Nuvasive (NUVA) 8-K Nuvasive Reports Second Quarter 2017 Financial Results

Q2 2017 Results

Supplemental Presentation to Earnings Press Release

July 27, 2017

Exhibit 99.4

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

second quarter 2017, as well as projections for 2017 financial guidance and longer-term financial performance goals. The

Company’s projections for 2017 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.

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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,

non-cash purchase accounting adjustments on acquisitions, business transition costs, CEO transition related costs,

certain litigation charges, significant one-time items, non-cash interest expense (excluding debt issuance cost) and/or

losses on repurchase of 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,

non-cash purchase accounting adjustments on acquisition, business transition costs, CEO transition related costs,

certain litigation charges, and other significant one-time items. Management calculates the non-GAAP financial

measures provided in this presentation 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.

This presentation is intended to accompany the Company’s second quarter 2017 earnings announcement, which

includes financial results reported on a GAAP and non-GAAP basis. For reconciliations of non-GAAP financial measures

to the comparable GAAP financial measure, please refer to the earnings announcement, as well as supplemental

financial information posted on the Investor Relations section of the Company’s corporate website at www.nuvasive.com.

3

Q2 2017 Performance

Reported year-over-year revenue growth of 10.3% to $260.6 million, or 10.7% on a constant

currency basis.

Delivered GAAP operating profit margin of 11.4%; non-GAAP operating profit margin of

16.3%.

Drove GAAP diluted earnings per share of $0.22; non-GAAP diluted EPS up 15.0% to

$0.46.

4

*Performance growth reflects comparison to prior year period; for additional details regarding full year 2017 guidance, see slide 11 ..

Re-iterated full year 2017 guidance (inclusive of acquisitions):

•

Revenue growth of ~10.7% to $1.065B, including an approximately $4 million in year-

over-year currency headwinds

•

Non-GAAP operating profit margin of ~17.1%

•

Adjusted EBITDA margin of ~26.7%

•

Non-GAAP diluted EPS of ~$2.00

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Second Quarter 2017 Revenue Highlights

3.0%

U.S. SPINAL HARDWARE

Includes All Implants, Fixation,

MAGEC

®

& PRECICE

®

18.7%

26.0%

*

* Constant currency basis

U.S. SURGICAL SUPPORT

Includes Biologics, IOM

Services & Disposables

INTERNATIONAL

Includes Puerto Rico

Key Performance Factors

Continued Adoption of Core Product Areas

within iGA

Platform, including RELINE

posterior fixation system 

Key Performance Factors

Driven By Addition of Biotronic

Key Performance Factors

Strong Growth in All Core Markets, including

EMEA, AsiaPac

and Latin America

in 2Q17

in 2Q17

in 2Q17

Second Quarter 2017 P&L Performance

6

Non-GAAP Measures

2Q17

Actuals

2Q17 YoY

Performance Factors

Gross Margin

74.5%

330

bps negatively impacted by

lower gross margin

profile of the Biotronic

business (~280 bps); inventory

inefficiencies due to transfer of production to new

manufacturing facility

Sales, Marketing

& Admin.

53.4%

350

bps improvement from prior year impacted by lower

SM&A profile of the Biotronic

business (~230 bps); greater

asset and workforce productivity (~120 bps)

Research & Development

4.8%

20

bps improvement from prior year impacted by the

Biotronic

business (30 bps); offset by investments

in

internal

R&D and strategic assets acquired to drive further

innovation (10 bps)

Operating Profit Margin

16.3%

40 bps improvement due to greater asset efficiencies

related to both freight and workforce productivity

EPS

$0.46

$0.06; 15.0% YoY

growth

Adjusted

EBITDA Margin

26.2%

90 bps reflecting the continued focus on improving the

cash earnings profile of the business

*

NuVasive

financial

performance

guidance

as

of

July

27,

2017.

