–Continued above-market worldwide net sales
growth of 5.8% as reported and 7.7% on a constant currency
basis–
–U.S. cervical delivers sixth consecutive quarter of greater
than 20% growth, driven by C360 and the Simplify Cervical
Disc–
SAN
DIEGO, May 10, 2023 /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 March 31, 2023.
First Quarter 2023 Highlights
- Net sales were $307.7 million, a
5.8% increase as reported and a 7.7% increase on a constant
currency basis, compared to the prior year period;
- GAAP operating margin of 2.3%; Non-GAAP operating margin of
11.3%; and
- GAAP diluted loss per share of ($0.02); Non-GAAP diluted earnings per share of
$0.47.
"I am proud of our results and continued above-market growth,"
said Chris Barry, chief executive
officer of NuVasive. "Our solid performance—led by anterior and
cervical procedural solutions—reflects the strength of our core
spine business, positioning us well to combine with Globus Medical
to deliver compelling long-term value creation for shareholders. We
remain focused on operating our business and delivering on our
commitments, while preparing for the merger to build a leading
musculoskeletal technology company."
First Quarter 2023 Results
NuVasive reported first
quarter 2023 total net sales of $307.7
million, a 5.8% increase as reported and a 7.7% increase on
a constant currency basis, compared to $290.8 million in the prior year period. First
quarter 2023 total net sales were primarily driven by further
adoption of new products and higher procedural volumes in the
U.S.
For the first quarter of 2023, GAAP gross profit was
$221.3 million, compared to
$211.7 million in the prior year
period. GAAP gross margin was 71.9%, compared to 72.8% in the prior
year period. On a non-GAAP basis, gross profit was $221.3 million, compared to $212.2 million in the prior year period. Non-GAAP
gross margin was 71.9%, compared to 73.0% in the prior year
period.
The Company reported GAAP net loss of ($1.0) million, or diluted loss per share of
($0.02), compared to GAAP net income
of $19.2 million, or diluted earnings
per share of $0.35 in the prior year
period. On a non-GAAP basis, the Company reported net income of
$24.8 million, or diluted earnings
per share of $0.47, compared to
non-GAAP net income of $28.2 million,
or diluted earnings per share of $0.54 in the prior year period.
Cash and cash equivalents were $181.2
million as of March 31, 2023.
During the first quarter, the Company made a net sales milestone
payment of $56.5 million related to
the Simplify Medical acquisition.
Full-year 2023 Net Sales Guidance
The Company
continues to expect 2023 net sales growth of 6%ꟷ8% on an as
reported and constant currency basis, compared to full year 2022,
based on foreign currency rates as of April
30, 2023.
Conference Call and Webcast
NuVasive will hold a
conference call on Wednesday, May 10, 2023, at 1:30 p.m.
PT / 4:30 p.m. ET to discuss the results of its financial
performance for the first quarter of 2023. The dial-in numbers are
1-877-300-8521 for domestic callers and 1-412-317-6026 for
international callers. A live webcast of the conference call and
supplemental financial information of our first quarter 2023
results will be available on the Investor Relations section of our
website at www.nuvasive.com. An audio replay of the call will
be available until May 17, 2023. 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:
10178161. In addition, the webcast will be archived
on the Investor Relations section of our
website.
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 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, costs related to the proposed merger with Globus
Medical, 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, costs related to the proposed merger
with Globus Medical, 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.
