Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 26, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NUVASIVE INC | |
Entity Central Index Key | 1,142,596 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | NUVA | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,803,820 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 130,932 | $ 153,643 |
Restricted cash and investments | 2,402 | |
Accounts receivable, net of allowances of $9,399 and $8,912, respectively | 190,169 | 171,595 |
Inventory, net | 236,839 | 208,249 |
Prepaid income taxes | 19,576 | 31,926 |
Prepaid expenses and other current assets | 12,310 | 10,030 |
Total current assets | 592,228 | 575,443 |
Property and equipment, net | 214,601 | 181,524 |
Intangible assets, net | 268,466 | 291,143 |
Goodwill | 486,439 | 485,685 |
Deferred tax assets | 5,961 | 5,810 |
Restricted cash and investments | 4,945 | 7,405 |
Other assets | 33,744 | 23,794 |
Total assets | 1,606,384 | 1,570,804 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 82,933 | 77,585 |
Contingent consideration liabilities | 19,271 | 49,742 |
Accrued payroll and related expenses | 49,323 | 51,000 |
Income tax liabilities | 11,995 | 2,469 |
Short-term borrowings | 20,000 | |
Senior convertible notes | 63,302 | 61,701 |
Total current liabilities | 246,824 | 242,497 |
Long-term senior convertible notes | 573,532 | 564,412 |
Deferred and income tax liabilities, non-current | 16,110 | 18,607 |
Other long-term liabilities | 46,312 | 44,764 |
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 June 30, 2017 and December 31, 2016, 58,081,702 and 55,184,660 issued and outstanding at June 30, 2017 and December 31, 2016, respectively | 58 | 55 |
Additional paid-in capital | 1,033,546 | 1,010,238 |
Accumulated other comprehensive loss | (8,131) | (10,631) |
Accumulated deficit | (53,077) | (66,859) |
Treasury stock at cost; 4,974,534 shares and 4,758,828 shares at June 30, 2017 and December 31, 2016, respectively | (253,503) | (237,867) |
Total NuVasive, Inc. stockholders’ equity | 718,893 | 694,936 |
Non-controlling interest | 4,713 | 5,588 |
Total equity | 723,606 | 700,524 |
Total liabilities and equity | $ 1,606,384 | $ 1,570,804 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 9,399 | $ 8,912 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 58,081,702 | 55,184,660 |
Common stock, shares outstanding | 58,081,702 | 55,184,660 |
Treasury stock at cost, shares | 4,974,534 | 4,758,828 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 260,573 | $ 236,210 | $ 510,437 | $ 451,314 |
Cost of goods sold (excluding below amortization of intangible assets) | 66,421 | 59,745 | 128,034 | 113,971 |
Gross profit | 194,152 | 176,465 | 382,403 | 337,343 |
Operating expenses: | ||||
Sales, marketing and administrative | 139,109 | 134,487 | 279,611 | 259,325 |
Research and development | 12,572 | 11,871 | 24,986 | 22,500 |
Amortization of intangible assets | 11,349 | 10,603 | 23,410 | 18,474 |
Litigation liability (gain) | (43,310) | (43,310) | ||
Business transition costs | 1,369 | 2,756 | 1,424 | 8,063 |
Total operating expenses | 164,399 | 116,407 | 329,431 | 265,052 |
Interest and other expense, net: | ||||
Interest income | 139 | 406 | 276 | 734 |
Interest expense | (10,083) | (10,537) | (19,882) | (19,009) |
Loss on repurchases of convertible notes | (17,444) | |||
Other expense, net | (501) | (246) | (243) | (196) |
Total interest and other expense, net | (10,445) | (10,377) | (19,849) | (35,915) |
Income before income taxes | 19,308 | 49,681 | 33,123 | 36,376 |
Income tax expense | (7,079) | (19,891) | (8,569) | (10,411) |
Consolidated net income | 12,229 | 29,790 | 24,554 | 25,965 |
Add back net loss attributable to non-controlling interest | (432) | (423) | (875) | (880) |
Net income attributable to NuVasive, Inc. | $ 12,661 | $ 30,213 | $ 25,429 | $ 26,845 |
Net income per share attributable to NuVasive, Inc.: | ||||
Basic | $ 0.25 | $ 0.60 | $ 0.50 | $ 0.54 |
Diluted | $ 0.22 | $ 0.57 | $ 0.44 | $ 0.51 |
Weighted average shares outstanding: | ||||
Basic | 51,082 | 50,027 | 50,825 | 49,822 |
Diluted | 58,330 | 53,159 | 58,059 | 52,354 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Consolidated net income | $ 12,229 | $ 29,790 | $ 24,554 | $ 25,965 |
Other comprehensive income: | ||||
Unrealized gain (loss) on marketable securities, net of tax | 1 | (6) | (1) | 342 |
Translation adjustments, net of tax | 642 | 2,734 | 2,501 | 5,419 |
Other comprehensive income | 643 | 2,728 | 2,500 | 5,761 |
Total consolidated comprehensive income | 12,872 | 32,518 | 27,054 | 31,726 |
Net loss attributable to non-controlling interest | (432) | (423) | (875) | (880) |
Comprehensive income attributable to NuVasive, Inc. | $ 13,304 | $ 32,941 | $ 27,929 | $ 32,606 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating activities: | ||
Consolidated net income | $ 24,554 | $ 25,965 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 58,688 | 46,329 |
Loss on repurchases of convertible notes | 17,444 | |
Amortization of non-cash interest | 10,882 | 10,943 |
Stock-based compensation | 15,411 | 12,357 |
Reserves on current assets | (95) | 6,751 |
Other non-cash adjustments | 7,380 | 8,387 |
Deferred income taxes | (2,570) | 14,691 |
Changes in operating assets and liabilities, net of effects from acquisitions: | ||
Accounts receivable | (17,586) | (8,615) |
Inventory | (29,012) | (12,019) |
Prepaid expenses and other current assets | (2,485) | 728 |
Contingent consideration liabilities | (11,200) | |
Accounts payable and accrued liabilities | 4,987 | 14,384 |
Litigation liability | (43,310) | |
Accrued payroll and related expenses | (2,004) | (4,356) |
Income taxes | 10,172 | 10,534 |
Net cash provided by operating activities | 67,122 | 100,213 |
Investing activities: | ||
Acquisition of Ellipse Technologies, net of cash acquired | (380,080) | |
Other acquisitions and investments | (14,417) | (8,079) |
Purchases of intangible assets | (1,695) | (5,918) |
Purchases of property and equipment | (68,690) | (52,566) |
Purchases of marketable securities | (128,956) | |
Proceeds from sales of marketable securities | 339,320 | |
Net cash used in investing activities | (84,802) | (236,279) |
Financing activities: | ||
Proceeds from the issuance of common stock | 5,369 | 6,150 |
Purchase of treasury stock | (10,844) | (22,549) |
Payment of contingent consideration | (18,800) | |
Proceeds from issuance of convertible debt, net of issuance costs | 634,140 | |
Proceeds from sale of warrants | 44,850 | |
Purchase of convertible note hedge | (111,150) | |
Repurchases of convertible notes | (343,835) | |
Proceeds from revolving line of credit | 20,000 | 50,000 |
Repayments on revolving line of credit | (50,000) | |
Other financing activities | (2,205) | (1,545) |
Net cash (used in) provided by financing activities | (6,480) | 206,061 |
Effect of exchange rate changes on cash | 1,449 | 748 |
(Decrease) increase in cash and cash equivalents | (22,711) | 70,743 |
Cash and cash equivalents at beginning of period | 153,643 | 192,339 |
Cash and cash equivalents at end of period | $ 130,932 | $ 263,082 |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
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’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 the Company’s proprietary software-driven nerve detection and avoidance systems and Intraoperative Monitoring (“IOM”) services and support; MaXcess, an integrated split-blade retractor system; and a wide variety of specialized implants and biologics. In May 2015, the Company launched Integrated Global Alignment (“iGA”), in which products and computer assisted technology under the MAS platform help achieve more precise spinal alignment. The individual components of the MAS platform, and many of the Company’s products, can also be used in open or traditional spine surgery. The Company continues to focus 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 dedicates significant resources toward training spine surgeons on its unique technology and products. The Company’s primary business model is to loan its MAS systems to surgeons and hospitals that purchase implants, biologics and disposables for use in individual procedures. 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. 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 sells MAS instrument sets, MaXcess and nerve monitoring systems to hospitals, however, such sales are immaterial to the Company’s results of operations. The Company also designs and sells expandable growing rod implant systems that can be non-invasively lengthened following implantation with precise, incremental adjustments via an external remote controller using magnetic technology called MAGnetic External Control, or MAGEC, which allows for the minimally invasive treatment of early-onset and adolescent scoliosis. This technology is also the basis for the Company’s PRECICE limb lengthening system, which allows for the correction of long bone limb length discrepancy, as well as enhanced bone healing in patients that have experienced traumatic injury. The Company intends to continue development on a wide variety of projects intended to broaden surgical applications for greater procedural integration of its MAS techniques and additional applications of the MAGEC technology. Such applications include tumor, trauma, and deformity, as well as increased fixation options, sagittal alignment products, imaging and navigation. The Company also expects to continue expanding its other product and services offerings as it executes on its strategy to offer customers an end-to-end, integrated procedural solution for spine surgery. The Company intends to continue to pursue business and technology acquisition targets and strategic partnerships. 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 interest at the acquisition date and classifies the amounts attributable to non-controlling interest 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 generally accepted accounting principles in the United States (“GAAP”). Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for any other interim period or for the full year. These Unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the Unaudited 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 certain operating expenses into business transition costs. The reclassification had no impact on previously reported results of operations or financial position Recently Adopted Accounting Standards” below for information regarding historical financial information adjusted for a Use of Estimates To prepare financial statements in conformity with GAAP, management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases, In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Restricted Cash In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Clarifying the Definition of a Business The Company is in the process of determining the effects the adoption will have on its Consolidated Financial Statements as well as whether to early adopt the new guidance In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other The Company is in the process of determining the effects the adoption will have on its Consolidated Financial Statements as well as whether to early adopt the new guidance In February 2017, the FASB issued Accounting Standards Update No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets The Company will adopt the new standard beginning January 2018. In May 2017 , the FASB issued Accounting Standards Update No. 2017-09, Compensation – Stock Compensation , which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those periods. The Company does not expect the adoption to have any significant impact on its Consolidated Financial Statements. In July 2017 , the FASB issued Accounting Standards Update No. 2017-19, Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging , which changes the accounting and