Thursday, October 23, 2008

NuVasive (NUVA) Earnings

NuVasive (NUVA) reported earnings last evening, and with all the 1x charges I have no idea how to compare to analysts expectations. Usually analyst expectations are on a non GAAP charges, but if so this means NuVasive reported a 21 cent quarter versus 1 cent expectation - so something seems amiss in the analyst expectations (they must include some of the one time charges). Another small healthcare company who raised guidance... we continue to focus on these companies that are executing - the market could care less. An exercise in frustration; honestly it feels dumb to even report all these great news items from company after company when no one cares about fundamentals anymore.
  • NuVasive, Inc. (Nasdaq: NUVA - News), a medical device company focused on developing products for minimally disruptive surgical treatments for the spine, announced today financial results for the quarter ended September 30, 2008. NuVasive reported third quarter revenues of $66.9 million, including $4.4 million of Osteocel revenue, a 73.7% increase over the $38.5 million for the third quarter of 2007 and a 16.5% increase over the $57.4 million for the second quarter of 2008.
  • Gross profit for the third quarter of 2008 was $54.7 million and gross margin was 81.8%, compared to a gross profit of $31.6 million and a gross margin of 82.0% in the third quarter of 2007.
  • On a GAAP basis, the Company reported a net loss of $23.1 million or $(0.64) per share for the third quarter of 2008.
  • On a non-GAAP basis, the Company reported net income of $8.0 million, or $0.21 per share, for the third quarter of 2008. The non-GAAP earnings per share calculations exclude (i) stock based compensation of $5.4 million; (ii) a charge for in-process research and development costs of $16.7 million; (iii) a charge related to transitional support costs for the Company's ERP system of $2.6 million; (iv) a one-time leasehold charge of $4.8 million related to vacating the Company's previous headquarters; (v) amortization of acquired intangible assets of $0.9 million; and (vi) intellectual property litigation expenses of $0.6 million. (this list is almost laughable - I cannot recall another instance of 6 separate line items of GAAP exclusions! I highlighted the big 3. Of course as is the American tradition compensating executives always is among the top expenses! That is why GAAP basis is never used - so we can wink wink as every company in America shuffles shareholder money to execs and it doesn't "count" against results)

  • Cash, cash equivalents and short and long-term investments were $221.7 million at September 30, 2008. (solid, although true cash closer to $100M)

  • ....We believe this will lead to revenue growth in 2009 approaching 40% over our revised 2008 revenue guidance with improving operating margins. Overall, we are extremely well positioned to achieve our goals and reach our interim target of $500 million in sales over the next several years."

2008 Guidance

  • Revenue: $245 million to $247 million, including $9 million in Osteocel; up from previous guidance of $238 million to $240 million, including $15 million in Osteocel
  • EPS: Non-GAAP: $0.70 to $0.72; up from $0.68 to $0.70
Just for kicks, and since NuVasive - unlike some other companies - does a nice breakout of GAAP to non GAAP earnings here is how it breaks out since accounting in the US is an art, not a science.


                  Reconciliation of Third Quarter 2008 Results

(in thousands, except per share amounts) $ Per Share
GAAP net loss per share (A) $(23,079) $(0.64)
In-process research and development (IPR&D) © 16,700 0.46
Other adjustments (E) 7,991 0.22
Earnings per share excluding IPR&D and other
adjustments 1,612 0.04
Stock-based compensation (B) 5,421 0.14
Amortization of acquired intangible assets (D) 931 0.03
Non-GAAP earnings per share (A) $7,964 $0.21
Shares used in computing GAAP net loss per
share (A) 35,931
Shares used in computing non-GAAP net loss per
share (A) 37,927

E -- Other adjustments related to the one-time leasehold termination

charge of $4.8 million, transitional support costs of $2.6 million related

to the Company's ERP system and $0.6 million for intellectual property

litigation expenses.

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