Current guidance reflects guidance provided July 26, 2016, as updated for the anticipated impact of the Biotronic Neuronetwork acquisition, the adoption of ASU 2016-09 Stock Compensation, as well as expected changes in currency. | |||||||||
| 2 Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | |||||||||
| 3 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | |||||||||
| Reconciliation of EBITDA % | |||||||||
| 2016 Guidance | |||||||||
| (in thousands, except %) | 2015 Actuals | Prior 1 | Current 1 | ||||||
| Net Income / (Loss) | 8.2% | 1.1% | 4.7% | ||||||
| Interest (income) / expense, net | 3.4% | 6.1% | 5.9% | ||||||
| Provision for income taxes | 5.8% | 1.7% | 3.2% | ||||||
| Depreciation and amortization 2 | 8.1% | 10.9% | 10.5% | ||||||
| EBITDA | 25.5% | 19.8% | 24.3% | ||||||
| Non-cash stock based compensation | 3.1% | 3.0% | 2.9% | ||||||
| Business transition costs 2 | 1.7% | 1.1% | 1.1% | ||||||
| Non-cash purchase accounting adjustments on acquisitions 3 | 0.0% | 1.6% | 1.5% | ||||||
| In-process research & development | 0.1% | 0.0% | 0.0% | ||||||
| Litigation liability gain | (5.2% | ) | 0.0% | (4.5% | ) | ||||
| Adjusted EBITDA | 25.2% | 25.4% | 25.4% | ||||||
| 1 Prior guidance provided April 26, 2016. Current guidance reflects guidance provided July 26, 2016, as updated for the anticipated impact of the Biotronic Neuronetwork acquisition, the adoption of ASU 2016-09 Stock Compensation, as well as expected changes in currency. | |||||||||
| 2 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | |||||||||
| 3 Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | |||||||||
Reconciliation of Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, non-GAAP net income, non-GAAP operating expenses and non-GAAP operating profit margin, which exclude amortization of intangible assets, purchase accounting related charges, leasehold related charges, integration related expenses associated with acquired businesses, one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges, non-cash interest expense and/or losses on convertible notes, and the impact from taxes related to these items, including those taxes that would have occurred in lieu of these items. Management also uses certain non-GAAP measures which are intended to exclude the impact of foreign exchange currency fluctuations. The measure constant currency is the use of 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, purchase accounting related changes, leasehold related charges, integration related expenses associated with acquired businesses, CEO transition related costs, certain litigation liabilities, acquisition related items 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.
| Reconciliation of Second Quarter 2016 Results | |||||||||
| GAAP Net Income per Share to Non-GAAP Earnings per Share | |||||||||
| (in thousands, except per share data) | Adjustments | Diluted Earnings Per Share | |||||||
| GAAP net income | $ | 30,213 | $ | 0.57 | |||||
| Litigation liability gain | (43,310 | ) | |||||||
| Business transition costs 1 | 2,756 | ||||||||
| Non-cash interest expense on convertible notes | 5,051 | ||||||||
| Non-cash purchase accounting adjustments on acquisitions 2 | 7,374 | ||||||||
| Amortization of intangible assets | 10,281 | ||||||||
| Tax effect of adjustments 3 | 8,255 | ||||||||
| Adjustments to GAAP net income | (9,593 | ) | (0.17 | ) | |||||
| Non-GAAP earnings | $ | 20,620 | 0.40 | ||||||
| GAAP weighted shares outstanding - diluted | 53,159 | ||||||||
| Non-GAAP weighted shares outstanding - diluted | 51,928 | ||||||||
| 1 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | |||||||||
| 2 Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | |||||||||
| 3 The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company's tax filings. The impact of the changes to the tax rate results in an annual estimated rate of 36.5% on a non-GAAP basis. The result of these adjustments is a change in the quarterly effective tax rate from 40% to 37%. | |||||||||
| Reconciliation of Year To Date 2016 Results | ||||||||
| GAAP Net Income per Share to Non-GAAP Earnings per Share | ||||||||
| (in thousands, except per share data) | Adjustments | Diluted Earnings Per Share | ||||||
| GAAP net income | $ | 26,845 | $ | 0.51 | ||||
| Litigation liability gain | (43,310 | ) | ||||||
| Business transition costs 1 | 8,063 | |||||||
| Non-cash interest expense on convertible notes | 9,361 | |||||||
| Non-cash purchase accounting adjustments on acquisitions 2 | 12,290 | |||||||
