Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 24, 2015 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NUVASIVE INC | |
Entity Central Index Key | 1142596 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | NUVA | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,356,489 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $88,494 | $142,387 |
Short-term marketable securities | 200,809 | 220,329 |
Accounts receivable, net of allowances of $6,119 and $5,844, respectively | 111,547 | 118,959 |
Inventory, net | 163,413 | 154,638 |
Deferred and prepaid taxes | 59,608 | 59,233 |
Prepaid expenses and other current assets | 8,992 | 10,325 |
Total current assets | 632,863 | 705,871 |
Property and equipment, net | 139,541 | 128,565 |
Long-term marketable securities | 27,501 | 43,042 |
Intangible assets, net | 92,640 | 96,555 |
Goodwill | 154,273 | 154,443 |
Deferred tax assets, non-current | 65,196 | 65,330 |
Restricted cash and investments | 156,155 | 123,233 |
Other assets | 27,439 | 26,420 |
Total assets | 1,295,608 | 1,343,459 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 71,507 | 133,324 |
Accrued payroll and related expenses | 27,702 | 38,032 |
Litigation liability | 14,000 | 30,000 |
Deferred and income tax liabilities | 750 | 13,543 |
Total current liabilities | 113,959 | 214,899 |
Senior Convertible Notes | 364,588 | 360,746 |
Deferred and income tax liabilities, non-current | 23,517 | 12,526 |
Non-current litigation liability | 117,430 | 93,700 |
Other long-term liabilities | 12,633 | 13,230 |
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 March 31, 2015 and December 31, 2014, 49,674,361 and 47,691,744 issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 50 | 48 |
Additional paid-in capital | 884,469 | 847,145 |
Accumulated other comprehensive loss | -11,722 | -9,670 |
Accumulated deficit | -155,378 | -186,938 |
Treasury stock at cost; 1,345,606 shares and 233,369 shares at March 31, 2015 and December 31, 2014, respectively | -62,085 | -10,537 |
Total NuVasive, Inc. stockholders’ equity | 655,334 | 640,048 |
Non-controlling interests | 8,147 | 8,310 |
Total equity | 663,481 | 648,358 |
Total liabilities and equity | $1,295,608 | $1,343,459 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $6,119 | $5,844 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 49,674,361 | 47,691,744 |
Common stock, shares outstanding | 49,674,361 | 47,691,744 |
Treasury stock at cost, shares | 1,345,606 | 233,369 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Revenue | $192,383 | $177,496 |
Cost of goods sold (excluding below amortization of intangible assets) | 45,664 | 43,294 |
Gross profit | 146,719 | 134,202 |
Operating expenses: | ||
Sales, marketing and administrative | 116,096 | 118,104 |
Research and development | 9,264 | 9,455 |
Amortization of intangible assets | 2,996 | 3,998 |
Litigation liability (gain) loss | -42,575 | 30,000 |
Business transition costs | 5,373 | |
Total operating expenses | 91,154 | 161,557 |
Interest and other expense, net: | ||
Interest income | 419 | 217 |
Interest expense | -7,126 | -6,865 |
Other income (expense), net | 424 | 375 |
Total interest and other expense, net | -6,283 | -6,273 |
Income (loss) before income taxes | 49,282 | -33,628 |
Income tax (expense) benefit | -17,885 | 15,095 |
Consolidated net income (loss) | 31,397 | -18,533 |
Add back net loss attributable to non-controlling interests | -163 | -257 |
Net income (loss) attributable to NuVasive, Inc. | $31,560 | ($18,276) |
Net income (loss) per share attributable to NuVasive, Inc.: | ||
Basic | $0.66 | ($0.40) |
Diluted | $0.61 | ($0.40) |
Weighted average shares outstanding: | ||
Basic | 47,989 | 45,798 |
Diluted | 51,716 | 45,798 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Statement Of Income And Comprehensive Income [Abstract] | ||
Consolidated net income (loss) | $31,397 | ($18,533) |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on marketable securities, net of tax | 133 | -12 |
Translation adjustments, net of tax | -2,185 | 1,071 |
Other comprehensive (loss) income: | -2,052 | 1,059 |
Total consolidated comprehensive income (loss) | 29,345 | -17,474 |
Net loss attributable to non-controlling interests | 163 | 257 |
Comprehensive income (loss) attributable to NuVasive, Inc. | $29,508 | ($17,217) |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating activities: | ||
Consolidated net income (loss) | $31,397 | ($18,533) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 16,051 | 15,363 |
Amortization of non-cash interest | 4,331 | 4,000 |
Stock-based compensation | 7,611 | 7,764 |
Deferred income taxes | 11,015 | |
Reserves on current assets | 633 | 1,366 |
Other non-cash adjustments | 6,172 | 1,661 |
Changes in operating assets and liabilities, net of effects from acquisitions: | ||
Accounts receivable | 5,931 | -1,194 |
Inventory | -11,367 | -11,743 |
Prepaid expenses and other current assets | 444 | -2,807 |
Accounts payable and accrued liabilities | 17,428 | 17,951 |
Income taxes | -13,731 | -16,751 |
Accrued royalties | -47,459 | 3,291 |
Litigation liability | 7,730 | 30,000 |
Accrued payroll and related expenses | -10,163 | -7,068 |
Net cash provided by operating activities | 26,023 | 23,300 |
Investing activities: | ||
Cash paid for acquisitions and investments | -1,357 | |
Purchase of intangible assets | -27,389 | |
Purchases of property and equipment | -30,694 | -13,390 |
Purchases of marketable securities | -71,129 | -46,126 |
Sales of marketable securities | 105,794 | 36,257 |
Purchases of restricted investments | -32,616 | |
Net cash used in investing activities | -57,391 | -23,259 |
Financing activities: | ||
Incremental tax benefits related to stock-based compensation awards | 8,092 | |
Proceeds from the issuance of common stock | 1,403 | 8,749 |
Payment of contingent consideration | -514 | -498 |
Purchase of treasury stock | -30,944 | |
Other financing activities | -45 | -596 |
Net cash (used in) provided by financing activities | -22,008 | 7,655 |
Effect of exchange rate changes on cash | -517 | 256 |
(Decrease) increase in cash and cash equivalents | -53,893 | 7,952 |
Cash and cash equivalents at beginning of period | 142,387 | 102,825 |
Cash and cash equivalents at end of period | $88,494 | $110,777 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation |
Description of Business | |
NuVasive, Inc. (the “Company” or “NuVasive”) was incorporated in Delaware on July 21, 1997, and began commercializing its products in 2001. The Company is focused on developing minimally-disruptive surgical products and procedurally-integrated solutions for the spine. NuVasive’s principal product offering includes a minimally-disruptive surgical platform called Maximum Access Surgery, or MAS®. The MAS platform combines three categories of solutions that collectively minimize soft tissue disruption during spine fusion surgery, provide maximum visualization and are designed to enable safe and reproducible outcomes for the surgeon and the patient. The platform includes proprietary software-driven nerve detection and avoidance systems, NVM5® and NVJJB®, and Intra-Operative Monitoring (“IOM”) services and support; MaXcess®, an integrated split-blade retractor system; and a wide variety of specialized implants and biologics. Many of the Company’s products, including the individual components of NuVasive’s MAS platform, can also be used in open or traditional spine surgery. The Company’s spine surgery product line offerings, which include thoracolumbar product offerings, cervical product offerings, IOM services, and disposables, are primarily used to enable access to the spine and to perform restorative and fusion procedures in a minimally-disruptive fashion. The Company’s biologic product line offerings used to aid the spinal fusion process or bone healing process include Osteocel® Plus and Osteocel Pro allograft (donated human tissue) which are cellular matrix products containing viable mesenchymal stem cells (“MSCs”), as well as other allograft offerings, FormaGraft®, a collagen synthetic product, and AttraX®, a synthetic bone graft material that is currently available commercially only in select markets outside of the United States. The Company continues to focus significant research and development efforts to expand its MAS product platform and advance the applications of its unique technology into procedurally-integrated surgical solutions. The Company has dedicated and continues to dedicate significant resources toward training spine surgeons around the world; both those who are new to its MAS product platform as well as previously MAS-trained surgeons attending advanced courses. | |
The Company’s primary business model is to loan its MAS systems to surgeons and hospitals who use such systems to perform individual procedures, with the hospitals purchasing implants, biologics and disposables in each such case. In addition, for larger customers, the Company’s proprietary nerve monitoring systems, MaXcess and surgical instrument sets are placed with hospitals for an extended period at no up-front cost to them, facilitating the hospital’s purchase of disposables for such machines from the Company. The Company also offers a range of bone allograft in patented saline packaging, disposables and spine implants, which include its branded CoRoent® products and fixation devices such as rods, plates and screws. The Company’s implants, biologics and disposables are currently sold and shipped from its primary distribution and warehousing operations facility located in Memphis, Tennessee. The Company sells MAS instrument sets, MaXcess devices and its proprietary software-driven nerve monitoring systems, however this does not make up a material part of its business. | |
Basis of Presentation and Principles of Consolidation | |
The accompanying Unaudited Consolidated Financial Statements include the accounts of the Company and its majority-owned or controlled subsidiaries, collectively referred to as either NuVasive or the Company. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the respective parent entity, the Company records the fair value of the non-controlling interests at the acquisition date and classifies the amounts attributable to non-controlling interests separately in equity in the Company’s Consolidated Financial Statements. Any subsequent changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. All significant intercompany balances and transactions have been eliminated in consolidation. | |
The accompanying Unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for any other interim period or for the full year. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the Consolidated Financial Statements include all adjustments that are of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. | |
The Company has reclassified historically presented product offerings revenue to conform to the current year presentation. The reclassification had no impact on previously reported results of operations or financial position. | |
Change in Accounting Estimate | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Business Transition Costs | |
From time to-time, the Company incurs costs related to integration and business transition activities which include severance, relocation, consulting, and other costs directly associated to such activities. The nature of these costs is that of personnel costs that the Company believes arise and warrant specific disclosure. During the three months ended March 31, 2015, the Company incurred $5.4 million of such costs, which included a $3.4 million charge associated with the resignation of the Company’s former Chief Executive Officer and Chairman of the Board, Alex V. Lukianov. Such resignation occurred in the first quarter 2015 and was announced on April 1, 2015 via filing of a Current Report on Form 8-K with the SEC. The $3.4 million charge includes certain severance and compensation-related charges, net of certain forfeitures of previously recognized equity compensation. | |
Restructuring Charges | |
The Company exited its New Jersey location and terminated the respective lease to reduce its footprint on the east coast of the United States as part of a company-wide efficiency effort in order to match its business needs without adversely impacting its ability to deliver surgeon education and local customer fulfillment. As a result of this undertaking, the Company recognized restructuring and associated impairment charges of $2.3 million during the three months ended March 31, 2015 in addition to the $6.4 million recognized during 2014. The restructuring and impairment charges mainly consist of the future rental payments through 2017, net with estimated future sublease income, and elimination of related leasehold improvements and deferred rent liabilities. These charges are recorded in sales, marketing and administrative expense in the Consolidated Statements of Operations. | |
As of March 31, 2015, the total recorded liability associated with this early lease termination was $4.9 million and consists of future rental payments net of estimated sublease income through 2017. The current portion of the liability is recorded within accounts payable and accrued liabilities and the long-term portion is recorded within other long-term liabilities in the Consolidated Balance Sheets at March 31, 2015. | |
Comprehensive Income (Loss) | |
Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) includes unrealized gains or losses on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive income (loss) were a net cumulative loss of $11.7 million and $9.5 million at March 31, 2015 and December 31, 2014, respectively. | |
Long-Lived Assets | |
Long-lived assets include surgical instruments, which are loaned to surgeons and hospitals who purchase implants, biologics and disposables for use in individual procedures, leasehold improvements, software, and intangible assets. The Company periodically re-evaluates the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of its long-lived assets. The criteria used for these evaluations include management’s estimate of the asset’s continuing ability to generate income from operations and positive cash flow in future periods as well as the strategic significance of any intangible asset to the Company’s business objectives. If assets are considered to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets, which is determined by applicable market prices when available or other methods by utilizing unobservable inputs including discounted cash flow models. See Note 3, Financial Instruments and Fair Value Measurements for further discussion. | |
Inventories | |
The Company’s inventory consists primarily of purchased finished goods which includes specialized implants and disposables, and is stated at the lower of cost or market determined by a weighted average cost method. The Company reviews the components of its inventory on a periodic basis for excess, obsolete or impaired inventory, and records a reserve for such identified items. The inventory reserve was $23.0 million and $22.7 million at March 31, 2015 and December 31, 2014, respectively. |
Net_Income_Loss_Per_Share
Net Income (Loss) Per Share | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Net Income (Loss) Per Share | 2. Net Income (Loss) Per Share | ||||||||
The Company computes basic net income (loss) per share using the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. Common stock equivalents include the Company’s stock options, employee stock purchase plan (ESPP), restricted stock units, including those with performance conditions, warrants, and the shares to be issued upon the conversion of the Senior Convertible Notes (see Note 6 to the Unaudited Consolidated Financial Statements). | |||||||||
The following table sets forth the computation of basic and diluted earnings or (loss) per share attributable to the Company: | |||||||||
Three Months Ended March 31, | |||||||||
(in thousands, except per share data) | 2015 | 2014 | |||||||
Numerator: | |||||||||
Net income (loss) available to the Company | $ | 31,560 | $ | (18,276 | ) | ||||
Denominator for basic and diluted net (loss) income per share: | |||||||||
Weighted average common shares outstanding for basic | 47,989 | 45,798 | |||||||
Dilutive potential common stock outstanding: | |||||||||
Stock options and ESPP | 1,528 | — | |||||||
