Exhibit 99.1
PRESS RELEASE
| Contact: | Investors: | |||
| Michael J. Lambert | Stephan Ogilvie | |||
| EVP & Chief Financial Officer | VP, Corporate Development & Investor Relations | |||
| NuVasive, Inc. | NuVasive, Inc. | |||
| 858-909-3394 | 201-322-6515 | |||
| investorrelations@nuvasive.com | investorrelations@nuvasive.com | |||
| Media: | ||||
| Nicholas S. Laudico | ||||
| The Ruth Group | ||||
| 646-536-7030 | ||||
| nlaudico@theruthgroup.com | ||||
NUVASIVE REPORTS FOURTH QUARTER
AND FULL YEAR 2012 FINANCIAL RESULTS
| • | Fourth quarter 2012 total revenue of $165.8 million; up 10.4% from fourth quarter 2011 and up 11.7% from third quarter 2012 |
| • | Full year 2012 total revenue of $620.3 million; up 14.8% from the full year 2011 |
| • | GAAP operating margin of 2.5% for the fourth quarter 2012 and 6.0% for the full year 2012 |
| • | Non-GAAP operating margin of 15.0% for the fourth quarter 2012 and 14.5% for the full year 2012 |
| • | GAAP net loss of $2.7 million, or $0.06 per share, for the fourth quarter 2012 and GAAP net earnings of $3.1 million, or $0.07 per share, for the full year 2012 |
| • | Non-GAAP earnings of $15.0 million, or $0.34 per share, for the fourth quarter 2012 and $45.8 million, or $1.04 per share, for the full year 2012 |
SAN DIEGO, February 26, 2013 - NuVasive, Inc. (Nasdaq: NUVA) a medical device company focused on developing minimally disruptive surgical products and procedures for the spine, announced today financial results for the quarter and for the full year ended December 31, 2012.
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Alex Lukianov, Chairman and Chief Executive Officer, said, “We are very proud of our strong close to 2012 and excellent revenue growth of 15% with profit translation. As we embark on 2013, we are excited to build upon our momentum with growing clinical evidence, game-changing new product launches, an energized sales force, and our expansion into new international markets. Over the last decade, NuVasive has positively changed the lives of over 100,000 spine patients through minimally invasive surgery with our XLIF procedure. We are highly focused on continually disrupting the global spine industry through innovation with advanced procedural solutions and executing to a long term plan of evolving into a $1 billion company with steadily increasing profitability. Our proven, three pillar market share taking strategy of Superior Outcomes, Absolute Responsiveness, and Speed of Innovation will sustain our future growth toward the #3 position within the global spine industry.”
NuVasive reported fourth quarter 2012 revenue of $165.8 million, a 10.4% increase over the $150.2 million for the fourth quarter 2011 and an 11.7% increase over the $148.4 million reported for the third quarter 2012.
Gross profit for the fourth quarter 2012 was $123.6 million and gross margin was 74.5%, compared to a gross profit of $113.1 million and a gross margin of 75.3% for the fourth quarter 2011. For the third quarter 2012, gross profit was $110.6 million and gross margin was 74.6%. Gross profit for the full year 2012 was $466.8 million and gross margin was 75.3%, compared to a gross profit of $428.4 million and gross margin of 79.3% for the full year 2011.
Total operating expenses for the fourth quarter 2012 were $119.4 million compared to $122.9 million in the fourth quarter 2011 and $98.1 million in the third quarter 2012. The higher operating expenses in the fourth quarter 2011 resulted from a higher 2011 asset impairment charge. Full year 2012 operating expenses were $429.8 million compared to $513.4 million reported for the full year 2011. The higher operating expenses for the full year 2011 resulted primarily from a 2011 charge related to a litigation liability.
On a GAAP basis, the Company reported a net loss of $2.7 million, or $0.06 per share, for the fourth quarter 2012, and net income of $3.1 million, or $0.07 per share for the full year 2012.