earnings per share for certain instruments with round down features. The amendments in this update should be applied using a cumulative-effect adjustment as of the beginning of the fiscal year or retrospective adjustment to each period presented. This update is effective for annual periods beginning after December 15, 2018, and interim periods within those periods. . Recently Adopted Accounting Standards In March 2016, the FASB issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory In January 2017, the FASB issued Accounting Standards Update No. 2017-03, Accounting Changes and Error Corrections and Investments – Equity Method and Joint Ventures Revenue Recognition In accordance with the SEC guidance, the Company recognizes revenue when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. Specifically, revenue from the sale of implants, biologics and disposables is generally recognized upon a purchase order from the hospital or acknowledgment from the hospital indicating product use or implantation, or upon shipment to third-party customers who immediately accept title. Revenue from IOM services is recognized in the period the service is performed for the amount of payment expected to be received. Revenue from the sale of instrument sets and nerve monitoring systems is recognized upon receipt of a purchase order and the subsequent shipment to customers who immediately accept title. Comprehensive Income Comprehensive income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income includes unrealized gains or losses, net of tax, on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive income were $8.1 million and $10.6 million at June 30, 2017 and December 31, 2016, respectively. Product Shipment Costs Product shipment costs, included in sales, marketing and administrative expense in the accompanying Consolidated Statements of Operations, were $5.7 million and $11.6 million for the three and six months ended June 30, 2017, respectively, and $6.6 million and $12.8 million for the three and six months ended June 30, 2016, respectively. The majority of the Company’s shipping costs are related to the loaning of instrument sets, which are not typically sold as part of the Company’s core sales offering. Amounts billed to customers for shipping and handling of products are reflected in revenues and are not significant for any period presented. Business Transition Costs The Company incurs certain costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisition costs and other costs directly associated with such activities. The Company incurred $1.4 million of business transition costs during the three and six months ended June 30, 2017, respectively, and $2.8 million and $8.1 million during the three and six months ended June 30, 2016, respectively, primarily related to acquisition and integration activities. Litigation Liability Gain During the three and six months ended June 30, 2016, the Company agreed to settle its ongoing litigation with Warsaw Orthopedic, Inc., Medtronic Sofamor Danek USA, Inc. and other Medtronic related entities (collectively, “Medtronic”). As a result of the settlement, the Company agreed to pay $45.0 million to Medtronic and accordingly recorded a gain of $43.3 million related to the settlement by reducing its previous accrual of $88.3 million related to the matter. See Note 11 to the Unaudited Consolidated Financial Statements for further discussion. |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | 2. Net Income Per Share The following table sets forth the computation of basic and diluted net income per share attributable to the Company: Three Months Ended June 30, Six Months Ended June 30, ( in thousands, except per share data 2017 2016 2017 2016 Numerator: Net income attributable to NuVasive, Inc. $ 12,661 $ 30,213 $ 25,429 $ 26,845 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,082 50,027 50,825 49,822 Dilutive potential common stock outstanding: Stock options and employee stock purchase plan 138 374 180 409 Restricted stock units 1,356 1,281 1,386 1,090 Warrants 2,929 819 2,987 409 Senior Convertible Notes 2,825 658 2,681 624 Weighted average common shares outstanding for diluted 58,330 53,159 58,059 52,354 Basic net income per share attributable to NuVasive, Inc. $ 0.25 $ 0.60 $ 0.50 $ 0.54 Diluted net income per share attributable to NuVasive, Inc. $ 0.22 $ 0.57 $ 0.44 $ 0.51 The following weighted-average outstanding common stock equivalents were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Three Months Ended June 30, Six Months Ended June 30, ( in thousands 2017 2016 2017 2016 Stock options, employee stock purchase plan, and restricted stock units 41 3 71 1,817 Warrants 10,865 10,865 10,865 15,642 Senior Convertible Notes — 10,865 — 15,100 Total 10,906 21,733 10,936 32,559 As discussed in Note 1 to the Unaudited Consolidated Financial Statements, the Company elected to early adopt ASU 2016-09 in the second quarter 2016, which requires any adjustments to be recorded as of the beginning of the fiscal year. The retrospective adjustments to the Company’s financial results for the three months ended March 31, 2016 included a decrease in net loss attributable to the Company of $5.5 million, which resulted in a decrease in net loss per share of $0.11. The financial information in the table above for the six months ended June 30, 2016 reflects this retrospective adjustment to the Company’s financial results for the three months ended March 31, 2016. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Investments Debt And Equity Securities [Abstract] | |
Financial Instruments and Fair Value Measurements | 3. Financial Instruments and Fair Value Measurements As of June 30, 2017, the Company held investments in securities classified as cash equivalents. During the periods presented, the Company did not hold any investments that were in a significant unrealized loss position and no impairment charges were recorded. Realized gains and losses and interest income related to marketable securities were immaterial during all periods presented. 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 (losses), which include gains and losses from derivative instruments, were $(0.5) million and $(0.3) million for the three and six months ended June 30, 2017, respectively, and $(0.3) and $(0.2) million for the three and six months ended June 30, 2016, respectively, and are included in other expense, net 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. A s of June 30, 2017 and December 31, 2016 a notional principal amount of $16.1 million and $ 15.1 million, respectively, in foreign currency forward contracts was outstanding to hedge currency risk relative to the Company’s foreign receivables and payables . Derivative instrument net losses on the Company’s forward exchange contracts were $0.9 million and $1.3 million for the three and six months ended June 30, 2017, respectively, and was immaterial and $0.2 million for the three and six months ended June 30, 2016, respectively, and are included in other expense, net in the Consolidated Statements of Operations. The fair value of the forward contract exchange derivative instrument asset (liability) was de minimis as of June 30, 2017 and $(0.2) million as of December 31, 2016. The derivative instruments are recorded in other current assets or other current liabilities in the Consolidated Balance Sheets commensurate with the nature of the instrument at period end. 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 June 30, 2017. The fair values of the Company’s assets and liabilities, including cash equivalents, marketable securities, and restricted investments are measured at fair value on a recurring basis, and are determined under the fair value categories as follows: Quoted Price in Significant Other Significant Active Market Observable Inputs Unobservable ( in thousands Total (Level 1) (Level 2) Inputs (Level 3) June 30, 2017: Cash equivalents: Money market funds $ 17,000 $ 17,000 $ — $ — Total cash equivalents $ 17,000 $ 17,000 $ — $ — December 31, 2016: Cash equivalents: Money market funds $ 72,866 $ 72,866 $ — $ — Corporate notes 4,551 — 4,551 — Commercial paper 21,471 — 21,471 — Securities of government-sponsored entities 5,995 — 5,995 — Total cash equivalents $ 104,883 $ 72,866 $ 32,017 $ — The fair value of certain financial instruments was measured and classified within Level 1 of the fair value hierarchy based on quoted prices. 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 June 30, 2017 and December 31, 2016 approximate their related fair values due to the short-term maturities of these instruments. The fair value, based on a quoted market price (Level 1), of the Company’s outstanding Senior Convertible Notes due 2017 at June 30, 2017 and December 31, 2016 were approximately $116.2 million and $102.7 million, respectively. The fair value, based on a quoted market price (Level 1), of the Company’s outstanding Senior Convertible Notes due 2021 at June 30, 2017 and December 31, 2016 was $901.8 million and $827.6 million, respectively. See Note 13 to the Unaudited Consolidated Financial Statements for further discussion on the carrying value and settlement of the Company’s Senior Convertible Notes due 2017. Contingent Consideration Liabilities The fair value of contingent consideration liabilities assumed in business combinations is recorded as part of the purchase price consideration of the acquisition, and is determined using a discounted cash flow model or probability simulation model. The significant inputs of such models are not observable in the market, such as certain financial metric growth rates, volatility rates, projections associated with the applicable milestone, the interest rate, and the related probabilities and payment structure in the contingent consideration arrangement. Fair value adjustments to contingent consideration liabilities are recorded through operating expenses in the Consolidated Statement of Operations. Contingent consideration arrangements assumed by an asset purchase will be measured and accrued when such contingency is resolved. Contingent consideration liabilities were $37.4 million and $67.5 million as of June 30, 2017 and December 31, 2016, respectively, and were recorded in the Consolidated Balance Sheet commensurate with the respective payment terms. In April 2017, t he Company paid the $30.0 million outstanding milestone obligation associated with the Ellipse Technologies acquisition. In accordance with the guidance outlined in ASU 2016-15, he initial purchase price allocation $11.2 million related to increased fair value adjustments and is presented in operating activities. 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): Six Months Ended June 30, ( in thousands 2017 2016 Fair value measurement at beginning of period $ 67,501 $ — Contingent consideration liability recorded upon acquisition 533 21,439 Change in fair value measurement (657 ) 339 Changes resulting from foreign currency fluctuations 44 32 Contingent consideration paid or settled (30,000 ) — Fair value measurement at end of period $ 37,421 $ 21,810 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 the discounted cash flow method or cost method, on a nonrecurring basis in accordance with authoritative guidance. These include items such as non-financial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived assets measured at fair value for an impairment assessment. In general, non-financial assets, including goodwill, 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 carrying values of the Company’s capital lease obligations approximated their estimated fair value as of June 30, 2017 and December 31, 2016. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
