NuVasive reported total revenue in the second quarter of 2014 increased 15.1 percent to $190.7 million, making it the third-largest company in the global spine market.
Company CEO Alex Lukianov was pleased with the overall results for the second quarter and first half of the year, and is looking ahead to the future. "During the quarter, we continue to solidly execute our strategy to take market share and according to reported results, we can now claim the number three spot in the global spine market. Having achieved such a remarkable long-standing goal, I am confident that our mission to improve spine surgery with market-leading innovation will support our drive beyond $1 billion in revenue and toward the number two position in the spine market," he said in a conference call reported in Seeking Alpha.
Here are 10 quick takeaways from the financial report:
1. The revenue growth was higher than expected, driven by a strong performance in the United States markets, according to the Seeking Alpha report. Particularly, growth in the lumbar and biologics businesses boosted the company's revenue. The United States monitoring service also grew 15 percent in the quarter. International markets had strong growth as well, at 45 percent year-to-date.
2. Although revenue was up, the company reported a GAAP net loss of $4.1 million, or $0.09 per share. Non-GAAP earnings were $13.6 million, or $0.28 per share. The company estimates the full year GAAP loss per share will be $0.38; this is an update from the previous estimation of $0.27.
3. GAAP operating margin was 2.4 percent. Non-GAAP operating margin was 16 percent.
4. Gross profit for the second quarter was $145.8 million and gross margin was 76.5 percent. Both are significantly higher than last year, when the company reported $117 gross profit and 70.6 percent gross margin for the second quarter, but there was a one-time $7.9 million charge related to royalty accruals in connection with the company's patent litigation with Medtronic last year.
5. Total GAAP operating expenses for the second quarter were $141.2 million, higher than the $116.9 million reported last year. The higher operating costs are attributable to an intangible asset impairment charge totaling $10.7 million related to the PMC device development which the company acquired from Cervitech in 2009. Investment to support international expansion also had an impact on operating expenses.
6. Cash, cash equivalents and short and long-term marketable securities were around $350.2 million at the quarter's end.
7. The company updated full-year guidance to estimate $745 million in revenue for 2014, a 9 percent growth over 2013 revenue. Previously, the company projected $725 million. For the full year, the company estimates GAAP effective tax expense will only reach $6 million. The company previously estimated it would be $6.5 million.
8. The company has roughly 8 percent of the global spine market and Mr. Lukianov described three future opportunities he feels will grow the company's market share: driving the minimally invasive spine surgery shift; penetrating traditional — open — spine surgery market with less invasive innovation; and expanding into under-penetrated markets globally.
9. Although the company is most noted for its lateral approach — eXtreme Lateral Interbody Fusion — it has expanded to establish new surgeon relationships with more recent products for traditional spine surgery techniques as well, like the MAS PLIF. The company hopes to eventually "convert traditional surgeon customers to MIS and less disruptive solutions and eventually toward MIS," according to the conference call.
10. The company's cervical spine performance in the United States was below expectations, dropping 1 percent due to a slower-than-expected ramp of the PCM device as well as set availability issues in posterior cervical and a late product launch. The posterior cervical plating product is now set to launch later this year, but the company lowered cervical growth estimates from 10 percent to 4 percent for the full year, according to the Seeking Alpha report.