On a Non-GAAP basis, the Company reported net income of $15.0 million, or $0.34 per share, for the fourth quarter 2012, and net income of $45.8 million, or $1.04 per share, for the full year 2012. The Non-GAAP earnings per share calculations for the fourth quarter and full year exclude, respectively, (i) non-cash stock-based compensation of $5.9 million and $26.3 million; (ii) certain intellectual property litigation expenses of $852,000 and $2.4 million; (iii) amortization of intangible assets of $3.6 million and $12.4 million; (iv) acquisition related items of $639,000 and $2.1 million; (v) non-cash interest expense on convertible notes of $3.3 million and $12.7 million; and (vi) intangible asset and goodwill impairment charges of $9.7 million and $9.7 million.
Cash, cash equivalents and short and long-term marketable securities were $346.1 million at December 31, 2012.
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2013 Full Year Financial Guidance
| • | Revenue of approximately $655 million |
| • | GAAP EPS of approximately $0.07 |
| • | Non-GAAP EPS of approximately $1.00 |
| • | Non-GAAP Operating Margin of approximately 14% |
| • | GAAP effective tax expense rate of approximately 60% |
Reconciliation of Full Year EPS Guidance
| 2013 | ||||
| Guidance 2 | ||||
GAAP earnings per share guidance1 | $ | 0.07 | ||
Non-cash stock based compensation | 0.39 | |||
Certain intellectual property litigation expenses | 0.06 | |||
Amortization of intangible assets | 0.27 | |||
Acquisition related items3 | 0.03 | |||
Non-cash interest expense on convertible notes | 0.18 | |||
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Non-GAAP earnings per share guidance1 | $ | 1.00 | ||
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Weighted shares outstanding - basic | 45,500 | |||
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Weighted shares outstanding - diluted | 46,500 | |||
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| 1 | Includes negative impact of Medical Device Excise Tax of ~$0.13 | |
| 2 | Effective tax rate of ~60% applied to GAAP earnings and ~40% applied to Non-GAAP adjustments | |
| 3 | Acquisition related items include expenses associated with prior M&A activity and as incurred |
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Reconciliation of Non-GAAP Operating Margin %
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| 2012 Actuals | 2013 Full Year Guidance | |||||||||||
| Fourth Quarter | Full Year | |||||||||||
Gross Margin % [A] | 74.5% | 75.3% | ~74.0% 1 | |||||||||
Non-GAAP Operating Expenses[B] | 59.5% | 60.8% | ~60.0% | |||||||||
Non-cash stock-based compensation | 3.5% | 4.2% | ~5.0% | |||||||||
Certain intellectual property litigation expenses | 0.5% | 0.4% | ~1.0% | |||||||||
Amortization of intangible assets | 2.2% | 2.0% | ~3.0% | |||||||||
Intangible asset and goodwill impairment charge | 5.9% | 1.5% | — | |||||||||
Acquisition related items2 | 0.4% | 0.3% | ~0.3% | |||||||||
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GAAP Operating Expenses | 72.0% | 69.3% | ~69.3% | |||||||||
Non-GAAP Operating Margin % [A-B] | 15.0% | 14.5% | ~14.0% 1 | |||||||||
1 Includes negative impact of Medical Device Excise Tax of ~1.5%, or ~150bps | ||||||||||||
| 2 Acquisition related items include expenses associated with prior M&A activity and as incurred | ||||||||||||
Reconciliation of Non-GAAP Information
Management uses certain Non-GAAP financial measures such as Non-GAAP earnings per share, which exclude non-cash stock-based compensation, certain intellectual property litigation expenses, amortization of intangible assets, acquisition related items, non-cash interest expense on convertible notes, and intangible asset and goodwill impairment charges. Management does not consider these costs in evaluating the continuing operations of the Company. 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 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 are reconciliations of the Non-GAAP financial measures to the comparable GAAP financial measure.