Cautionary Notes on Forward-Looking Statements
This
communication contains "forward-looking statements" within the
meaning of the federal securities laws, including Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as "expect," "anticipate," "intend," "plan,"
"believe," "seek," "see," "will," "would," "may," "target," and
similar expressions and variations or negatives of these
words. Forward-looking statements by their nature address
matters that are, to different degrees, uncertain, such as
statements about NuVasive's net sales outlook for 2023 and
expectations regarding longer-term financial performance, and the
consummation of the proposed transaction with Globus Medical and
the anticipated benefits thereof. These and other
forward-looking statements are not guarantees of future results and
are subject to risks, uncertainties and assumptions that could
cause actual results to differ materially from those expressed in
any forward-looking statements, including the failure to consummate
the proposed transaction or to make any filing or take other action
required to consummate such transaction in a timely matter or at
all. Important risk factors that may cause such a difference
include, but are not limited to: (i) the impact of the
COVID-19 pandemic on NuVasive's business and financial results;
(ii) further deterioration of general macroeconomic conditions,
including inflationary pressures, disruptions to the global supply
chain, fluctuations in currency exchange rates, higher freight and
labor costs, and weakness in economic conditions generally; (iii)
NuVasive's ability to maintain operations to support its customers
and patients in the near-term and to capitalize on future growth
opportunities; (iv) risks associated with acceptance of NuVasive's
surgical products and procedures by spine surgeons and hospitals,
(v) development and acceptance of new products or product
enhancements, (vi) clinical and statistical verification of the
benefits achieved via the use of NuVasive's products, (vii)
NuVasive's ability to adequately manage inventory as it continues
to release new products, (viii) the remaining conditions to closing
of the transaction with Globus Medical may not be satisfied on a
timely basis or at all, including obtaining regulatory approval,
(ix) the anticipated tax treatment of the transaction may not be
obtained, (x) the potential impact of unforeseen liabilities,
future capital expenditures, revenues, costs, expenses, earnings,
synergies, economic performance, indebtedness, financial condition
and losses on the future prospects, business and management
strategies for the management, expansion and growth of the combined
business after the consummation of the transactions, (xi) potential
litigation relating to the proposed transaction that could be
instituted against Globus Medical, NuVasive or their respective
directors, (xii) potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the
transactions, (xiii) any negative effects of the announcement,
pendency or consummation of the transactions on the market price of
Globus Medical's or NuVasive's common stock and on Globus Medical's
or NuVasive's businesses or operating results, (xiv) risks
associated with third party contracts containing consent and/or
other provisions that may be triggered by the proposed transaction,
(xv) the risks and costs associated with the integration of, and
the ability of Globus Medical and NuVasive to integrate, their
businesses successfully and to achieve anticipated synergies, (xvi)
the risk that disruptions from the proposed transaction will harm
Globus Medical's or NuVasive's business, including current plans
and operations, (xvii) the ability of Globus Medical or NuVasive to
retain and hire key personnel and uncertainties arising from
leadership changes, (xviii) legislative, regulatory and economic
developments, and (xix) the other risks described in Globus
Medical's and NuVasive's most recent annual reports on Form 10-K
and quarterly reports on Form 10-Q. In addition, this communication
contains selected financial results for NuVasive for the period
ended March 31, 2023 which are prior
to the completion of review and audit procedures by NuVasive's
external auditors and are subject to adjustment. NuVasive's
projections for 2023 net sales 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.
These risks, as well as other risks associated with the proposed
transaction, are more fully discussed in the joint proxy
statement/prospectus included in the registration statement on Form
S-4 initially filed by Globus Medical with the U.S. Securities and
Exchange Commission ("SEC") on March 10,
2023, as amended on March 24,
2023, in connection with the proposed transaction. While the
list of factors presented here is, and the list of factors
presented in the registration statement on Form S-4 are, considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements. Consequences of material
differences in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material adverse effect on Globus Medical's or NuVasive's
consolidated financial condition, results of operations, credit
rating or liquidity. Neither Globus Medical nor NuVasive assumes
any obligation to publicly provide revisions or updates to any
forward-looking statements, whether as a result of new information,
future developments or otherwise, should circumstances change,
except as otherwise required by securities and other applicable
laws.
Important Information About the Transaction and Where To Find
It
This communication references the proposed business
combination of NuVasive and Globus Medical. In connection with
the proposed transaction, Globus Medical filed a registration
statement on Form S-4 with the SEC on March 10, 2023, which was amended on March 24, 2023, and that includes a joint proxy
statement/prospectus. The registration statement on
Form S-4, including the joint proxy statement/prospectus,
provides details of the proposed transaction and the attendant
benefits and risks. The registration statement was declared
effective on March 28, 2023, and
NuVasive filed a definitive proxy statement on March 28, 2023. Globus Medical and NuVasive
commenced mailing of the definitive joint proxy
statement/prospectus to their respective stockholders on
March 29, 2023. Globus Medical and
NuVasive may also file other documents with the SEC regarding the
proposed transaction. This document is not a substitute for
the joint proxy statement/prospectus or the registration statement
on Form S-4 or any other document which Globus Medical or NuVasive
may file with the SEC. INVESTORS AND SECURITY HOLDERS OF
GLOBUS MEDICAL AND NUVASIVE ARE URGED TO READ THE REGISTRATION
STATEMENT, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS, AND ANY
OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE
SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
RELATED MATTERS. The documents filed by Globus Medical or
NuVasive with the SEC will be available free of charge at the SEC's
website (www.sec.gov) and from Globus Medical and NuVasive, as
applicable. Requests for copies of the joint proxy statement/
prospectus and other documents filed by Globus Medical with the SEC
may be made by contacting Keith
Pfeil, Chief Financial Officer, by phone at (610) 930-1800
or by email at kpfeil@globusmedical.com, and request for copies of
the joint proxy statement/prospectus and other documents filed by
NuVasive may be made by contacting Matt
Harbaugh, Chief Financial Officer, by phone at (858)
210-2129 or by email at investorrelations@nuvasive.com.