Global Revenue

(In Millions)

$762.4

$811.1

$962.1

2014

2015

2016

2017E

Non-GAAP Operating

Profit Margin

~570

Basis

Point

Improvement

$1,065*

2014

2015

2016

2017E

11.4%

15.4%

16.1%

~17.1%*

Strong History of Growth and Profitability

DISCIPLINED EXECUTION OF STRATEGY DRIVES EXCEPTIONAL RESULTS

7

Reducing Surgical Radiation

Software that enables O.R. staff to

reduce their levels of exposure to

surgical radiation

Will help increase adoption of

minimally invasive surgery without

any disruption of surgeon’s familiar

workflow

8

Takes low-quality, low-radiation

images and improves them to look

like conventional full dose images

A foundational element of our multi-

generational imaging, navigation

and surgical automation platform

development strategy

Launching LessRay

®

Targeted launch in September 2017

Revenue recognition expected to begin in Q417

Priced with options, inducing capital purchase and leasing

option with service and support agreements

Focused selling for use in spine surgery and over time will

address additional markets where radiation reduction is a

clear problem

9

New ‘all digital’, 180,000 sq. ft. facility is on-line and

supporting select implants and instruments

Produced 160,000+ parts out of facility in Q2, doubling

the parts from Q1

Hiring accelerated in Q2; expect to employ

~300 high-tech positions

Further align R&D and Product Development teams

to optimize and accelerate product launches,

including 3D printing capabilities

Transition from current Fairborn facility expected by

end of 2017

World-class, Manufacturing HQ in West Carrollton Nearly Complete

10

Investment in U.S. Manufacturing

WEST CARROLLTON,

OHIO

*

NuVasive

financial

performance

guidance

as

of

July

27,

2017;

^Constant

currency

11

FY17 Guidance

Performance Drivers

Revenues

•

As reported

~$1.065B, ~11.1%

YoY growth^

~$61M

full

year

of

Biotronic

contribution;

~$4M

currency

headwind

•

U.S. Spinal Hardware

•

U.S. Surgical

Support

•

International

~7% YoY growth

~10% YoY growth

~26% YoY growth

Strong expected lumbar, cervical and NSO product performance

Full year of Biotronic

contribution

~29% constant currency

growth

Non-GAAP

Gross Margin

~75.6%

~100

bps

YoY

decrease

due

to

the

lower

gross

margin

profile

of

Biotronic,

partially offset by the

increasing production at the West Carrollton facility

Non-GAAP

Sales,

Marketing

&

Admin.

~53.5%

~200

bps

YoY

improvement

primarily

driven

by

sales

force

efficiencies

and

SM&A

profile

of

Biotronic

business

Non-GAAP Research &

Development

~5.0%

~$5M YoY increase in investment in innovation

Non-GAAP Operating Profit

Margin

~17.1%

~100 bps

YoY improvement driven by core efficiencies while continuing to

integrate acquired entities

Non-GAAP Earnings Per Share

~$2.00

~20% YoY

growth

Adjusted

EBITDA Margin

~26.7%

~150 bps

YoY increase

Non-GAAP Effective Tax Rate

~35%

Continued

efforts to drive YoY improvement; ASU adoption 2016-09

Non-GAAP

diluted WASO

~52.7M shares

Increased from ~52M shares in 2016 due to higher share price impact on

remaining

2017

convertible

note

dilution;

ASU

adoption

2016-09

Full Year 2017 Financial Performance Guidance*

12

New product launches

and leading spine

innovation roadmap

International executing

on all cylinders

Success in adding

new, leading surgeons

Entering new markets:  

-

trauma

-

radiation reduction

iGA platform continues

to ramp up

New sales reps hired last

year to begin rolling off

non-compete agreements

2H 2017 Performance Drivers

STRATEGIC PRIORITIES ALIGNED TO DELIVER CONTINUED GROWTH

Growing

revenues at

multiples of

market in high

single-digit range*

Long-term non-GAAP

operating profit

margins expanding to

~25% and adjusted

EBITDA margin to

~32%*

Drive change in tax

rate from high

30%’s

to high

20%’s*

Optimizing tax

structure to drive

EPS growth 2x

the

rate of revenue

growth*

Set to generate

significant

increases in free

cash flow

#1

#2

#3

#4

#5

Grow   

Revenues

Expand

Operating +

EBITDA Margins

Tax Rate

Improvement

Free Cash   

Flow

EPS

Growth

Why Invest in NuVasive

RELENTLESS FOCUS ON DRIVING SHAREHOLDER VALUE

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* NuVasive financial performance guidance as of July 27, 2017.

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