NuVasive Announces Third Quarter 2021 Financial Results
-- Company updates full-year 2021 financial guidance --
-- Pulse platform launches and completes first commercial cases --
-- Cervical portfolio delivers double-digit, year-over-year growth in U.S. led by Simplify Cervical Disc --
SAN DIEGO, Nov. 9, 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 ended September 30, 2021.
Third Quarter 2021
- Net sales decreased 8.3% to $270.8 million, on a reported and constant currency basis, compared to the prior year period;
- GAAP operating margin of (2.4%); Non-GAAP operating margin of 11.2%; and
- GAAP diluted loss per share of $0.42; Non-GAAP diluted earnings per share of $0.32.
"The third quarter presented unexpected challenges for elective surgical procedures due to the negative impact from the resurgence of COVID-19 and healthcare staffing shortages," said J. Christopher Barry, chief executive officer of NuVasive. "Despite these external factors, our strategy remains unchanged. The Company is well-positioned with multiple vectors of growth to create increased value for our stakeholders in 2022 and beyond. With the recent Pulse commercial launch and continued adoption of our C360 portfolio—highlighted by the Simplify Cervical Disc—I am confident in our ability to further transform surgery, advance care, and change patient lives around the world."
Third Quarter 2021 Results
NuVasive reported third quarter 2021 total net sales of $270.8 million, an 8.3% decrease on a reported and constant currency basis, compared to $295.3 million in the prior year period. Third quarter 2021 total net sales were driven by new product introductions in the spine portfolio and International performance. These third quarter results were negatively impacted by the COVID-19 global pandemic, healthcare staffing shortages, and NuVasive Specialized Orthopedics product availability.
For the third quarter of 2021, GAAP gross profit was $182.2 million and $197.0 million on a non-GAAP basis, compared to GAAP and non-GAAP gross profit of $210.6 million in the prior year period. GAAP gross margin was 67.3% and 72.7% on a non-GAAP basis, compared to GAAP and non-GAAP gross margin of 71.3% in the prior year period.
For the third quarter of 2021, GAAP net loss was $21.6 million or diluted loss per share of $0.42, compared to GAAP net income of $5.9 million or diluted earnings per share of $0.11 in the prior year period. Non-GAAP net income was $16.9 million or diluted earnings per share of $0.32, compared to non-GAAP net income of $28.3 million or diluted earnings per share of $0.55 in the prior year period.
Cash, cash equivalents, and investments were $234.6 million as of September 30, 2021.
A full reconciliation of GAAP to non-GAAP financial measures can be found in the tables of this press release and in the Investor Relations section of the Company's website.
Updated Financial Guidance
The Company lowered its full-year 2021 financial guidance based on year-to-date performance and as a result of the unanticipated variability in elective surgical volumes due to the impact of COVID-19 and healthcare staffing shortages:
2021 financial guidance range* |
||
Current guidance |
Prior guidance |
|
Net sales |
$1.132 billion−$1.142 billion |
$1.190 billion−$1.210 billion |
Non-GAAP operating margin |
12.5%−12.9% |
14.4%−14.9% |
Non-GAAP diluted EPS |
$1.73−$1.83 |
$2.25−$2.35 |
*Prior guidance reflects the range provided July 28, 2021. Current guidance reflects the range provided November 9, 2021. |
||
Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.
Share Repurchase Program Extension and Increase
The NuVasive Board of Directors has approved a one-year extension of the Company's previously announced share repurchase program and increased the share repurchase authorization. As a result, the Company is now authorized to repurchase up to $100.0 million dollars of its common stock through December 31, 2022. Under this program, the Company may repurchase stock from time to time, in amounts, at prices, and at such times the Company deems appropriate, subject to market conditions, legal requirements, and other considerations.
Conference Call and Webcast
The Company will hold a conference call today, November 9, 2021, at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its financial performance for the third quarter of 2021. 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 and supplemental financial information of the Company's third quarter financial results will be available on the Investor Relations page of the Company's website at www.nuvasive.com.