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 June 30, 2017: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 247,148 $ (82,352 ) $ 164,796 Manufacturing know-how and trade secrets 12 21,139 (14,432 ) 6,707 Trade name and trademarks 9 25,200 (9,022 ) 16,178 Customer relationships 9 118,275 (37,490 ) 80,785 Total intangible assets subject to amortization 9 $ 411,762 $ (143,296 ) $ 268,466 Intangible assets not subject to amortization: Goodwill $ 486,439 Total goodwill and intangible assets, net $ 754,905 Weighted- Average Amortization Period Gross Accumulated Intangible December 31, 2016: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 247,148 $ (66,833 ) $ 180,315 Manufacturing know-how and trade secrets 13 20,572 (13,604 ) 6,968 Trade name and trademarks 9 25,200 (7,478 ) 17,722 Customer relationships 9 117,018 (30,880 ) 86,138 Total intangible assets subject to amortization 9 $ 409,938 $ (118,795 ) $ 291,143 Intangible assets not subject to amortization: Goodwill $ 485,685 Total goodwill and intangible assets, net $ 776,828 The following table summarizes the changes in the carrying value of the Company’s goodwill: ( in thousands December 31, 2016 Gross goodwill $ 493,985 Accumulated impairment loss (8,300 ) 485,685 Changes to gross goodwill Increases recorded in business combinations 374 Changes in purchase price allocation 386 Changes resulting from foreign currency fluctuations (6 ) 754 June 30, 2017 Gross goodwill 494,739 Accumulated impairment loss (8,300 ) $ 486,439 Total expense related to the amortization of intangible assets, which is recorded in both cost of goods sold and operating expenses in the Consolidated Statements of Operations depending on the functional nature of the intangible asset, was $12.2 million and $11.3 million for the three months ended June 30, 2017 and June 30, 2016, respectively, and $25.2 million and $20.1 million for the six months ended June 30, 2017 and June 30, 2016, respectively. Total future amortization expense related to intangible assets subject to amortization at June 30, 2017 is set forth in the table below: ( in thousands Remaining 2017 $ 24,489 2018 46,917 2019 45,235 2020 44,780 2021 42,861 Thereafter through 2026 64,184 Total future amortization expense $ 268,466 |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2017 | |
Business Combination Description [Abstract] | |
Business Combinations | 5. Business Combinations 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 price allocation of the acquisition, with subsequent fair value adjustments to the contingent consideration recorded in the Consolidated Statements of Operations. See Note 3 Acquisition of Ellipse Technologies, Inc. On February 11 NSO designs and sells expandable growing rod implant systems that can be non-invasively lengthened following implantation with precise, incremental adjustments via an external remote controller using magnetic technology called MAGnetic External Control, or MAGEC. The technology platform provides the basis of NSO’s core product offerings, including MAGEC-EOS, which allows for the minimally invasive treatment of early-onset and adolescent scoliosis, as well as the PRECICE limb lengthening system, which allows for the correction of long bone limb length discrepancy, as well as enhanced bone healing in patients that have experienced traumatic injury. The Company applied certain assumptions and findings in the valuation outcome for the assets acquired and liabilities assumed, for which the allocation of the purchase price is based on their fair values, as follows: ( in thousands Cash paid for purchase $ 381,579 Accounts receivable 7,148 Inventory 22,451 Other current assets 1,855 Property, plant and equipment, net 6,725 Definite-lived intangible assets: Developed technology 133,900 Customer relationships 33,200 Trade names 16,200 Goodwill 241,905 Deferred tax assets 18,471 Other assets 1,868 Contingent consideration liability 18,800 Deferred tax liabilities 75,160 Other liabilities assumed 8,184 $ 381,579 Goodwill recognized in this transaction is not deductible for income tax purposes. Goodwill largely consists of expected revenue synergies resulting from the combination of product portfolios, cost synergies related to elimination of redundant facilities, functions and staffing; use of the Company’s existing commercial infrastructure to expand sales of NSO’s products; In connection with the acquisition, a contingent liability of $18.8 million was recorded as of the acquisition date for the potential revenue-based milestone payment. The liability was fair valued using the Monte Carlo simulation based on specific revenue achievement scenarios and discount factors. Changes in fair value of the liability over the measurement period were recorded in the results of operations in the Consolidated Statements of Operations. The revenue-based milestone was achieved as of December 31, 2016, and the Company adjusted the milestone liability to $30.0 million, which represented the full amount of the milestone obligation under the merger agreement. The Company paid the milestone in April 2017, and no additional consideration is owed related to the acquisition. Acquisition costs of $4.0 million were recognized in business transition costs as incurred. The Company’s results of operations included the operating results of NSO, since the date of acquisition, of $15.1 million and $21.0 million of revenue for the three and six months ended June 30, 2016, respectively, and net income (loss) of $1.1 million and $(0.7) million for the three and six months ended June 30, 2016, respectively, in the Unaudited Consolidated Statement of Operations The following table presents the unaudited pro forma results for the three and six months ended June 30, 2017 and June 30, 2016. The unaudited pro forma financial information combines the results of operations of NuVasive and Ellipse Technologies as though the companies had been combined as of January 1, 2015 and therefore many of the non-recurring business combination adjustments would have been included in the year ended December 31, 2015 by nature of such adjustments instead of the periods presented. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at such times. The comparable periods for the three and six months ended June 30, 2016, include adjustments directly attributable to the business combination, including adjustments for increased fair value of acquired inventory of $(7.4) million and $(12.3) million respectively, . The six month period ended June 30, 2016 also includes an adjustment of $4.0 million for acquisition related expenses. Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 ( in thousands, except per share amounts (unaudited) (unaudited) (unaudited) (unaudited) Revenues $ 260,573 $ 236,270 $ 510,437 $ 457,282 Net income (loss) attributable to NuVasive, Inc. 12,661 35,966 25,429 28,438 Net income per share attributable to NuVasive, Inc.: Basic $ 0.25 $ 0.72 $ 0.50 $ 0.57 Diluted $ 0.22 $ 0.68 $ 0.44 $ 0.54 Other Acquisitions The Company has completed other acquisitions that were not considered material to the overall Unaudited Consolidated Financial Statements during the periods presented. These acquisitions have been included in the Unaudited Consolidated Financial Statements from the respective dates of acquisition. The Company does not believe that collectively the acquisitions made during the periods presented, excluding NSO, are material to the overall financial statements. For certain acquisitions completed during the periods presented, excluding NSO, the Company is still in the process of finalizing the purchase price allocation given the timing of the acquisition and the size and scope of the assets and liabilities subject to valuation. While the Company does not expect material changes in the valuation outcome, certain assumptions and findings that were in place at the date of acquisition could result in changes in the purchase price allocation. Variable Interest Entities Progentix Orthobiology B.V. In 2009, the Company completed the purchase of forty percent (40%) of the capital stock of Progentix Orthobiology B.V. (“Progentix”), a company organized under the laws of the Netherlands, from existing shareholders pursuant to a Preferred Stock Purchase Agreement for $10.0 million in cash (the “Initial Investment”). As of June 30, 2017, the Company has loaned Progentix cumulatively $5.3 million at an interest rate of 6% per year. The Company is not obligated to provide additional funding. Concurrently, with the Initial Investment, the Company and Progentix entered into a Distribution Agreement (as amended, the “Distribution Agreement”), whereby Progentix appointed the Company 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. Total assets and liabilities of Progentix included in the accompanying Consolidated Balance Sheets are as follows: ( in thousands June 30, 2017 December 31, 2016 Total current assets $ 781 $ 334 Identifiable intangible assets, net 9,826 10,900 Goodwill 12,654 12,654 Accounts payable and accrued expenses 496 551 Deferred tax liabilities, net 689 880 Non-controlling interest 4,713 5,588 The following is a reconciliation of equity (net assets) attributable to the non-controlling interest: Six Months Ended June 30, ( in thousands 2017 2016 Non-controlling interest at beginning of period $ 5,588 $ 7,309 Less: Net loss attributable to the non-controlling interest (875 ) (880 ) Non-controlling interest at end of period $ 4,713 $ 6,429 NuVasive Clinical Services and Physician Practices The Company’s NuVasive Clinical Services division, which provides IOM services to surgeons and healthcare facilities across the U.S., maintains contractual relationships with several physician practices (“PCs”) which were inherited through the 2011 acquisition of Impulse Monitoring, Inc. and the 2016 acquisition of BNN Holdings Corp. In accordance with authoritative guidance, the Company has determined that the PCs are VIEs and the therefore, the accompanying Unaudited Consolidated Financial Statements include the accounts of the PCs from the date of acquisition. During the periods presented, the results of the PCs were immaterial to the Company’s 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. |
Indebtedness