| Loss on repurchases of convertible notes | 17,444 | |||||||
| Amortization of intangible assets | 17,830 | |||||||
| Tax effect of adjustments 3 | (10,749 | ) | ||||||
| Adjustments to GAAP net income | 10,929 | 0.22 | ||||||
| Non-GAAP earnings | $ | 37,774 | $ | 0.73 | ||||
| GAAP weighted shares outstanding - diluted | 52,354 | |||||||
| Non-GAAP weighted shares outstanding - diluted | 51,443 | |||||||
| 1 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | ||||||||
| 2 Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | ||||||||
| 3 The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company's tax filings. The impact of the changes to the tax rate results in an annual estimated rate of 36.5% on a non-GAAP basis. The result of these adjustments is a change in the annual effective tax rate from 29% to 36.5%. The Company adopted ASU 2016-09 Stock Compensation in Q2 2016 which was effective as of January 1, 2016 with retrospective adjustment. The result of the retrospective adjustment resulted in a change in the Q1 2016 quarterly effective tax rate on a non-GAAP basis from 41% to 36%. | ||||||||
| Reconciliation of Second Quarter and Six Months 2016 Results | |||||||||
| GAAP net income to Adjusted EBITDA | |||||||||
| Three months ended | Six months ended | ||||||||
| (in thousands, except per share data) | June 30, 2016 | June 30, 2016 | |||||||
| GAAP net income | $ | 30,213 | $ | 26,845 | |||||
| Interest (income) / expense, net 1 | 10,131 | 35,719 | |||||||
| Provision for income taxes | 19,891 | 10,411 | |||||||
| Depreciation and amortization | 24,813 | 45,707 | |||||||
| EBITDA | $ | 85,048 | $ | 118,682 | |||||
| Litigation liability gain | (43,310 | ) | (43,310 | ) | |||||
| Business transition costs 2 | 2,756 | 8,063 | |||||||
| Non-cash purchase accounting related charges 3 | 7,374 | 12,290 | |||||||
| Non-cash stock based compensation | 7,865 | 12,357 | |||||||
| Adjusted EBITDA | $ | 59,733 | $ | 108,082 | |||||
| As a percentage of revenue | 25.3% | 23.9% | |||||||
| 1 Included in Interest (income) / expense, net for the six months ended June 30, 2016 is loss on extinguishment of debt for $17.4 million. | |||||||||
| 2 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | |||||||||
| 3 Represents costs associated with non-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | |||||||||
Investor Conference Call
NuVasive will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its financial performance for the second quarter 2016. The dial-in numbers are 1-877-407-9039 for domestic callers and 1-201-689-8470 for international callers. A live webcast of the conference call will be available online from the Investor Relations page of the Company's website at www.nuvasive.com . After the live webcast, the call will remain available on NuVasive's website through August 26, 2016. In addition, a telephone replay of the call will be available until August 5, 2016. The replay dial-in numbers are 1-877-870-5176 for domestic callers and 1-858-384-5517 for international callers. Please use pin number: 13640365.
About NuVasive
NuVasive, Inc. (
NuVasive cautions you that statements included in this news release or made on the investor conference call referenced herein 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. In addition, this news release contains selected financial results from the second quarter 2016, as well as projections for 2016 financial guidance and longer-term financial performance goals. The numbers for the second quarter 2016 are prior to the completion of review procedures by the Company's external auditors and are subject to adjustment. In addition, the Company's projections for 2016 financial guidance and longer-term financial performance goals represent current estimates, including initial estimates of the potential benefits, synergies and cost savings associated with acquisitions, which are subject to the risk of being inaccurate because of the preliminary nature of the forecasts, the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to: the risk that NuVasive's revenue or earnings projections may turn out to be inaccurate because of the preliminary nature of the forecasts; the risk of further adjustment to financial results or future financial expectations; unanticipated difficulty in selling products, generating revenue or producing expected profitability; the risk that acquisitions will not be integrated successfully or that the benefits and synergies from the acquisition may not be fully realized or may take longer to realize than expected; and those other risks and uncertainties more fully described in the Company's news releases and periodic filings with the Securities and Exchange Commission. NuVasive's public filings with the Securities and Exchange Commission are available at www.sec.gov . The forward-looking statements contained herein are based on the current expectations and assumptions of NuVasive and not on historical facts. NuVasive 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. | ||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