After the live event, the webcast will remain available on NuVasive's website for future reference. In addition, an audio replay of the call will be available until November 16, 2021. The replay dial-in numbers are 1-844-512-2921 for domestic callers and 1-412-317-6671 for international callers. Please use pin number: 13722935.
About NuVasive
NuVasive, Inc. (NASDAQ: NUVA) is the leader in spine technology innovation, with a mission to transform surgery, advance care, and change lives. The Company's less-invasive, procedurally integrated surgical solutions are designed to deliver reproducible and clinically proven outcomes. The Company's comprehensive procedural portfolio includes surgical access instruments, spinal implants, fixation systems, biologics, software for surgical planning, navigation and imaging solutions, magnetically adjustable implant systems for spine and orthopedics, and intraoperative neuromonitoring technology and service offerings. With more than $1 billion in net sales, NuVasive has approximately 2,700 employees and operates in more than 50 countries serving surgeons, hospitals, and patients. For more information, please visit www.nuvasive.com.
Reconciliation of GAAP to Non-GAAP Information
Management uses certain non-GAAP financial measures such as non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP net income (loss), and non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures exclude amortization of intangible assets, business transition costs, purchased in-process research and development, one-time restructuring charges, non-cash purchase accounting adjustments, inventory charges associated with product withdrawals, certain foreign currency impacts and related items in connection with acquisitions, investments and divestitures, 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, non-cash interest expense (excluding debt issuance cost) and other significant one-time items. 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 charges, non-cash purchase accounting adjustments, inventory charges associated with product withdrawals, certain foreign currency impacts and related items in connection with acquisitions, investments and divestitures, 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 in the financial tables accompanying this press release are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measure.
Forward-Looking Statements
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 third quarter 2021, as well as projections for 2021 financial guidance and expectations regarding longer-term financial performance. The Company's results for the third quarter 2021 are prior to the completion of review and audit procedures by the Company's external auditors and are subject to adjustment. In addition, the Company's projections for 2021 financial guidance and expectations regarding longer-term financial performance represent initial estimates, and 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 which contribute to the uncertain nature of these statements include, among others, the impact of the COVID-19 pandemic on the Company's business and financial results; the Company's ability to maintain operations to support its customers and patients in the near-term and to capitalize on future growth opportunities; risks associated with acceptance of the Company's surgical products and procedures by spine surgeons and hospitals, development and acceptance of new products or product enhancements, clinical and statistical verification of the benefits achieved via the use of NuVasive's products, the Company's ability to adequately manage inventory as it continues to release new products, its ability to recruit and retain management and key personnel, and the 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. 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. |