Indebtedness | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Indebtedness | 6. Indebtedness The carrying values of the Company’s Senior Convertible Notes are as follows: ( in thousands June 30, 2017 December 31, 2016 2.75% Senior Convertible Notes due 2017: Principal amount $ 63,302 $ 63,317 Unamortized debt discount — (1,417 ) Unamortized debt issuance costs — (199 ) 63,302 61,701 2.25% Senior Convertible Notes due 2021: Principal amount 650,000 650,000 Unamortized debt discount (64,880 ) (72,713 ) Unamortized debt issuance costs (11,588 ) (12,875 ) 573,532 564,412 Total Senior Convertible Notes $ 636,834 $ 626,113 Less: Current portion (63,302 ) (61,701 ) Long-term Senior Convertible Notes $ 573,532 $ 564,412 2.25% Senior Convertible Notes due 2021 In March 2016, the Company issued $650.0 million principal amount of unsecured Senior Convertible Notes with a stated interest rate of 2.25% and a maturity date of March 15, 2021 (the "2021 Notes"). The net proceeds from the offering, after deducting initial purchasers' discounts and costs directly related to the offering, were approximately $634.1 million. The 2021 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 2021 Notes is 16.7158 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $59.82 per share, subject to adjustments. The Company uses the treasury share method for assumed conversion of the 2021 Notes to compute the weighted average shares of common stock outstanding for diluted earnings per share. The Company also entered into transactions for convertible note hedge (the "2021 Hedge") and warrants (the "2021 Warrants") concurrently with the issuance of the 2021 Notes. The cash conversion feature of the 2021 Notes required bifurcation from the Notes and was initially accounted for as an equity instrument classified to stockholders’ equity, which resulted in recognizing $84.8 million in additional paid-in-capital during 2016. The interest expense recognized on the 2021 Notes during the three months ended June 30, 2017 June Prior to September 15, 2020, holders may convert their 2021 Notes only under the following conditions: (a) during any calendar quarter beginning June 30, 2016, 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 2021 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 2021 Notes. From September 15, 2020 and until the close of business on the second scheduled trading day immediately preceding March 15, 2021, holders may convert their 2021 Notes at any time (regardless of the foregoing circumstances). The Company may not redeem the 2021 Notes prior to March 20, 2019. The Company may redeem the 2021 Notes, at its option, in whole or in part on or after March 20, 2019 until the close of business on the business day immediately preceding September 15, 2020 if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company delivers written notice of a redemption. The redemption price will be equal to 100% of the principal amount of such 2021 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date 2021 Hedge In connection with the offering of the 2021 Notes, the Company entered into the hedge transaction with the initial purchasers and/or their affiliates (the "2021 Counterparties") entitling the Company to purchase up to 10,865,270 shares of the Company's common stock at an initial stock price of $59.82 per share, each of which is subject to adjustment. The cost of the 2021 Hedge was $111.2 million and accounted for as an equity instrument by recognizing $111.2 million in additional paid-in-capital during 2016. The 2021 Hedge will expire on March 15, 2021. The 2021 Hedge is expected to reduce the potential equity dilution upon conversion of the 2021 Notes if the daily volume-weighted average price per share of the Company's common stock exceeds the strike price of the 2021 Hedge. An assumed exercise of the 2021 Hedge by the Company is considered anti-dilutive since the effect of the inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. 2021 Warrants The Company sold warrants to the 2021 Counterparties to acquire up to 10,865,270 shares of the Company’s common stock. The 2021 Warrants will expire on various dates from June 2021 through December 2021 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 $44.9 million in cash proceeds from the sale of the 2021 Warrants, which was recorded in additional paid-in-capital. The 2021 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 2021 Warrants, which is $80.00 per share. The Company uses the treasury share method for assumed conversion of its 2021 Warrants to compute the weighted average common shares outstanding for diluted earnings per share. Repurchases of Senior Convertible Notes due 2017 In March 2016, the Company used approximately $345.2 million of the net proceeds from the 2021 Notes offering to repurchase approximately $276.8 million principal amount outstanding of the Senior Convertible Notes due 2017 (the “2017 Notes”), the associated conversion feature of the repurchased notes (which is recorded in additional paid-in capital), and the accrued interest on the repurchased notes. Subsequently, in the fourth quarter of 2016, the Company used approximately $96.3 million of cash on hand to repurchase an additional $62.3 million in principal amount outstanding of 2017 Notes, the associated conversion feature of the repurchased notes (which is recorded in additional paid-in capital), and the accrued interest on the repurchased notes. The repurchases of 2017 Notes in 2016 resulted in a cumulative loss of approximately $19.1 million, including $17.4 million recorded during the six months ended June 30, 2016. The Company recorded the loss on the repurchases of 2017 Notes in other expense on the accompanying Consolidated Statements of Operations. The loss on the repurchases included the related debt issuance costs that were previously capitalized in connection with the issuance of the 2017 Notes. The remaining balances resulting from the aggregate repurchase of a portion of the 2017 Notes were $63.3 million, $1.4 million, and $0.2 million of principal outstanding, debt discount, and debt issuance costs, respectively, immediately following the repurchase. 2.75% Senior Convertible Notes due 2017 In June 2011, the Company issued $402.5 million 2.75% July 1, 2017 $359.2 million 23.7344 $1,000 $42.13 The interest expense recognized on the 2017 Notes during the three months ended June 30, 2017 The interest expense recognized on the 2017 Notes during the six months ended June 30, 2017 includes $0.9 million, $1.4 million and $0.2 million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. Prior to January 1, 2017, holders could 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 30 130% five 98% 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 $42.13 $80.1 million and accounted for as derivative assets upon issuance of the 2017 Notes additional paid-in-capital effect of inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. 2017 Warrants The Company sold warrants to the 2017 Counterparties to acquire up to 477,654 $988.51 20 $47.9 million additional paid-in-capital Settlement of 2017 Notes, 2017 Hedge and 2017 Warrants On July 1, 2017, the 2017 Notes reached maturity and a majority of the holders elected to convert their outstanding notes. The Company On May 24, 2017, the Company entered into warrant termination agreements with the 2017 Counterparties to settle the outstanding 2017 Warrants by accelerating the expiration period to varying settlement dates from June 2017 through July 2017, which terminated the existing 2017 Warrants settlement period. The settlement will be delivered in shares of Company common stock, based on a fixed formula using the daily volume weighted average price as the settlement measure. As of June 30, 2017, 2017 Warrants with respect to an aggregate of 6,100,000 shares were settled on a net share basis, resulting in the issuance of 2,328,351 shares of the Company’s common stock to the 2017 Counterparties. The remaining 2017 Warrants, with respect to an aggregate of 3,453,096 shares, will be settled on a net share basis throughout July 2017. See Note 13 to the Unaudited Consolidated Financial Statements for further discussion on the settlement of the 2017 Notes, 2017 Hedge and 2017 Warrants. Revolving Senior Credit Facility In April 2017, the Company entered into an Amended and Restated Credit Agreement (the “2017 Credit Agreement”) for a revolving senior credit facility (the “2017 Facility”), which replaced the previous Credit Agreement the Company had entered into in February 2016. The 2017 Credit Agreement provides for secured revolving loans, multicurrency loan options and letters of credit in an aggregate amount of up to $500.0 million. The 2017 Credit Agreement also contains an expansion feature, which allows the Company to increase the aggregate principal amount of the 2017 Facility provided the Company remains in compliance with the underlying financial covenants, including but not limited to, compliance with the consolidated interest coverage ratio and certain consolidated leverage ratios. The 2017 Facility matures in April 2022 (subject to an earlier springing maturity date), and includes a sublimit of $100.0 million for multicurrency borrowings, a sublimit of $50.0 million for the issuance of standby letters of credit, and a sublimit of $5.0 million for swingline loans. All assets of the Company and its material domestic subsidiaries are pledged as collateral under the 2017 Facility (subject to customary exceptions) pursuant to the term set forth in the Amended and Restated Security and Pledge Agreement (the “2017 Security Agreement”) executed in favor of the administrative agent by the Company. Each of the Company’s material domestic subsidiaries guarantees the 2017 Facility. In connection with the 2017 Facility, the Company incurred issuance costs which will be amortized over the term of the 2017 Facility. As of June 30, 2017, the Company had $20.0 million outstanding under the 2017 Facility, at an interest rate of 2.97% (one month LIBOR plus 1.75%). Borrowings under the 2017 Facility are used by the Company to provide financing for working capital and other general corporate purposes, including potential mergers and acquisitions. Borrowings under the 2017 Facility bear interest, at the Company’s option, at a rate equal to an applicable margin plus: (a) the applicable Eurocurrency Rate (as defined in the 2017 Credit Agreement), or (b) a base rate determined by reference to the highest of (1) the federal funds effective rate plus 0.50%, (2) the Bank of America prime rate, and (3) LIBOR for an interest period of one month plus 1.00%. The margin for the 2017 Facility ranges, based on the Company’s consolidated leverage ratio, from 0.00% to 1.00% in the case of base rate loans and from 1.00% to 2.00% in the case of Eurocurrency Rate loans. The 2017 Facility includes an unused line fee ranging, based on the Company’s consolidated leverage ratio, from 0.20% to 0.35% per annum on the revolving commitment. The 2017 Credit Agreement contains affirmative, negative, permitted acquisition and financial covenants, and events of default customary for financings of this type. The financial covenants require the Company to maintain ratios of consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) in relation to consolidated interest expense and consolidated debt, respectively, as defined in the 2017 Credit Agreement. The 2017 Facility grants the lenders preferred first priority liens and security interests in capital stock, intercompany debt and all of the present and future property and assets of the Company and each guarantor. The Company is currently in compliance with the 2017 Credit Agreement covenants. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 7. Stock-Based Compensation 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 June 30, Six Months Ended June 30, ( in thousands 2017 2016 2017 2016 Sales, marketing and administrative expense $ 7,891 $ 7,415 $ 14,686 $ 11,846 Research and development expense 428 397 567 406 Cost of goods sold 75 53 158 105 Stock-based compensation expense before taxes 8,394 7,865 15,411 12,357 Related income tax benefits (3,190 ) (3,146 ) (5,856 ) (4,943 ) Stock-based compensation expense, net of taxes $ 5,204 $ 4,719 $ 9,555 $ 7,414 At June 30, 2017, there was $62.7 million of unamortized compensation expense for restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) to be recognized over a weighted average period of 2.3 years. Restricted Stock Units The Company issued approximately 16,000 and 316,000 shares of common stock, before net share settlement, upon vesting of RSUs (including PRSUs) during the three and six months ended June 30, 2017, respectively, and issued approximately 772,000 shares of common stock in settlement of RSUs (including PRSUs) upon their vesting during the year ended December 31, 2016. Stock Options and Purchase Rights The weighted average assumptions used to estimate the fair value of stock purchase rights under the employee stock purchase plan (“ESPP”) are as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 ESPP Volatility 21 % 31 % 23 % 31 % Expected term (years) 0.5 0.5 0.5 0.6 Risk free interest rate 0.8 % 0.4 % 0.6 % 0.3 % Expected dividend yield — % — % — % — % Under the terms of the ESPP, shareowners 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 the Company’s common stock for a purchase price equal to 85% of the lower of the fair market value per share (at closing) of the Company’s common stock on (i) the commencement date of the two-year or six-month offering period (depending on the purchase period enrolled), or (ii) the respective purchase date. The Company has not granted any options since 2011. The Company issued approximately 23,000 and 162,000 shares of common stock, before net share settlement, upon the exercise of outstanding stock options during the three and six months ended June 30, 2017, respectively, and issued approximately 1,556,000 shares of common stock upon the exercise of outstanding stock options during the year ended December 31, 2016. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes Income taxes are determined using an estimated annual effective tax rate applied against income, and then adjusted for the tax impacts of certain significant and discrete items. For the six months ended June 30, 2017, the Company treated the tax impact of the following as discrete events for which the tax effect was recognized separately from the application of the annual effective tax rate: tax benefits related to excess share-based payments and certain losses for which the Company receives no tax benefit. The Company’s effective tax rate recorded for the six months ended June 30, 2017 was 26%. 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 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. The Company had an increase in gross unrecognized tax benefits of approximately $0.5 million during the six months ended June 30, 2017, primarily related to research and development credits and domestic production activities deductions. The Company does not anticipate that there will be a significant change in unrecognized tax benefits within the next 12 months. The Company is subject to routine compliance reviews on various tax matters around the world in the ordinary course of business. Currently, income tax audits are being conducted in the state of New York and the state of Louisiana. U.S. and most foreign jurisdictions remain subject to examination in all years due to prior year net operating losses and R&D credits. |
Business Segment, Product, and
Business Segment, Product, and Geographic Information | 6 Months Ended |
Jun. 30, 2017 | |
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 and investments are managed and evaluated by the chief operating decision maker (“CODM”) as well as the lack of availability of discrete financial information at a lower level. 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, decision-making regarding the Company’s overall operating performance and allocation of Company resources is assessed on a consolidated basis. As such, the Company operates as one reporting segment. The Company has disclosed the revenues for each of its product line offerings to provide the reader of the financial statements transparency into the operations of the Company. The Company reports under two distinct product lines; spinal hardware and surgical support. The Company’s spinal hardware product line offerings include implants and fixation products. The Company’s surgical support product offerings include IOM services, disposables and biologics, all of which are used to aid spinal surgery. Revenue by product line was as follows: Three Months Ended June 30, Six Months Ended June 30, ( in thousands 2017 2016 2017 2016 Spinal Hardware $ 183,589 $ 171,242 $ 357,293 $ 323,199 Surgical Support 76,984 64,968 153,144 128,115 Total Revenue $ 260,573 $ 236,210 $ 510,437 $ 451,314 Revenue and property and equipment, net, by geographic area were as follows: Revenue Property and Equipment, Net Three Months Ended June 30, Six Months Ended June 30, June 30, December 31, ( in thousands 2017 2016 2017 2016 2017 2016 United States $ 217,147 $ 200,599 $ 431,354 $ 388,949 $ 177,657 $ 148,227 International (excludes Puerto Rico) 43,426 35,611 79,083 62,365 36,944 33,297 Total $ 260,573 $ 236,210 $ 510,437 $ 451,314 $ 214,601 $ 181,524 |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments | 10. Commitments Licensing and Purchasing Agreements As of June 30, 2017 the Company has obligations under certain consulting arrangements to pay up to approximately $20.4 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 these contingent obligations are considered a cost of goods sold and are recognized ratably as and if milestones are achieved. These agreements expire on various dates through 2024. Executive Severance Plans The Company has employment contracts with key executives and maintains severance plans that provide for the payment of severance and other benefits if terminated for reasons other than cause, as defined in those agreements and plans. Certain agreements call for payments that are based on historical compensation, accordingly, the amount of the contractual commitment will change over time commensurate with the executive’s applicable earnings. At June 30, 2017, future commitments for such key executives were approximately $32.6 million. In certain circumstances, the agreements call for the acceleration of equity vesting. Those figures are not reflected in the above information. |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
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. 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, Medtronic filed a patent infringement lawsuit against the Company (the “Medtronic Litigation”), alleging that certain of the Company’s products or methods, including the XLIF procedure, infringe, or contribute to the infringement of, various U.S. patents assigned or licensed to Medtronic. The Company brought counterclaims against Medtronic alleging infringement of certain of the Company’s patents. On July 13, 2016, the Company entered into a settlement and patent license agreement (the “2016 Settlement Agreement”) with Medtronic to settle the Medtronic Litigation. The Company no longer has any remaining liability or restricted cash related to this matter. The Medtronic Litigation was administratively broken into three phases. The initial trial on the first phase of the case concluded in September 2011 in the U.S. District Court for the Southern District of California (the “District Court”), and a jury delivered an unfavorable verdict against the Company with respect to certain Medtronic patents and a favorable verdict with respect to one $101.2 million Both parties appealed the verdict, and the Company entered into an escrow arrangement and transferred $113.3 million of cash into a restricted escrow account in March 2012 to secure the amount of judgment, plus prejudgment interest, during pendency of the appeal. In March 2015, the U.S. Court of Appeals for the Federal Circuit issued a decision upholding the jury’s findings of liability as to all patents, but overturning the damage award against the Company as improper (the “Court of Appeals Decision”). The case was remanded back to the District Court for further proceedings and a retrial to determine a proper damages award. As a result of the Court of Appeals Decision, the parties agreed to release all of the escrow funds related to this matter back to the Company. During the year ended December 31, 2015, the Company transferred all of the funds in escrow related to this matter, approximately $114.1 million, from long-term restricted cash and investments into its unrestricted investment accounts. In March 2015, the Company sought reexamination of certain claims of one of the Medtronic patents at issue and for which the Company was found to have infringed. On June 15, 2016, the District Court stayed remand proceedings and retrial of this first phase of the case pending the reexamination. The second phase of the case involved one Medtronic cervical plate patent. In April 2013, the Company and Medtronic entered into a settlement agreement fully resolving the second phase of the case. As part of the settlement, the Company received a license to practice various patent families that collectively represent a 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 The third phase of the case involved Medtronic filing additional patent claims in the U.S. District Court for the Northern District of Indiana in August 2012 alleging that certain Company spinal implants (including its CoRoent XL family of spinal implants), the Company’s Osteocel Plus bone graft product, and the Company’s XLIF procedure and use of MaXcess IV retractor during the XLIF procedure infringe several Medtronic patents. Under the terms of the 2016 Settlement Agreement, the Company paid Medtronic $45.0 million, and the parties released each other from, inter alia, any and all past patent infringement arising from the Medtronic Litigation. As a result, the Company adjusted its litigation accrual from $88.3 million to $45.0 million and recorded a $43.3 million gain in the Consolidated Statement of Operations during the three months ended June 30, 2016. Pursuant to the 2016 Settlement Agreement, the parties granted each other irrevocable, worldwide, nonexclusive, paid-up, royalty-free licenses to practice certain of their respective patents as to certain of their respective existing product lines, subject to specified exceptions and limitations. The 2016 Settlement Agreement also provides that, subject to certain limitations and exceptions, and for a period of seven years, neither party will assert against the other certain claims for patent infringement (generally claims related to spinal implants and related instruments, biologics and neuromonitoring) other than through a specified dispute resolution process, with the right to thereafter pursue claims outside that process subject to certain limitations and exceptions. Further, Medtronic has agreed that, for a period of five years, and subject to limitations and exceptions, it will not assert against the Company certain other claims for patent infringement other than through a specified dispute resolution process, with the right to thereafter pursue claims outside that process subject to certain limitations and exceptions. Securities Litigation On August 28, 2013, a purported securities class action lawsuit was filed in the U.S. 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 operative 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, Brad Mauss, the lead plaintiff in the case, filed an Amended Class Action Complaint for Violations of the Federal Securities Laws. The Company answered the complaint on August 25, 2016, and discovery is proceeding. The plaintiffs filed motions for class certification on October 28, 2016 and the Company’s opposition papers were filed on January 9, 2017. On March 22, 2017, the court issued an order granting class certification. The Company filed a petition to appeal the order granting class certification with the U.S. Court of Appeals for the Ninth Circuit on April 5, 2017 and the plaintiffs have filed an opposition to the petition. Trial has been set for December 18, 2017. At June 30, 2017, 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. Shareholder Derivative Litigation On September 28, 2016, a shareholder derivative complaint was filed by James Borta in the Superior Court of California for the County of San Diego naming certain of the Company’s current and former executive officers and directors for allegedly breaching their fiduciary duties by, among other things, making allegedly false and misleading statements about the Company’s business, operations, and prospects. The derivative complaint is based upon the same factual allegations as the securities class action litigation and names the Company as a nominal defendant. The plaintiff filed an Amended Complaint on March 1, 2017. The Company demurred to the Amended Complaint on April 7, 2017 and the court sustained the Company’s demurrer and provided the plaintiff thirty days to file an amended complaint. On June 30, 2017 the plaintiff filed a Second Amended Derivative Complaint. At June 30, 2017, 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. Madsen Medical, Inc. Litigation On February 19, 2016, an unfavorable jury verdict was