Nuvasive (NUVA) 8-K Nuvasive Reports First Quarter 2016 Financial Results

NuVasive, Inc.

First Quarter 2016 Results

April 26, 2016

Exhibit 99.2

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

Forward-Looking Statements

NuVasive

cautions

you

that

statements

included

in

this

presentation

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.

In

addition,

this

presentation

contains

selected

financial

results

from

the

first

quarter

2016,

as

well

as

projections

for

2016

financial

guidance

and

longer-term

financial

performance

goals.

The

numbers

for

the

first

quarter

2016

are

prior

to

the

completion

of

review

procedures

by

the

Company’s

external

auditors

and

are

subject

to

adjustment.

In

addition,

the

Company’s

projections

for

2016

financial

guidance

and

longer-term

financial

performance

goals

represent

current

estimates,

including

initial

estimates

of

the

potential

benefits,

synergies

and

cost

savings

associated

with

acquisitions,

which

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.

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

to

financial

results

or

future

financial

expectations;

unanticipated

difficulty

in

selling

products,

generating

revenue

or

producing

expected

profitability;

the

risk

that

acquisitions

will

not

be

integrated

successfully

or

that

the

benefits

and

synergies

from

the

acquisition

may

not

be

fully

realized

or

may

take

longer

to

realize

than

expected;

and

those

other

risks

and

uncertainties

more

fully

described

in

the

Company’s

news

releases

and

periodic

filings

with

the

Securities

and

Exchange

Commission.

NuVasive’s

public

filings

with

the

Securities

and

Exchange

Commission

are

available

at

www.sec.gov.

The

forward-

looking

statements

contained

herein

are

based

on

the

current

expectations

and

assumptions

of

NuVasive

and

not

on

historical

facts.

NuVasive

assumes

no

obligation

to

update

any

forward-looking

statement

to

reflect

events

or

circumstances

arising

after

the

date

on

which

it

was

made.

2

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

Non-GAAP Financial Measures

Management

uses

certain

non-GAAP

financial

measures

such

as

non-GAAP

earnings

per

share,

non-GAAP

net

income,

non-GAAP

operating

expenses

and

non-GAAP

operating

profit

margin,

which

exclude

amortization

of

intangible

assets,

purchase

accounting

related

charges,

leasehold

related

charges,

integration

related

expenses

associated

with

acquired

businesses,

one-time

restructuring

and

acquisition

related

items,

CEO

transition

related

costs,

certain

litigation

charges,

non-cash

interest

expense

and/or

losses

on

convertible

notes,

and

the

impact

from

taxes

related

to

these

items,

including

those

taxes

that

would

have

occurred

in

lieu

of

these

items.

Management

also

uses

certain

non-GAAP

measures

which

are

intended

to

exclude

the

impact

of

foreign

exchange

currency

fluctuations.

The

measure

constant

currency

is

the

use

of

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,

purchase

accounting

related

changes,

leasehold

related

charges,

integration

related

expenses

associated

with

acquired

businesses,

CEO

transition

related

costs,

certain

litigation

liabilities,

acquisition

related

items

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.

For

reconciliations

of

non-GAAP

financial

measures

to

the

comparable

GAAP

financial

measure,

please

visit

the

Investor

Relations

section

of

the

Company’s

corporate

website

at

www.nuvasive.com.