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Consolidated Statements of Operations |
||||||||
(in thousands, except per share data) |
||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
(unaudited) |
2021 |
2020 |
2021 |
2020 |
||||
Net sales: |
||||||||
Products |
$ 247,061 |
$ 267,571 |
$ 759,275 |
$ 685,922 |
||||
Services |
23,775 |
27,711 |
77,638 |
72,853 |
||||
Total net sales |
270,836 |
295,282 |
836,913 |
758,775 |
||||
Cost of sales (excluding below amortization of intangible assets): |
||||||||
Products |
69,609 |
66,049 |
181,495 |
182,067 |
||||
Services |
19,043 |
18,584 |
57,248 |
54,936 |
||||
Total cost of sales |
88,652 |
84,633 |
238,743 |
237,003 |
||||
Gross profit |
182,184 |
210,649 |
598,170 |
521,772 |
||||
Operating expenses: |
||||||||
Selling, general and administrative |
146,056 |
146,260 |
449,407 |
402,935 |
||||
Research and development |
23,405 |
20,404 |
67,393 |
58,067 |
||||
Amortization of intangible assets |
14,805 |
13,826 |
43,230 |
39,150 |
||||
Purchase of in-process research and development |
— |
— |
— |
1,011 |
||||
Business transition costs |
4,551 |
3,107 |
21,688 |
2,541 |
||||
Total operating expenses |
188,817 |
183,597 |
581,718 |
503,704 |
||||
Interest and other expense, net: |
||||||||
Interest income |
23 |
271 |
119 |
1,306 |
||||
Interest expense |
(4,320) |
(21,123) |
(16,738) |
(49,164) |
||||
Other (expense) income, net |
(13,082) |
251 |
(24,339) |
(18,819) |
||||
Total interest and other expense, net |
(17,379) |
(20,601) |
(40,958) |
(66,677) |
||||
(Loss) income before income taxes |
(24,012) |
6,451 |
(24,506) |
(48,609) |
||||
Income tax benefit (expense) |
2,373 |
(579) |
(2,844) |
9,764 |
||||
Consolidated net (loss) income |
$ (21,639) |
$ 5,872 |
$ (27,350) |
$ (38,845) |
||||
Net (loss) income per share: |
||||||||
Basic |
$ (0.42) |
$ 0.11 |
$ (0.53) |
$ (0.76) |
||||
Diluted |
$ (0.42) |
$ 0.11 |
$ (0.53) |
$ (0.76) |
||||
Weighted average shares outstanding: |
||||||||
Basic |
51,669 |
51,261 |
51,539 |
51,440 |
||||
Diluted |
51,669 |
51,805 |
51,539 |
51,440 |
||||
NuVasive, Inc. |
||||
Consolidated Balance Sheets |
||||
(in thousands, except par value data) |
||||
September 30, 2021 |
December 31, 2020 |
|||
ASSETS |
(Unaudited) |
|||
Current assets: |
||||
Cash and cash equivalents |
$ 234,578 |
$ 856,869 |
||
Short-term marketable securities |
— |
173,145 |
||
Accounts receivable, net of allowances of $21,756 and $20,631, respectively |
199,366 |
207,071 |
||
Inventory, net |
311,414 |
300,623 |
||
Prepaid income taxes |
5,623 |
4,727 |
||
Prepaid expenses and other current assets |
19,380 |
19,749 |
||
Total current assets |
770,361 |
1,562,184 |
||
Property and equipment, net |
302,195 |
286,369 |
||
Intangible assets, net |
256,416 |
152,264 |
||
Goodwill |
633,121 |
559,553 |
||
Operating lease right-of-use assets |
104,590 |
102,270 |
||
Deferred tax assets |
48,851 |
15,755 |
||
Restricted cash and investments |
1,494 |
1,494 |
||
Other assets |
17,005 |
13,193 |
||
Total assets |
$ 2,134,033 |
$ 2,693,082 |
||
LIABILITIES AND EQUITY |
||||
Current liabilities: |
||||
Accounts payable and accrued liabilities |
$ 110,796 |
$ 110,401 |
||
Contingent consideration liabilities |
7,468 |
7,289 |
||
Accrued payroll and related expenses |
65,741 |
63,421 |
||
Operating lease liabilities |
9,627 |
7,875 |
||
Income tax liabilities |
1,730 |
2,073 |
||
Senior convertible notes |
— |
645,303 |
||
Total current liabilities |
195,362 |
836,362 |
||
Long-term senior convertible notes |
883,180 |
766,226 |
||
Deferred tax liabilities |
2,683 |
2,807 |
||
Operating lease liabilities |
113,128 |
111,634 |
||
Contingent consideration liabilities |
93,584 |
29,752 |
||
Other long-term liabilities |
21,900 |
22,686 |
||
Commitments and contingencies |
||||
Redeemable equity component of senior convertible notes |
— |
4,697 |
||
Stockholders' equity: |
||||
