Exhibit 99.1
NEWS RELEASE
NUVASIVE REPORTS FOURTH QUARTER AND FULL YEAR 2016 FINANCIAL RESULTS
Company Drives Record Revenue of $962.1 Million; Provides Updated Financial Performance Guidance for 2017
SAN DIEGO, CA – February 9, 2017 -NuVasive, Inc. (NASDAQ: NUVA), a leading medical device company focused on transforming spine surgery with minimally disruptive, procedurally-integrated solutions,announced today financial results for the quarter and full year ended December 31, 2016. Key performance highlights included:
Fourth Quarter 2016 Highlights:
| | ● | | Revenue increased 25.9% to $271.1 million, or 25.5% on a constant currency basis; |
| | ● | | GAAP operating profit margin of 11.1%;Non-GAAP operating profit margin up 90 basis points to 18.0%; and |
| | ● | | GAAP diluted earnings per share of $0.11;Non-GAAP diluted earnings per share increase of 51.4% to $0.53. |
Full Year 2016 Highlights:
| | ● | | Revenue increased 18.6% to $962.1 million, or 18.4% on a constant currency basis; |
| | ● | | GAAP operating profit margin of 12.8%;Non-GAAP operating profit margin up 70 basis points to 16.1%; and |
| | ● | | GAAP diluted earnings per share of $0.69;Non-GAAP diluted earnings per share increase of 26.7% to $1.66. |
“NuVasive delivered record fourth quarter results and exceeded expectations for the full year 2016. By all measures, the Company had a tremendous year executing against our market-share taking initiatives, delivering strong revenue growth, including a return to 20% year-over-year growth in our core International markets. We exceeded our profitability targets and integrated strategic acquisitions to augment our leadership in spine and deliver the substantial growth we forecasted as part of the deal models,” said Gregory T. Lucier, chairman and chief executive officer of NuVasive. “In 2017, we are committed to driving further market expansion, especially in the spine deformity area, while significantly increasing ourin-sourced manufacturing capabilities and focusing on streamlining our operations to drive scale and profitability in our business.”
A full reconciliation ofnon-GAAP to GAAP measures can be found in the tables of this news release.
Fourth Quarter 2016 Results
NuVasive reported fourth quarter 2016 total revenue of $271.1 million, a 25.9% increase compared to $215.3 million for the fourth quarter 2015. On a constant currency basis, fourth quarter 2016 total revenue increased 25.5% compared to the same period last year.
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Gross profit for the fourth quarter 2016 was $204.2 million on a GAAP andnon-GAAP basis, while GAAP andnon-GAAP gross margin was 75.3%. These results compared to gross profit of $164.0 million on a GAAP andnon-GAAP basis, and GAAP andnon-GAAP gross margin of 76.2% for the fourth quarter 2015. Total GAAP andnon-GAAP operating expenses for the fourth quarter 2016 were $174.1 million and $155.4 million, respectively. These results compared to GAAP andnon-GAAP operating expenses of $134.5 million and $127.3 million, respectively, for the fourth quarter 2015.
The Company reported a GAAP net income of $6.4 million, or $0.11 per share, for the fourth quarter 2016 compared to a GAAP net income of $11.5 million, or $0.22 per share, for the fourth quarter 2015. On anon-GAAP basis, the Company reported net income of $27.6 million, or $0.53 per share, for the fourth quarter 2016 compared to net income of $18.0 million, or $0.35 per share, for the fourth quarter 2015.
Full Year 2016 Results
NuVasive reported full year 2016 total revenue of $962.1 million, an 18.6% increase compared to $811.1 million for the full year 2015. On a constant currency basis, full year 2016 total revenue increased 18.4% compared to the same period last year.