3

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

Double-digit revenue growth and profitability expansion

First Quarter 2016 Performance Highlights

4

Innovation

Growth

Profitability

•

Completed acquisition of Ellipse

Technologies and now focused

on integration

•

Expanded reach into early-onset

scoliosis market with acquisition

of MAGEC® technology

•

Readying launch of several new

innovations at AANS, including

AttraX® Putty Biotextured™

Bone Graft, Reline® Modular

System and Reline Power, MAS®

TLIF 2 and Monolith™

Corpectomy

System

•

Dedicating 5.6% of revenue, or

more than $50 million, to R&D

investments in 2016

•

Returned to double-digit

revenue growth up 12.3%,

constant currency, to $215.1

million

•

Strong Reline posterior fixation

system performance and

ongoing adoption of iGA™ and

NUVA planning technology

•

Performance up in all procedural

categories, lead by posterior

lumbar with strong growth in

cervical and anterior lumbar

•

Localized improvement plans in

Western Europe showing

improved results

•

Acquired Brazilian distributor

•

Delivered 150 basis points of

profitability expansion

•

Non-GAAP operating profit

margin of 14.1%

•

Non-GAAP EPS of $0.31

•

Capturing well-identified

operating efficiencies,

particularly around gross margin

and SM&A leverage

•

Continued focus on optimizing

scale and globalization efforts

•

On track with build out of West

Carrollton, OH manufacturing

facility to support ~100% self-

manufacturing goal

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

Operational excellence

delivering significant

margin expansion

Driving organic growth

with numerous inorganic

opportunities available

Industry disruptor

adding value and

addressing unmet needs

NuVasive’s

Formula

for

Success

Fueling 2016 strategic agenda with proven approach to win

5

Profitability

©2015 NuVasive®, Inc.

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

First Quarter 2016 Revenue Highlights

Strong revenue performance in key growth areas

*Constant currency basis

6

U.S. SPINAL HARDWARE

Includes All Implants, Fixation, MAGEC®

& PRECICE®

Up 15.0% in 1Q16

Key Performance Factors:

Fifth Consecutive Quarter of

Increasing Growth

Driven by ReLine, Increased

Adoption of iGA, Strong MAGEC and

PRECICE Sales

U.S. SURGICAL SUPPORT

Key Performance Factors:

Driven By Increased

Case Volumes

INTERNATIONAL

Up 20.7%

*

in 1Q16

Includes Puerto Rico

Key Performance Factors:

Japan, Italy & ANZ Remain

Strong Performers

Localized XLIF/MIS Focus Driving

Resurgence in Germany & U.K.

Includes Biologics, IOM Services

& Disposables

Up 3.7% in 1Q16

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

7

Driving Improved Financial Profile

Improve Adjusted EBITDA, reduce tax rate and lower depreciation

Driving to ~41% in 2016

Mid to High 30% in 2017

Mid to Low 30% Beyond

Reducing Non-GAAP

Effective Tax Rate*

Reducing CapEx

Burn from

~8% to ~6% of Revenue* Through

Better Set Configuration and

Utilization in Near Term

Improvement Opportunities Such

as 3-D Printing Longer Term

Lower Depreciation

*NuVasive financial performance guidance as of April 26, 2016

*

Increased Focus on Driving Improved

Adjusted EBITDA Through Disciplined

Spending and Improved Efficiencies

$144

$167

$204

~$236

$0

$50

$100

$150

$200

$250

2013

2014

2015

2016E

(In Millions)

Adjusted EBITDA

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

NuVasive Specialized Orthopedics™ (NSO)

Ellipse Technologies Integrates Into Newly Created NUVA Division

8

1Q16

Actuals

1Q16 YoY

Growth

NSO Revenues

•

As Reported –

February 12 to March 31, 2016

$5.8M

N/A

•

Pro

Forma –

January 1 to March 31, 2016

$11.7M

39.3%

NUVA

Core Revenues

•

U.S.

$182.7M

8.9%

•

International

$26.7M

8.5%, or 12.5% excluding currency

•

Total

$209.3M

8.8%, or 9.3% excluding currency

Combined 1Q16 Pro Forma Revenue Grew 10%, or 10.6% Constant Currency –

Outperforming Expectations to Drive High Single-Digit Growth with the Addition of NSO

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

Non-GAAP Measures

1Q16

Actuals

1Q16 YoY

Performance Factors

Gross Margin

77.1%

80

bps driven

by asset efficiencies,

lower royalties, med device tax repeal

Sales, Marketing

& Admin.

