NuVasive Q3 Growth Outpaces Overall Spine Industry

The third quarter of 2013 wrapped up nicely for San Diego, Calif.-based NuVasive Inc. For the quarter, ended Sept. 30, revenue of $169.2 million, a 14 percent increase compared to $148.4 million for the third quarter of 2012.

Gross profit for the third quarter 2013 was $125.9 million and gross margin was 74.4 percent, compared to a gross profit of $110.6 million and a gross margin of 74.6 percent for the same period in 2012.

Total operating expenses for the third quarter 2013 were $114.3 million compared to $98.1 million for the 2012. The higher operating expenses in the third quarter 2013 resulted primarily from additional costs associated with international infrastructure expansion and higher revenue.

The company reported net income of $7.5 million, or 16 cents per share, for the third quarter 2013.
On an adjusted bases, net income was $18.3 million, or 39 cents per share, for the third quarter 2013. Adjusted net earnings don’t include non-cash stock-based compensation of $8.5 million; certain intellectual property litigation expenses of $1.1 million; amortization of intangible assets of $5 million; acquisition related items of $17 thousand; and non-cash interest expense on convertible notes of $3.4 million.

“The execution of our market share taking strategy has been outstanding through the first three quarters of 2013,” said Alex Lukianov, chairman and CEO. “We are building on the momentum established at Eurospine and at NASS to close this year well and kick off 2014 with continued strategic execution.”

NuVasive has more than 80 unique products developed to improve spine surgery. The company’s principal procedural solution is its Maximum Access Surgery, or MAS platform for lateral spine fusion.
Richard Newitter, an analyst for Boston, Mass.-based Leerink Swann, noted that NuVasive outperformed the overall spine market.

“NUVA continues to be a share-gainer in U.S. spine, growing 14 percent vs. relatively flat growth for the overall spine market,” he wrote. “But, management also called out improving U.S. market trends and continues to characterize pressures that have weighed on industry growth in prior years (e.g., physician-owned distributors and insurance pushback) as ‘less bad.’ To some extent, NUVA is also likely benefiting from Johnson & Johnson/Synthes merger-related disruption/share shifts. Still, management is reluctant to call a bottom in market growth given that above-mentioned pressures are not going away, and new ones (i.e., insurer pushback on cervical cages) could be emerging.”