Total GAAP andnon-GAAP gross profit for the full year 2016 was $722.0 million and $736.7 million, respectively, while GAAP andnon-GAAP gross margin of 75.0% and 76.6%, respectively. These results compared to gross profit of $616.6 million on a GAAP andnon-GAAP basis and a GAAP andnon-GAAP gross margin of 76.0% for the full year 2015. Total GAAP andnon-GAAP operating expenses for the full year 2016 were $598.5 million and $581.6 million, respectively. These results compared to $477.6 million and $492.0 million, respectively, for the full year 2015.
The Company reported a GAAP net income of $37.1 million, or $0.69 per share, for the full year 2016 compared to a GAAP net income of $66.3 million, or $1.26 per share, for the full year 2015. On anon-GAAP basis, the Company reported net income of $86.5 million, or $1.66 per share, for the full year 2016 compared to net income of $66.9 million, or $1.31 per share, for the full year 2015.
Cash, cash equivalents and short and long-term marketable securities were approximately $153.6 million at December 31, 2016.
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Annual Financial Guidance for 2017
The Company provided the following updated projections to its full year 2017 guidance:
| | | | | | | | |
| | | | | 2017 Guidance1 | | |
| | | (in Million’s; except %’s and EPS) | | GAAP | | Non-GAAP | | |
| | Revenue | | $ 1,065 | | $ 1,065 | |
| | % Growth - Reported | | 10.7% | | 10.7% | |
| | % Growth - Constant Currency2 | | | | 11.7% | |
| | Operating margin | | 12.6% | | 17.1% | |
| | Earnings per share | | $ 1.16 | | $ 2.00 | |
| | EBITDA | | 23.6% | | 26.7% | |
| | Tax Rate | | ~35% | | ~35% | |
1 Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency. 2 Constant currency is a measure that adjusts US GAAP revenue for the impact of currency over the same period in the prior year. |
| | ● | | Revenue of $1.065 billion, which includes approximately $10 million in year-over-year currency headwinds, and reflects 10.7% growth on a reported basis and 11.7% growth on a constant currency basis compared to revenue of $962.1 million for 2016; |
| | ● | | Non-GAAP diluted earnings per share of $2.00, an increase of 20% compared tonon-GAAP diluted earnings per share of $1.66 for 2016; |
| | ● | | Non-GAAP operating profit margin of 17.1%, an increase of 100 basis points compared to 16.1% for 2016; and |
| | ● | | Adjusted EBITDA margin of 26.7%, an increase of 150 basis points compared to 25.2% for 2016. |
Supplementary Financial Information
For additional financial detail, please visit the Investor Relations section of the Company’s website atwww.nuvasive.com to access Supplementary Financial Information.
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| | | | | | | | |
| | | Reconciliation of Full Year EPS Guidance |
| | | | | 2016
Actuals | | 2017
Guidance 1 | | |
| | GAAP net income per share | | $ 0.69 | | $ 1.16 | |
| | Impact of change to diluted share count | | 0.02 | | 0.07 | |
| | | | | | | |
| | GAAP net income per share, adjusted to dilutedNon-GAAP share count | | $ 0.71 | | $ 1.23 | |
| | Litigation liability gain | | (0.83) | | - | |
| | Business transition costs2 | | 0.35 | | 0.05 | |
| | Non-cash interest expense on convertible notes | | 0.38 | | 0.33 | |
| | Non-cash purchase accounting adjustments on acquisitions3 | | 0.28 | | - | |
| | Loss on repurchase of convertible notes | | 0.37 | | - | |
| | Amortization of intangible assets4 | | 0.78 | | 0.83 | |
| | Tax effect of adjustments5 | | (0.38) | | (0.44) | |
| | | | | | | |
| | Non-GAAP earnings per share | | $ 1.66 | | $ 2.00 | |
| | | | | | | |
| | GAAP Weighted shares outstanding - basic | | 50,077 | | 50,967 | |
| | | | | | | |
| | GAAP Weighted shares outstanding - diluted | | 54,102 | | 56,269 | |
| | | | | | | |
| | Non-GAAP Weighted shares outstanding - diluted | | 51,981 | | 53,069 | |
| | | | | | | |
1 Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency. Effective tax expense rate of ~35% applied to GAAP earnings and ~35% applied toNon-GAAP earnings. 2 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. 3 Represents costs associated withnon-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. 4 Excludes the amortization associated with non-controlling interest. 5 The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company’s tax filings. The impact of the changes to the tax rate results in an annual estimated rate of ~35% on anon-GAAP basis. |
