2014

NuVasive Reports Second Quarter 2007 Revenue Of $35.6 Million - Increases 2007 Revenue and GAAP EPS Guidance -

Second Quarter 2007 Highlights:

* Total revenues increased to $35.6 million; up 56.7% from the second

quarter of 2006

* Gross profit increased to $28.9 million; up 63.9% from the second quarter

of 2006

* Gross margin was 81.2%; up 360 basis points from the second quarter of

2006

* GAAP loss per share for the quarter was $(0.10); non-GAAP earnings per

share was $0.01

* Vertical integration was 47%; up from 45% at March 31, 2007;

approximately 50 new accounts were added in the quarter

* NeoDisc(TM) clinical trial continues to progress with enrollment over 40%



    SAN DIEGO, July 25 /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 June 30, 2007.
     The Company reported second quarter revenues of $35.6 million, a 56.7%
 increase over the $22.7 million for the second quarter of 2006 and a 7.2%
 increase over the $33.2 million for the first quarter of 2007.
     Gross profit for the second quarter of 2007 was $28.9 million and gross
 margin was 81.2%, compared to a gross profit of $17.6 million and a gross
 margin of 77.6% in the second quarter of 2006. For the first quarter of
 2007, gross profit was $27.5 million and gross margin was 82.8%.
     Total operating expenses for the second quarter of 2007 were $34.0
 million, compared with $37.9 million (or $27.4 million, excluding a charge
 of $10.5 million for the NeoDisc buyout) in the second quarter of 2006 and
 $33.8 million in the first quarter of 2007. Operating expenses for the
 second quarter of 2007 included (i) costs associated with continued
 investment in the Company's next generation MAS(TM) products, specifically
 those launched late in the second quarter and those scheduled for launch
 later in the year; (ii) costs incurred in the second quarter of 2007
 related to the NeoDisc clinical trial; and (iii) additional sales costs
 directly associated with higher revenue.
     On a GAAP basis for the second quarter of 2007, the Company reported a
 net loss of $3.4 million or $(0.10) per share. On a non-GAAP basis, the
 Company reported net income of $0.5 million or $0.01 per share. The
 non-GAAP earnings per share calculation in the second quarter of 2007
 excludes (i) stock based
     compensation of $3.5 million and (ii) amortization of acquired
 intangible assets of $0.4 million.
     Cash, cash equivalents and short and long-term investments were $96.7
 million at June 30, 2007.
     Alexis V. Lukianov, Chairman and Chief Executive Officer, said, "Our
 strong second quarter results demonstrate the increasing effectiveness of
 our exclusive sales force and our initial success with the newly launched
 products. This progress on our growth strategy is demonstrated by the
 increasing number of vertically integrated hospitals, the revenue we derive
 from those hospitals, and from an increasing number of accounts.
 Additionally, our unique lateral access XLIF(R) technique continues rapidly
 to proliferate and drive our selling strategy. During the second quarter,
 we completed building inventory and successfully completed launches of our
 SpheRx(R) II pedicle screw system, XLP(TM) Lateral Plate and Formagraft(R)
 biologic, enhancing our potential revenue per procedure and providing for
 incremental revenue growth in the second half of 2007. Initial surgeon
 demand for these products has been strong."
     Mr. Lukianov continued, "Our NeoDisc clinical trial enrollment
 continues to progress on schedule. In the second half of 2007, we will
 increase our investment in our NeoDisc clinical study and the next
 generation NeuroVision(R) system, which we believe will protect and expand
 our position as a leader in spine technology."
     Guidance
     NuVasive announced increased full year 2007 financial guidance as follows:
 
     Revenue: $143 to $146 million, up from $139 to $143 million
     GAAP loss per share: $(0.38) to $(0.31), down from $(0.43) to $(0.36)
     Non-GAAP earnings per share: $0.05 to $0.09 (unchanged)
     The increase with respect to GAAP net loss primarily reflects reduced
 stock-based compensation.
     Reconciliation of Non-GAAP Information
     Management uses certain non-GAAP financial measures such as non-GAAP
 earnings per share and non-GAAP net loss per share, which exclude stock
 based compensation and charges directly related to acquisition transactions
 such as in-process research and development, milestone payments,
 amortization of the acquired technology assets and certain other
 non-recurring internal costs incurred as a result of the transaction.
 Management does not consider these costs in evaluating the continuing
 operations of the Company because management believes they are not
 indicative of the ongoing business operations. 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 a 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 2007 Results
     (in thousands, except per share amounts)
 