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Reconciliation of Fourth Quarter 2012 Results
| (in thousands, except per share data) | Pre-Tax Adjustments | Net of Tax 1 | (Loss) Earnings Per Share | |||||||||
GAAP net income | $ | (2,746 | ) | $ | (0.06 | ) | ||||||
Impact of change from basic to diluted share count | — | |||||||||||
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GAAP net loss, adjusted to diluted share count | $ | (2,746 | ) | $ | (0.06 | ) | ||||||
Non-cash stock-based compensation | $ | 5,912 | 3,547 | 0.08 | ||||||||
Certain intellectual property litigation expenses | 852 | �� | 511 | 0.01 | ||||||||
Amortization of intangible assets | 3,600 | 2,160 | 0.05 | |||||||||
Acquisition related items | 639 | 383 | 0.01 | |||||||||
Non-cash interest expense on convertible notes | 3,262 | 1,957 | 0.04 | |||||||||
Intangible asset impairment charge | 1,400 | 840 | 0.02 | |||||||||
Goodwill impairment charge | 8,300 | 8,300 | 0.19 | |||||||||
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Non-GAAP earnings | $ | 14,953 | $ | 0.34 | ||||||||
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GAAP weighted shares outstanding - basic and diluted | 43,628 | |||||||||||
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Non-GAAP weighted shares outstanding - diluted | 44,634 | |||||||||||
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1 40% tax rate applied to Non-GAAP adjustments, except for non-deductible goodwill impairment charge
Reconciliation of Full Year 2012 Results
| (in thousands, except per share data) | Pre-Tax Adjustments | Net of Tax 1 | Earnings Per Share | |||||||||
GAAP net income | $ | 3,144 | $ | 0.07 | ||||||||
Non-cash stock-based compensation | $ | 26,312 | 15,787 | 0.36 | ||||||||
Certain intellectual property litigation expenses | 2,419 | 1,451 | 0.03 | |||||||||
Amortization of intangible assets | 12,430 | 7,458 | 0.17 | |||||||||
Acquisition related items | 2,059 | 1,235 | 0.03 | |||||||||
Non-cash interest expense on convertible notes | 12,697 | 7,618 | 0.17 | |||||||||
Intangible asset impairment charge | 1,400 | 840 | 0.02 | |||||||||
Goodwill impairment charge | 8,300 | 8,300 | 0.19 | |||||||||
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Non-GAAP earnings | $ | 45,834 | $ | 1.04 | ||||||||
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Weighted shares outstanding - diluted | 44,272 | |||||||||||
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140% tax rate applied to Non-GAAP adjustments, except for non-deductible goodwill impairment charge
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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 1-877-407-9039 for domestic callers and 1-201-689-8470 for international callers. A live webcast of the conference call will be available online from the investor relations page of the Company’s corporate website atwww.nuvasive.com.
After the live webcast, the call will remain available on NuVasive’s website,www.nuvasive.com, through March 26, 2013. In addition, a telephonic replay of the call will be available until March 12, 2013. The replay dial-in numbers are 1-877-870-5176 for domestic callers and 1-858-384-5517 for international callers. Please use pin number 406960.
About NuVasive
NuVasive is a medical device company focused on developing minimally disruptive surgical products and procedurally integrated solutions for the spine. The Company is the 4th largest player in the $8.2 billion global spine market.
NuVasive’s principal product offering is based on its Maximum Access Surgery, or MAS® platform. The MAS platform combines several categories of solutions that collectively may minimize soft tissue disruption during spine surgery with maximum visualization and safe, easy reproducibility for the surgeon: a proprietary software-driven nerve avoidance system and intra-operative monitoring support; MaXcess®, a unique split-blade retractor system; a wide variety of specialized implants; and several biologic fusion enhancers. MAS may significantly improve surgical outcomes and returns patients to activities of daily living much faster than conventional approaches. Having redefined spine surgery with the MAS platform’s lateral approach, known as eXtreme Lateral Interbody Fusion, or XLIF®, NuVasive has built an entire spine franchise. With a complete portfolio of products spanning lumbar, thoracic, and cervical applications, the Company will continue to expand and evolve its offering predicated on its focus on innovation and dedication to outstanding service levels supported by a culture of Absolute Responsiveness®.
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 risk that NuVasive’s revenue or earnings projections may turn out to be inaccurate because of the preliminary nature of the forecasts; the risk of further adjustment, or unanticipated difficulty in selling products or generating expected profitability; 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 atwww.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.