| (unaudited) | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Revenue | $ | 236,210 | $ | 202,910 | $ | 451,314 | $ | 395,293 | ||||||||||
| Cost of goods sold (excluding below amortization of intangible assets) | 59,745 | 48,415 | 113,971 | 94,079 | ||||||||||||||
| Gross profit | 176,465 | 154,495 | 337,343 | 301,214 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Sales, marketing and administrative | 134,487 | 114,680 | 259,325 | 227,889 | ||||||||||||||
| Research and development | 11,871 | 8,774 | 22,500 | 18,038 | ||||||||||||||
| Amortization of intangible assets | 10,603 | 2,974 | 18,474 | 5,970 | ||||||||||||||
| Litigation liability (gain) loss | (43,310 | ) | 568 | (43,310 | ) | (42,007 | ) | |||||||||||
| Business transition costs | 2,756 | 1,636 | 8,063 | 9,896 | ||||||||||||||
| Total operating expenses | 116,407 | 128,632 | 265,052 | 219,786 | ||||||||||||||
| Interest and other expense, net: | ||||||||||||||||||
| Interest income | 406 | 344 | 734 | 763 | ||||||||||||||
| Interest expense | (10,537 | ) | (7,242 | ) | (19,009 | ) | (14,368 | ) | ||||||||||
| Loss on repurchases of convertible notes | - | - | (17,444 | ) | - | |||||||||||||
| Other (loss) income, net | (246 | ) | (281 | ) | (196 | ) | 143 | |||||||||||
| Total interest and other expense, net | (10,377 | ) | (7,179 | ) | (35,915 | ) | (13,462 | ) | ||||||||||
| Income before income taxes | 49,681 | 18,684 | 36,376 | 67,966 | ||||||||||||||
| Income tax expense | (19,891 | ) | (8,644 | ) | (10,411 | ) | (26,529 | ) | ||||||||||
| Consolidated net income | $ | 29,790 | $ | 10,040 | $ | 25,965 | $ | 41,437 | ||||||||||
| Add back net loss attributable to non-controlling interests | $ | (423 | ) | $ | (228 | ) | $ | (880 | ) | $ | (391 | ) | ||||||
| Net income attributable to NuVasive, Inc. | $ | 30,213 | $ | 10,268 | $ | 26,845 | $ | 41,828 | ||||||||||
| Net income per share attributable to NuVasive, Inc.: | ||||||||||||||||||
| Basic | $ | 0.60 | $ | 0.21 | $ | 0.54 | $ | 0.87 | ||||||||||
| Diluted | $ | 0.57 | $ | 0.20 | $ | 0.51 | $ | 0.81 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||
| Basic | 50,027 | 48,545 | 49,822 | 48,269 | ||||||||||||||
| Diluted | 53,159 | 51,681 | 52,354 | 51,700 | ||||||||||||||
| NuVasive, Inc. | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (in thousands, except par values and share amounts) | ||||||||||
| June 30, 2016 | December 31, 2015 | |||||||||
| ASSETS | (Unaudited) | |||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 263,082 | $ | 192,339 | ||||||
| Short-term marketable securities | 54,081 | 165,423 | ||||||||
| Accounts receivable, net of allowances of $6,066 and $5,320, respectively | 141,917 | 127,595 | ||||||||
| Inventory, net | 201,901 | 168,140 | ||||||||
| Prepaid income taxes | 42,852 | 40,540 | ||||||||
| Prepaid expenses and other current assets | 8,141 | 8,790 | ||||||||
| Total current assets | 711,974 | 702,827 | ||||||||
| Property and equipment, net | 171,291 | 141,441 | ||||||||
| Long-term marketable securities | 13,654 | 112,332 | ||||||||
| Intangible assets, net | 263,607 | 85,076 | ||||||||
| Goodwill | 405,569 | 154,281 | ||||||||
| Deferred tax assets | 14,698 | 83,691 | ||||||||
| Restricted cash and investments | 7,403 | 5,615 | ||||||||
| Other assets | 17,714 | 17,404 | ||||||||
| Total assets | $ | 1,605,910 | $ | 1,302,667 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued liabilities | $ | 100,791 | $ | 60,985 | ||||||
| Accrued payroll and related expenses | 35,268 | 37,641 | ||||||||
| Litigation liabilities | 45,140 | - | ||||||||
| Income tax liabilities | 1,083 | 990 | ||||||||
| Short term senior convertible notes | 119,451 | - | ||||||||
| Total current liabilities | 301,733 | 99,616 | ||||||||
| Long term senior convertible notes | 555,493 | 372,920 | ||||||||
| Long-term acquisition-related liabilities | - | |||||||||
| Deferred and income tax liabilities, non-current | 14,288 | 8,602 | ||||||||