Preferred stock, $0.001 par value; 5,000 shares authorized, none outstanding |
— |
— |
||
Common stock, $0.001 par value; 150,000 shares authorized at September 30, 2021 |
63 |
62 |
||
Additional paid-in capital |
1,425,242 |
1,550,001 |
||
Accumulated other comprehensive loss |
(7,309) |
(7,585) |
||
Retained earnings |
82,444 |
45,322 |
||
Treasury stock at cost; 6,672 shares and 6,569 shares at September 30, 2021 and December 31, 2020, |
(676,244) |
(668,882) |
||
Total equity |
824,196 |
918,918 |
||
Total liabilities and equity |
$ 2,134,033 |
$ 2,693,082 |
||
NuVasive, Inc. |
||||
Consolidated Statements of Cash Flows |
||||
(in thousands) |
||||
Nine Months Ended September 30, |
||||
(unaudited) |
2021 |
2020 |
||
Operating activities: |
||||
Consolidated net loss |
$ (27,350) |
$ (38,845) |
||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||
Depreciation and amortization |
111,818 |
106,097 |
||
Amortization of non-cash interest |
6,672 |
33,714 |
||
Stock-based compensation |
17,972 |
9,806 |
||
Reserves on current assets |
25,418 |
44,927 |
||
Purchase of in-process research and development |
— |
1,011 |
||
Net (gain) loss on strategic investments |
(2,101) |
278 |
||
Net loss on change in fair value of derivatives |
— |
12,301 |
||
Net loss from foreign currency adjustments |
26,572 |
6,207 |
||
Other non-cash adjustments |
15,396 |
7,692 |
||
Deferred income taxes |
(5,211) |
(6,257) |
||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||
Accounts receivable |
4,142 |
2,388 |
||
Inventory |
(29,266) |
(37,523) |
||
Prepaid expenses and other current assets |
(367) |
(1,620) |
||
Accounts payable and accrued liabilities |
(779) |
10,176 |
||
Accrued payroll and related expenses |
3,021 |
(33,529) |
||
Income taxes |
(1,167) |
(3,625) |
||
Net cash provided by operating activities |
144,770 |
113,198 |
||
Investing activities: |
||||
Acquisition of Simplify Medical, net of cash acquired |
(149,463) |
— |
||
Payment of contingent consideration for Simplify Medical |
(45,850) |
— |
||
Acquisitions and investments |
(500) |
1,132 |
||
Purchases of intangible assets |
(1,200) |
(3,810) |
||
Purchases of property and equipment |
(85,630) |
(77,857) |
||
Purchases of marketable securities |
— |
(207,695) |
||
Proceeds from sales of marketable securities |
127,023 |
— |
||
Proceeds from maturities of marketable securities |
46,000 |
— |
||
Other investing activities |
(819) |
— |
||
Net cash used in investing activities |
(110,439) |
(288,230) |
||
Financing activities: |
||||
Proceeds from the issuance of common stock |
3,803 |
3,871 |
||
Purchases of treasury stock |
(7,309) |
(79,680) |
||
Payment of contingent consideration |
(3) |
(7,053) |
||
Proceeds from issuance of convertible debt, net of issuance costs |
— |
873,890 |
||
Proceeds from sale of warrants |
— |
93,915 |
||
Purchases of convertible note hedges |
— |
(147,825) |
||
Payments upon settlement of senior convertible notes |
(649,426) |
— |
||
Other financing activities |
(1,038) |
(1,405) |
||
Net cash (used in) provided by financing activities |
(653,973) |
735,713 |
||
Effect of exchange rate changes on cash |
(2,649) |
829 |
||
(Decrease) increase in cash, cash equivalents and restricted cash |
(622,291) |
561,510 |
||
Cash, cash equivalents and restricted cash at beginning of period |
858,363 |
214,528 |
||
Cash, cash equivalents and restricted cash at end of period |
$ 236,072 |
$ 776,038 |
||
For the Three Months Ended September 30, 2021 |
|||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||
(Unaudited - in thousands, except per share data) |
|||||||
Gross Profit |
Operating (Loss) Profit |
Net (Loss) Income |
Diluted EPS |
Diluted WASO8 |
Net (Loss) to Adjusted EBITDA |
||
Reported GAAP |
$ 182,184 |
$ (6,633) |
$ (21,639) |
$ (0.42) |
51,669 |
$ (21,639) |
|
% of net sales |
67.3% |
(2.4%) |
|||||
Non-cash purchase accounting adjustments on acquisitions1 |
557 |