Restricted stock units | 1,308 | — | |||||||
Senior Convertible Notes | 891 | — | |||||||
Weighted average common shares outstanding for diluted | 51,716 | 45,798 | |||||||
Basic net income (loss) per share attributable to the Company | $ | 0.66 | $ | (0.40 | ) | ||||
Diluted net income (loss) per share attributable to the Company | $ | 0.61 | $ | (0.40 | ) | ||||
The following weighted outstanding common stock equivalents were not included in the calculation of net income (loss) per diluted share because their effects were anti-dilutive: | |||||||||
Three Months Ended March 31, | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Stock Options, ESPP, and RSUs | 22 | 7,870 | |||||||
Warrants | 9,553 | 9,553 | |||||||
Senior Convertible Notes | — | 9,553 | |||||||
Total | 9,575 | 26,976 | |||||||
Financial_Instruments_and_Fair
Financial Instruments and Fair Value Measurements | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Investments Debt And Equity Securities [Abstract] | |||||||||||||||||||
Financial Instruments and Fair Value Measurements | 3. Financial Instruments and Fair Value Measurements | ||||||||||||||||||
The Company invests its excess cash in certificates of deposit, corporate notes, commercial paper, U.S. government treasury securities and securities of government-sponsored entities. The Company classifies all such securities as available-for-sale as the sale of such securities may be required prior to maturity to implement management strategies. These securities are carried at fair value with the unrealized gains and losses reported as a component of other comprehensive income in equity until realized. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in other income or expense on the Consolidated Statements of Operations and a new accounting cost basis for the security is established. The Company reviews its investments if there is an indicator of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. As of March 31, 2015, the Company had no investments that were in a significant unrealized loss position and no impairment charges were recorded during the periods presented. Interest and dividends on securities classified as available-for-sale are also included in interest income on the Consolidated Statements of Operations. Realized gains and losses and interest income related to marketable securities were immaterial during all periods presented. | |||||||||||||||||||
According to the Company’s investment policy, the Company maintains a diversified investment portfolio in terms of types, maturities, and credit exposure, and invests with institutions that have high credit quality. The Company does not currently hold financial instruments for speculative purposes. | |||||||||||||||||||
The composition of marketable securities is as follows: | |||||||||||||||||||
(in thousands, except years) | Contractual | Amortized Cost | Gross | Gross | Fair Value | ||||||||||||||
Maturity | Unrealized | Unrealized | |||||||||||||||||
(in years) | Gains | Losses | |||||||||||||||||
March 31, 2015: | |||||||||||||||||||
Classified as current assets | |||||||||||||||||||
Corporate notes | Less than 1 | $ | 121,761 | $ | 37 | $ | (81 | ) | $ | 121,717 | |||||||||
Securities of government-sponsored entities | Less than 1 | 56,822 | 12 | (2 | ) | 56,832 | |||||||||||||
Commercial paper | Less than 1 | 21,979 | — | — | 21,979 | ||||||||||||||
Certificates of deposit | Less than 1 | 281 | — | — | 281 | ||||||||||||||
Short-term marketable securities | 200,843 | 49 | (83 | ) | 200,809 | ||||||||||||||
Classified as non-current assets | |||||||||||||||||||
Securities of government-sponsored entities | 1 to 2 | 19,498 | 2 | (1 | ) | 19,499 | |||||||||||||
Corporate notes | 1 to 2 | 7,996 | 6 | — | 8,002 | ||||||||||||||
Long-term marketable securities | 27,494 | 8 | (1 | ) | 27,501 | ||||||||||||||
Classified as restricted investments | |||||||||||||||||||
Securities of government-sponsored entities | Less than 2 | 71,971 | 9 | (21 | ) | 71,959 | |||||||||||||
U.S. government treasury securities | Less than 2 | 52,223 | 52 | — | 52,275 | ||||||||||||||
Restricted investments | 124,194 | 61 | (21 | ) | 124,234 | ||||||||||||||
Total marketable securities at March 31, 2015 | $ | 352,531 | $ | 118 | $ | (105 | ) | $ | 352,544 | ||||||||||
December 31, 2014: | |||||||||||||||||||
Classified as current assets | |||||||||||||||||||
Certificates of deposit | Less than 1 | $ | 282 | $ | — | $ | — | $ | 282 | ||||||||||
Corporate notes | Less than 1 | 129,037 | 8 | (105 | ) | 128,940 | |||||||||||||
Commercial paper | Less than 1 | 11,290 | — | — | 11,290 | ||||||||||||||
U.S. government treasury securities | Less than 1 | 1,500 | 1 | — | 1,501 | ||||||||||||||
Securities of government-sponsored entities | Less than 1 | 78,333 | 12 | (29 | ) | 78,316 | |||||||||||||
Short-term marketable securities | 220,442 | 21 | (134 | ) | 220,329 | ||||||||||||||
Classified as non-current assets | |||||||||||||||||||
Corporate notes | 1 to 2 | 14,082 | — | (13 | ) | 14,069 | |||||||||||||
Securities of government-sponsored entities | 1 to 2 | 28,996 | — | (23 | ) | 28,973 | |||||||||||||
Long-term marketable securities | 43,078 | — | (36 | ) | 43,042 | ||||||||||||||
Classified as restricted investments | |||||||||||||||||||
U.S. government treasury securities | Less than 2 | 51,331 | 13 | (13 | ) | 51,331 | |||||||||||||
Securities of government-sponsored entities | Less than 2 | 42,862 | 2 | (54 | ) | 42,810 | |||||||||||||
Restricted investments | 94,193 | 15 | (67 | ) | 94,141 | ||||||||||||||
Total marketable securities at December 31, 2014 | $ | 357,713 | $ | 36 | $ | (237 | ) | $ | 357,512 | ||||||||||
Foreign Currency and Derivative Financial Instruments | |||||||||||||||||||
The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. | |||||||||||||||||||
Some of the Company’s reporting entities conduct a portion of their business in currencies other than the entity’s functional currency. These transactions give rise to receivables and payables that are denominated in currencies other than the entity’s functional currency. The value of these receivables and payables is subject to changes in currency exchange rates from the point at which the transactions are originated until the settlement in cash. Both realized and unrealized gains and losses in the value of these receivables and payables are included in the determination of net income. Net currency exchange gains recognized on business transactions were $0.3 million, net with hedging transactions, for the three months ended March 31, 2015, and $0.2 million for the three months ended March 31, 2014, and are included in other income (expense) in the Consolidated Statements of Operations. | |||||||||||||||||||
To manage foreign currency exposure risks, the Company uses derivatives for activities in entities that have short term intercompany receivables and payables denominated in a currency other than the entity’s functional currency. Realized and unrealized gains or losses on the value of financial contracts entered into to hedge the exchange rate exposure of these receivables and payables are also included in the determination of net income as they have not been designated for hedge accounting under ASC Topic 815, Derivatives and Hedging. These contracts, which settle monthly, effectively fix the exchange rate at which these specific receivables and payables will be settled in, so that gains or losses on the forward contracts offset the gains or losses from changes in the value of the underlying receivables and payables. As of March 31, 2015 a notional principal amount of $34.4 million in foreign currency forward contracts was outstanding to hedge currency risk relative to our foreign receivables and payables. The Company did not have this program during the three months ended March 31, 2014. | |||||||||||||||||||
The Company’s currency exposures vary, but are primarily concentrated in the pound sterling, the euro, the Australian dollar, the Singapore dollar, and the yen. The Company will continuously monitor the costs and the impact of foreign currency risks upon the financial results as part of the Company’s risk management program. The Company does not use derivative financial instruments for speculation or trading purposes or for activities other than risk management. The Company does not require and is not required to pledge collateral for these financial instruments and does not carry any master netting arrangements to mitigate the credit risk. | |||||||||||||||||||
The following table summarizes the fair values of derivative instruments at March 31, 2015 and December 31, 2014: | |||||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||
Balance Sheet | March 31, | December 31, | Balance Sheet | March 31, | December 31, | ||||||||||||||
(in thousands) | Location | 2015 | 2014 | Location | 2015 | 2014 | |||||||||||||
Derivative instruments not designated as cash flow | |||||||||||||||||||
hedges | |||||||||||||||||||
Forward exchange contracts | Other current | $ | 268 | $ | — | Other current | $ | — | * | ||||||||||
assets | liabilities | ||||||||||||||||||
Total derivatives | $ | 268 | $ | — | $ | — | * | ||||||||||||
*De minimus amount recognized in the hedge relationship. | |||||||||||||||||||
The following table summarizes the effect of derivative instruments on the Consolidated Statements of Operations for the three months ended March 31, 2015 and March 31, 2014: | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
31-Mar-15 | 31-Mar-14 | ||||||||||||||||||
Location of | Amount of | Location of | Amount of | ||||||||||||||||
(Gain)/Loss | (Gain)/Loss | (Gain)/Loss | (Gain)/Loss | ||||||||||||||||
Recognized in | Recognized in | Recognized in | Recognized in | ||||||||||||||||
(in thousands) | Income | Income | Income | Income | |||||||||||||||
Derivative instruments not designated as cash flow hedges | |||||||||||||||||||
Forward exchange contracts | Other (income) | $ | (2,165 | ) | Other (income) | $ | — | ||||||||||||
expense | expense | ||||||||||||||||||
Total derivatives | $ | (2,165 | ) | $ | — | ||||||||||||||
Fair value measurements | |||||||||||||||||||
The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements be classified and disclosed in one of the following three categories: | |||||||||||||||||||
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. | |||||||||||||||||||
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. | |||||||||||||||||||
Level 3: Unobservable inputs are used when little or no market data is available. | |||||||||||||||||||
Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the Levels of the fair value measurement hierarchy during the three months ended March 31, 2015 or March 31, 2014. | |||||||||||||||||||
The carrying amounts of certain financial instruments such as cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other current liabilities as of March 31, 2015 and December 31, 2014 approximate their related fair values due to the short-term maturities of these instruments. The carrying values of the Company’s capital lease obligations approximate their related fair values as of March 31, 2015 and December 31, 2014. | |||||||||||||||||||
The fair value, based on a quoted market price (Level 1), of the Company’s outstanding Senior Convertible Notes due 2017 at March 31, 2015 and December 31, 2014 was approximately $503.1 million and $516.1 million, respectively. The carrying value of the Company’s Senior Convertible Notes is discussed in Note 6, Senior Convertible Notes. | |||||||||||||||||||
The fair values of the Company’s assets and liabilities, including cash equivalents, marketable securities, restricted investments, derivatives, and contingent considerations are measured at fair value on a recurring basis, and are determined using the following inputs: | |||||||||||||||||||
Quoted Price in | Significant Other | Significant | |||||||||||||||||
Active Market | Observable Inputs | Unobservable | |||||||||||||||||
(in thousands) | Total | (Level 1) | (Level 2) | Inputs (Level 3) | |||||||||||||||
March 31, 2015: | |||||||||||||||||||
Money market funds | $ | 30,464 | $ | 30,464 | $ | — | $ | — | |||||||||||
Certificates of deposit | 281 | 281 | — | — | |||||||||||||||
Corporate notes | 129,719 | — | 129,719 | — | |||||||||||||||
Commercial paper | 21,979 | — | 21,979 | — | |||||||||||||||
U.S. government treasury securities | 52,275 | 52,275 | — | — | |||||||||||||||
Securities of government-sponsored entities | 148,290 | — | 148,290 | — | |||||||||||||||
Derivative forward exchange contracts | 268 | — | 268 | — | |||||||||||||||
Total assets | $ | 383,276 | $ | 83,020 | $ | 300,256 | $ | — | |||||||||||
December 31, 2014: | |||||||||||||||||||
Money market funds | $ | 39,963 | $ | 39,963 | $ | — | $ | — | |||||||||||
Certificates of deposit | 282 | 282 | — | — | |||||||||||||||
Corporate notes | 143,009 | — | 143,009 | — | |||||||||||||||
Commercial paper | 11,290 | — | 11,290 | — | |||||||||||||||
U.S. government treasury securities | 52,831 | 52,831 | — | — | |||||||||||||||
Securities of government-sponsored entities | 150,101 | — | 150,101 | — | |||||||||||||||
Total assets | $ | 397,476 | $ | 93,076 | $ | 304,400 | $ | — | |||||||||||
Acquisition-related liabilities, current | $ | (644 | ) | $ | — | $ | — | $ | (644 | ) | |||||||||
Total liabilities | $ | (644 | ) | $ | — | $ | — | $ | (644 | ) | |||||||||
Contingent Consideration Liability | |||||||||||||||||||
The fair value of contingent consideration liabilities assumed by a business combination is determined using a discounted cash flow model, the significant inputs of which are not observable in the market. The fair value of such contingent considerations is recorded as part of the purchase consideration of the acquisition. The key assumptions in applying this approach are the revenue projections, the interest rate and the probabilities assigned to the milestones being achieved. For those contingent consideration arrangements assumed by an asset purchase will be measured and accrued when contingency is resolved. | |||||||||||||||||||
The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3): | |||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
(in thousands) | 2015 | 2014 | |||||||||||||||||
Fair value measurement at beginning of period | $ | 644 | $ | 1,212 | |||||||||||||||
Change in fair value measurement included in operating expenses | (36 | ) | — | ||||||||||||||||
Contingent consideration paid or settled | (608 | ) | (608 | ) | |||||||||||||||
Fair value measurement at end of period | $ | — | $ | 604 | |||||||||||||||
The payments made during the three months ended March 31, 2015 and 2014 were related to an immaterial business combination completed in 2012. | |||||||||||||||||||
Non-financial assets and liabilities measured on a nonrecurring basis | |||||||||||||||||||
Certain non-financial assets and liabilities are measured at fair value, usually with Level 3 inputs including discounted cash flow method or cost method, on a nonrecurring basis in accordance with authoritative guidance. In general, non-financial assets, including intangible assets and property and equipment, are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. | |||||||||||||||||||
The Company exited its New Jersey property and made a decision to terminate the respective lease. Based on management’s assessment, during the three months ended March 31, 2015 and March 31, 2014, the Company recognized impairment charges of $0.9 million and $2.2 million, respectively, in leasehold improvement write-offs associated with the lease termination. | |||||||||||||||||||
See Note 1 to the Consolidated Financial Statements included in this Quarterly Report for further discussion on impairment analysis and leasehold related charges. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | |||||||||||||||
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets | ||||||||||||||
Goodwill and intangible assets consisted of the following: | |||||||||||||||
Weighted- | |||||||||||||||
Average | |||||||||||||||
Amortization | |||||||||||||||
(in thousands, except years) | Period | Gross | Accumulated | Intangible | |||||||||||
March 31, 2015: | (in years) | Amount | Amortization | Assets, net | |||||||||||
Intangible assets subject to amortization: | |||||||||||||||
Developed technology | 9 | $ | 79,008 | $ | (30,045 | ) | $ | 48,963 | |||||||