delivered against the Company in its litigation in the U.S. District Court for the Southern District of California against Madsen Medical, Inc. (“MMI”), a former sales agent. Specifically, the jury awarded MMI $7.5 million in lost profits for tortious interference, $14.0 million for unjust enrichment, $20.0 million in punitive damages, and approximately $0.3 million in damages for breach of contract. he trial court entered judgment in favor of MMI in the amount of $27.8 million, which amount excluded the $14.0 million disgorgement awarded by the jury. On July 5, 2016, the trial court also awarded MMI attorney’s fees and costs of approximately $1.1 million. The Company’s post-trial motions for judgment as a matter of law and/or for a new trial were denied, and the Company has appealed both the verdict and the court’s subsequent award of attorney’s fees and costs. However, the Company did not appeal the judgment with respect to breach of contract and accordingly accrued the $0.3 million in damages during the six months ended June 30, 2017. During pendency of any appeals, the Company has secured a bond to cover the amount of the judgment and attorneys’ fees and costs. Historically the Company had believed the likelihood of a loss in this case was remote given the underlying facts of the case, however, during the quarter ended March 31, 2016, the judgment entered caused the Company to reassess its position. The Company, based on its own assessment as well as that of outside counsel, believes that upon either post-trial motions or appeal the judgment will be vacated and have deemed it probable that is the outcome for all appealed judgments. The Company continues to believe for all judgments under appeal that such judgments will be vacated, and accordingly, at 30, 2017, the Company believes that the outcome of the case does not constitute a probable nor an estimable loss associated with the litigation but rather a reasonably possible loss rather than a remote loss as historically contemplated. Therefore, for all judgments under appeal the Company has not recorded a loss contingency but has assessed a reasonable range of potential loss, which would be from zero to the current amount entered as a judgment, as well as attorney’s fees and interest, in accordance with the accounting guidance required by ASC 450, Contingencies. |
Regulatory Matters
Regulatory Matters | 6 Months Ended |
Jun. 30, 2017 | |
Regulatory Matter [Abstract] | |
Regulatory Matters | 12. Regulatory Matters On August 31, 2015, the Company received a civil investigative demand (“CID”) issued by the Department of Justice (“DOJ”) pursuant to the federal False Claims Act. The CID requires the delivery of a wide range of documents and information related to an investigation by the DOJ concerning allegations that the Company assisted a physician group customer in submitting improper claims for reimbursement and made improper payments to the physician group in violation of the Anti-Kickback Statute. The Company is cooperating with the DOJ. No assurance can be given as to the timing or outcome of this investigation. At June 30, 2017, the probable outcome of this matter 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 matter. On June 9, 2017, the Company received a 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 seeks discovery of documents for the period January 2014 through June 2017, primarily associated with sales to a particular customer and relationships related to that customer account. The Company is working with the OIG to understand the scope of the subpoena and its request for documents, and the Company intends to fully cooperate with the OIG's request. No assurance can be given as to the timing or outcome of this investigation. At June 30, 2017, the probable outcome of this matter 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 matter. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events Settlement of 2017 Notes and 2017 Hedge On July 1, 2017, the 2017 Notes reached maturity and a majority of the holders elected to convert their outstanding notes. The Company On May 24, 2017, the Company entered into warrant termination agreements with the 2017 Counterparties to settle the outstanding 2017 Warrants by accelerating the expiration period to varying settlement dates from June 2017 through July 2017, which terminated the existing 2017 Warrants settlement period. The settlement will be delivered in shares of Company common stock, based on a fixed formula using the daily volume weighted average price as the settlement measure. As of June 30, 2017, 2017 Warrants with respect to an aggregate of 6,100,000 shares were settled on a net share basis, resulting in the issuance of 2,328,351 shares of the Company’s common stock to the 2017 Counterparties. The remaining 2017 Warrants, with respect to an aggregate of 3,453,096 shares, will be settled on a net share basis throughout July 2017. |
Description of Business and B20
Description of Business and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
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’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 the Company’s proprietary software-driven nerve detection and avoidance systems and Intraoperative Monitoring (“IOM”) services and support; MaXcess, an integrated split-blade retractor system; and a wide variety of specialized implants and biologics. In May 2015, the Company launched Integrated Global Alignment (“iGA”), in which products and computer assisted technology under the MAS platform help achieve more precise spinal alignment. The individual components of the MAS platform, and many of the Company’s products, can also be used in open or traditional spine surgery. The Company continues to focus 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 dedicates significant resources toward training spine surgeons on its unique technology and products. The Company’s primary business model is to loan its MAS systems to surgeons and hospitals that purchase implants, biologics and disposables for use in individual procedures. 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. 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 sells MAS instrument sets, MaXcess and nerve monitoring systems to hospitals, however, such sales are immaterial to the Company’s results of operations. The Company also designs and sells expandable growing rod implant systems that can be non-invasively lengthened following implantation with precise, incremental adjustments via an external remote controller using magnetic technology called MAGnetic External Control, or MAGEC, which allows for the minimally invasive treatment of early-onset and adolescent scoliosis. This technology is also the basis for the Company’s PRECICE limb lengthening system, which allows for the correction of long bone limb length discrepancy, as well as enhanced bone healing in patients that have experienced traumatic injury. The Company intends to continue development on a wide variety of projects intended to broaden surgical applications for greater procedural integration of its MAS techniques and additional applications of the MAGEC technology. Such applications include tumor, trauma, and deformity, as well as increased fixation options, sagittal alignment products, imaging and navigation. The Company also expects to continue expanding its other product and services offerings as it executes on its strategy to offer customers an end-to-end, integrated procedural solution for spine surgery. The Company intends to continue to pursue business and technology acquisition targets and strategic partnerships. |
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 interest at the acquisition date and classifies the amounts attributable to non-controlling interest 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 generally accepted accounting principles in the United States (“GAAP”). Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for any other interim period or for the full year. These Unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the Unaudited 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 certain operating expenses into business transition costs. The reclassification had no impact on previously reported results of operations or financial position Recently Adopted Accounting Standards” below for information regarding historical financial information adjusted for a |
Use of Estimates | Use of Estimates To prepare financial statements in conformity with GAAP, management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Recently Adopted Accounting Standards | Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases, In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Restricted Cash In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Clarifying the Definition of a Business The Company is in the process of determining the effects the adoption will have on its Consolidated Financial Statements as well as whether to early adopt the new guidance In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other The Company is in the process of determining the effects the adoption will have on its Consolidated Financial Statements as well as whether to early adopt the new guidance In February 2017, the FASB issued Accounting Standards Update No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets The Company will adopt the new standard beginning January 2018. In May 2017 , the FASB issued Accounting Standards Update No. 2017-09, Compensation – Stock Compensation , which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those periods. The Company does not expect the adoption to have any significant impact on its Consolidated Financial Statements. In July 2017 , the FASB issued Accounting Standards Update No. 2017-19, Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging , which changes the accounting and earnings per share for certain instruments with round down features. The amendments in this update should be applied using a cumulative-effect adjustment as of the beginning of the fiscal year or retrospective adjustment to each period presented. This update is effective for annual periods beginning after December 15, 2018, and interim periods within those periods. . Recently Adopted Accounting Standards In March 2016, the FASB issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory In January 2017, the FASB issued Accounting Standards Update No. 2017-03, Accounting Changes and Error Corrections and Investments – Equity Method and Joint Ventures |
Revenue Recognition | Revenue Recognition In accordance with the SEC guidance, the Company recognizes revenue when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. Specifically, revenue from the sale of implants, biologics and disposables is generally recognized upon a purchase order from the hospital or acknowledgment from the hospital indicating product use or implantation, or upon shipment to third-party customers who immediately accept title. Revenue from IOM services is recognized in the period the service is performed for the amount of payment expected to be received. Revenue from the sale of instrument sets and nerve monitoring systems is recognized upon receipt of a purchase order and the subsequent shipment to customers who immediately accept title. |
Comprehensive Income | Comprehensive Income Comprehensive income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income includes unrealized gains or losses, net of tax, on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive income were $8.1 million and $10.6 million at June 30, 2017 and December 31, 2016, respectively. |