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NuVasive, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenue | $ | 165,754 | $ | 150,194 | $ | 620,255 | $ | 540,506 | ||||||||
Cost of goods sold (excluding amortization of purchased technology) | 42,196 | 37,062 | 153,409 | 112,111 | ||||||||||||
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Gross profit | 123,558 | 113,132 | 466,846 | 428,395 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales, marketing and administrative | 97,713 | 93,428 | 372,416 | 349,052 | ||||||||||||
Research and development | 8,398 | 8,888 | 35,296 | 38,408 | ||||||||||||
Amortization of intangible assets | 3,600 | 2,368 | 12,430 | 6,609 | ||||||||||||
Impairment of goodwill and intangible assets | 9,700 | 18,167 | 9,700 | 18,167 | ||||||||||||
Litigation award | — | — | — | 101,200 | ||||||||||||
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Total operating expenses | 119,411 | 122,851 | 429,842 | 513,436 | ||||||||||||
Interest and other expense, net: | ||||||||||||||||
Interest income | 254 | 241 | 915 | 832 | ||||||||||||
Interest expense | (7,028 | ) | (6,971 | ) | (27,710 | ) | (17,933 | ) | ||||||||
Other income (expense), net | 901 | (225 | ) | 1,047 | 2,078 | |||||||||||
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Total interest and other expense, net | (5,873) | (6,955) | (25,748) | (15,023) | ||||||||||||
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(Loss) income before income taxes | (1,726) | (16,674) | 11,256 | (100,064) | ||||||||||||
Income tax expense (benefit) | 1,050 | (6,328) | 8,814 | (29,043) | ||||||||||||
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Consolidated net (loss) income | $ | (2,776) | $ | (10,346) | $ | 2,442 | $ | (71,021) | ||||||||
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Net loss attributable to noncontrolling interests | $ | (30) | $ | (310) | $ | (702) | $ | (1,172) | ||||||||
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Net (loss) income attributable to NuVasive, Inc. | $ | (2,746) | $ | (10,036) | $ | 3,144 | $ | (69,849) | ||||||||
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Net (loss) income per share attributable to NuVasive, Inc.: | ||||||||||||||||
Basic | $ | (0.06 | ) | $ | (0.24 | ) | $ | 0.07 | $ | (1.73 | ) | |||||
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Diluted | $ | (0.06 | ) | $ | (0.24 | ) | $ | 0.07 | $ | (1.73 | ) | |||||
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Weighted average shares outstanding: | ||||||||||||||||
Basic | 43,628 | 42,172 | 43,328 | 40,372 | ||||||||||||
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Diluted | 43,628 | 42,172 | 44,272 | 40,372 | ||||||||||||
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Stock-based compensation is included in expenses in the following categories: | ||||||||||||||||
Sales, marketing and administrative | $ | 5,373 | $ | 7,627 | $ | 24,096 | $ | 29,583 | ||||||||
Research and development | 514 | 654 | 2,138 | 2,487 | ||||||||||||
Cost of goods sold | 25 | — | 78 | — | ||||||||||||
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| $ | 5,912 | $ | 8,281 | $ | 26,312 | $ | 32,070 | |||||||||
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NuVasive, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| December 31, 2012 | December 31, 2011 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 123,299 | $ | 163,492 | ||||
Short-term marketable securities | 138,405 | 146,228 | ||||||
Accounts receivable, net | 88,958 | 87,736 | ||||||
Inventory | 126,335 | 119,313 | ||||||
Deferred tax assets, current | 28,236 | 54,550 | ||||||
Prepaid expenses and other current assets | 8,516 | 20,518 | ||||||
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Total current assets | 513,749 | 591,837 | ||||||
Property and equipment, net | 125,123 | 124,754 | ||||||
Long-term marketable securities | 84,412 | 32,503 | ||||||
Intangible assets, net | 101,362 | 108,140 | ||||||
Goodwill | 154,106 | 159,349 | ||||||
Deferred tax assets | 40,575 | 19,857 | ||||||
Restricted cash and investments | 118,995 | 68,600 | ||||||
Other assets | 25,463 | 18,522 | ||||||
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Total assets | $ | 1,163,785 | $ | 1,123,562 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 62,048 | $ | 51,744 | ||||
Accrued payroll and related expenses | 27,916 | 22,215 | ||||||
Litigation liability | — | 101,200 | ||||||
Acquisition-related liabilities | — | 32,221 | ||||||
Senior Convertible Notes, current | 74,311 | — | ||||||