58.0%

80

bps driven by asset efficiencies,

including better instrument utilization

& back-office efficiencies

Research & Development

4.9%

10 bps driven by investments

in NSO

& iGA

platforms, procedural offerings

Operating Profit Margin

14.1%

150 bps driven by COGS and SM&A

leverage

EPS

$0.31

$0.01

Adjusted

EBITDA Margin

22.5%

50 bps due to NSO acquisition

Operating leverage story continues to play out

First Quarter 2016 P&L Performance

9

©2015 NuVasive®, Inc.

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

Provides certainty, extends maturities and addresses potential dilution

Completed 2021 Convertible Notes Issuance

•

Raised $650 million, including a $100 million over-allotment option,

generating net proceeds of ~$634 million

•

Notes have a coupon rate of 2.25%, in addition to callable feature that

provides opportunity to control future dilutive impacts to shareholders

•

Used proceeds to put in place bond hedge at net cost of ~$66 million, taking

effective conversion price from $59.82 to $80.00

•

Used ~$344 million to repurchase ~70% of existing 2017 convertible notes

and intend to make additional repurchases over time

•

Paid down the original $50 million draw on revolver

•

Expect 2016 non-GAAP Other Income & Expense of ~$19 million for the year

•

Expect 2016 non-GAAP weighted average shares outstanding of ~51.3 million

10

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

11

FY16 Guidance

Performance

Drivers

Revenues

•

As reported

•

Full year

pro forma

~$928.0M, ~14%

YoY

growth^

$935M, ~9% growth

~$53M NSO contribution; ~$5M currency impact

$~875 core business revenue; ~$60M NSO revenue

•

U.S. Spinal Hardware

•

U.S. Surgical

Support

•

International

~14% YoY

growth

~3% YoY

growth

~40% YoY

growth

Strong expected lumbar, cervical and NSO product performance

Slower growth expectations for biologics and services

~37% constant currency impact; comprised

of core NuVasive

growth

of ~20%,

NSO product growth of ~17%

Non-GAAP

Gross Margin

~77.4%

~140 bps increase due to 2-year suspension of med device tax,

favorable mix from lumbar and cervical portfolios

Non-GAAP Sales, Marketing

&

Admin.

~56.0%

~40 bps improvement driven

by core NuVasive asset and

sales force

efficiencies,

support function management, International scale

Non-GAAP Research &

Development

~5.6%

~130 bps increase in

organic and inorganic investment in innovation

Non-GAAP Operating Profit

Margin

~15.8%

~140 bps

of core NuVasive margin improvement,

primarily offset by

NSO investment

Non-GAAP Earnings Per Share

~$1.48

~13% YoY

growth

Adjusted

EBITDA Margin

~25.4%

~20 bps

increase

Non-GAAP Effective Tax Rate

~41.0%

~100

bps improvement from 42% in 2015

Non-GAAP

diluted WASO

~51.3M shares

Reduced from ~52.5M shares due to convertible note

issuance and

note

repurchases

Reflects Impact of Acquisitions, Convertible Note Issuance and Note

Repurchases, and Expected Currency Rates

Full Year 2016 Financial Performance Guidance*

*NuVasive financial performance guidance as of April 26, 2016; ^Constant currency as reported

©2016 NuVasive®, Inc.

©2016 NuVasive®, Inc.

Relentless focus on driving shareholder value

Why Invest in NuVasive

12

Industry-leading innovation and

integrated procedural solutions

enables share-taking and

premium pricing

Drive surgeon conversion,

increase service line

partnerships and expand

services integration

Double International revenue

contribution in coming years

Competitively positioned in large and growing global spine market with

favorable transformative dynamics playing to NuVasive strengths

Grow revenues at

multiples of

market in high

single-digit

range*

Achieve ~25%

long-term non-

GAAP operating

profit margin and

~32% adjusted

EBITDA goals*

Optimize tax

structure to help

drive EPS growth

2x the rate of

revenue growth*

Disciplined capital

deployment for

strategic M&A

and partnerships

Set to generate

significant

increases in free

cash flow

*NuVasive financial performance guidance as of April 26, 2016