     GAAP net loss (A)                                              $ (3,416)
      Stock based compensation (B)                                     3,469
      Amortization of acquired intangible assets (C)                     397
     Non-GAAP earnings (A)                                          $    450
 
 
 
     GAAP net loss per share (A)                                    $  (0.10)
      Stock based compensation (B)                                      0.10
      Amortization of acquired intangible assets (C)                    0.01
     Non-GAAP earnings per share (A)                                $   0.01
      Shares used in computing GAAP net loss per
       share (A)                                                      34,654
      Shares used in computing non-GAAP earnings per
       share (A)                                                      36,110
 
 
     Reconciliation of Full Year 2007 Guidance
     (in thousands, except per share amounts)
 
                                                        Range for Year Ending
                                                           December 31, 2007
                                                           Low           High
 
 
 
     GAAP net loss per share (A)                        $ (0.38)      $ (0.31)
      Stock based compensation (B)                         0.39          0.36
      Amortization of acquired intangible
       assets (C)                                          0.04          0.04
     Non-GAAP earnings per share (A)                    $  0.05       $  0.09
     Shares used in computing GAAP net
      loss per share (A)                                 34,756        34,756
     Share used in computing non-GAAP
      earnings per share (A)                             36,256        36,256
 
     A - GAAP net loss per share is calculated using basic weighted shares
         outstanding;  Non-GAAP earnings per share is calculated using diluted
         weighted shares outstanding,
     B - Non-cash stock-based compensation.
     C - Amortization of technology assets purchased in 2005 and 2007.
     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 Web cast of
 the conference call will be available online from the investor relations
 page of the Company's corporate Web site at www.nuvasive.com.
     After the live Web cast, the call will remain available on NuVasive's
 Web site, www.nuvasive.com, through August 25, 2007. In addition, a
 telephonic replay of the call will be available until August 15, 2007. 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 247324.
     Contact:                           Investors:
     Kevin C. O'Boyle                   Nick Laudico/ Zack Kubow
     EVP & Chief Financial Officer      The Ruth Group
     NuVasive, Inc.                     646-536-7030 / 7020
     investorrelations@nuvasive.com     nlaudico@theruthgroup.com
                                        zkubow@theruthgroup.com
 
                                        Media:
                                        Jason Rando
                                        The Ruth Group
                                        646-536-7025
                                        jrando@theruthgroup.com
     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 on applications in the over $3.6
 billion U.S. spine fusion market. The Company's current principal product
 offering includes a minimally disruptive surgical platform called Maximum
 Access Surgery, or MAS, as well as a growing offering of cervical and
 motion preservation products.
     The MAS platform offers advantages for both patients and surgeons such
 as reduced surgery and hospitalization time and faster recovery. MAS
 combines three categories of current product offerings: NeuroVision a
 proprietary software-driven nerve avoidance system; MaXcess(R) a unique
 split-blade design retraction system; and specialized implants, like
 SpheRx(R) and CoRoent(R), that collectively minimize soft tissue disruption
 during spine surgery while allowing maximum visualization and surgical
 reproducibility. NuVasive's product offering is also focused on cervical
 internal fixation products and its R&D pipeline emphasizes both MAS and
 motion preservation.
     NuVasive cautions you that statements included in this press release
 that are not a description of historical facts are forward-looking
 statements that involve risks, uncertainties, assumptions and other factors
 which, if they do not materialize or prove correct, could cause NuVasive's
 results to differ materially from historical results or those expressed or
 implied by such forward-looking statements. The potential risks and
 uncertainties that could cause actual growth and results to differ
 materially include, but are not limited to: the uncertain process of
 seeking regulatory approval or clearance for NuVasive's products or
 devices, including risks that such process could be significantly delayed;
 the possibility that the FDA may require significant changes to NuVasive's
 products or clinical studies; the risk that the Company's financial
 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 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.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
 
 
                                     Three Months Ended     Six Months Ended
                                          June 30,               June 30,
                                       2007      2006         2007       2006
 
 
     Revenues                       $35,618   $22,724      $68,838    $42,409
     Cost of goods sold               6,710     5,087       12,417      8,967
     Gross profit                    28,908    17,637       56,421     33,442
 