Manufacturing know-how and trade secrets | 12 | 21,783 | (12,008 | ) | 9,775 | ||||||||||
Trade name and trademarks | 11 | 9,500 | (4,468 | ) | 5,032 | ||||||||||
Customer relationships | 8 | 43,120 | (24,890 | ) | 18,230 | ||||||||||
Total intangible assets subject to amortization | 10 | $ | 153,411 | $ | (71,411 | ) | $ | 82,000 | |||||||
Intangible assets not subject to amortization: | |||||||||||||||
In-process research and development | $ | 10,640 | |||||||||||||
Goodwill | $ | 154,273 | |||||||||||||
Weighted- | |||||||||||||||
Average | |||||||||||||||
Amortization | |||||||||||||||
Period | Gross | Accumulated | Intangible | ||||||||||||
December 31, 2014: | (in years) | Amount | Amortization | Assets, net | |||||||||||
Intangible assets subject to amortization: | |||||||||||||||
Developed technology | 9 | $ | 79,008 | $ | (27,760 | ) | $ | 51,248 | |||||||
Manufacturing know-how and trade secrets | 12 | 21,879 | (11,640 | ) | 10,239 | ||||||||||
Trade name and trademarks | 11 | 9,500 | (4,264 | ) | 5,236 | ||||||||||
Customer relationships | 8 | 43,153 | (23,961 | ) | 19,192 | ||||||||||
Total intangible assets subject to amortization | 10 | $ | 153,540 | $ | (67,625 | ) | $ | 85,915 | |||||||
Intangible assets not subject to amortization: | |||||||||||||||
In-process research and development | $ | 10,640 | |||||||||||||
Goodwill | $ | 154,443 | |||||||||||||
Total expense related to the amortization of intangible assets was $3.9 million and $4.0 million for the three months ended March 31, 2015 and March 31, 2014, respectively. Intangible assets acquired in a business combination that are used for in-process research and development activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon reaching the end of the relevant research and development project, the Company will amortize the acquired in-process research and development over its estimated useful life or expense the acquired in-process research and development should the research and development project be unsuccessful with no future alternative use. | |||||||||||||||
The Company made a payment of $27.4 million during the three months ended March 31, 2015 associated with the intangible assets which were accrued for as of December 31, 2014 in accounts payable and accrued liabilities. | |||||||||||||||
Total future amortization expense related to intangible assets subject to amortization at March 31, 2015 is set forth in the table below: | |||||||||||||||
(in thousands) | |||||||||||||||
Remaining 2015 | $ | 11,363 | |||||||||||||
2016 | 14,802 | ||||||||||||||
2017 | 12,455 | ||||||||||||||
2018 | 11,432 | ||||||||||||||
2019 | 10,078 | ||||||||||||||
2020 | 9,666 | ||||||||||||||
Thereafter through 2027 | 12,204 | ||||||||||||||
Total future amortization expense | $ | 82,000 | |||||||||||||
Business_Combinations
Business Combinations | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Business Combination Description [Abstract] | |||||||||
Business Combinations | 5. Business Combinations | ||||||||
The Company has completed acquisitions that were not considered individually or collectively material to the overall Consolidated Financial Statements and/or the results of the Company’s operations. These acquisitions have been included in the Consolidated Financial Statements from the respective dates of the acquisitions. The Company recognizes the assets acquired, liabilities assumed, and any non-controlling interest at fair value at the date of acquisition. Certain acquisitions contained contingent consideration arrangements that required the Company to assess the acquisition date fair value of the contingent consideration liabilities, which was recorded as part of the purchase consideration of the acquisition with subsequent fair value adjustments to the contingent consideration reflected in the line items of the Consolidated Statements of Operations commensurate with the nature of the contingent consideration. | |||||||||
Investment in Progentix Orthobiology B.V. | |||||||||
In 2009, the Company completed the purchase of 40% of the capital stock of Progentix Orthobiology B.V. (“Progentix”), a company organized under the laws of the Netherlands, from existing shareholders (the Progentix Shareholders) pursuant to a Preferred Stock Purchase Agreement for $10.0 million in cash (the Initial Investment). As of March 31, 2015, NuVasive has loaned Progentix cumulatively $5.3 million at an interest at a rate of 6% per year. NuVasive is not obligated to provide additional funding. | |||||||||
Concurrently with the Preferred Stock Purchase Agreement, NuVasive, Progentix and the Progentix Shareholders entered into an Option Purchase Agreement (as amended the “Option Agreement”), whereby NuVasive was obligated under certain circumstances, and had the option under other circumstances, to purchase the remaining 60% of capital stock of Progentix (the “Remaining Shares”) from its shareholders for an amount up to $35.0 million, subject to certain reductions. The Option Agreement expired unexercised in 2013. Also, concurrently with the Preferred Stock Purchase Agreement, NuVasive and Progentix entered into a Distribution Agreement, as amended, whereby Progentix appointed NuVasive as its exclusive distributor for certain Progentix products. The Distribution Agreement is in effect for a term of ten years unless terminated earlier in accordance with its terms. | |||||||||
In accordance with authoritative guidance, the Company has determined that Progentix is a variable interest entity, (“VIE”) as it does not have the ability to finance its activities without additional subordinated financial support and its equity investors will not absorb their proportionate share of expected losses and will be limited in the receipt of the potential residual returns of Progentix. Additionally, pursuant to this guidance, NuVasive is considered a primary beneficiary as NuVasive has both the power to direct the economically significant activities of Progentix and the obligation to absorb losses of, or the right to receive benefits from, Progentix. Accordingly, the financial position and results of operations of Progentix have been included in the Company’s consolidated financial statements from the date of the Initial Investment. The liabilities recognized as a result of consolidating Progentix do not represent additional claims on the Company’s general assets. The creditors of Progentix have claims only on the assets of Progentix, which are not material, and the assets of Progentix are not available to NuVasive. | |||||||||
The equity interests in Progentix not owned by the Company, which includes shares of both common and preferred stock, are reported as non-controlling interests on the consolidated balance sheet of the Company. The preferred stock represents 18% of the non-controlling equity interests and provides for a cumulative 8% dividend, if and when declared by Progentix’s Board of Directors. As the rights of the preferred stock are substantially the same as those of the common stock, the preferred stock is classified as non-controlling interest and shares in the allocation of the losses incurred by Progentix. Losses incurred by Progentix are charged to the Company and to the non-controlling interest holders based on their ownership percentage. | |||||||||
Total assets and liabilities of Progentix included in the accompanying Consolidated Balance Sheet are as follows: | |||||||||
(in thousands) | 31-Mar-15 | 31-Dec-14 | |||||||
Total current assets | $ | 639 | $ | 839 | |||||
Identifiable intangible assets, net | 13,819 | 13,935 | |||||||
Goodwill | 12,654 | 12,654 | |||||||
Other long-term assets | 1 | 1 | |||||||
Accounts payable and accrued expenses | 453 | 542 | |||||||
Deferred tax liabilities, net | 2,770 | 2,770 | |||||||
Non-controlling interests | 8,147 | 8,310 | |||||||
The following is a reconciliation of equity (net assets) attributable to the non-controlling interests: | |||||||||
Three Months Ended March 31, | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Non-controlling interests at beginning of period | $ | 8,310 | $ | 9,086 | |||||
Less: Net loss attributable to the non-controlling interests | 163 | 257 | |||||||
Non-controlling interests at end of period | $ | 8,147 | $ | 8,829 | |||||
Impulse Monitoring Inc. and Physician Practices | |||||||||
The Company maintains contractual relationships with several physician practices (“PCs”) which were inherited through the 2011 acquisition of Impulse Monitoring Inc. Under the respective contracts’ terms, respective PCs provide physician oversight services associated with the IOM service offerings. The Company provides management services to these PCs including all non-medical services, management reporting, billing and collections of all charges for medical services provided as well as administrative support. In turn, the PCs pay the Company a monthly management fee for these services. In accordance with authoritative guidance, the Company has determined that the PCs are VIEs and the Company has controlling financial interests in the PCs as it has both the power to direct the economically significant activities of the PCs, and the obligation to absorb losses of, or the right to receive benefits from, the PCs. Therefore, the accompanying Consolidated Financial Statements include the accounts of the PCs from the date of acquisition. During the periods presented, the result of PCs was immaterial to our financials. The creditors of the PCs have claims only on the assets of the PCs, which are not material, and the assets of the PCs are not available to the Company. |
Senior_Convertible_Notes
Senior Convertible Notes | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Senior Convertible Notes | 6. Senior Convertible Notes | ||||||||
The carrying values of the Company’s Senior Convertible Notes are as follows: | |||||||||
(in thousands) | 31-Mar-15 | 31-Dec-14 | |||||||
2.75% Senior Convertible Notes due 2017: | |||||||||
Principal amount | $ | 402,500 | $ | 402,500 | |||||
Unamortized debt discount | (37,912 | ) | (41,754 | ) | |||||
Total Senior Convertible Notes | $ | 364,588 | $ | 360,746 | |||||
2.75% Senior Convertible Notes due 2017 | |||||||||
In June 2011, the Company issued $402.5 million principal amount of Senior Convertible Notes with a stated interest rate of 2.75% and a maturity date of July 1, 2017 (the “2017 Notes”). The net proceeds from the offering, after deducting initial purchasers’ discounts and costs directly related to the offering, were approximately $359.2 million. The 2017 Notes may be settled in cash, stock, or a combination thereof, solely at the Company’s discretion. It is the Company’s current intent and policy to settle all conversions through combination settlement, which involves satisfying the principal amount outstanding with cash and any note conversion value over the principal amount in shares of the Company’s common stock. The initial conversion rate of the 2017 Notes is 23.7344 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $42.13 per share, subject to adjustments. The Company also entered into transactions for convertible note hedge (the “2017 Hedge”) and warrants (the “2017 Warrants”) concurrently with the issuance of the 2017 Notes. | |||||||||
The cash conversion feature of the 2017 Notes (the “Embedded Conversion Derivative”) required bifurcation from the 2017 Notes and was initially accounted for as a derivative liability and debt discount of $88.9 million upon issuance of the 2017 Notes without authorization of issuing additional common stock for the conversion. Upon obtaining stockholder approval for the additional authorized shares of the Company’s common stock, the derivative liability was reclassified to stockholders’ equity, which resulted in recognizing cumulatively $39.5 million in other income for change in fair value measurement and $49.4 million in additional paid-in-capital during 2011. The debt discount of $88.9 million is recognized as interest expense using an effective interest rate of 8.0% over the term of the 2017 Notes. The interest expense recognized on the 2017 Notes during the three months ended March 31, 2015 includes $2.8 million and $3.8 million for the contractual coupon interest and the accretion of the debt discount, respectively. The interest expense recognized on the 2017 Notes during the three months ended March 31, 2014 includes $2.8 million and $3.6 million for the contractual coupon interest and the accretion of the debt discount, respectively. Interest on the 2017 Notes began accruing upon issuance and is payable semi-annually. The Company uses the treasury share method for assumed conversion of the 2017 Notes to compute the weighted average common shares outstanding for diluted earnings per share. | |||||||||
Prior to January 1, 2017, holders may convert their 2017 Notes only under the following conditions: (a) during any calendar quarter beginning October 1, 2011, if the reported sale price of the Company’s common stock for at least 20 days out of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (b) during the five business day period in which the trading price of the 2017 Notes falls below 98% of the product of (i) the last reported sale price of the Company’s common stock and (ii) the conversion rate on that date; and (c) upon the occurrence of specified corporate events, as defined in the 2017 Notes. From January 1, 2017 and until the close of business on the second scheduled trading day immediately preceding July 1, 2017, holders may convert their 2017 Notes at any time (regardless of the foregoing circumstances). The Company may not redeem the 2017 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the 2017 Notes do not contain any financial covenants and do not restrict the Company from paying dividends or issuing or repurchasing any of its other securities. | |||||||||
2017 Hedge | |||||||||
In connection with the offering of the 2017 Notes, the Company entered into the 2017 Hedge with the initial purchasers and/or their affiliates (the “2017 Counterparties”) entitling the Company to purchase up to 9,553,096 shares of the Company’s common stock at an initial stock price of $42.13 per share, each of which is subject to adjustment. The cost of the 2017 Hedge was $80.1 million and accounted for as derivative assets upon issuance of the 2017 Notes. Upon obtaining stockholder approval for the additional authorized shares of the Company’s common stock, the derivative asset was reclassified to stockholders’ equity, resulted in recognizing cumulatively $37.1 million in other expense for the change in fair value measurement and $43.0 million in additional paid-in-capital during 2011. The 2017 Hedge will expire on July 1, 2017. The 2017 Hedge is expected to reduce the potential equity dilution upon conversion of the 2017 Notes if the daily volume-weighted average price per share of the Company’s common stock exceeds the strike price of the 2017 Hedge. An assumed exercise of the 2017 Hedge by the Company is considered anti-dilutive since the effect of inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. | |||||||||
2017 Warrant | |||||||||
The Company sold warrants to the 2017 Counterparties to acquire up to 477,654 shares of the Company’s Series A Participating Preferred Stock at an initial strike price of $988.51 per share, subject to adjustment. Each share of Series A Participating Preferred Stock is convertible into 20 shares of the Company’s common stock, or up to 9,553,080 common shares in total. The 2017 Warrants will expire on various dates from September 2017 through January 2018 and may be settled in cash or net shares. It is the Company’s current intent and policy to settle all conversions in shares of the Company’s common stock. The Company received $47.9 million in cash proceeds from the sale of the 2017 Warrants, which was recorded in additional paid-in-capital. The 2017 Warrants could have a dilutive effect on the Company’s earnings per share to the extent that the price of the Company’s common stock during a given measurement period exceeds the strike price of the 2017 Warrants. The Company uses the treasury share method for assumed conversion of its 2017 Warrants to compute the weighted average common shares outstanding for diluted earnings per share. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||||||||