557 |
557 |
557 |
|||
Inventory charges associated with product withdrawals2 |
14,215 |
14,215 |
14,215 |
14,215 |
|||
Amortization of intangible assets |
14,805 |
14,805 |
|||||
Litigation related expenses and settlements3 |
762 |
762 |
762 |
||||
Business transition costs4 |
4,551 |
4,551 |
4,551 |
||||
European medical device regulation5 |
2,132 |
2,132 |
2,132 |
||||
Non-cash acquisition-related foreign currency impacts6 |
10,280 |
10,280 |
|||||
Tax effect of adjustments7 |
(8,775) |
||||||
Interest expense/(income), net |
4,297 |
||||||
Income tax benefit |
(2,373) |
||||||
Depreciation and amortization |
37,864 |
||||||
Non-cash stock-based compensation |
4,965 |
||||||
Adjusted Non-GAAP |
$ 196,956 |
$ 30,389 |
$ 16,888 |
$ 0.32 |
52,268 |
$ 55,611 |
|
% of net sales |
72.7% |
11.2% |
20.5% |
||||
1Represents 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. |
|||||||
2Represents charges for inventory write-offs associated with the Company's product withdrawals. During the three months ended September 30, 2021, the Company made a determination to withdraw certain products marketed and sold by its wholly-owned subsidiary, NuVasive Specialized Orthopedics. |
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3Represents expenses associated with certain ongoing litigation matters, including infringement of the Company's intellectual property. |
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4Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities. |
|||||||
5Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
|||||||
6Represents non-cash adjustments to acquisition-related intercompany balances and contingent consideration liabilities held in a foreign currency. |
|||||||
7Represents the impact from tax affecting the adjustments above at their statutory tax rate. |
|||||||
8Adjusted 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. |
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For the Nine Months Ended September 30, 2021 |
|||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||
(Unaudited - in thousands, except per share data) |
|||||||
Gross Profit |
Operating Profit |
Net (Loss) Income |
Diluted EPS |
Diluted WASO8 |
Net (Loss) to Adjusted EBITDA |
||
Reported GAAP |
$ 598,170 |
$ 16,452 |
$ (27,350) |
$ (0.53) |
51,539 |
$ (27,350) |
|
% of net sales |
71.5% |
2.0% |
|||||
Non-cash purchase accounting adjustments on acquisitions1 |
1,299 |
1,299 |
1,299 |
1,299 |
|||
Inventory charges associated with product withdrawals2 |
14,215 |
14,215 |
14,215 |
14,215 |
|||
Amortization of intangible assets |
43,230 |
43,230 |
|||||
Litigation related expenses and settlements3 |
4,010 |
4,010 |
4,010 |
||||
Business transition costs4 |
21,688 |
21,688 |
21,688 |
||||
European medical device regulation5 |
5,696 |
5,696 |
5,696 |
||||
Net gain on strategic investments |
(2,101) |
(2,101) |
|||||
Non-cash acquisition-related foreign currency impacts6 |
23,673 |
23,673 |
|||||
Tax effect of adjustments7 |
(17,269) |
||||||
Interest expense/(income), net |
16,619 |
||||||
Income tax expense |
2,844 |
||||||
Depreciation and amortization |
111,818 |
||||||
Non-cash stock-based compensation |
17,972 |
||||||
Adjusted Non-GAAP |
$ 613,684 |
$ 106,590 |
$ 67,091 |
$ 1.29 |
52,184 |
$ 190,383 |
|
% of net sales |
73.3% |
12.7% |
22.7% |
||||
1Represents 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. |
|||||||
2Represents charges for inventory write-offs associated with the Company's product withdrawals. During the three months ended September 30, 2021, the Company made a determination to withdraw certain products marketed and sold by its wholly-owned subsidiary, NuVasive Specialized Orthopedics. |
|||||||
3Represents expenses associated with certain ongoing litigation matters, including infringement of the Company's intellectual property. |
|||||||
4Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities. |