No Offer
This communication is for informational
purposes only and is not intended to and does not constitute an
offer to subscribe for, buy or sell, or the solicitation of an
offer to subscribe for, buy or sell, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in which
such offer, sale or solicitation would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, and otherwise in accordance
with applicable law.
NuVasive,
Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
|
|
|
|
Three Months Ended
March 31,
|
(unaudited)
|
|
2023
|
|
2022
|
Net sales:
|
|
|
|
|
Products
|
|
$
279,370
|
|
$
265,973
|
Services
|
|
28,341
|
|
24,789
|
Total net
sales
|
|
307,711
|
|
290,762
|
Cost of sales
(excluding below amortization of intangible assets):
|
|
|
|
|
Products
|
|
64,877
|
|
57,183
|
Services
|
|
21,493
|
|
21,914
|
Total cost of
sales
|
|
86,370
|
|
79,097
|
Gross profit
|
|
221,341
|
|
211,665
|
Operating
expenses:
|
|
|
|
|
Selling, general and
administrative
|
|
176,192
|
|
160,281
|
Research and
development
|
|
24,573
|
|
23,358
|
Amortization of
intangible assets
|
|
8,796
|
|
13,032
|
Business transition
costs
|
|
4,614
|
|
3,060
|
Total operating
expenses
|
|
214,175
|
|
199,731
|
Interest and other
(expense) income, net:
|
|
|
|
|
Interest
income
|
|
1,828
|
|
43
|
Interest
expense
|
|
(4,378)
|
|
(4,379)
|
Other (expense) income,
net
|
|
(4,436)
|
|
16,244
|
Total interest and
other (expense) income, net
|
|
(6,986)
|
|
11,908
|
Income before income
taxes
|
|
180
|
|
23,842
|
Income tax
expense
|
|
(1,193)
|
|
(4,641)
|
Consolidated net (loss)
income
|
|
$
(1,013)
|
|
$
19,201
|
|
|
|
|
|
Net (loss) income per
share:
|
|
|
|
|
Basic
|
|
$
(0.02)
|
|
$
0.37
|
Diluted
|
|
$
(0.02)
|
|
$
0.35
|
Weighted average shares
outstanding:
|
|
|
|
|
Basic
|
|
52,242
|
|
51,829
|
Diluted
|
|
52,242
|
|
62,579
|
NuVasive,
Inc.
Consolidated Balance Sheets
(in thousands, except par value data)
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
181,199
|
|
$
248,663
|
Accounts receivable,
net of allowances of $20,317 and $19,601, respectively
|
|
250,023
|
|
249,373
|
Inventory,
net
|
|
345,945
|
|
338,601
|
Prepaid income
taxes
|
|
8,782
|
|
7,118
|
Prepaid expenses and
other current assets
|
|
20,409
|
|
21,457
|
Total current
assets
|
|
806,358
|
|
865,212
|
Property and equipment,
net
|
|
355,473
|
|
346,510
|
Intangible assets,
net
|
|
174,341
|
|
184,289
|
Goodwill
|
|
638,686
|
|
639,663
|
Operating lease
right-of-use assets
|
|
93,273
|
|
95,112
|
Deferred tax
assets
|
|
74,575
|
|
68,273
|
Restricted cash and
investments
|
|
1,494
|
|
1,494
|
Other assets
|
|
22,954
|
|
23,952
|
Total assets
|
|
$
2,167,154
|
|
$
2,224,505
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
122,277
|
|
$
120,333
|
Contingent
consideration liabilities
|
|
27,218
|
|
66,975
|
Accrued payroll and
related expenses
|
|
50,102
|
|
58,448
|
Operating lease
liabilities
|
|
10,193
|
|
10,019
|
Income tax
liabilities
|
|
15,786
|
|
12,217
|
Senior convertible
notes
|
|
449,220
|
|
448,056
|
Total current
liabilities
|
|
674,796
|
|
716,048
|
Long-term senior
convertible notes
|
|
444,871
|
|
444,202
|
Deferred and other tax
liabilities
|
|
14,219
|
|
13,088
|
Operating lease
liabilities
|
|
101,606
|
|
103,806
|
Contingent
consideration liabilities
|
|
41,461
|
|
63,640
|
Other long-term
liabilities
|
|
16,521
|
|
14,831
|
Commitments and
contingencies
|
|
|
|
|
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 March 31, 2023 and
December 31, 2022;
59,223 shares issued and 52,349 outstanding at March 31, 2023;
58,939 shares issued and 52,134