Stock-Based Compensation | 7. Stock-Based Compensation | ||||||||
The Company estimates the fair value of stock options and shares issued to shareowners under the NuVasive, Inc. 2004 Amended and Restated Employee Stock Purchase Plan (the “ESPP”) using a Black-Scholes option-pricing model on the date of grant. The Black-Scholes option-pricing model incorporates various and highly sensitive assumptions including expected volatility, expected term and risk-free interest rates. The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options and ESPP which is derived from historical experience. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. The fair value of restricted stock units (“RSUs”) including performance RSU (“PRSUs”) with pre-defined performance criteria is based on the stock price on the date of grant whereas the expense for PRSU with pre-defined performance criteria is adjusted with probability of achievements at each period end. The fair value of the PRSUs that are earned based on the achievement of pre-defined market conditions for total shareholder return (“TSR PRSUs”) is estimated on the date of grant using a Monte Carlo valuation model. The key assumptions in applying this model are an expected volatility and a risk free interest rate. The fair value of equity instruments that are expected to vest are recognized and amortized on an accelerated basis over the requisite service period. | |||||||||
The Company is required to estimate at the grant date the value of awards that are anticipated to be forfeited prior to their vesting, and thereafter, adjusts the forfeiture rate estimates as necessary through the vesting date so that full compensation cost is recognized only for awards that vest. The Company assesses the reasonableness of the estimated forfeiture rate at least annually, with any change to be made on a cumulative basis in the period the estimated forfeiture rates change. The Company considered its historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners as the basis to arrive at its estimated annual pre-vesting forfeiture rates for RSUs. | |||||||||
The compensation cost that has been included in the Consolidated Statements of Operations for all stock-based compensation arrangements was as follows: | |||||||||
Three Months Ended March 31, | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Sales, marketing and administrative expense | $ | 7,277 | $ | 7,186 | |||||
Research and development expense | 259 | 465 | |||||||
Cost of goods sold | 75 | 113 | |||||||
Stock-based compensation expense before taxes | 7,611 | 7,764 | |||||||
Related income tax benefits | (3,044 | ) | (3,106 | ) | |||||
Stock-based compensation expense, net of taxes | $ | 4,567 | $ | 4,658 | |||||
At March 31, 2015, there was $30.7 million of unamortized compensation expense for stock options, restricted stock units and performance-based restricted stock units to be recognized over a weighted average period of 2.1 years. | |||||||||
Stock Options and Purchase Rights | |||||||||
The weighted average assumptions used to estimate the fair value of stock purchase rights under the ESPP are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
ESPP | |||||||||
Volatility | 44 | % | 47 | % | |||||
Expected term (years) | 1.4 | 1.1 | |||||||
Risk free interest rate | 0.2 | % | 0.2 | % | |||||
Expected dividend yield | — | % | — | % | |||||
Under the terms of ESPP, employees can elect to have up to 15% of their annual compensation, up to a maximum of $21,250 per year withheld to purchase shares of NuVasive common stock at a discount. The purchase price of the common stock is equal to 85% of the lower of the fair market value per share of the common stock on the commencement date of the two-year or six-month offering period (depending on the purchase period enrolled) or the end of each semi-annual purchase period. The Company has not granted any options since 2011. | |||||||||
The Company issued approximately 692,000 shares of common stock, before net share settlement, upon the exercise of outstanding stock options during the three months ended March 31, 2015 and approximately 1,030,000 shares of common stock upon the exercise of outstanding stock options during the year ended December 31, 2014. | |||||||||
Restricted Stock Units | |||||||||
RSUs represent a right to receive shares of common stock at a future date determined in accordance with the terms and conditions of a participant’s award agreement (issued under either our 2004 Amended and Restated Equity Incentive Plan (as previously amended “the 2004 EIP”) or the 2014 Equity Incentive Plan of NuVasive, Inc. (the “2014 EIP”)). No exercise price or other monetary payment is required for receipt of RSUs or the shares issued in settlement of the respective award; instead, consideration is furnished in the form of the participant’s service to the Company. The Company has granted time-based RSUs with graded vesting terms of up to four years. The Company has also granted PRSUs with up to three year graded or cliff vesting terms (in each case, with service through the date of vesting being required) and for which the ultimate issuance amount is determined by the Company’s Compensation Committee upon its certification of Company performance against a pre-determined matrix, including revenue targets, total shareholder return, or earnings per share over pre-determined periods of time. Share payout levels range from 0 to 250% depending on the respective terms of an award. | |||||||||
The Company issued approximately 1,291,000 shares of common stock, before net share settlement, upon vesting of RSUs (including PRSUs) during the three months ended March 31, 2015, and issued approximately 1,361,000 shares of common stock in settlement of RSUs (including PRSUs) upon their vesting during the year ended December 31, 2014. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes |
The Company recorded an income tax expense of $17.9 million for the three months ended March 31, 2015 and an income tax benefit of $15.1 million for the three months ended March 31, 2014. The effective income tax rate for the three months ended March 31, 2015 was 36% and reflects a negative impact from our globalization initiative project, change in mix of earnings between high tax and low tax jurisdictions, reduced by an unexpected benefit relating to executive stock-based compensation. The effective income tax rate for the three months ended March 31, 2014 was 45% and reflected a negative impact from our globalization initiative project and non-deductible expenses primarily relating to stock-based compensation. The globalization initiative which started during 2013 and became effective in January 2014 involved establishing new international operations and entering into new intercompany transfer pricing arrangements, including the licensing of intangibles. As part of the initiative the Company expects a negative impact on the tax rate in the implementation years with longer term benefits as international operations expand. | |
In accordance with the disclosure requirements as described in ASC Topic 740, Income Taxes, the Company has classified unrecognized tax benefits as non-current income tax liabilities, or a reduction in non-current deferred tax assets, unless expected to be paid within one year. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. There were no material changes to the Company’s unrecognized tax benefits and interest accrued related to unrecognized tax benefits during the three months ended March 31, 2015 and 2014. |
Business_Segment_Product_and_G
Business Segment, Product, and Geographic Information | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
Business Segment, Product and Geographic Information | 9. Business Segment, Product and Geographic Information | ||||||||||||||||
The Company operates in one segment based upon the Company’s organizational structure, the way in which the operations are managed and evaluated by the chief operating decision maker (“CODM”) and the lack of availability of discrete financial information. The Company’s CODM reviews revenue at the product line offering level, and manufacturing, operating income and expenses, and net income at the Company wide level to allocate resources and assess the Company’s overall performance. The Company shares common, centralized support functions, including finance, human resources, legal, information technology, and corporate marketing, all of which report directly to the CODM. Accordingly, decisions regarding the Company’s overall operating performance and allocation of Company resources are assessed on a consolidated basis. The Company believes it is appropriate to operate as one reporting segment. The Company has disclosed the revenues for each of its product line offerings to allow the reader of the financial statements the ability to gain some transparency into the operations of the Company. | |||||||||||||||||
The Company operates under two distinct product line offerings for revenue; spine surgery products, and biologics. The Company’s spine surgery products line offerings, which include thoracolumbar product offerings, cervical product offerings, IOM services, and disposables, are primarily used to enable access to the spine and to perform restorative and fusion procedures in a minimally-disruptive fashion. The Company’s biologics product line offerings includes allograft (donated human tissue), FormaGraft (a collagen synthetic product), Osteocel Plus and Osteocel Pro (each an allograft cellular matrix containing viable mesenchymal stem cells, or MSCs), and AttraX (a synthetic bone graft material), all of which are used to aid the spinal fusion or bone healing process. | |||||||||||||||||
Revenue by product line offerings was as follows: | |||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
(in thousands) | 2015 | 2014 | |||||||||||||||
Spine surgery products | $ | 159,054 | $ | 148,007 | |||||||||||||
Biologics | 33,329 | 29,489 | |||||||||||||||
Total Revenue | $ | 192,383 | $ | 177,496 | |||||||||||||
Revenue and property and equipment, net, by geographic area were as follows: | |||||||||||||||||
Revenue | Property and Equipment, Net | ||||||||||||||||
Three Months Ended March 31, | March 31, | December 31, | |||||||||||||||
(in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
United States | $ | 169,926 | $ | 158,394 | $ | 116,229 | $ | 105,022 | |||||||||
International (excludes Puerto Rico) | 22,457 | 19,102 | 23,312 | 23,543 | |||||||||||||
Total | $ | 192,383 | $ | 177,496 | $ | 139,541 | $ | 128,565 | |||||||||
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments | 10. Commitments |
Licensing and Purchasing Agreements | |
As of March 31, 2015, the Company has obligations under certain consultancy arrangements to pay up to approximately $22.7 million in the aggregate in the event that specified revenue-based milestones are achieved prior to 2024. Any such payment will be made in a combination of cash and the Company’s common shares as provided in the agreements. Any payments in satisfaction of theses contingent obligations are considered a cost of goods sold and are recognized as and if milestones are achieved. In early 2014, the Company paid $6.2 million in aggregate – $3.0 million in cash and $3.2 million in common shares - in connection with these agreements. There was no accrual recognized as of March 31, 2015 and December 31, 2014 related to these payments. | |
Executive Severance Plans | |
The Company is party to certain agreements with its key executives that provide for certain payments if an executive is terminated for reasons other than cause, as defined in those agreements. At March 31, 2015, future contractual commitments for such key executives were approximately $15.3 million, excluding the acceleration of equity vesting, which is called for in certain circumstances by the applicable agreements. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Contingencies [Abstract] | |
Contingencies | 11. Contingencies |
The Company is subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted from time-to-time. These matters arise in the ordinary course and conduct of the Company’s business and include, for example, commercial, intellectual property, environmental, securities and employment matters. The Company intends to continue to defend itself vigorously in such matters. Furthermore, the Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. During the period ended March 31, 2015, the Company had a litigation accrual change gain of $56.4 million related to the legal proceedings in the Medtronic Sofamor Danek USA, Inc. litigation whereby the damages award by the jury was overturned. Refer to the subsequent section herein titled “Legal Proceedings” for further information. | |
An estimated loss contingency is accrued in the Company’s financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable or that it considers immaterial to its overall financial position. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. | |
Legal Proceedings | |
Medtronic Sofamor Danek USA, Inc. Litigation | |
In August 2008, Warsaw Orthopedic, Inc., Medtronic Sofamor Danek USA, Inc. and other Medtronic related entities (collectively, “Medtronic”) filed a patent infringement lawsuit against the Company in the United States District Court for the Southern District of California (the “Medtronic Litigation”), alleging that certain of the Company’s products or methods, including the XLIF® procedure, infringe, or contribute to the infringement of, twelve U.S. patents assigned or licensed to Medtronic. Three of the patents were later withdrawn by Medtronic, leaving nine purportedly infringed patents. The Company brought counterclaims against Medtronic alleging infringement of certain of the Company’s patents. | |
The case has been administratively broken into several phases. | |
The first phase of the case included three Medtronic patents and one Company patent. The initial trial on the first phase of the case concluded on September 20, 2011 and a jury delivered an unfavorable verdict against the Company with respect to the three Medtronic patents and a favorable verdict with respect to the one Company patent at hand, including a monetary damages award of approximately $101.2 million to Medtronic (the “2011 verdict”). Medtronic’s subsequent motion for a permanent injunction was denied by the District Court on January 26, 2012. On March 19, 2012, the District Court issued an order granting prejudgment interest with respect to the patent infringements determined in the 2011 verdict. On May 15, 2013, the District Court granted the parties’ joint motion to dismiss claims relating to one of the three Medtronic patents pursuant to a settlement agreement. On June 11, 2013, the District Court granted the parties ongoing royalties with respect to the two Medtronic patents and the one Company patent remaining in the first phase of the case (the “June 2013 ruling”). | |
On August 20, 2013, the Company and Medtronic filed their respective notices of appeal to the U.S. Court of Appeals for the Federal Circuit. On March 2, 2015, the Court of Appeals issued a decision upholding the jury’s findings of liability as to all patents, but overturning the damage award against the Company as improper (“March 2nd Court of Appeals Decision”). The case has been transferred back to the District Court for further proceedings to determine a proper damage award, and no trial date has been set. As a result of the affirmation of the infringement and remand for a new trial on damages, the Company assessed the existing liability under the loss contingency framework and – in accordance with applicable accounting guidance – believes the most appropriate accrual estimate within the possible range dictated by such guidance is $87.4 million. This amount represents a liability for the infringement of patents for infringing products at historically supplied rates from the date of infringement to the current period. The liability does not include an accrual for lost profits or convoyed products. A liability associated with this matter has been recorded in non-current litigation liabilities. In prior periods, the Company recorded the respective liabilities (as estimated) in non-current litigation liabilities and the accrued royalties in accrued liabilities. The Company does not agree with the previously-ruled royalty rates, and intends to rigorously pursue appropriate rates during the new trial on damages. Nonetheless, in the interim, the Company has applied the previously-ruled royalty rates when calculating the appropriate estimate. As a result of the adjustment, the Company has recorded an adjustment of $56.4 million as a gain in its Consolidated Statements of Operations. | |