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| | | | | | | | |
| | | Reconciliation ofNon-GAAP Operating Margin % |
| | | (in thousands, except %) | | 2016
Actuals | | 2017
Guidance 1 | | |
| | Non-GAAP Gross Margin % [A] | | 76.6% | | 76.1% | |
| | Non-cash purchase accounting adjustments on acquisitions2 | | (1.5%) | | 0.0% | |
| | | | | | | |
| | GAAP Gross Margin [B] | | 75.0% | | 76.1% | |
| | GAAP &Non-GAAP Sales, Marketing & Administrative Expense [C] | | 55.5% | | 54.0% | |
| | Non-GAAP Research & Development Expense [D] | | 5.0% | | 5.0% | |
| | In-process research & development | | 0.0% | | 0.0% | |
| | | | | | | |
| | GAAP Research & Development Expense [E] | | 5.0% | | 5.0% | |
| | Litigation liability [F] | | (4.5%) | | 0.0% | |
| | Amortization of intangible assets [G]3 | | 4.4% | | 4.3% | |
| | Business transition costs [H]4 | | 1.9% | | 0.3% | |
| | | | | | | |
| | Non-GAAP Operating Margin % [A - C - D] | | 16.1% | | 17.1% | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | GAAP Operating Margin % [B - C - E - F - G - H] | | 12.8% | | 12.6% | |
| | | | | | | |
1 Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency. 2 Represents costs associated withnon-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. 3 Excludes the amortization associated with non-controlling interest. 4 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. |
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| | | | | | | | | | | | |
| | | Reconciliation of EBITDA % | | | |
| | | (in thousands, except %) | | 2016
Actuals | | | 2017
Guidance 1 | | | |
| | Net Income / (Loss) | | | 3.9% | | | | 6.1% | | |
| | Interest (income) / expense, net2 | | | 6.1% | | | | 3.5% | | |
| | Provision for income taxes | | | 3.0% | | | | 3.1% | | |
| | Depreciation and amortization3 | | | 10.5% | | | | 10.8% | | |
| | | | | | | | | | | |
| | EBITDA | | | 23.5% | | | | 23.6% | | |
| | Non-cash stock based compensation | | | 2.8% | | | | 2.9% | | |
| | Business transition costs4 | | | 1.9% | | | | 0.3% | | |
| | Non-cash purchase accounting adjustments on acquisitions5 | | | 1.5% | | | | 0.0% | | |
| | In-process research & development | | | 0.0% | | | | 0.0% | | |
| | Litigation liability gain | | | (4.5%) | | | | 0.0% | | |
| | | | | | | | | | | |
| | Adjusted EBITDA | | | 25.2% | | | | 26.7% | | |
| | | | | | | | | | | |
1 Current guidance reflects guidance provided February 9, 2017, as updated for the expected changes in currency. 2 Interest (income) / expense, net for the quarter and year ended December 31, 2016 includes loss on extinguishment of debt for $1.6 million and $19.1 million, respectively. 3 Excludes the amortization associated with non-controlling interest. 4 Costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. 5 Represents costs associated withnon-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. |
Reconciliation ofNon-GAAP Information
Management uses certainnon-GAAP financial measures such asnon-GAAP earnings per share,non-GAAP net income,non-GAAP operating expenses andnon-GAAP operating profit margin, which exclude amortization of intangible assets, leasehold related charges, integration related expenses associated with acquired businesses,one-time restructuring and acquisition related items, CEO transition related costs, certain litigation charges andnon-cash interest expense (excluding debt issuance cost) and or losses on convertible notes. Management also uses certainnon-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, leasehold related charges, integration related expenses associated with acquired businesses, CEO transition related costs, certain litigation liabilities, acquisition related items and other significantone-time items. Management calculates thenon-GAAP financial measures provided in this earnings release excluding these costs and uses thesenon-GAAP financial measures to enable it to further and more consistently analyze theperiod-to-period financial performance of its core business operations. Management believes that providing investors with thesenon-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. Thesenon-GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different fromnon-GAAP measures used by other companies. Set forth below are reconciliations of thenon-GAAP financial measures to the comparable GAAP financial measure.