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Total current liabilities | 164,275 | 207,380 | ||||||
Senior Convertible Notes | 332,404 | 394,019 | ||||||
Deferred tax liabilities | 3,129 | 3,952 | ||||||
Litigation liability | 101,200 | — | ||||||
Other long-term liabilities | 15,199 | 13,461 | ||||||
Commitments and contingencies | ||||||||
Noncontrolling interests | 10,003 | 10,705 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 44 | 42 | ||||||
Additional paid-in capital | 714,865 | 674,790 | ||||||
Accumulated other comprehensive income | 786 | 477 | ||||||
Accumulated deficit | (178,120) | (181,264) | ||||||
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Total stockholders’ equity | 537,575 | 494,045 | ||||||
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Total liabilities and stockholders’ equity | $ | 1,163,785 | $ | 1,123,562 | ||||
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NuVasive, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Operating activities: | ||||||||||||
Consolidated net income (loss) | $ | 2,442 | $ | (71,021) | $ | 76,533 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 51,909 | 36,242 | 36,737 | |||||||||
Deferred income tax expense (benefit) | 4,525 | (30,967) | (53,664) | |||||||||
Amortization of debt discount | 12,697 | 6,108 | — | |||||||||
Amortization of debt issuance costs | 1,872 | 1,816 | 1,493 | |||||||||
Stock-based compensation | 26,312 | 32,070 | 28,225 | |||||||||
Impairment of goodwill and intangible assets | 9,700 | 18,167 | — | |||||||||
Loss on repurchase of Senior Convertible Notes, net | — | 332 | — | |||||||||
Gain recognized on change in fair value of derivatives | — | (2,387) | — | |||||||||
Allowance for doubtful accounts and sales return reserve | 103 | 1,345 | (995) | |||||||||
Allowance for excess and obsolete inventory, net of write-offs | 5,475 | 6,028 | 1,607 | |||||||||
Accretion of contingent consideration | 1,364 | 980 | 962 | |||||||||
Other non-cash adjustments | 5,919 | 5,247 | 3,844 | |||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||
Accounts receivable | (2,005) | (9,929) | (17,865) | |||||||||
Inventory | (11,022) | (17,170) | (18,664) | |||||||||
Prepaid expenses and other current assets | 12,725 | (14,396) | (2,105) | |||||||||
Accounts payable and accrued liabilities | 2,938 | (3,385) | 11,596 | |||||||||
Litigation liability | — | 101,200 | — | |||||||||
Accrued payroll and related expenses | 5,128 | 2,685 | (1,877) | |||||||||
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Net cash provided by operating activities | 130,082 | 62,965 | 65,827 | |||||||||
Investing activities: | ||||||||||||
Cash paid for business and asset acquisitions | (11,088) | (37,574) | (973) | |||||||||
Purchases of property and equipment | (41,189) | (53,370) | (45,846) | |||||||||
Purchases of marketable securities | (235,919) | (253,210) | (203,415) | |||||||||
Sales of marketable securities | 246,504 | 151,966 | 204,439 | |||||||||
Purchases of restricted investments | (113,281) | (4,536) | — | |||||||||
Sales of restricted investments | 7,079 | — | — | |||||||||
Payment for specific rights in connection with supply agreement, net of refund received | — | (5,000) | — | |||||||||
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Net cash used in investing activities | (147,894) | (201,724) | (45,795) | |||||||||
Financing activities: | ||||||||||||
Proceeds from the sale of warrants | — | 47,898 | — | |||||||||
Proceeds from the issuance of convertible debt, net of issuance costs | — | 391,445 | — | |||||||||
Purchase of convertible note hedges | — | (80,097) | — | |||||||||
Repurchase of 2013 Senior Convertible Notes | — | (154,164) | — | |||||||||
Tax benefits related to stock-based compensation awards | 3,003 | 463 | 186 | |||||||||
Proceeds from the issuance of common stock | 4,884 | 6,852 | 14,831 | |||||||||
Payment of contingent consideration | (29,722) | (1,800) | — | |||||||||
Other assets | (721) | (718) | (7,935) | |||||||||
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Net cash (used in) provided by financing activities | (22,556) | 209,879 | 7,082 | |||||||||
Effect of exchange rate changes on cash | 175 | (225) | 70 | |||||||||
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(Decrease) increase in cash and cash equivalents | (40,193) | 70,895 | 27,184 | |||||||||
Cash and cash equivalents at beginning of year | 163,492 | 92,597 | 65,413 | |||||||||
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Cash and cash equivalents at end of year | $ | 123,299 | $ | 163,492 | $ | 92,597 | ||||||
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