On March 19, 2012, in connection with these proceedings, the Company entered into an escrow arrangement and transferred $113.3 million of cash into a restricted escrow account to secure the amount of judgment, plus prejudgment interest, during pendency of the appeal. These funds are included in restricted cash and investments on the Company’s March 31, 2015 Consolidated Balance Sheet. | |
In accordance with the authoritative guidance on the evaluation of loss contingencies, during the year ended December 31, 2011, the Company recorded an accrual of $101.2 million for the 2011 verdict. In addition, the Company accrued royalties at the royalty rates stated in the 2011 verdict on sales subsequent to the 2011 verdict and through March 31, 2013. After the June 2013 ruling, the Company (i) began accruing ongoing royalties on sales at the royalty rates stated in the June 2013 ruling, and (ii) recorded a charge of approximately $7.9 million to account for the difference between using the royalty rates stated in the 2011 verdict and those in the June 2013 ruling on sales through March 31, 2013. Based on the June 2013 ruling, the Company agreed to escrow funds to secure accrued royalties as well as future ongoing royalties. However, in light of the Court of Appeals ruling, absent a court order the Company will no longer escrow such funds until damages are ultimately determined. Additionally, the Company has modified its accrual from the 2011 verdict as a result of the March 2, 2015 Court of Appeals ruling as previously discussed. | |
With respect to the favorable verdict delivered regarding the one Company patent litigated to verdict, the jury awarded the Company monetary damages of approximately $0.7 million for reasonable royalty damages. In accordance with the authoritative guidance on the evaluation of gain contingencies, this amount has not been recorded at March 31, 2015. Additionally, the June 2013 ruling determined the ongoing royalty rate to be paid to the Company by Medtronic for its post-verdict sales of the one Company patent. Consistent with the treatment afforded the $0.7 million damage award, no amount has been recorded for royalty revenue as of March 31, 2015. | |
The second phase of the case involved one Medtronic cervical plate patent. On April 25, 2013, the Company and Medtronic entered into a settlement agreement fully resolving the second phase of the case. The settlement also removed from the case the cervical plate patent that was part of the first phase. As part of the settlement, the Company received a broad license to practice (i) the Medtronic patent that was the sole subject of the second phase of the litigation, (ii) the Medtronic cervical plate patent that was part of the first phase of the litigation, and (iii) each of the Medtronic patent families that collectively represent the vast majority of Medtronic’s patent rights related to cervical plate technology. In exchange for these license rights, the Company made a one-time payment to Medtronic of $7.5 million, which amount will be fully offset against any damage award ultimately determined to be owed by the Company in connection with a final resolution of the first phase of the litigation. In addition, Medtronic will receive a royalty on certain cervical plate products sold by the Company, including the Helix® and Gradient® lines of products. As a result of this settlement, all current patent disputes between the parties related to cervical plate technology have been resolved. | |
In August 2012, Medtronic filed additional patent claims in the U.S. District Court for the Northern District of Indiana alleging that various Company spinal implants (including its CoRoent® XL family of spinal implants) infringe Medtronic’s U.S. Patent No. 8,021,430, that the Company’s Osteocel® Plus bone graft product infringes Medtronic’s U.S. Patent No. 5,676,146, (‘146 Patent) and that the Company’s XLIF® procedure and use of MaXcess IV retractor during the XLIF procedure infringe methodology claims of Medtronic’s U.S. Patent No. 8,251,997. The case, which is referred to herein as the third phase of the Medtronic litigation, was later transferred to the Southern District of California, and, on March 7, 2013, the Company counterclaimed alleging infringement by Medtronic of the Company’s U.S. Patent Nos. 8,000,782 (systems and related methods for performing surgical procedures), 8,005,535 (systems and related methods for performing surgical procedures), 8,016,767 (a surgical access system including a tissue distraction assembly and a tissue retraction assembly), 8,192,356 (a system for accessing a surgical target site and related methods, involving an initial distraction system, among other things), 8,187,334 (spinal fusion implant), 8,361,156 (spinal fusion implant), D652,922 (dilator design), and D666,294 (dilator design). On July 25, 2013, Medtronic amended its complaint to add a charge of infringement of its U.S. Patent No. 8,444,696. The District Court has stayed litigation of a number of Medtronic and Company patents currently subject to reexamination or review proceedings conducted by the Patent Office. Both parties brought motions for summary judgment addressing the remaining patents, Medtronic’s ‘146 Patent and the Company’s ‘922 Patent but the District Court has not yet issued a final decision regarding summary judgment. No trial date has been set in this third phase of the litigation for the ‘146 Patent or ‘922 Patent. At March 31, 2015, the probable outcome of this litigation cannot be determined, nor can the Company estimate a range of potential loss. In accordance with the authoritative guidance on the evaluation of loss contingencies, the Company has not recorded an accrual related to this litigation. | |
Trademark Infringement Litigation | |
On September 25, 2009, Neurovision Medical Products, Inc. (NMP) filed suit against the Company in the U.S. District Court for the Central District of California (Case No. 2:09-cv-06988-R-JEM) alleging trademark infringement and unfair competition. NMP sought cancellation of NuVasive’s “NeuroVision” trademark registrations, injunctive relief and damages based on NMP’s common law use of the “NeuroVision” mark. The matter was tried in October 2010 and an unfavorable jury verdict was delivered against the Company. The verdict awarded damages to NMP of $60.0 million, which was upheld in a January 2011 judgment ordered by the District Court. NuVasive appealed the judgment, and during pendency of the appeal, NuVasive was required to escrow funds totaling $62.5 million. In September 2012, the Court of Appeals reversed and vacated the District Court judgment and ordered the case back to the District Court for a new trial before a different judge. As a result, the full $62.5 million was released from escrow and returned to the Company. Retrial of the matter began on March 25, 2014, and on April 3, 2014, a jury returned a verdict in favor of NMP on its claims against the Company in the amount of $30.0 million. The Court affirmed the jury’s verdict, and on September 4, 2014, the Company filed a notice of appeal. The Court entered judgment and ordered a permanent injunction on September 24, 2014, enjoining the Company’s future use of the NeuroVision trademark to market or promote its products. The Court also entered an order canceling the Company’s NeuroVision trademark registrations, but that order is stayed pending the appeal process. On December 2, 2014, the Court denied NMP’s motion for attorneys’ fees, costs, and prejudgment interest, and NMP filed a notice of appeal on December 17, 2014. The appeals were consolidated on February 2, 2015, and resolution of the appeals may take up to two years. During pendency of the appeal, the Company escrowed funds totaling $32.5 million to secure the amount of judgment, and cover potential attorney’s fees and costs. Those funds accrue interest and are included in restricted cash and investments in the Consolidated Balance Sheets. At March 31, 2015 the jury verdict represents a probable loss that can reasonably be determined. Accordingly, in accordance with the authoritative guidance on the evaluation of loss contingencies, the Company has a litigation accrual of $30.0 million related to this litigation at period end, which was reclassified from current liabilities to long-term liabilities to coincide with the establishment of restricted assets during the three months ended March 31, 2015. | |
Securities Litigation | |
On August 28, 2013, a purported securities class action lawsuit was filed in the United States District Court for the Southern District of California naming the Company and certain of its current and former executive officers for allegedly making false and materially misleading statements regarding the Company’s business and financial results, specifically relating to the purported improper submission of false claims to Medicare and Medicaid. The complaint asserts a putative class period stemming from October 22, 2008 to July 30, 2013. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder and seeks unspecified monetary relief, interest, and attorneys’ fees. On February 13, 2014, the lead plaintiff (“Plaintiff”) filed an Amended Class Action Complaint for Violations of the Federal Securities Laws. In March 2014, the Company filed a motion to dismiss the Amended Class Action Complaint for Violations of the Federal Securities Laws. On August 19, 2014, the Court granted the Company’s motion to dismiss and ordered Plaintiff to amend its complaint. Plaintiff filed a Second Amended Complaint on September 8, 2014. The Company once again moved to dismiss the complaint on September 22, 2014 and that motion was granted on December 9, 2014. On December 23, 2014 Plaintiff filed a Third Amended Complaint. The Company filed a motion to dismiss the Third Amended Complaint on January 9, 2015. While the Company’s motion was pending, Plaintiff sought leave to file a Fourth Amended Complaint. The Company moved to dismiss the Fourth Amended Complaint and the motion is pending. At March 31, 2015, the probable outcome of this litigation cannot be determined, nor can the Company estimate a range of potential loss. In accordance with authoritative guidance on the evaluation of loss contingencies, the Company has not recorded an accrual related to this litigation. |
Regulatory_Matter
Regulatory Matter | 3 Months Ended |
Mar. 31, 2015 | |
Regulatory Matter [Abstract] | |
Regulatory Matter | 12. Regulatory Matter |
In 2013, the Company received a federal administrative subpoena from the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG) in connection with an investigation into possible false or otherwise improper claims submitted to Medicare and Medicaid. The subpoena sought discovery of documents for the period January 2007 through April 2013. The Company has been working with the OIG to understand the scope of their investigation and has reached an agreement in principle with the U.S. Department of Justice (“DOJ”), as further detailed in the Company’s Current Report on Form 8-K filed with the SEC on April 30, 2015. Subject to completion of a written settlement agreement, the Company has agreed to pay $13.8 million to resolve this matter. The Company does not currently anticipate entering into a corporate integrity agreement with the OIG as part of the settlement. Finalizing the written settlement agreement could take several months. In accordance with the authoritative guidance on the evaluation of loss contingencies, the Company recorded a $13.8 million liability related to this matter, which is included in the Consolidated Statements of Operations during the three months ending March 31, 2015. |
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business | Description of Business |
NuVasive, Inc. (the “Company” or “NuVasive”) was incorporated in Delaware on July 21, 1997, and began commercializing its products in 2001. The Company is focused on developing minimally-disruptive surgical products and procedurally-integrated solutions for the spine. NuVasive’s principal product offering includes a minimally-disruptive surgical platform called Maximum Access Surgery, or MAS®. The MAS platform combines three categories of solutions that collectively minimize soft tissue disruption during spine fusion surgery, provide maximum visualization and are designed to enable safe and reproducible outcomes for the surgeon and the patient. The platform includes proprietary software-driven nerve detection and avoidance systems, NVM5® and NVJJB®, and Intra-Operative Monitoring (“IOM”) services and support; MaXcess®, an integrated split-blade retractor system; and a wide variety of specialized implants and biologics. Many of the Company’s products, including the individual components of NuVasive’s MAS platform, can also be used in open or traditional spine surgery. The Company’s spine surgery product line offerings, which include thoracolumbar product offerings, cervical product offerings, IOM services, and disposables, are primarily used to enable access to the spine and to perform restorative and fusion procedures in a minimally-disruptive fashion. The Company’s biologic product line offerings used to aid the spinal fusion process or bone healing process include Osteocel® Plus and Osteocel Pro allograft (donated human tissue) which are cellular matrix products containing viable mesenchymal stem cells (“MSCs”), as well as other allograft offerings, FormaGraft®, a collagen synthetic product, and AttraX®, a synthetic bone graft material that is currently available commercially only in select markets outside of the United States. The Company continues to focus significant research and development efforts to expand its MAS product platform and advance the applications of its unique technology into procedurally-integrated surgical solutions. The Company has dedicated and continues to dedicate significant resources toward training spine surgeons around the world; both those who are new to its MAS product platform as well as previously MAS-trained surgeons attending advanced courses. | |
The Company’s primary business model is to loan its MAS systems to surgeons and hospitals who use such systems to perform individual procedures, with the hospitals purchasing implants, biologics and disposables in each such case. In addition, for larger customers, the Company’s proprietary nerve monitoring systems, MaXcess and surgical instrument sets are placed with hospitals for an extended period at no up-front cost to them, facilitating the hospital’s purchase of disposables for such machines from the Company. The Company also offers a range of bone allograft in patented saline packaging, disposables and spine implants, which include its branded CoRoent® products and fixation devices such as rods, plates and screws. The Company’s implants, biologics and disposables are currently sold and shipped from its primary distribution and warehousing operations facility located in Memphis, Tennessee. The Company sells MAS instrument sets, MaXcess devices and its proprietary software-driven nerve monitoring systems, however this does not make up a material part of its business. | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation |
The accompanying Unaudited Consolidated Financial Statements include the accounts of the Company and its majority-owned or controlled subsidiaries, collectively referred to as either NuVasive or the Company. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the respective parent entity, the Company records the fair value of the non-controlling interests at the acquisition date and classifies the amounts attributable to non-controlling interests separately in equity in the Company’s Consolidated Financial Statements. Any subsequent changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. All significant intercompany balances and transactions have been eliminated in consolidation. | |