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| | | | | | | | |
| | | Reconciliation of Fourth Quarter 2016 Results GAAP Net Income per Share toNon-GAAP Earnings per Share |
| | | (in thousands, except per share data) | | Adjustments | | Diluted Earnings Per Share | | |
| | GAAP net income | | $ 6,376 | | $ 0.11 | |
| | Loss on extinguishment of debt | | 1,641 | | | |
| | Business transition costs1 | | 6,624 | | | |
| | Non-cash interest expense on convertible notes | | 4,992 | | | |
| | Amortization of intangible assets2 | | 11,767 | | | |
| | Tax effect of adjustments3 | | (3,843) | | | |
| | | | | | | |
| | Adjustments to GAAP net income | | 21,181 | | | |
| | | | | | | |
| | Non-GAAP earnings | | $ 27,557 | | $ 0.53 | |
| | | | | | | |
| | | | | | | |
| | GAAP weighted shares outstanding - diluted | | | | 55,913 | |
| | | | | | | |
| | Non-GAAP weighted shares outstanding - diluted | | | | 52,399 | |
| | | | | | | | | |
1 | | Costs related to acquisition, integration and business transition activities which includes severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. |
2 | | Excludes the amortization associated withnon-controlling interest. | | |
3 | | The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company’s tax filings. The impact of the changes to the tax rate results in an annual estimated rate of 37% on anon-GAAP basis. The result of these adjustments is a change in the annual effective tax rate from 29% to 37%. The Company adopted ASU2016-09 Stock Compensation in Q2 2016 which was effective as of January 1, 2016 with retrospective adjustment. The result of the retrospective adjustment resulted in a change in the Q1 2016 quarterly effective tax rate on anon-GAAP basis from 41% to 36%. |
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Reconciliation of Year To Date 2016 Results
GAAP Net Income per Share toNon-GAAP Earnings per Share
| | | | | | | | | | |
| (in thousands, except per share data) | | Adjustments | | | Diluted Earnings Per
Share | | | |
GAAP net income | | $ | 37,147 | | | $ | 0.69 | | |
| | | | | | | | | |
Litigation liability gain | | | (43,310) | | | | | | |
Business transition costs1 | | | 18,138 | | | | | | |
Non-cash interest expense on convertible notes | | | 19,539 | | | | | | |
Non-cash purchase accounting adjustments on acquisitions 2 | | | 14,747 | | | | | | |
Loss on repurchases of convertible notes | | | 19,085 | | | | | | |
Amortization of intangible assets3 | | | 40,712 | | | | | | |
Tax effect of adjustments4 | | | (19,602) | | | | | | |
| | | | | | | | | |
Adjustments to GAAP net income | | | 49,309 | | | | | | |
| | | | | | | | | |
Non-GAAP earnings | | $ | 86,456 | | | $ | 1.66 | | |
| | | | | | | | | |
| | | | | | | | | |
GAAP weighted shares outstanding - diluted | | | | | | | 54,102 | | |
| | | | | | | | | |
Non-GAAP weighted shares outstanding - diluted | | | | | | | 51,981 | | | |
| | | | | | | | | | |
| | 1 | Costs related to acquisition, integration and business transition activities which includes severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | |
| | 2 | Represents costs associated withnon-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | |
| | 3 | Excludes the amortization associated withnon-controlling interest. | |
| | 4 | The impact on results from taxes include tax effecting the adjustments above at the statutory rate as well as taking into account discrete items and including those discrete items in the annual effective tax rate calculation. The Company also includes those adjustments that would have benefited the tax rate in lieu of the above adjustments as part of the Company’s tax filings. The impact of the changes to the tax rate results in an annual estimated rate of approximately 37% on anon-GAAP basis. The result of these adjustments is a change in the annual effective tax rate from approximately 29% to 37%. The Company adopted ASU2016-09 Stock Compensation in Q2 2016 which was effective as of January 1, 2016 with retrospective adjustment. The result of the retrospective adjustment resulted in a change in the Q1 2016 quarterly effective tax rate on anon-GAAP basis from approximately 41% to 36%. | |