Product Shipment Costs | Product Shipment Costs Product shipment costs, included in sales, marketing and administrative expense in the accompanying Consolidated Statements of Operations, were $5.7 million and $11.6 million for the three and six months ended June 30, 2017, respectively, and $6.6 million and $12.8 million for the three and six months ended June 30, 2016, respectively. The majority of the Company’s shipping costs are related to the loaning of instrument sets, which are not typically sold as part of the Company’s core sales offering. Amounts billed to customers for shipping and handling of products are reflected in revenues and are not significant for any period presented. |
Business Transition Costs | Business Transition Costs The Company incurs certain costs related to acquisition, integration and business transition activities which include severance, relocation, consulting, leasehold exit costs, third party merger and acquisition costs and other costs directly associated with such activities. The Company incurred $1.4 million of business transition costs during the three and six months ended June 30, 2017, respectively, and $2.8 million and $8.1 million during the three and six months ended June 30, 2016, respectively, primarily related to acquisition and integration activities. |
Litigation Liability Gain | Litigation Liability Gain During the three and six months ended June 30, 2016, the Company agreed to settle its ongoing litigation with Warsaw Orthopedic, Inc., Medtronic Sofamor Danek USA, Inc. and other Medtronic related entities (collectively, “Medtronic”). As a result of the settlement, the Company agreed to pay $45.0 million to Medtronic and accordingly recorded a gain of $43.3 million related to the settlement by reducing its previous accrual of $88.3 million related to the matter. See Note 11 to the Unaudited Consolidated Financial Statements for further discussion. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Income Per Share | The following table sets forth the computation of basic and diluted net income per share attributable to the Company: Three Months Ended June 30, Six Months Ended June 30, ( in thousands, except per share data 2017 2016 2017 2016 Numerator: Net income attributable to NuVasive, Inc. $ 12,661 $ 30,213 $ 25,429 $ 26,845 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,082 50,027 50,825 49,822 Dilutive potential common stock outstanding: Stock options and employee stock purchase plan 138 374 180 409 Restricted stock units 1,356 1,281 1,386 1,090 Warrants 2,929 819 2,987 409 Senior Convertible Notes 2,825 658 2,681 624 Weighted average common shares outstanding for diluted 58,330 53,159 58,059 52,354 Basic net income per share attributable to NuVasive, Inc. $ 0.25 $ 0.60 $ 0.50 $ 0.54 Diluted net income per share attributable to NuVasive, Inc. $ 0.22 $ 0.57 $ 0.44 $ 0.51 |
Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share | The following weighted-average outstanding common stock equivalents were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Three Months Ended June 30, Six Months Ended June 30, ( in thousands 2017 2016 2017 2016 Stock options, employee stock purchase plan, and restricted stock units 41 3 71 1,817 Warrants 10,865 10,865 10,865 15,642 Senior Convertible Notes — 10,865 — 15,100 Total 10,906 21,733 10,936 32,559 |
Financial Instruments and Fai22
Financial Instruments and Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis | The fair values of the Company’s assets and liabilities, including cash equivalents, marketable securities, and restricted investments are measured at fair value on a recurring basis, and are determined under the fair value categories as follows: Quoted Price in Significant Other Significant Active Market Observable Inputs Unobservable ( in thousands Total (Level 1) (Level 2) Inputs (Level 3) June 30, 2017: Cash equivalents: Money market funds $ 17,000 $ 17,000 $ — $ — Total cash equivalents $ 17,000 $ 17,000 $ — $ — December 31, 2016: Cash equivalents: Money market funds $ 72,866 $ 72,866 $ — $ — Corporate notes 4,551 — 4,551 — Commercial paper 21,471 — 21,471 — Securities of government-sponsored entities 5,995 — 5,995 — Total cash equivalents $ 104,883 $ 72,866 $ 32,017 $ — |
Schedule of Fair Value of Liabilities Measured on Recurring Basis Using Unobservable Inputs | 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): Six Months Ended June 30, ( in thousands 2017 2016 Fair value measurement at beginning of period $ 67,501 $ — Contingent consideration liability recorded upon acquisition 533 21,439 Change in fair value measurement (657 ) 339 Changes resulting from foreign currency fluctuations 44 32 Contingent consideration paid or settled (30,000 ) — Fair value measurement at end of period $ 37,421 $ 21,810 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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 June 30, 2017: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 247,148 $ (82,352 ) $ 164,796 Manufacturing know-how and trade secrets 12 21,139 (14,432 ) 6,707 Trade name and trademarks 9 25,200 (9,022 ) 16,178 Customer relationships 9 118,275 (37,490 ) 80,785 Total intangible assets subject to amortization 9 $ 411,762 $ (143,296 ) $ 268,466 Intangible assets not subject to amortization: Goodwill $ 486,439 Total goodwill and intangible assets, net $ 754,905 Weighted- Average Amortization Period Gross Accumulated Intangible December 31, 2016: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 247,148 $ (66,833 ) $ 180,315 Manufacturing know-how and trade secrets 13 20,572 (13,604 ) 6,968 Trade name and trademarks 9 25,200 (7,478 ) 17,722 Customer relationships 9 117,018 (30,880 ) 86,138 Total intangible assets subject to amortization 9 $ 409,938 $ (118,795 ) $ 291,143 Intangible assets not subject to amortization: Goodwill $ 485,685 Total goodwill and intangible assets, net $ 776,828 |
Schedule of changes in the carrying value of goodwill | The following table summarizes the changes in the carrying value of the Company’s goodwill: ( in thousands December 31, 2016 Gross goodwill $ 493,985 Accumulated impairment loss (8,300 ) 485,685 Changes to gross goodwill Increases recorded in business combinations 374 Changes in purchase price allocation 386 Changes resulting from foreign currency fluctuations (6 ) 754 June 30, 2017 Gross goodwill 494,739 Accumulated impairment loss (8,300 ) $ 486,439 |
Future amortization expense related to intangible assets | Total future amortization expense related to intangible assets subject to amortization at June 30, 2017 is set forth in the table below: ( in thousands Remaining 2017 $ 24,489 2018 46,917 2019 45,235 2020 44,780 2021 42,861 Thereafter through 2026 64,184 Total future amortization expense $ 268,466 |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisition [Line Items] | |
Summary of assets and liabilities included in the accompanying consolidated balance sheet | Total assets and liabilities of Progentix included in the accompanying Consolidated Balance Sheets are as follows: ( in thousands June 30, 2017 December 31, 2016 Total current assets $ 781 $ 334 Identifiable intangible assets, net 9,826 10,900 Goodwill 12,654 12,654 Accounts payable and accrued expenses 496 551 Deferred tax liabilities, net 689 880 Non-controlling interest 4,713 5,588 |
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 interest: Six Months Ended June 30, ( in thousands 2017 2016 Non-controlling interest at beginning of period $ 5,588 $ 7,309 Less: Net loss attributable to the non-controlling interest (875 ) (880 ) Non-controlling interest at end of period $ 4,713 $ 6,429 |
Ellipse Technologies Inc [Member] | |
Business Acquisition [Line Items] | |
Schedule of allocation for purchase price to the assets acquired and liabilities assumed based on fair values | The Company applied certain assumptions and findings in the valuation outcome for the assets acquired and liabilities assumed, for which the allocation of the purchase price is based on their fair values, as follows: ( in thousands Cash paid for purchase $ 381,579 Accounts receivable 7,148 Inventory 22,451 Other current assets 1,855 Property, plant and equipment, net 6,725 Definite-lived intangible assets: Developed technology 133,900 Customer relationships 33,200 Trade names 16,200 Goodwill 241,905 Deferred tax assets 18,471 Other assets 1,868 Contingent consideration liability 18,800 Deferred tax liabilities 75,160 Other liabilities assumed 8,184 $ 381,579 |
Schedule of unaudited pro forma financial information | The following table presents the unaudited pro forma results for the three and six months ended June 30, 2017 and June 30, 2016. The unaudited pro forma financial information combines the results of operations of NuVasive and Ellipse Technologies as though the companies had been combined as of January 1, 2015 and therefore many of the non-recurring business combination adjustments would have been included in the year ended December 31, 2015 by nature of such adjustments instead of the periods presented. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at such times. The comparable periods for the three and six months ended June 30, 2016, include adjustments directly attributable to the business combination, including adjustments for increased fair value of acquired inventory of $ (7.4) million and $(12.3) million respectively, . The six month period ended June 30, 2016 also includes an adjustment of $4.0 million for acquisition related expenses. Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 ( in thousands, except per share amounts (unaudited) (unaudited) (unaudited) (unaudited) Revenues $ 260,573 $ 236,270 $ 510,437 $ 457,282 Net income (loss) attributable to NuVasive, Inc. 12,661 35,966 25,429 28,438 Net income per share attributable to NuVasive, Inc.: Basic $ 0.25 $ 0.72 $ 0.50 $ 0.57 Diluted $ 0.22 $ 0.68 $ 0.44 $ 0.54 |
Indebtedness (Tables)
Indebtedness (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Carrying Value of Senior Convertible Notes | The carrying values of the Company’s Senior Convertible Notes are as follows: ( in thousands June 30, 2017 December 31, 2016 2.75% Senior Convertible Notes due 2017: Principal amount $ 63,302 $ 63,317 Unamortized debt discount — (1,417 ) Unamortized debt issuance costs — (199 ) 63,302 61,701 2.25% Senior Convertible Notes due 2021: Principal amount 650,000 650,000 Unamortized debt discount (64,880 ) (72,713 ) Unamortized debt issuance costs (11,588 ) (12,875 ) 573,532 564,412 Total Senior Convertible Notes $ 636,834 $ 626,113 Less: Current portion (63,302 ) (61,701 ) Long-term Senior Convertible Notes $ 573,532 $ 564,412 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [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 June 30, Six Months Ended June 30, ( in thousands 2017 2016 2017 2016 Sales, marketing and administrative expense $ 7,891 $ 7,415 $ 14,686 $ 11,846 Research and development expense 428 397 567 406 Cost of goods sold 75 53 158 105 Stock-based compensation expense before taxes 8,394 7,865 15,411 12,357 Related income tax benefits (3,190 ) (3,146 ) (5,856 ) (4,943 ) Stock-based compensation expense, net of taxes $ 5,204 $ 4,719 $ 9,555 $ 7,414 |
Weighted Average Assumptions Used to Estimate Fair Value of Stock Purchase Rights under ESPP | The weighted average assumptions used to estimate the fair value of stock purchase rights under the employee stock purchase plan (“ESPP”) are as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 ESPP Volatility 21 % 31 % 23 % 31 % Expected term (years) 0.5 0.5 0.5 0.6 Risk free interest rate 0.8 % 0.4 % 0.6 % 0.3 % Expected dividend yield — % — % — % — % |
Business Segment, Product and G
Business Segment, Product and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Product Lines | Revenue by product line was as follows: Three Months Ended June 30, Six Months Ended June 30, ( in thousands 2017 2016 2017 2016 Spinal Hardware $ 183,589 $ 171,242 $ 357,293 $ 323,199 Surgical Support 76,984 64,968 153,144 128,115 Total Revenue $ 260,573 $ 236,210 $ 510,437 $ 451,314 |