The accompanying Unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for any other interim period or for the full year. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the Consolidated Financial Statements include all adjustments that are of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. | |
The Company has reclassified historically presented product offerings revenue to conform to the current year presentation. The reclassification had no impact on previously reported results of operations or financial position. | |
Change in Accounting Estimate | Change in Accounting Estimate |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Business Transition Costs | From time to-time, the Company incurs costs related to integration and business transition activities which include severance, relocation, consulting, and other costs directly associated to such activities. The nature of these costs is that of personnel costs that the Company believes arise and warrant specific disclosure. During the three months ended March 31, 2015, the Company incurred $5.4 million of such costs, which included a $3.4 million charge associated with the resignation of the Company’s former Chief Executive Officer and Chairman of the Board, Alex V. Lukianov. Such resignation occurred in the first quarter 2015 and was announced on April 1, 2015 via filing of a Current Report on Form 8-K with the SEC. The $3.4 million charge includes certain severance and compensation-related charges, net of certain forfeitures of previously recognized equity compensation. |
Restructuring Charges | Restructuring Charges |
The Company exited its New Jersey location and terminated the respective lease to reduce its footprint on the east coast of the United States as part of a company-wide efficiency effort in order to match its business needs without adversely impacting its ability to deliver surgeon education and local customer fulfillment. As a result of this undertaking, the Company recognized restructuring and associated impairment charges of $2.3 million during the three months ended March 31, 2015 in addition to the $6.4 million recognized during 2014. The restructuring and impairment charges mainly consist of the future rental payments through 2017, net with estimated future sublease income, and elimination of related leasehold improvements and deferred rent liabilities. These charges are recorded in sales, marketing and administrative expense in the Consolidated Statements of Operations. | |
As of March 31, 2015, the total recorded liability associated with this early lease termination was $4.9 million and consists of future rental payments net of estimated sublease income through 2017. The current portion of the liability is recorded within accounts payable and accrued liabilities and the long-term portion is recorded within other long-term liabilities in the Consolidated Balance Sheets at March 31, 2015. | |
Comprehensive Income (Loss) | Comprehensive Income (Loss) |
Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) includes unrealized gains or losses on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive income (loss) were a net cumulative loss of $11.7 million and $9.5 million at March 31, 2015 and December 31, 2014, respectively. | |
Long-Lived Assets | Long-Lived Assets |
Long-lived assets include surgical instruments, which are loaned to surgeons and hospitals who purchase implants, biologics and disposables for use in individual procedures, leasehold improvements, software, and intangible assets. The Company periodically re-evaluates the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of its long-lived assets. The criteria used for these evaluations include management’s estimate of the asset’s continuing ability to generate income from operations and positive cash flow in future periods as well as the strategic significance of any intangible asset to the Company’s business objectives. If assets are considered to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets, which is determined by applicable market prices when available or other methods by utilizing unobservable inputs including discounted cash flow models. See Note 3, Financial Instruments and Fair Value Measurements for further discussion. | |
Inventories | Inventories |
The Company’s inventory consists primarily of purchased finished goods which includes specialized implants and disposables, and is stated at the lower of cost or market determined by a weighted average cost method. The Company reviews the components of its inventory on a periodic basis for excess, obsolete or impaired inventory, and records a reserve for such identified items. The inventory reserve was $23.0 million and $22.7 million at March 31, 2015 and December 31, 2014, respectively. |
Net_Income_Loss_Per_Share_Tabl
Net Income (Loss) Per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings or (loss) per share attributable to the Company: | ||||||||
Three Months Ended March 31, | |||||||||
(in thousands, except per share data) | 2015 | 2014 | |||||||
Numerator: | |||||||||
Net income (loss) available to the Company | $ | 31,560 | $ | (18,276 | ) | ||||
Denominator for basic and diluted net (loss) income per share: | |||||||||
Weighted average common shares outstanding for basic | 47,989 | 45,798 | |||||||
Dilutive potential common stock outstanding: | |||||||||
Stock options and ESPP | 1,528 | — | |||||||
Restricted stock units | 1,308 | — | |||||||
Senior Convertible Notes | 891 | — | |||||||
Weighted average common shares outstanding for diluted | 51,716 | 45,798 | |||||||
Basic net income (loss) per share attributable to the Company | $ | 0.66 | $ | (0.40 | ) | ||||
Diluted net income (loss) per share attributable to the Company | $ | 0.61 | $ | (0.40 | ) | ||||
Anti-dilutive common stock equivalents not included in calculation of net income per diluted share | The following weighted outstanding common stock equivalents were not included in the calculation of net income (loss) per diluted share because their effects were anti-dilutive: | ||||||||
Three Months Ended March 31, | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Stock Options, ESPP, and RSUs | 22 | 7,870 | |||||||
Warrants | 9,553 | 9,553 | |||||||
Senior Convertible Notes | — | 9,553 | |||||||
Total | 9,575 | 26,976 | |||||||
Financial_Instruments_and_Fair1
Financial Instruments and Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Fair Value Table [Abstract] | |||||||||||||||||||
Composition of Marketable Securities | The composition of marketable securities is as follows: | ||||||||||||||||||
(in thousands, except years) | Contractual | Amortized Cost | Gross | Gross | Fair Value | ||||||||||||||
Maturity | Unrealized | Unrealized | |||||||||||||||||
(in years) | Gains | Losses | |||||||||||||||||
March 31, 2015: | |||||||||||||||||||
Classified as current assets | |||||||||||||||||||
Corporate notes | Less than 1 | $ | 121,761 | $ | 37 | $ | (81 | ) | $ | 121,717 | |||||||||
Securities of government-sponsored entities | Less than 1 | 56,822 | 12 | (2 | ) | 56,832 | |||||||||||||
Commercial paper | Less than 1 | 21,979 | — | — | 21,979 | ||||||||||||||
Certificates of deposit | Less than 1 | 281 | — | — | 281 | ||||||||||||||
Short-term marketable securities | 200,843 | 49 | (83 | ) | 200,809 | ||||||||||||||
Classified as non-current assets | |||||||||||||||||||
Securities of government-sponsored entities | 1 to 2 | 19,498 | 2 | (1 | ) | 19,499 | |||||||||||||
Corporate notes | 1 to 2 | 7,996 | 6 | — | 8,002 | ||||||||||||||
Long-term marketable securities | 27,494 | 8 | (1 | ) | 27,501 | ||||||||||||||
Classified as restricted investments | |||||||||||||||||||
Securities of government-sponsored entities | Less than 2 | 71,971 | 9 | (21 | ) | 71,959 | |||||||||||||
U.S. government treasury securities | Less than 2 | 52,223 | 52 | — | 52,275 | ||||||||||||||
Restricted investments | 124,194 | 61 | (21 | ) | 124,234 | ||||||||||||||
Total marketable securities at March 31, 2015 | $ | 352,531 | $ | 118 | $ | (105 | ) | $ | 352,544 | ||||||||||
December 31, 2014: | |||||||||||||||||||
Classified as current assets | |||||||||||||||||||
Certificates of deposit | Less than 1 | $ | 282 | $ | — | $ | — | $ | 282 | ||||||||||
Corporate notes | Less than 1 | 129,037 | 8 | (105 | ) | 128,940 | |||||||||||||
Commercial paper | Less than 1 | 11,290 | — | — | 11,290 | ||||||||||||||
U.S. government treasury securities | Less than 1 | 1,500 | 1 | — | 1,501 | ||||||||||||||
Securities of government-sponsored entities | Less than 1 | 78,333 | 12 | (29 | ) | 78,316 | |||||||||||||
Short-term marketable securities | 220,442 | 21 | (134 | ) | 220,329 | ||||||||||||||
Classified as non-current assets | |||||||||||||||||||
Corporate notes | 1 to 2 | 14,082 | — | (13 | ) | 14,069 | |||||||||||||
Securities of government-sponsored entities | 1 to 2 | 28,996 | — | (23 | ) | 28,973 | |||||||||||||
Long-term marketable securities | 43,078 | — | (36 | ) | 43,042 | ||||||||||||||
Classified as restricted investments | |||||||||||||||||||
U.S. government treasury securities | Less than 2 | 51,331 | 13 | (13 | ) | 51,331 | |||||||||||||
Securities of government-sponsored entities | Less than 2 | 42,862 | 2 | (54 | ) | 42,810 | |||||||||||||
Restricted investments | 94,193 | 15 | (67 | ) | 94,141 | ||||||||||||||
Total marketable securities at December 31, 2014 | $ | 357,713 | $ | 36 | $ | (237 | ) | $ | 357,512 | ||||||||||
Schedule of Derivatives Not Designated as Cash Flow Hedges | The following table summarizes the fair values of derivative instruments at March 31, 2015 and December 31, 2014: | ||||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||
Balance Sheet | March 31, | December 31, | Balance Sheet | March 31, | December 31, | ||||||||||||||
(in thousands) | Location | 2015 | 2014 | Location | 2015 | 2014 | |||||||||||||
Derivative instruments not designated as cash flow | |||||||||||||||||||
hedges | |||||||||||||||||||
Forward exchange contracts | Other current | $ | 268 | $ | — | Other current | $ | — | * | ||||||||||
assets | liabilities | ||||||||||||||||||
Total derivatives | $ | 268 | $ | — | $ | — | * | ||||||||||||
*De minimus amount recognized in the hedge relationship. | |||||||||||||||||||
Schedule of Derivative Instruments Effect on Statements of Operations | The following table summarizes the effect of derivative instruments on the Consolidated Statements of Operations for the three months ended March 31, 2015 and March 31, 2014: | ||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
31-Mar-15 | 31-Mar-14 | ||||||||||||||||||
Location of | Amount of | Location of | Amount of | ||||||||||||||||
(Gain)/Loss | (Gain)/Loss | (Gain)/Loss | (Gain)/Loss | ||||||||||||||||
Recognized in | Recognized in | Recognized in | Recognized in | ||||||||||||||||
(in thousands) | Income | Income | Income | Income | |||||||||||||||
Derivative instruments not designated as cash flow hedges | |||||||||||||||||||
Forward exchange contracts | Other (income) | $ | (2,165 | ) | Other (income) | $ | — | ||||||||||||
expense | expense | ||||||||||||||||||
Total derivatives | $ | (2,165 | ) | $ | — | ||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair values of the Company’s assets and liabilities, including cash equivalents, marketable securities, restricted investments, derivatives, and contingent considerations are measured at fair value on a recurring basis, and are determined using the following inputs: | ||||||||||||||||||
Quoted Price in | Significant Other | Significant | |||||||||||||||||
Active Market | Observable Inputs | Unobservable | |||||||||||||||||
(in thousands) | Total | (Level 1) | (Level 2) | Inputs (Level 3) | |||||||||||||||
March 31, 2015: | |||||||||||||||||||
Money market funds | $ | 30,464 | $ | 30,464 | $ | — | $ | — | |||||||||||
Certificates of deposit | 281 | 281 | — | — | |||||||||||||||
Corporate notes | 129,719 | — | 129,719 | — | |||||||||||||||
Commercial paper | 21,979 | — | 21,979 | — | |||||||||||||||
U.S. government treasury securities | 52,275 | 52,275 | — | — | |||||||||||||||
Securities of government-sponsored entities | 148,290 | — | 148,290 | — | |||||||||||||||
Derivative forward exchange contracts | 268 | — | 268 | — | |||||||||||||||
Total assets | $ | 383,276 | $ | 83,020 | $ | 300,256 | $ | — | |||||||||||
December 31, 2014: | |||||||||||||||||||
Money market funds | $ | 39,963 | $ | 39,963 | $ | — | $ | — | |||||||||||
Certificates of deposit | 282 | 282 | — | — | |||||||||||||||
Corporate notes | 143,009 | — | 143,009 | — | |||||||||||||||
Commercial paper | 11,290 | — | 11,290 | — | |||||||||||||||
U.S. government treasury securities | 52,831 | 52,831 | — | — | |||||||||||||||
Securities of government-sponsored entities | 150,101 | — | 150,101 | — | |||||||||||||||
Total assets | $ | 397,476 | $ | 93,076 | $ | 304,400 | $ | — | |||||||||||
Acquisition-related liabilities, current | $ | (644 | ) | $ | — | $ | — | $ | (644 | ) | |||||||||
Total liabilities | $ | (644 | ) | $ | — | $ | — | $ | (644 | ) | |||||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation | The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3): | ||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
(in thousands) | 2015 | 2014 | |||||||||||||||||
Fair value measurement at beginning of period | $ | 644 | $ | 1,212 | |||||||||||||||
Change in fair value measurement included in operating expenses | (36 | ) | — | ||||||||||||||||
Contingent consideration paid or settled | (608 | ) | (608 | ) | |||||||||||||||
Fair value measurement at end of period | $ | — | $ | 604 | |||||||||||||||
The payments made during the three months ended March 31, 2015 and 2014 were related to an immaterial business combination completed in 2012. |
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | |||||||||||||||
Goodwill and intangible assets | Goodwill and intangible assets consisted of the following: | ||||||||||||||
Weighted- | |||||||||||||||
Average | |||||||||||||||
Amortization | |||||||||||||||
(in thousands, except years) | Period | Gross | Accumulated | Intangible | |||||||||||
March 31, 2015: | (in years) | Amount | Amortization | Assets, net | |||||||||||
Intangible assets subject to amortization: | |||||||||||||||
Developed technology | 9 | $ | 79,008 | $ | (30,045 | ) | $ | 48,963 | |||||||
Manufacturing know-how and trade secrets | 12 | 21,783 | (12,008 | ) | 9,775 | ||||||||||
Trade name and trademarks | 11 | 9,500 | (4,468 | ) | 5,032 | ||||||||||
Customer relationships | 8 | 43,120 | (24,890 | ) | 18,230 | ||||||||||
Total intangible assets subject to amortization | 10 | $ | 153,411 | $ | (71,411 | ) | $ | 82,000 | |||||||
Intangible assets not subject to amortization: | |||||||||||||||
In-process research and development | $ | 10,640 | |||||||||||||
Goodwill | $ | 154,273 | |||||||||||||
Weighted- | |||||||||||||||
Average | |||||||||||||||
Amortization | |||||||||||||||
Period | Gross | Accumulated | Intangible | ||||||||||||
December 31, 2014: | (in years) | Amount | Amortization | Assets, net | |||||||||||
Intangible assets subject to amortization: | |||||||||||||||
Developed technology | 9 | $ | 79,008 | $ | (27,760 | ) | $ | 51,248 | |||||||
Manufacturing know-how and trade secrets | 12 | 21,879 | (11,640 | ) | 10,239 | ||||||||||
Trade name and trademarks | 11 | 9,500 | (4,264 | ) | 5,236 | ||||||||||
Customer relationships | 8 | 43,153 | (23,961 | ) | 19,192 | ||||||||||
Total intangible assets subject to amortization | 10 | $ | 153,540 | $ | (67,625 | ) | $ | 85,915 | |||||||
Intangible assets not subject to amortization: | |||||||||||||||
In-process research and development | $ | 10,640 | |||||||||||||
Goodwill | $ | 154,443 | |||||||||||||
Future amortization expense related to intangible assets | Total future amortization expense related to intangible assets subject to amortization at March 31, 2015 is set forth in the table below: | ||||||||||||||
(in thousands) | |||||||||||||||
Remaining 2015 | $ | 11,363 | |||||||||||||
2016 | 14,802 | ||||||||||||||
2017 | 12,455 | ||||||||||||||
2018 | 11,432 | ||||||||||||||
2019 | 10,078 | ||||||||||||||
2020 | 9,666 | ||||||||||||||
Thereafter through 2027 | 12,204 | ||||||||||||||
Total future amortization expense | $ | 82,000 | |||||||||||||
Business_Combinations_Tables
Business Combinations (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Business Combination Description [Abstract] | |||||||||