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Reconciliation of Fourth Quarter and Twelve Months 2016 Results
GAAP net income to Adjusted EBITDA
| | | | | | | | |
| | | Three months ended | | | Twelve months ended | |
| (in thousands, except per share data) | | December 31, 2016 | | | December 31, 2016 | |
| | |
GAAP net income | | $ | 6,376 | | | $ | 37,147 | |
Interest (income) / expense, net1 | | | 12,006 | | | | 58,514 | |
Provision for income taxes | | | 11,899 | | | | 29,282 | |
Depreciation and Amortization2 | | | 28,573 | | | | 101,438 | |
| | | | | | | | |
EBITDA | | $ | 58,854 | | | $ | 226,381 | |
| | | | | | | | |
Litigation liability gain | | | — | | | | (43,310) | |
Non-cash purchase accounting related charges3 | | | — | | | | 14,747 | |
Business transition costs 4 | | | 6,624 | | | | 18,138 | |
Non-cash stock based compensation | | | 7,279 | | | | 26,924 | |
| | | | | | | | |
Adjusted EBITDA | | $ | 72,757 | | | $ | 242,880 | |
| | | | | | | | |
As a percentage of revenue | | | 26.8% | | | | 25.2% | |
| | 1 | Interest (income) / expense, net for the quarter and year ended December 31, 2016 includes loss on extinguishment of debt for $1.6 million and $19.1 million, respectively. | |
| | 2 | Excludes the amortization associated withnon-controlling interest. | |
| | 3 | Represents costs associated withnon-cash purchase accounting adjustments, such as acquired inventory fair market value adjustments, which are amortized over the period in which underlying products are sold. | |
| | 4 | Costs related to acquisition, integration and business transition activities which includes severance, relocation, consulting, leasehold exit costs, third party merger and acquisitions costs and other costs directly associated with such activities. | |
Investor Conference Call
The Company will hold a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss the results of its fourth quarter and full year 2016 financial performance. Thedial-in numbers are1-877-407-9039 for domestic callers and1-201-689-8470 for international callers. A live webcast of the conference call will be available online from the Investor Relations page of the Company’s website atwww.nuvasive.com.
After the live webcast, the call will remain available on NuVasive’s website through March 9, 2017. In addition, a telephone replay of the call will be available until February 16, 2017. The replaydial-in numbers are 1-844-512-2921 for domestic callers and 1-412-317-6671 for international callers. Please use pin number: 13652783.
About NuVasive
NuVasive, Inc. (NASDAQ: NUVA) is a world leader in minimally invasive, procedurally-integrated spine solutions. From complex spinal deformity to degenerative spinal conditions, NuVasive is transforming spine surgery with innovative technologies designed to deliver reproducible and clinically proven surgical outcomes. NuVasive’s highly differentiated, procedurally-integrated solutions include access instruments, implantable hardware and software systems for surgical planning and reconciliation technology that centers on achieving the global alignment of the spine. With $962 million in revenues (2016), NuVasive has an approximate 2,300 person workforce in more than 40 countries around the world. For more information, please visitwww.nuvasive.com.