outstanding at December 31, 2022
|
|
63
|
|
63
|
Additional paid-in
capital
|
|
1,476,318
|
|
1,469,411
|
Accumulated other
comprehensive loss
|
|
(1,392)
|
|
(3,249)
|
Retained
earnings
|
|
85,102
|
|
86,115
|
Treasury stock at cost;
6,874 shares and 6,805 shares at March 31, 2023 and
December 31, 2022, respectively
|
|
(686,411)
|
|
(683,450)
|
Total equity
|
|
873,680
|
|
868,890
|
Total liabilities and
equity
|
|
$
2,167,154
|
|
$
2,224,505
|
NuVasive,
Inc.
Consolidated Statements of Cash Flows
(in thousands)
|
|
|
|
Three Months Ended
March 31,
|
(unaudited)
|
|
2023
|
|
2022
|
Operating
activities:
|
|
|
|
|
Consolidated net (loss)
income
|
|
$
(1,013)
|
|
$
19,201
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
33,467
|
|
36,801
|
Deferred income
taxes
|
|
(5,209)
|
|
(3,891)
|
Amortization of
non-cash interest
|
|
1,986
|
|
1,963
|
Stock-based
compensation
|
|
6,907
|
|
6,807
|
Changes in fair value
of contingent consideration
|
|
(4,799)
|
|
39
|
Net gain on strategic
investments
|
|
(310)
|
|
—
|
Net loss (gain) from
foreign currency adjustments
|
|
4,787
|
|
(15,988)
|
Reserves on current
assets
|
|
1,959
|
|
(1,864)
|
Other non-cash
adjustments
|
|
968
|
|
1,326
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Accounts
receivable
|
|
(729)
|
|
(17,216)
|
Inventory
|
|
(7,657)
|
|
(3,215)
|
Prepaid
expenses and other current assets
|
|
1,192
|
|
805
|
Payment of
contingent consideration
|
|
(25,462)
|
|
(1,198)
|
Accounts
payable and accrued liabilities
|
|
2,438
|
|
(6,758)
|
Accrued
payroll and related expenses
|
|
(8,420)
|
|
(10,491)
|
Income
taxes
|
|
1,865
|
|
218
|
Net cash
provided by operating activities
|
|
1,970
|
|
6,539
|
Investing
activities:
|
|
|
|
|
Purchases of property
and equipment
|
|
(35,148)
|
|
(33,223)
|
Other investing
activities
|
|
—
|
|
(947)
|
Net cash used in
investing activities
|
|
(35,148)
|
|
(34,170)
|
Financing
activities:
|
|
|
|
|
Payment of contingent
consideration
|
|
(31,671)
|
|
(6,839)
|
Purchases of treasury
stock
|
|
(2,961)
|
|
(5,345)
|
Other financing
activities
|
|
(270)
|
|
(521)
|
Net cash used in
financing activities
|
|
(34,902)
|
|
(12,705)
|
Effect of exchange rate
changes on cash
|
|
616
|
|
(443)
|
Decrease in cash, cash
equivalents and restricted cash
|
|
(67,464)
|
|
(40,779)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
250,157
|
|
247,585
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
182,693
|
|
$
206,806
|
For the Three Months
Ended March 31, 2023
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
WASO6
|
Net (Loss) to
Adjusted EBITDA
|
Reported
GAAP
|
$
221,341
|
$
7,166
|
$
(1,013)
|
$
(0.02)
|
52,242
|
$
(1,013)
|
% of net
sales
|
71.9 %
|
2.3 %
|
|
|
|
|
Amortization of
intangible assets
|
|
8,796
|
8,796
|
|
|
|
Litigation related
expenses and settlements1
|
|
10,402
|
10,402
|
|
|
10,402
|
Business transition
costs2
|
|
4,614
|
4,614
|
|
|
4,614
|
European medical device
regulation3
|
|
3,754
|
3,754
|
|
|
3,754
|
Net gain on strategic
investments
|
|
|
(310)
|
|
|
(310)
|
Non-cash
acquisition-related foreign currency impacts4
|
|
|
5,183
|
|
|
5,183
|
Tax effect of
adjustments5
|
|
|
(6,669)
|
|
|
|
Interest
expense/(income), net
|
|
|
|
|
|
2,550
|
Income tax
expense
|
|
|
|
|
|
1,193
|
Depreciation and
amortization
|
|
|
|
|
|
33,467
|
Non-cash stock-based
compensation
|
|
|
|
|
|
6,907
|
Adjusted
Non-GAAP
|
$
221,341
|
$
34,732
|
$
24,757
|
$
0.47
|
52,778
|
$
66,747
|
% of net
sales
|
71.9 %
|
11.3 %
|
|
|
|
21.7 %
|
|
|
1
|
Represents expenses and
settlements associated with certain ongoing litigation
matters.