Summary of assets and liabilities included in the accompanying consolidated balance sheet | Total assets and liabilities of Progentix included in the accompanying Consolidated Balance Sheet are as follows: | ||||||||
(in thousands) | 31-Mar-15 | 31-Dec-14 | |||||||
Total current assets | $ | 639 | $ | 839 | |||||
Identifiable intangible assets, net | 13,819 | 13,935 | |||||||
Goodwill | 12,654 | 12,654 | |||||||
Other long-term assets | 1 | 1 | |||||||
Accounts payable and accrued expenses | 453 | 542 | |||||||
Deferred tax liabilities, net | 2,770 | 2,770 | |||||||
Non-controlling interests | 8,147 | 8,310 | |||||||
Reconciliation of equity (net assets) attributable to the non-controlling interests | The following is a reconciliation of equity (net assets) attributable to the non-controlling interests: | ||||||||
Three Months Ended March 31, | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Non-controlling interests at beginning of period | $ | 8,310 | $ | 9,086 | |||||
Less: Net loss attributable to the non-controlling interests | 163 | 257 | |||||||
Non-controlling interests at end of period | $ | 8,147 | $ | 8,829 | |||||
Senior_Convertible_Notes_Table
Senior Convertible Notes (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Net carrying amount of the debt component | The carrying values of the Company’s Senior Convertible Notes are as follows: | ||||||||
(in thousands) | 31-Mar-15 | 31-Dec-14 | |||||||
2.75% Senior Convertible Notes due 2017: | |||||||||
Principal amount | $ | 402,500 | $ | 402,500 | |||||
Unamortized debt discount | (37,912 | ) | (41,754 | ) | |||||
Total Senior Convertible Notes | $ | 364,588 | $ | 360,746 | |||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||||||||
Weighted average assumptions used to estimate fair value of stock options granted and stock purchase rights under ESPP | The weighted average assumptions used to estimate the fair value of stock purchase rights under the ESPP are as follows: | ||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
ESPP | |||||||||
Volatility | 44 | % | 47 | % | |||||
Expected term (years) | 1.4 | 1.1 | |||||||
Risk free interest rate | 0.2 | % | 0.2 | % | |||||
Expected dividend yield | — | % | — | % | |||||
Equity [Abstract] | |||||||||
Compensation costs included in statement of income for all stock-based compensation arrangements | The compensation cost that has been included in the Consolidated Statements of Operations for all stock-based compensation arrangements was as follows: | ||||||||
Three Months Ended March 31, | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Sales, marketing and administrative expense | $ | 7,277 | $ | 7,186 | |||||
Research and development expense | 259 | 465 | |||||||
Cost of goods sold | 75 | 113 | |||||||
Stock-based compensation expense before taxes | 7,611 | 7,764 | |||||||
Related income tax benefits | (3,044 | ) | (3,106 | ) | |||||
Stock-based compensation expense, net of taxes | $ | 4,567 | $ | 4,658 | |||||
Business_Segment_Product_and_G1
Business Segment, Product and Geographical Information (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
Revenue from External Customers by Products and Services | Revenue by product line offerings was as follows: | ||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
(in thousands) | 2015 | 2014 | |||||||||||||||
Spine surgery products | $ | 159,054 | $ | 148,007 | |||||||||||||
Biologics | 33,329 | 29,489 | |||||||||||||||
Total Revenue | $ | 192,383 | $ | 177,496 | |||||||||||||
Schedule of Revenue from Net Property and Equipment by Geographical Areas | Revenue and property and equipment, net, by geographic area were as follows: | ||||||||||||||||
Revenue | Property and Equipment, Net | ||||||||||||||||
Three Months Ended March 31, | March 31, | December 31, | |||||||||||||||
(in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
United States | $ | 169,926 | $ | 158,394 | $ | 116,229 | $ | 105,022 | |||||||||
International (excludes Puerto Rico) | 22,457 | 19,102 | 23,312 | 23,543 | |||||||||||||
Total | $ | 192,383 | $ | 177,496 | $ | 139,541 | $ | 128,565 | |||||||||
Description_of_Business_and_Ba2
Description of Business and Basis of Presentation (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | ||
Relocation, consulting, and other costs | $5.40 | |
Severance Costs | 3.4 | |
Total recorded liability associated with early lease termination | 4.9 | |
Translation Adjustment Functional to Reporting Currency, Net of Tax | 11.7 | 9.5 |
Inventory Valuation Reserves | 23 | 22.7 |
Sales, Marketing and Administrative Expense [Member] | ||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | ||
Restructuring and associated impairment charges | 2.3 | 6.4 |
Chief Executive Officer and Chairman of the Board [Member] | ||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | ||
Severance Costs | $3.40 |
Net_Income_Loss_Per_Share_Comp
Net Income (Loss) Per Share - Computation of Basic and Diluted Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Numerator: | ||
Net income (loss) available to the Company | $31,560 | ($18,276) |
Denominator for basic and diluted net (loss) income per share: | ||
Weighted average common shares outstanding for basic | 47,989 | 45,798 |
Dilutive potential common stock outstanding: | ||
Weighted average common shares outstanding for diluted | 51,716 | 45,798 |
Basic net income (loss) per share attributable to the Company | $0.66 | ($0.40) |
Diluted net income (loss) per share attributable to the Company | $0.61 | ($0.40) |
Senior Convertible Notes [Member] | ||
Dilutive potential common stock outstanding: | ||
Incremental common shares attributable to dilutive effect of share-based payment arrangements | 891 | |
Stock Options and ESPP [Member] | ||
Dilutive potential common stock outstanding: | ||
Incremental common shares attributable to dilutive effect of share-based payment arrangements | 1,528 | |
Restricted Stock Units (RSUs) [Member] | ||
Dilutive potential common stock outstanding: | ||
Incremental common shares attributable to dilutive effect of share-based payment arrangements | 1,308 |
Net_Income_Loss_Per_Share_Anti
Net Income (Loss) Per Share - Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share (Details) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 9,575 | 26,976 |
Stock Options and RSUs [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 22 | 7,870 |
Warrants [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 9,553 | 9,553 |
Senior Convertible Notes [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 9,553 |
Financial_Instruments_and_Fair2
Financial Instruments and Fair Value Measurements (Details Textual) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
investment | |||
Business Acquisition [Line Items] | |||
Impairment charges recorded for earnings | $0 | ||
Unrealized loss position investment | 0 | ||
Net currency exchange gains (losses) | 300,000 | 200,000 | |
Leasehold improvement impairment | 900,000 | 2,200,000 | |
Quoted price in active market (Level 1) [Member] | |||
Business Acquisition [Line Items] | |||
Debt instrument, fair value disclosure | 503,100,000 | 516,100,000 | |
Foreign Exchange Forward [Member] | |||
Business Acquisition [Line Items] | |||
Notional principal amount | $34,400,000 |
Financial_Instruments_and_Fair3
Financial Instruments and Fair Value Measurements - Composition of Marketable Securities (Details) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 352,531 | 357,713 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 118 | 36 |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -105 | -237 |
Available-for-sale Securities, Fair Value | 352,544 | 357,512 |
Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 200,843 | 220,442 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 49 | 21 |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -83 | -134 |
Available-for-sale Securities, Fair Value | 200,809 | 220,329 |
Long-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 27,494 | 43,078 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 8 | |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -1 | -36 |
Available-for-sale Securities, Fair Value | 27,501 | 43,042 |
Commercial paper [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 21,979 | 11,290 |
Available-for-sale Securities, Fair Value | 21,979 | 11,290 |
Commercial paper [Member] | Maximum [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 1 year | 1 year |
Certificates of deposit [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 281 | 282 |
Available-for-sale Securities, Fair Value | 281 | 282 |
Certificates of deposit [Member] | Maximum [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 1 year | 1 year |
Restricted Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 124,194 | 94,193 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 61 | 15 |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -21 | -67 |
Available-for-sale Securities, Fair Value | 124,234 | 94,141 |
Corporate notes [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 121,761 | 129,037 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 37 | 8 |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -81 | -105 |
Available-for-sale Securities, Fair Value | 121,717 | 128,940 |
Corporate notes [Member] | Long-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 7,996 | 14,082 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 6 | |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -13 | |
Available-for-sale Securities, Fair Value | 8,002 | 14,069 |
Corporate notes [Member] | Maximum [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 1 year | 1 year |
Corporate notes [Member] | Maximum [Member] | Long-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 2 years | 2 years |
Corporate notes [Member] | Minimum [Member] | Long-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 1 year | 1 year |
Securities of government-sponsored entities [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 56,822 | 78,333 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 12 | 12 |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -2 | -29 |
Available-for-sale Securities, Fair Value | 56,832 | 78,316 |
Securities of government-sponsored entities [Member] | Long-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 19,498 | 28,996 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 2 | |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -1 | -23 |
Available-for-sale Securities, Fair Value | 19,499 | 28,973 |
Securities of government-sponsored entities [Member] | Maximum [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 1 year | 1 year |
Securities of government-sponsored entities [Member] | Maximum [Member] | Long-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 2 years | 2 years |
Securities of government-sponsored entities [Member] | Minimum [Member] | Long-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 1 year | 1 year |
Securities of government-sponsored entities [Member] | Restricted Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 71,971 | 42,862 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 9 | 2 |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -21 | -54 |
Available-for-sale Securities, Fair Value | 71,959 | 42,810 |
Securities of government-sponsored entities [Member] | Restricted Investments [Member] | Maximum [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 2 years | 2 years |
U.S. government treasury securities [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 1,500 | |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 1 | |
Available-for-sale Securities, Fair Value | 1,501 | |
U.S. government treasury securities [Member] | Maximum [Member] | Short-term Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 1 year | |
U.S. government treasury securities [Member] | Restricted Investments [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities, Cost | 52,223 | 51,331 |
Available-for-sale Securities, Gross Unrealized Gains, Before Tax | 52 | 13 |
Available-for-sale Securities, Gross Unrealized Losses, Before Tax | -13 | |
Available-for-sale Securities, Fair Value | 52,275 | 51,331 |
U.S. government treasury securities [Member] | Restricted Investments [Member] | Maximum [Member] | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Available-for-sale Securities Contractual Maturity | 2 years | 2 years |
Financial_Instruments_and_Fair4
Financial Instruments and Fair Value Measurements - Schedule of Derivatives Not Designated as Cash Flow Hedges (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Derivative [Line Items] | ||
Asset Derivatives | $0 | $0 |
Liability Derivatives | 0 | 0 |
Cash Flow Hedges [Member] | Not Designated As Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Asset Derivatives | 268 | 0 |
Cash Flow Hedges [Member] | Not Designated As Hedging Instrument [Member] | Other Current Liabilities [Member] | ||
Derivative [Line Items] | ||
Liability Derivatives | 0 | 0 |
Cash Flow Hedges [Member] | Not Designated As Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Other Current Assets [Member] | ||
Derivative [Line Items] | ||
Asset Derivatives | 268 | 0 |
Cash Flow Hedges [Member] | Not Designated As Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Other Current Liabilities [Member] | ||
Derivative [Line Items] | ||
Liability Derivatives | $0 | $0 |
Financial_Instruments_and_Fair5
Financial Instruments and Fair Value Measurements - Schedule of Derivative Instruments Effect on Statements of Operations (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Derivative Instruments Gain Loss [Line Items] | ||
Amount of (Gain)/Loss Recognized in Income | $0 | $0 |
Cash Flow Hedges [Member] | Not Designated As Hedging Instrument [Member] | ||
Derivative Instruments Gain Loss [Line Items] | ||
Amount of (Gain)/Loss Recognized in Income | -2,165 | 0 |
Cash Flow Hedges [Member] | Not Designated As Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Other (Income) Expense [Member] | ||
Derivative Instruments Gain Loss [Line Items] | ||
Amount of (Gain)/Loss Recognized in Income | ($2,165) | $0 |
Financial_Instruments_and_Fair6
Financial Instruments and Fair Value Measurements - Fair Value of Assets and Liabilities (Details) (Fair value measurements on recurring basis [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | $383,276 | $397,476 |
Contingent Consideration: | ||
Acquisition-related liabilities, current | -644 | |
Acquisition-related liabilities | -644 | |
Foreign Exchange Forward [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 268 | |
Money Market Funds [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 30,464 | 39,963 |
Certificates of deposit [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 281 | 282 |
Corporate notes [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 129,719 | 143,009 |
Commercial paper [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 21,979 | 11,290 |
U.S. government treasury securities [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 52,275 | 52,831 |
Securities of government-sponsored entities [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 148,290 | 150,101 |
Quoted price in active market (Level 1) [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 83,020 | 93,076 |
Quoted price in active market (Level 1) [Member] | Money Market Funds [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 30,464 | 39,963 |
Quoted price in active market (Level 1) [Member] | Certificates of deposit [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 281 | 282 |
Quoted price in active market (Level 1) [Member] | U.S. government treasury securities [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 52,275 | 52,831 |
Significant other observable inputs (Level 2) [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 300,256 | 304,400 |
Significant other observable inputs (Level 2) [Member] | Foreign Exchange Forward [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 268 | |
Significant other observable inputs (Level 2) [Member] | Corporate notes [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 129,719 | 143,009 |
Significant other observable inputs (Level 2) [Member] | Commercial paper [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 21,979 | 11,290 |
Significant other observable inputs (Level 2) [Member] | Securities of government-sponsored entities [Member] | ||
Marketable Securities and Restricted Investments | ||
Total marketable securities and restricted investments | 148,290 | 150,101 |