| Non-current litigation liabilities | - | 88,261 | ||||||||
| Other long-term liabilities | 26,541 | 14,425 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock, $0.001 par value; 5,000,000 shares authorized, none outstanding | - | - | ||||||||
| Common stock, $0.001 par value; 120,000,000 shares authorized at June 30, 2016 and December 31, 2015, 54,868,373 and 52,616,471 issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 55 | 53 | ||||||||
| Additional paid-in capital | 1,017,902 | 989,387 | ||||||||
| Accumulated other comprehensive loss | (6,351 | ) | (12,112 | ) | ||||||
| Accumulated deficit | (77,161 | ) | (104,006 | ) | ||||||
| Treasury stock at cost; 4,681,346 shares and 3,316,794 shares at June 30, 2016 and December 31, 2015, respectively | (233,019 | ) | (161,788 | ) | ||||||
| Total NuVasive, Inc. stockholders' equity | 701,426 | 711,534 | ||||||||
| Non-controlling interests | 6,429 | 7,309 | ||||||||
| Total equity | $ | 707,855 | $ | 718,843 | ||||||
| Total liabilities and equity | $ | 1,605,910 | $ | 1,302,667 | ||||||
| NuVasive, Inc. | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| (in thousands) | ||||||||||||
| Six Months Ended June 30, | ||||||||||||
| 2016 | 2015 | |||||||||||
| (unaudited) | ||||||||||||
| Operating activities: | ||||||||||||
| Consolidated net income | $ | 25,965 | $ | 41,437 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 46,329 | 32,630 | ||||||||||
| Loss on repurchases of convertible notes | 17,444 | - | ||||||||||
| Amortization of non-cash interest | 10,943 | 8,749 | ||||||||||
| Stock-based compensation | 12,357 | 13,493 | ||||||||||
| Reserves on current assets | 6,751 | 4,083 | ||||||||||
| Other non-cash adjustments | 8,387 | 10,669 | ||||||||||
| Deferred income taxes | 14,691 | 19,996 | ||||||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||
| Accounts receivable | (8,615 | ) | 637 | |||||||||
| Inventory | (12,019 | ) | (15,181 | ) | ||||||||
| Prepaid expenses and other current assets | 728 | 1,182 | ||||||||||
| Accounts payable and accrued liabilities | 14,273 | 6,841 | ||||||||||
| Accrued royalties | 111 | (47,112 | ) | |||||||||
| Accrued payroll and related expenses | (4,356 | ) | (8,370 | ) | ||||||||
| Litigation liability | (43,310 | ) | 4,795 | |||||||||
| Income taxes | 10,534 | (38,666 | ) | |||||||||
| Net cash provided by operating activities | 100,213 | 35,183 | ||||||||||
| Investing activities: | ||||||||||||
| Acquisition of Ellipse Technologies, net of cash acquired | (380,080 | ) | - | |||||||||
| Other acquisitions and investments | (8,079 | ) | (1,357 | ) | ||||||||
| Purchases of intangible assets | (5,918 | ) | (28,589 | ) | ||||||||
| Purchases of property and equipment | (52,566 | ) | (47,976 | ) | ||||||||
| Purchases of marketable securities | (128,956 | ) | (129,549 | ) | ||||||||
| Proceeds from sales of marketable securities | 339,320 | 164,147 | ||||||||||
| Sales of restricted investments | - | 33,809 | ||||||||||
| Purchases of restricted investments | - | (62,625 | ) | |||||||||
| Net cash used in investing activities | (236,279 | ) | (72,140 | ) | ||||||||
| Financing activities: | ||||||||||||
| Incremental tax benefits related to stock-based compensation awards | - | 9,928 | ||||||||||
| Proceeds from the issuance of common stock | 6,150 | 8,360 | ||||||||||
| Payment of contingent consideration | - | (514 | ) | |||||||||
| Purchase of treasury stock | (22,549 | ) | (43,937 | ) | ||||||||
| Proceeds from issuance of convertible debt, net of issuance costs | 634,140 | - | ||||||||||
| Proceeds from sale of warrants | 44,850 | - | ||||||||||
| Purchase of convertible note hedge | (111,150 | ) | - | |||||||||
| Repurchases of convertible notes | (343,835 | ) | - | |||||||||
| Proceeds from revolving line of credit | 50,000 | - | ||||||||||
| Repayments on revolving line of credit | (50,000 | ) | - | |||||||||
| Other financing activities | (1,545 | ) | (87 | ) | ||||||||
| Net cash provided by (used in) financing activities | 206,061 | (26,250 | ) | |||||||||
| Effect of exchange rate changes on cash | 748 | (543 | ) | |||||||||
| Increase (decrease) in cash and cash equivalents | 70,743 | (63,750 | ) | |||||||||
| Cash and cash equivalents at beginning of period | 192,339 | 142,387 | ||||||||||
| Cash and cash equivalents at end of period | $ | 263,082 | $ | 78,637 | ||||||||
Investor Contact: Suzanne Hatcher NuVasive, Inc. 1-858-458-2240 Email contact Media Contact: Michael Farrington NuVasive, Inc. 1-858-909-1940 Email contact