Forward-Looking Statements
NuVasive cautions you that statements included in this news release or made on the investor conference call referenced herein 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 news release contains selected financial results from the fourth quarter and full year 2016, as well as projections for 2017 financial guidance and longer-term financial performance goals. The Company’s results for the fourth quarter and full year 2016 are prior to the completion of review and audit procedures by the Company’s external auditors and are subject to adjustment. In addition, the Company’s projections for 2017 financial guidance and longer-term financial performance goals 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. The potential risks and uncertainties which contribute to the uncertain nature of these statements include, among others, risks associated with acceptance of the Company’s surgical products and procedures by spine surgeons, spine surgeons, development and acceptance of new products or product enhancements, clinical and statistical verification of the benefits achieved via the use of NuVasive’s products (including the iGA™ platform), the Company’s ability to effectually manage inventory as it continues to release new products, its ability to recruit and retain management and key personnel, and the 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. 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.
Consolidated Statements of Operations
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | | | | Year Ended December 31, | |
| | | 2016 | | | 2015 | | | | | 2016 | | | 2015 | |
| | | (Unaudited) | | | (Unaudited) | | | | | | | | | |
Revenue | | $ | 271,109 | | | $ | 215,282 | | | | | $ | 962,072 | | | $ | 811,113 | |
Cost of goods sold (excluding below amortization of intangible assets) | | | 66,926 | | | | 51,233 | | | | | | 240,093 | | | | 194,479 | |
| | | | | | | | | | | | | | | | | | |
Gross profit | | | 204,183 | | | | 164,049 | | | | | | 721,979 | | | | 616,634 | |
Operating expenses: | | | | | | | | | | | | | | | | | | |
Sales, marketing and administrative | | | 142,413 | | | | 118,837 | | | | | | 533,624 | | | | 457,280 | |
Research and development | | | 12,983 | | | | 8,606 | | | | | | 47,999 | | | | 35,833 | |
Amortization of intangible assets | | | 12,089 | | | | 3,479 | | | | | | 42,001 | | | | 12,516 | |
Litigation liability (gain) loss | | | — | | | | 681 | | | | | | (43,310) | | | | (41,826) | |
Business transition costs | | | 6,624 | | | | 2,902 | | | | | | 18,138 | | | | 13,748 | |
| | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 174,109 | | | | 134,505 | | | | | | 598,452 | | | | 477,551 | |
Interest and other expense, net: | | | | | | | | | | | | | | | | | | |
Interest income | | | 167 | | | | 464 | | | | | | 1,091 | | | | 1,589 | |
Interest expense | | | (10,532) | | | | (7,403) | | | | | | (40,520) | | | | (29,078) | |
Loss on repurchases of convertible notes | | | (1,641) | | | | — | | | | | | (19,085) | | | | — | |
Other (expense) income, net | | | (203) | | | | (105) | | | | | | (305) | | | | 425 | |
| | | | | | | | | | | | | | | | | | |
Total interest and other expense, net | | | (12,209) | | | | (7,044) | | | | | | (58,819) | | | | (27,064) | |
| | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 17,865 | | | | 22,500 | | | | | | 64,708 | | | | 112,019 | |
Income tax expense | | | (11,899) | | | | (11,397) | | | | | | (29,282) | | | | (46,729) | |
| | | | | | | | | | | | | | | | | | |
Consolidated net income | | $ | 5,966 | | | $ | 11,103 | | | | | $ | 35,426 | | | $ | 65,290 | |
| | | | | | | | | | | | | | | | | | |
Add back net loss attributable tonon-controlling interests | | $ | (410) | | | $ | (400) | | | | | $ | (1,721) | | | $ | (1,001) | |
| | | | | | | | | | | | | | | | | | |
Net income attributable to NuVasive, Inc. | | $ | 6,376 | | | $ | 11,503 | | | | | $ | 37,147 | | | $ | 66,291 | |
| | | | | | | | | | | | | | | | | | |
Net income per share attributable to NuVasive, Inc.: | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.13 | | | $ | 0.23 | | | | | $ | 0.74 | | | $ | 1.36 | |
| | | | | | | | | | | | | | | | | | |
Diluted | | $ | 0.11 | | | $ | 0.22 | | | | | $ | 0.69 | | | $ | 1.26 | |
| | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | |
Basic | | | 50,394 | | | | 49,205 | | | | | | 50,077 | | | | 48,687 | |
| | | | | | | | | | | | | | | | | | |
Diluted | | | 55,913 | | | | 53,087 | | | | | | 54,102 | | | | 52,424 | |
| | | | | | | | | | | | | | | | | | |
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NuVasive, Inc.