|||||||
5Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
|||||||
6Represents non-cash adjustments to acquisition-related intercompany balances and contingent consideration liabilities held in a foreign currency. |
|||||||
7Represents the impact from tax affecting the adjustments above at their statutory tax rate. |
|||||||
8Adjusted 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. |
|||||||
For the Three Months Ended September 30, 2020 |
|||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||
(Unaudited - in thousands, except per share data) |
|||||||
Gross Profit |
Operating Profit |
Net Income |
Diluted EPS |
Diluted WASO5 |
Net Income to Adjusted EBITDA |
||
Reported GAAP |
$ 210,649 |
$ 27,052 |
$ 5,872 |
$ 0.11 |
51,805 |
$ 5,872 |
|
% of net sales |
71.3% |
9.2% |
|||||
Amortization of intangible assets |
13,826 |
13,826 |
|||||
Litigation related expenses and settlements1 |
1,396 |
1,396 |
1,396 |
||||
Business transition costs2 |
3,107 |
3,107 |
3,107 |
||||
European medical device regulation3 |
1,149 |
1,149 |
1,149 |
||||
Non-cash interest expense on convertible notes |
12,683 |
||||||
Net gain on strategic investments |
(1,132) |
(1,132) |
|||||
Tax effect of adjustments4 |
(8,575) |
||||||
Interest expense/(income), net |
20,852 |
||||||
Income tax expense |
579 |
||||||
Depreciation and amortization |
35,959 |
||||||
Non-cash stock-based compensation |
7,572 |
||||||
Adjusted Non-GAAP |
$ 210,649 |
$ 46,530 |
$ 28,326 |
$ 0.55 |
51,805 |
$ 75,354 |
|
% of net sales |
71.3% |
15.8% |
25.5% |
||||
1Represents expenses associated with certain ongoing litigation matters, including infringement of the Company's intellectual property. |
|||||||
2Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities. |
|||||||
3Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
|||||||
4Represents the impact from tax affecting the adjustments above at their statutory tax rate. |
|||||||
5Adjusted 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. |
|||||||
For the Nine Months Ended September 30, 2020 |
|||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||
(Unaudited - in thousands, except per share data) |
|||||||
Gross Profit |
Operating Profit |
Net (Loss) Income |
Diluted EPS |
Diluted WASO7 |
Net (Loss) to Adjusted EBITDA |
||
Reported GAAP |
$ 521,772 |
$ 18,068 |
$ (38,845) |
$ (0.76) |
51,440 |
$ (38,845) |
|
% of net sales |
68.8% |
2.4% |
|||||
Amortization of intangible assets |
39,150 |
39,150 |
|||||
Litigation related expenses and settlements1 |
5,686 |
5,686 |
5,686 |
||||
Business transition costs2 |
2,541 |
2,541 |
2,541 |
||||
Purchase of in-process research and development3 |
1,011 |
1,011 |
1,011 |
||||
European medical device regulation4 |
4,079 |
4,079 |
4,079 |
||||
Non-cash interest expense on convertible notes |
28,022 |
||||||
Net loss on strategic investments |
278 |
278 |
|||||
Net loss recognized on change in fair value of derivatives5 |
12,301 |
12,301 |
|||||
Tax effect of adjustments6 |
(20,834) |
||||||
Interest expense/(income), net |
47,858 |
||||||
Income tax benefit |
(9,764) |
||||||
Depreciation and amortization |
106,097 |
||||||
Non-cash stock-based compensation |
9,751 |
||||||
Adjusted Non-GAAP |
$ 521,772 |
$ 70,535 |
$ 33,389 |
$ 0.64 |
52,033 |
$ 140,993 |
|
% of net sales |
68.8% |
9.3% |
18.6% |
||||
1Represents expenses associated with certain ongoing litigation matters, including infringement of the Company's intellectual property. |
|||||||
2Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs, contingent consideration fair value adjustments, and other costs directly associated with such activities. |
|||||||
3Purchase of an in-process research and development asset which had no future alternative use. |
|||||||
4Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
|||||||
5Represents the net change in fair value of the Company's derivative asset and liability associated with the 2023 Notes. |