|
2
|
Costs related to
acquisition, integration and business transition activities which
include severance, relocation, consulting, leasehold exit costs,
costs related to the proposed merger with Globus Medical,
third-party acquisition costs, contingent consideration fair value
adjustments, and other costs directly associated with such
activities.
|
3
|
Represents costs
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
4
|
Represents non-cash
adjustments to acquisition-related intercompany balances and
contingent consideration liabilities held in a foreign
currency.
|
5
|
Represents the impact
from tax affecting the adjustments above at their statutory tax
rate.
|
6
|
Adjusted 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 March 31, 2022
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited - in thousands, except per share data)
|
|
|
Gross
Profit
|
Operating
Profit
|
Net
Income
|
Diluted
EPS7
|
Diluted
WASO8
|
Net Income to
Adjusted EBITDA
|
Reported
GAAP
|
$
211,665
|
$
11,934
|
$
19,201
|
$
0.35
|
62,579
|
$
19,201
|
% of net
sales
|
72.8 %
|
4.1 %
|
|
|
|
|
Non-cash purchase
accounting adjustments on acquisitions1
|
557
|
557
|
557
|
|
|
557
|
Amortization of
intangible assets
|
|
13,032
|
13,032
|
|
|
|
Litigation related
expenses and settlements2
|
|
3,201
|
3,201
|
|
|
3,201
|
Business transition
costs3
|
|
3,060
|
3,060
|
|
|
3,060
|
European medical device
regulation4
|
|
2,191
|
2,191
|
|
|
2,191
|
Non-cash
acquisition-related foreign currency impacts5
|
|
|
(9,318)
|
|
|
(9,318)
|
Tax effect of
adjustments6
|
|
|
(3,768)
|
|
|
|
Interest
expense/(income), net
|
|
|
|
|
|
4,336
|
Income tax
expense
|
|
|
|
|
|
4,641
|
Depreciation and
amortization
|
|
|
|
|
|
36,801
|
Non-cash stock-based
compensation
|
|
|
|
|
|
6,807
|
Adjusted
Non-GAAP
|
$
212,222
|
$
33,975
|
$
28,156
|
$
0.54
|
52,410
|
$
71,477
|
% of net
sales
|
73.0 %
|
11.7 %
|
|
|
|
24.6 %
|
|
|
1
|
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.
|
2
|
Represents expenses
associated with certain ongoing litigation matters, including
infringement of the Company's intellectual property.
|
3
|
Costs 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.
|
4
|
Represents costs
specific to updating our quality system, product labeling, asset
write-offs and product remanufacturing to comply with European
medical device regulation.
|
5
|
Represents non-cash
adjustments to acquisition-related intercompany balances and
contingent consideration liabilities held in a foreign
currency.
|
6
|
Represents the impact
from tax affecting the adjustments above at their statutory tax
rate.
|
7
|
Reported GAAP diluted
EPS is calculated using Net Income plus interest and debt issuance
costs on senior convertible notes whose effect is dilutive, net of
tax divided by diluted WASO.
|
8
|
Adjusted 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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SOURCE NuVasive, Inc.