Consolidated Balance Sheets
(in thousands, except par values and share amounts)
| | | | | | | | |
| | | December 31, | |
| | | 2016 | | | 2015 | |
| ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 153,643 | | | $ | 192,339 | |
Short-term marketable securities | | | — | | | | 165,423 | |
Accounts receivable, net of allowances of $8,912 and $5,320, respectively | | | 171,595 | | | | 127,595 | |
Inventory, net | | | 208,249 | | | | 168,140 | |
Prepaid income taxes | | | 31,926 | | | | 40,540 | |
Prepaid expenses and other current assets | | | 10,030 | | | | 8,790 | |
| | | | | | | | |
Total current assets | | | 575,443 | | | | 702,827 | |
Property and equipment, net | | | 181,524 | | | | 141,441 | |
Long-term marketable securities | | | — | | | | 112,332 | |
Intangible assets, net | | | 291,143 | | | | 85,076 | |
Goodwill | | | 485,685 | | | | 154,281 | |
Deferred tax assets | | | 5,810 | | | | 83,691 | |
Restricted cash and investments | | | 7,405 | | | | 5,615 | |
Other assets | | | 23,794 | | | | 17,404 | |
| | | | | | | | |
Total assets | | $ | 1,570,804 | | | $ | 1,302,667 | |
| | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 77,585 | | | $ | 60,986 | |
Contingent consideration liabilities | | | 49,742 | | | | — | |
Accrued payroll and related expenses | | | 51,000 | | | | 37,640 | |
Income tax liabilities | | | 2,469 | | | | 990 | |
Short-term senior convertible notes | | | 61,701 | | | | — | |
| | | | | | | | |
Total current liabilities | | | 242,497 | | | | 99,616 | |
Long term senior convertible notes | | | 564,412 | | | | 372,920 | |
Deferred and income tax liabilities,non-current | | | 18,607 | | | | 8,602 | |
Non-current litigation liabilities | | | — | | | | 88,261 | |
Other long-term liabilities | | | 44,764 | | | | 14,425 | |
Commitments and contingencies | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none outstanding | | | — | | | | — | |
Common stock, $0.001 par value; 120,000,000 shares authorized at December 31, 2016 and December 31, 2015, 55,184,660 and 52,616,471 issued and outstanding at December 31, 2016 and December 31, 2015, respectively | | | 55 | | | | 53 | |
Additionalpaid-in capital | | | 1,010,238 | | | | 989,387 | |
Accumulated other comprehensive loss | | | (10,631) | | | | (12,112) | |
Accumulated deficit | | | (66,859) | | | | (104,006) | |
Treasury stock at cost; 4,758,828 shares and 3,316,794 shares at December 31, 2016 and December 31, 2015, respectively | | | (237,867) | | | | (161,788) | |
| | | | | | | | |
Total NuVasive, Inc. stockholders’ equity | | | 694,936 | | | | 711,534 | |
Non-controlling interests | | | 5,588 | | | | 7,309 | |
| | | | | | | | |
Total equity | | | 700,524 | | | | 718,843 | |
| | | | | | | | |
Total liabilities and equity | | $ | 1,570,804 | | | $ | 1,302,667 | |
| | | | | | | | |
11
NuVasive, Inc.