|||||||
6Represents the impact from tax affecting the adjustments above at their statutory tax rate. |
|||||||
7Adjusted 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. |
|||||||
Full-Year 2021 Financial Guidance |
||||||||
Reconciliation of GAAP to Non-GAAP EPS |
||||||||
2021 Guidance Range1,2 |
||||||||
2020 Actuals1 |
Prior |
Current |
||||||
GAAP diluted earnings (loss) per share |
$(0.72) |
$ 0.54 - 0.64 |
$ (0.40) - (0.30) |
|||||
Impact of change to diluted share count3 |
0.01 |
0.00 - 0.05 |
0.00 - 0.05 |
|||||
Amortization of intangible assets |
0.99 |
1.09 - 1.14 |
1.09 - 1.14 |
|||||
Non-cash interest expense on convertible notes4 |
0.79 |
- |
- |
|||||
European medical device regulation5 |
0.15 |
0.17 - 0.22 |
0.17 - 0.22 |
|||||
Inventory charges associated with product withdrawals6 |
- |
- |
0.27 |
|||||
Other7 |
0.60 |
0.72 - 0.77 |
0.95 - 1.00 |
|||||
Tax effect of adjustments8 |
(0.59) |
(0.38) - (0.33) |
(0.47) - (0.42) |
|||||
Non-GAAP diluted earnings per share |
$1.23 |
$ 2.25 - 2.35 |
$ 1.73 - 1.83 |
|||||
1Data has been intentionally rounded and may not sum. |
||||||||
2Prior guidance reflects the range provided July 28, 2021. Current guidance reflects the range provided November 9, 2021. |
||||||||
3Adjusted 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. |
||||||||
4Discontinuation of debt discount accretion for our Senior Convertible Notes resulting from adopting ASU 2020-06 on January 1, 2021. |
||||||||
5Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
||||||||
6Represents charges for inventory write-offs associated with the Company's product withdrawals. During the three months ended September 30, 2021, the Company made a determination to withdraw certain products marketed and sold by its wholly-owned subsidiary, NuVasive Specialized Orthopedics. |
||||||||
7Include costs primarily associated with litigation related expenses and settlements, non-cash acquisition-related foreign currency impacts, net loss recognized on change in fair value of derivatives and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables within respective earnings releases for further detail. |
||||||||
8Represents the impact from tax affecting the adjustments above at their statutory tax rate. |
||||||||
Full-Year 2021 Financial Guidance |
|||||||
Reconciliation of GAAP to non-GAAP Operating Margin % |
|||||||
2021 Guidance Range1,2 |
|||||||
2020 Actuals1 |
Prior |
Current |
|||||
GAAP Operating Margin % |
3.7% |
6.5% - 7.0% |
2.8% - 3.2% |
||||
Amortization of intangible assets |
4.9% |
4.7% - 4.9% |
5.0% - 5.2% |
||||
European medical device regulation3 |
0.7% |
0.7% - 0.9% |
0.7% - 0.9% |
||||
Inventory charges associated with product withdrawals4 |
- |
- |
1.2% |
||||
Other5 |
1.8% |
2.2% - 2.4% |
2.5% - 2.7% |
||||
Non-GAAP Operating Margin % |
11.1% |
14.4% - 14.9% |
12.5% - 12.9% |
||||
1Data has been intentionally rounded and may not sum. |
|||||||
2Prior guidance reflects the range provided July 28, 2021. Current guidance reflects the range provided November 9, 2021. |
|||||||
3Represents costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with European medical device regulation. |
|||||||
4Represents charges for inventory write-offs associated with the Company's product withdrawals. During the three months ended September 30, 2021, the Company made a determination to withdraw certain products marketed and sold by its wholly-owned subsidiary, NuVasive Specialized Orthopedics. |
|||||||
5Include costs primarily associated with litigation related expenses and settlements, purchase of in-process research and development, and business transition costs. See Reconciliation of GAAP to Non-GAAP Financial Measures tables within respective earnings releases for further detail. |
|||||||
SOURCE NuVasive, Inc.
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