Significant unobservable inputs (Level 3) [Member] | ||
Contingent Consideration: | ||
Acquisition-related liabilities, current | -644 | |
Acquisition-related liabilities | ($644) |
Financial_Instruments_and_Fair7
Financial Instruments and Fair Value Measurements - Estimated Fair Value of Liabilities Measured on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Fair Value Disclosures [Abstract] | ||
Fair value measurement at beginning of period | $644 | $1,212 |
Change in fair value measurement included in operating expenses | -36 | |
Contingent consideration paid or settled | -608 | -608 |
Fair value measurement at end of period | $604 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Details 1) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 10 years | 10 years |
Gross Amount | $153,411 | $153,540 |
Accumulated Amortization | -71,411 | -67,625 |
Intangible Assets, net | 82,000 | 85,915 |
Intangible assets not subject to amortization: | ||
In-process research and development | 10,640 | 10,640 |
Goodwill | 154,273 | 154,443 |
Developed technology [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | 79,008 | 79,008 |
Accumulated Amortization | -30,045 | -27,760 |
Intangible Assets, net | 48,963 | 51,248 |
Manufacturing know-how and trade secrets [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 12 years | 12 years |
Gross Amount | 21,783 | 21,879 |
Accumulated Amortization | -12,008 | -11,640 |
Intangible Assets, net | 9,775 | 10,239 |
Trade name and trademarks [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 11 years | 11 years |
Gross Amount | 9,500 | 9,500 |
Accumulated Amortization | -4,468 | -4,264 |
Intangible Assets, net | 5,032 | 5,236 |
Customer relationships [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 8 years | 8 years |
Gross Amount | 43,120 | 43,153 |
Accumulated Amortization | -24,890 | -23,961 |
Intangible Assets, net | $18,230 | $19,192 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Amortization expense related to intangible assets | $3,900,000 | $4,000,000 |
Purchase of intangible assets | $27,389,000 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Future amortization expense related to intangible assets | ||
Remaining 2015 | $11,363 | |
2016 | 14,802 | |
2017 | 12,455 | |
2018 | 11,432 | |
2019 | 10,078 | |
2020 | 9,666 | |
Thereafter through 2027 | 12,204 | |
Intangible Assets, net | $82,000 | $85,915 |
Business_Combinations_Details_
Business Combinations (Details Textual) (Progentix Orthobiology [Member], USD $) | 3 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2009 |
Senior Secured Facility [Member] | ||
Business Acquisition [Line Items] | ||
Advanced loan accordance to loan agreement | 5.3 | |
Accrued interest rate of loan | 6.00% | |
Preferred Stock Purchase Agreement [Member] | ||
Business Acquisition [Line Items] | ||
Percentage of ownership Interests acquired | 40.00% | |
Cash payment on purchase of outstanding shares | 10 | |
Percentage of cumulative dividend, description | cumulative 8% dividend | |
Preferred Stock Purchase Agreement [Member] | Cumulative Preferred Stock [Member] | ||
Business Acquisition [Line Items] | ||
Percentage of minority interest represented by preferred stock | 18.00% | |
Percentage of cumulative dividend | 8.00% | |
Option Purchase Agreement | ||
Business Acquisition [Line Items] | ||
Call option remaining variable interest entity ownership percentage | 60.00% | |
Amount of remaining shares | $35 | |
Term of distribution agreement years | 10 years |
Business_Combinations_Details
Business Combinations (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |||
Business Acquisition [Line Items] | |||
Total current assets | $632,863 | $705,871 | |
Identifiable intangible assets, net | 92,640 | 96,555 | |
Goodwill | 154,273 | 154,443 | |
Other long-term assets | 27,439 | 26,420 | |
Non-controlling interests | 8,147 | 8,310 | |
Variable Interest Entity [Member] | |||
Business Acquisition [Line Items] | |||
Non-controlling interests | 8,147 | 8,829 | |
Variable Interest Entity [Member] | Progentix Orthobiology [Member] | |||
Business Acquisition [Line Items] | |||
Total current assets | 639 | 839 | |
Identifiable intangible assets, net | 13,819 | 13,935 | |
Goodwill | 12,654 | 12,654 | |
Other long-term assets | 1 | 1 | |
Accounts payable and accrued expenses | 453 | 542 | |
Deferred tax liabilities, net | 2,770 | 2,770 | |
Non-controlling interests | $8,147 | $8,310 |
Reconciliation_of_Equity_Net_A
Reconciliation of Equity (Net Assets) Attributable to the Non-controlling Interests (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Reconciliation of equity (net assets) attributable to the non-controlling interests | |||
Non-controlling interests at end of period | $8,147 | $8,310 | |
Variable Interest Entity [Member] | |||
Reconciliation of equity (net assets) attributable to the non-controlling interests | |||
Non-controlling interests at beginning of period | 8,310 | 9,086 | |
Less: Net loss attributable to the non-controlling interests | 163 | 257 | |
Non-controlling interests at end of period | $8,147 | $8,829 |
Senior_Convertible_Notes_Detai
Senior Convertible Notes (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2011 | Jun. 30, 2011 |
In Thousands, unless otherwise specified | ||||
Debt Instrument [Line Items] | ||||
Total Senior Convertible Notes | $364,588 | $360,746 | ||
2.75% Senior Convertible Notes due 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 402,500 | 402,500 | 402,500 | |
Unamortized debt discount | -37,912 | -41,754 | -88,900 | |
Total Senior Convertible Notes | $364,588 | $360,746 |
Senior_Convertible_Notes_Paren
Senior Convertible Notes (Parenthetical) (Details) (2.75% Senior Convertible Notes due 2017 [Member]) | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2011 |
2.75% Senior Convertible Notes due 2017 [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate on convertible notes | 2.75% | 2.75% | 2.75% |
Senior_Convertible_Notes_Detai1
Senior Convertible Notes (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2011 | Jun. 30, 2011 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||||
Contractual Coupon Interest Expense | $2,800,000 | $2,800,000 | |||
Amortization of Debt Discount (Premium) | 3,800,000 | 3,600,000 | |||
Derivative, maturity date | 1-Jul-17 | ||||
Initial strike price at which Warrants to be acquired | $988.51 | ||||
Number of common stock shares preferred stock convertible into | 20 | ||||
Cash proceeds from the sale of warrants | 47,900,000 | ||||
2017 Hedge [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of common stock to be purchased | 9,553,096 | ||||
Cost of hedge transaction | 80,100,000 | ||||
Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Class of warrant or rights expiry month and year | 2017-09 | ||||
Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Class of warrant or rights expiry month and year | 2018-01 | ||||
Maximum [Member] | Series A Convertible Participating Preferred Stock [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of preferred or common stock into which the warrants is converted | 477,654 | ||||
Maximum [Member] | Common Shares [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of preferred or common stock into which the warrants is converted | 9,553,080 | ||||
Other Expense [Member] | 2017 Hedge [Member] | |||||
Debt Instrument [Line Items] | |||||
Embedded derivative, gain (loss) reclassified to earnings | 37,100,000 | ||||
Additional Paid-in Capital [Member] | 2017 Hedge [Member] | |||||
Debt Instrument [Line Items] | |||||
Embedded derivative, amount reclassified to stockholders' equity | 43,000,000 | ||||
2.75% Senior Convertible Notes due 2017 [Member] | |||||
Debt Instrument [Line Items] | |||||
Principal amount | 402,500,000 | 402,500,000 | 402,500,000 | ||
Net proceeds of unsecured senior convertible notes | 359,200,000 | ||||
Interest rate on convertible notes | 2.75% | 2.75% | 2.75% | ||
Debt instrument, maturity date | 1-Jul-17 | ||||
Initial conversion rate adjustment Shares | 23.7344 | ||||
Principal amount of debt considered for conversion rate | 1,000 | ||||
Initial conversion price of convertible notes | $42.13 | ||||
Fair value of debt conversion cost | 37,912,000 | 88,900,000 | 41,754,000 | ||
Effective interest rate | 8.00% | ||||
2.75% Senior Convertible Notes due 2017 [Member] | Scenario Two [Member] | |||||
Debt Instrument [Line Items] | |||||
Consecutive trading days considered for debt conversion | 5 days | ||||
2.75% Senior Convertible Notes due 2017 [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Percentage of conversion price | 130.00% | ||||
2.75% Senior Convertible Notes due 2017 [Member] | Minimum [Member] | Scenario One [Member] | |||||
Debt Instrument [Line Items] | |||||
Consecutive trading days considered for debt conversion | 20 days | ||||
2.75% Senior Convertible Notes due 2017 [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Percentage of conversion price | 98.00% | ||||
2.75% Senior Convertible Notes due 2017 [Member] | Maximum [Member] | Scenario One [Member] | |||||
Debt Instrument [Line Items] | |||||
Trading days considered for debt conversion | 30 | ||||
2.75% Senior Convertible Notes due 2017 [Member] | Other Income [Member] | |||||
Debt Instrument [Line Items] | |||||
Embedded derivative, gain (loss) reclassified to earnings | 39,500,000 | ||||
2.75% Senior Convertible Notes due 2017 [Member] | Additional Paid-in Capital [Member] | |||||
Debt Instrument [Line Items] | |||||
Embedded derivative, amount reclassified to stockholders' equity | $49,400,000 |
StockBased_Compensation_Stock_
Stock-Based Compensation, Stock Compensation Expense (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense before taxes | $7,611 | $7,764 |
Related income tax benefits | -3,044 | -3,106 |
Stock-based compensation expense, net of taxes | 4,567 | 4,658 |
Sales, Marketing and Administrative Expense [Member] | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense before taxes | 7,277 | 7,186 |
Research and development expense [Member] | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense before taxes | 259 | 465 |
Cost of goods sold [Member] | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense before taxes | $75 | $113 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unamortized cost related to share-based compensation | $30,700,000 | ||
Weighted average contractual term | 2 years 1 month 6 days | ||
Stock options granted | 0 | 0 | |
Number of common stock issued to exercise stock options | 692,000 | 1,030,000 | |
Restricted Stock Units (RSUs) [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period for the award | 4 years | ||
Number of shares of common stock issued upon vesting of RSUs | 1,291,000 | 1,361,000 | |
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Share payout levels | 0.00% | ||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Share payout levels | 250.00% | ||
Performance Based Restricted Stock Units (PRSUs) [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period for the award | 3 years | ||
Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Percentage of issuance price of stock under the stock issuance program | 85.00% | ||
Maximum percentage of annual compensation | 15.00% | ||
Maximum amount withheld to purchase shares of the company | $21,250 | ||
Employee Stock Purchase Plan Offering Period | 2 years |
StockBased_Compensation_Assump
Stock-Based Compensation, Assumptions Table (Details) (ESPP [Member]) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
ESPP [Member] | ||
Weighted average assumptions used to estimate fair value of stock options granted and stock purchase rights under ESPP | ||
Volatility | 44.00% | 47.00% |
Expected term (years) | 1 year 4 months 24 days | 1 year 1 month 6 days |
Risk free interest rate | 0.20% | 0.20% |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Income Tax Expense (Benefit) | $17,885,000 | ($15,095,000) |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 36.00% | 45.00% |
Unrecognized tax benefit | 0 | 0 |
Accrued interest related to unrecognized tax benefit | $0 | $0 |
Business_Segment_Product_and_G2
Business Segment, Product and Geographic Information (Details Textual) | 3 Months Ended |
Mar. 31, 2015 | |
segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Business_Segment_Product_and_G3
Business Segment, Product and Geographic Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Entity Wide Information Revenue From External Customer [Line Items] | ||
Total Revenue | $192,383 | $177,496 |
Spine surgery products [Member] | ||
Entity Wide Information Revenue From External Customer [Line Items] | ||
Total Revenue | 159,054 | 148,007 |
Biologics [Member] | ||
Entity Wide Information Revenue From External Customer [Line Items] | ||
Total Revenue | $33,329 | $29,489 |
Business_Segment_Product_and_G4
Business Segment, Product and Geographic Information (Details 2) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||
Revenue | $192,383 | $177,496 | |
Property and equipment, net | 139,541 | 128,565 | |
UNITED STATES | |||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||
Revenue | 169,926 | 158,394 | |
Property and equipment, net | 116,229 | 105,022 | |
International [Member] | |||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||
Revenue | 22,457 | 19,102 | |
Property and equipment, net | $23,312 | $23,543 |
Commitments_Details_Textual
Commitments (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Licensing and Purchasing Agreements [Member] | ||
Business Acquisition [Line Items] | ||
Obligation under consultancy arrangements | $22,700,000 | |
Revenue based milestone period | achieved prior to 2024 | |
Total payment for arrangements | 6,200,000 | |
Cash payment on purchase of outstanding shares | 3,000,000 | |
Payment in shares | 3,200,000 | |
Accrual recognized | 0 | 0 |
Executive Severance Plans [Member] | ||
Business Acquisition [Line Items] | ||
Other Commitments, Future Minimum Payments, Remainder of Fiscal Year | $15,300,000 |
Contingencies_Details
Contingencies (Details) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2014 | Apr. 25, 2013 | Sep. 20, 2011 | Aug. 31, 2008 | Dec. 31, 2011 | Dec. 02, 2014 | Oct. 31, 2010 | Dec. 31, 2014 | Mar. 02, 2015 | Sep. 30, 2012 | |
patent | patent | ||||||||||
Loss Contingencies [Line Items] | |||||||||||
Gain related to litigation | $42,575,000 | ($30,000,000) | |||||||||
Loss Contingency, Estimate of Possible Loss | 87,400,000 | ||||||||||
Legal Proceedings (Textual) [Abstract] | |||||||||||
Unrecorded royalty damages | 0 | ||||||||||
Medtronic Litigation | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Gain related to litigation | 56,400,000 | ||||||||||
Number of patents assigned or licensed | 9 | 12 | |||||||||
Number of patents withdrawn | 3 | ||||||||||
Number of patents selected for litigation | 3 | ||||||||||
Company's patents in initial phase of litigation | 1 | ||||||||||
Litigation liability | 101,200,000 | 101,200,000 | |||||||||
Loss contingency, settlement agreement, court | On May 15, 2013, the District Court granted the parties’ joint motion to dismiss claims relating to one of the three Medtronic patents pursuant to a settlement agreement. On June 11, 2013, the District Court granted the parties ongoing royalties with respect to the two Medtronic patents and the one Company patent remaining in the first phase of the case (the “June 2013 rulingâ€). | ||||||||||
Company's cash and investment in escrow | 113,300,000 | ||||||||||
Royalty accrual charge | 7,900,000 | ||||||||||
Legal Proceedings (Textual) [Abstract] | |||||||||||
Unrecorded royalty damages | 700,000 | ||||||||||
Loss contingency, settlement agreement, consideration | 7,500,000 | ||||||||||
Trademark Infringement [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Company's cash and investment in escrow | 32,500,000 | 62,500,000 | |||||||||
Legal Proceedings (Textual) [Abstract] | |||||||||||
Jury award | 60,000,000 | ||||||||||
Release of funds from escrow | 62,500,000 | ||||||||||
Litigation Liability | $30,000,000 |
Regulatory_Matter_Details_Text
Regulatory Matter (Details Textual) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Regulatory Asset [Line Items] | ||
Liability related to settlement with OIG | $42,575 | ($30,000) |
OIG [Member] | ||
Regulatory Asset [Line Items] | ||
Liability related to settlement with OIG | $13,800 |