Consolidated Statements of Cash Flows
(in thousands)
| | | | | | | | |
| | | Year Ended December 31, | |
| | | 2016 | | | 2015 | |
Operating activities: | | | | | | | | |
Consolidated net income | | $ | 35,426 | | | $ | 65,290 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 102,713 | | | | 65,915 | |
Deferred income tax expense | | | 26,265 | | | | 34,757 | |
Loss on repurchases of convertible notes | | | 19,085 | | | | — | |
Amortization ofnon-cash interest | | | 22,721 | | | | 17,851 | |
Stock-based compensation | | | 26,924 | | | | 26,203 | |
Reserves on current assets | | | 11,408 | | | | 9,454 | |
Othernon-cash adjustments | | | 16,928 | | | | 17,581 | |
Changes in operating assets and liabilities, net of effects from acquisitions: | | | | | | | | |
Accounts receivable | | | (33,250) | | | | (9,463) | |
Inventory | | | (22,636) | | | | (25,984) | |
Prepaid expenses and other current assets | | | (5,665) | | | | 1,239 | |
Accounts payable and accrued liabilities | | | 11,854 | | | | 7,742 | |
Accrued royalties | | | 471 | | | | (46,092) | |
Accrued payroll and related expenses | | | 8,849 | | | | (192) | |
Litigation liability | | | (88,450) | | | | (36,270) | |
Income taxes | | | 23,652 | | | | (39,304) | |
| | | | | | | | |
Net cash provided by operating activities | | | 156,295 | | | | 88,727 | |
Investing activities: | | | | | | | | |
Acquisition of Ellipse Technologies, net of cash acquired | | | (380,080) | | | | — | |
Other acquisitions and investments | | | (108,591) | | | | (1,357) | |
Purchases of intangible assets | | | (5,918) | | | | (32,020) | |
Proceeds from sales of property and equipment | | | — | | | | 40 | |
Purchases of property and equipment | | | (88,372) | | | | (75,772) | |
Purchases of marketable securities | | | (128,956) | | | | (427,945) | |
Proceeds from sales of marketable securities | | | 407,032 | | | | 411,471 | |
Proceeds from sales of restricted investments | | | — | | | | 180,694 | |
Purchases of restricted investments | | | — | | | | (62,625) | |
| | | | | | | | |
Net cash used in investing activities | | | (304,885) | | | | (7,514) | |
Financing activities: | | | | | | | | |
Incremental tax benefits related to stock-based compensation awards | | | — | | | | 15,185 | |
Proceeds from the issuance of common stock | | | 9,492 | | | | 12,106 | |
Payment of contingent consideration | | | (422) | | | | (514) | |
Purchase of treasury stock | | | (24,734) | | | | (56,929) | |
Proceeds from issuance of convertible debt, net of issuance costs | | | 634,140 | | | | — | |
Proceeds from sale of warrants | | | 44,850 | | | | — | |
Purchase of convertible note hedge | | | (111,150) | | | | — | |
Repurchases of convertible notes | | | (439,519) | | | | — | |
Proceeds from revolving line of credit | | | 50,000 | | | | — | |
Repayments on revolving line of credit | | | (50,000) | | | | — | |
Other financing activities | | | (1,834) | | | | (192) | |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 110,823 | | | | (30,344) | |
Effect of exchange rate changes on cash | | | (929) | | | | (917) | |
| | | | | | | | |
(Decrease) increase in cash and cash equivalents | | | (38,696) | | | | 49,952 | |
Cash and cash equivalents at beginning of year | | | 192,339 | | | | 142,387 | |
| | | | | | | | |
Cash and cash equivalents at end of year | | $ | 153,643 | | | $ | 192,339 | |
| | | | | | | | |
12