     Operating expenses:
      Sales, marketing and
       administrative                28,027    22,996       56,067     44,015
      Research and development        5,925     4,448       11,677      8,438
      Development milestone
       expense                            -    10,500            -     10,500
     Total operating expenses        33,952    37,944       67,744     62,953
     Interest and other
      income, net                     1,628     1,837        3,487      2,935
 
     Net loss                       $(3,416) $(18,470)     $(7,836)  $(26,576)
 
     Net loss per share:
      Basic and diluted              $(0.10)   $(0.56)      $(0.23)    $(0.85)
      Weighted average shares
       - basic and diluted           34,654    33,113       34,485     31,394
 
     Stock-based compensation
      is included in operating
      expenses in the following
      categories:
     Sales, marketing and
      administrative                 $2,894    $2,481       $5,522     $5,270
     Research and development           575       741        1,091      1,553
                                     $3,469    $3,222       $6,613     $6,823
 
 
                                 NUVASIVE, INC.
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
 
 
                                            June 30,2007      December 31, 2006
     Assets
     Current assets:
      Cash and cash equivalents                $44,218            $41,476
      Short-term investments                    44,460             73,930
      Accounts receivable, net                  23,261             18,960
      Inventory, net                            26,763             18,636
      Prepaid expenses and other current
       assets                                    1,628              1,716
     Total current assets                      140,330            154,718
     Property and equipment, net of
      accumulated depreciation                  33,917             30,573
     Intangible assets, net of accumulated
      amortization                              25,335              8,441
     Long-term investments                       9,987              1,996
     Other assets                                  451                456
     Total assets                             $210,020           $196,184
     Liabilities and Stockholders' Equity
      Current liabilities:
       Accounts payable and accrued
        liabilities                            $10,694             $8,937
       Accrued payroll and related expenses      8,056              8,477
       Royalties payable                         1,424              1,068
     Total current liabilities                  20,174             18,482
     Long-term liabilities                       1,112              1,399
     Commitments and contingencies
     Stockholders' equity:
      Common stock, 70,000 shares authorized
       34,842 and 33,929 issued and
       outstanding at June 30, 2007 and
       December 31, 2006, respectively              35                 34
      Additional paid-in capital               353,311            333,009
      Accumulated other comprehensive loss         (61)               (25)
      Accumulated deficit                     (164,551)          (156,715)
     Total stockholders' equity                188,734            176,303
     Total liabilities and stockholders'
      equity                                  $210,020           $196,184
 
 
                                 NUVASIVE, INC.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
 
 
                                                    Six Months Ended June 30,
                                                         2007         2006
     Operating activities:
     Net loss                                         $(7,836)     $(26,576)
      Adjustments to reconcile net loss to net
       cash used in operating activities:
      Depreciation and amortization                     5,933         3,545
      Stock-based compensation                          6,613         6,823
     Write-off of inventory in connection with
       planned 2006 product introductions and
       enhancements                                         -           343
      Other non-cash adjustments                        1,179           930
      Changes in operating assets and
       liabilities:
        Accounts receivable                            (4,621)       (2,157)
        Inventory                                      (8,868)       (5,333)
        Prepaid expenses and other current assets         (39)         (819)
        Accounts payable and accrued liabilities        1,926         3,158
        Accrued payroll and related expenses             (421)         (307)
        Development milestone payable                       -        10,500
      Net cash used in operating activities            (6,134)       (9,893)
 
     Investing activities:
     Cash paid for acquisition of Radius
      Medical LLC                                      (6,970)            -
     Investment in Maxigen Biotech, Inc.               (2,000)            -
     Purchases of property and equipment               (8,527)       (8,561)
     Sales of short-term investments                   79,050        10,950
     Purchases of short-term investments              (49,580)      (45,455)
     Sales of long-term investments                     6,000             -
     Purchases of long-term investments               (11,991)            -
     Other assets                                           5          (291)
     Net cash provided by (used in) investing
      activities                                        5,987       (43,357)
 
     Financing activities:
     Payment of long-term liabilities                    (300)         (300)
     Issuance of common stock, including net
      proceeds from secondary offering                  3,189       143,065
     Net cash provided by financing activities          2,889       142,765
     Increase in cash and cash equivalents              2,742        89,515
     Cash and cash equivalents at beginning of
      period                                           41,476        12,545
     Cash and cash equivalents at end of
      period                                          $44,218      $102,060
 
 

SOURCE NuVasive, Inc.

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