Schedule of Revenue and Net Property and Equipment by Geographical Area | Revenue and property and equipment, net, by geographic area were as follows: Revenue Property and Equipment, Net Three Months Ended June 30, Six Months Ended June 30, June 30, December 31, ( in thousands 2017 2016 2017 2016 2017 2016 United States $ 217,147 $ 200,599 $ 431,354 $ 388,949 $ 177,657 $ 148,227 International (excludes Puerto Rico) 43,426 35,611 79,083 62,365 36,944 33,297 Total $ 260,573 $ 236,210 $ 510,437 $ 451,314 $ 214,601 $ 181,524 |
Description of Business and B28
Description of Business and Basis of Presentation (Details Textual) - USD ($) | Jan. 01, 2017 | May 31, 2013 | Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||||||
Translation adjustment functional to reporting currency, net of tax | $ 8,100,000 | $ 8,100,000 | $ 10,600,000 | ||||||
Product shipment costs | 5,700,000 | $ 6,600,000 | 11,600,000 | $ 12,800,000 | |||||
Business transition costs | $ 1,369,000 | 2,756,000 | $ 1,424,000 | 8,063,000 | |||||
Litigation liability gain | 43,310,000 | 43,310,000 | |||||||
Medtronic Litigation [Member] | |||||||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||||||
Loss contingency, settlement agreement, consideration paid | $ 7,500,000 | 45,000,000 | 45,000,000 | $ 45,000,000 | |||||
Litigation liability gain | 43,300,000 | 43,300,000 | |||||||
Medtronic Litigation [Member] | Maximum [Member] | |||||||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||||||
Litigation accrual | $ 88,300,000 | $ 88,300,000 | |||||||
Accounting Standards Update 2016-09 [Member] | |||||||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||||||
Adjustment of deferred tax assets and accumulated deficit | $ 16,600,000 | ||||||||
Adjustment of provision for income taxes | $ (5,500,000) | ||||||||
Effect of change in net income (loss) basic per share | $ (0.11) | ||||||||
Accounting Standards Update 2016-16 [Member] | |||||||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||||||
Adjustment of deferred tax assets and accumulated deficit | $ 11,600,000 | ||||||||
Effect of change in net income (loss) basic per share | $ 0.02 | $ 0.02 | |||||||
Effect of change in income tax expense | $ 900,000 | $ 1,500,000 | |||||||
Effect of change in net income (loss) diluted per share | $ 0.03 | $ 0.03 |
Net Income Per Share - Computat
Net Income Per Share - Computation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Numerator: | ||||
Net income attributable to NuVasive, Inc. | $ 12,661 | $ 30,213 | $ 25,429 | $ 26,845 |
Denominator for basic and diluted net income per share: | ||||
Weighted average common shares outstanding for basic | 51,082 | 50,027 | 50,825 | 49,822 |
Dilutive potential common stock outstanding: | ||||
Warrants | 2,929 | 819 | 2,987 | 409 |
Senior Convertible Notes | 2,825 | 658 | 2,681 | 624 |
Weighted average common shares outstanding for diluted | 58,330 | 53,159 | 58,059 | 52,354 |
Basic net income per share attributable to NuVasive, Inc. | $ 0.25 | $ 0.60 | $ 0.50 | $ 0.54 |
Diluted net income per share attributable to NuVasive, Inc. | $ 0.22 | $ 0.57 | $ 0.44 | $ 0.51 |
Stock Options and Employee Stock Purchase Plan [Member] | ||||
Dilutive potential common stock outstanding: | ||||
Stock options and employee stock purchase plan | 138 | 374 | 180 | 409 |
Restricted Stock Units [Member] | ||||
Dilutive potential common stock outstanding: | ||||
Stock options and employee stock purchase plan | 1,356 | 1,281 | 1,386 | 1,090 |
Net Income Per Share - Anti-dil
Net Income Per Share - Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of earnings per share | 10,906 | 21,733 | 10,936 | 32,559 |
Stock Options, Employee Stock Purchase Plan, and Restricted Stock Units [Member] | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of earnings per share | 41 | 3 | 71 | 1,817 |
Warrants [Member] | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of earnings per share | 10,865 | 10,865 | 10,865 | 15,642 |
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 | 10,865 | 15,100 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Details) - Accounting Standards Update 2016-09 [Member] $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($)$ / shares | |
Earning Per Share [Line Items] | |
Retrospective adjustments resulting decrease in net loss attributable to the company | $ | $ 5.5 |
Effect of change in net loss per share | $ / shares | $ (0.11) |
Financial Instruments and Fai32
Financial Instruments and Fair Value Measurements (Details Textual) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2017USD ($) | Jun. 30, 2017USD ($)investment | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)investment | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Business Acquisition [Line Items] | ||||||
Unrealized loss position investment | investment | 0 | 0 | ||||
Impairment charges recorded for earnings | $ 0 | |||||
Net currency exchange gains (losses) from derivatives instruments | $ (500,000) | $ (300,000) | (300,000) | $ (200,000) | ||
Contingent consideration liability | 19,271,000 | 19,271,000 | $ 49,742,000 | |||
Payments for initial purchase price allocation | 18,800,000 | |||||
Increased fair value adjustments | (11,200,000) | |||||
Ellipse Technologies Inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Payments of outstanding milestone obligation | $ 30,000,000 | |||||
Ellipse Technologies Inc [Member] | ASU 2016-15 [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Payments for initial purchase price allocation | 18,800,000 | |||||
Increased fair value adjustments | (11,200,000) | |||||
Contingent Consideration Liability [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Contingent consideration liability | 37,400,000 | 37,400,000 | 67,500,000 | |||
Quoted Price in Active Market (Level 1) [Member] | Convertible Notes due 2017 [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Debt instrument, fair value disclosure | 116,200,000 | 116,200,000 | 102,700,000 | |||
Quoted Price in Active Market (Level 1) [Member] | Senior Convertible Notes due 2021 [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Debt instrument, fair value disclosure | 901,800,000 | 901,800,000 | 827,600,000 | |||
Foreign Exchange Forward [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Notional principal amount | 16,100,000 | 16,100,000 | 15,100,000 | |||
Foreign Exchange Forward [Member] | Other Current Assets or Other Current Liabilities [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Fair value of derivative instrument asset (liability) | $ (200,000) | |||||
Foreign Exchange Forward [Member] | Other Income (Expense) [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Net losses recognized on derivative instruments | $ 900,000 | $ 1,300,000 | $ 200,000 |
Financial Instruments and Fai33
Financial Instruments and Fair Value Measurements - Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value Measurements on Recurring Basis [Member] - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | $ 17,000 | $ 104,883 |
Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 17,000 | 72,866 |
Corporate Notes [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 4,551 | |
Commercial Paper [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 21,471 | |
Securities of Government-sponsored Entities [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 5,995 | |
Quoted Price in Active Market (Level 1) [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 17,000 | 72,866 |
Quoted Price in Active Market (Level 1) [Member] | Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | $ 17,000 | 72,866 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 32,017 | |
Significant Other Observable Inputs (Level 2) [Member] | Corporate Notes [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 4,551 | |
Significant Other Observable Inputs (Level 2) [Member] | Commercial Paper [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 21,471 | |
Significant Other Observable Inputs (Level 2) [Member] | Securities of Government-sponsored Entities [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | $ 5,995 |
Financial Instruments and Fai34
Financial Instruments and Fair Value Measurements - Schedule of Fair Value of Liabilities Measured on Recurring Basis Using Unobservable Inputs (Details) - Contingent Consideration Liabilities [Member] - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value measurement at beginning of period | $ 67,501 | |
Contingent consideration liability recorded upon acquisition | 533 | $ 21,439 |
Change in fair value measurement | (657) | 339 |
Changes resulting from foreign currency fluctuations | 44 | 32 |
Contingent consideration paid or settled | (30,000) | |
Fair value measurement at end of period | $ 37,421 | $ 21,810 |
Goodwill and Intangible Asset35
Goodwill and Intangible Assets - Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 411,762 | $ 409,938 |
Accumulated Amortization | (143,296) | (118,795) |
Intangible Assets, net | 268,466 | 291,143 |
Intangible assets not subject to amortization: | ||
Goodwill | 486,439 | 485,685 |
Total goodwill and intangible assets, net | $ 754,905 | $ 776,828 |
Developed Technology [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 8 years | 8 years |
Gross Amount | $ 247,148 | $ 247,148 |
Accumulated Amortization | (82,352) | (66,833) |
Intangible Assets, net | $ 164,796 | $ 180,315 |
Manufacturing know-how and trade secrets [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 12 years | 13 years |
Gross Amount | $ 21,139 | $ 20,572 |
Accumulated Amortization | (14,432) | (13,604) |
Intangible Assets, net | $ 6,707 | $ 6,968 |
Trade name and trademarks [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 25,200 | $ 25,200 |
Accumulated Amortization | (9,022) | (7,478) |
Intangible Assets, net | $ 16,178 | $ 17,722 |
Customer relationships [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 118,275 | $ 117,018 |
Accumulated Amortization | (37,490) | (30,880) |
Intangible Assets, net | $ 80,785 | $ 86,138 |
Goodwill and Intangible Asset36
Goodwill and Intangible Assets - Schedule of Changes in the Carrying Value of Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Gross goodwill | $ 494,739 | $ 493,985 |
Accumulated impairment loss | (8,300) | (8,300) |
Goodwill | 486,439 | $ 485,685 |
Changes to gross goodwill | ||
Increases recorded in business combinations | 374 | |
Changes in purchase price allocation | 386 | |
Changes resulting from foreign currency fluctuations | (6) | |
Goodwill period increase (decrease) | $ 754 |
Goodwill and Intangible Asset37
Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Amortization expense related to intangible assets | $ 12.2 | $ 11.3 | $ 25.2 | $ 20.1 |
Goodwill and Intangible Asset38
Goodwill and Intangible Assets - Future Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Future amortization expense related to intangible assets | ||
Remaining 2,017 | $ 24,489 | |
2,018 | 46,917 | |
2,019 | 45,235 | |
2,020 | 44,780 | |
2,021 | 42,861 | |
Thereafter through 2026 | 64,184 | |
Intangible Assets, net | $ 268,466 | $ 291,143 |
Business Combinations (Details
Business Combinations (Details Textual) - USD ($) | Feb. 11, 2016 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2009 | Jun. 30, 2017 |
Business Acquisition [Line Items] | |||||||
Intangible assets, weighted-average useful life | 9 years | 9 years | |||||
Technology-Based Intangible Assets [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets, weighted-average useful life | 8 years | 8 years | |||||
Customer-Related Intangible Assets [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets, weighted-average useful life | 9 years | 9 years | |||||
Ellipse Technologies Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition. date of acquisition | Feb. 11, 2016 | ||||||
Business acquisition, purchase price | $ 380,000,000 | ||||||
Business acquisition, future milestone payment | 30,000,000 | ||||||
Cash payment on purchase of outstanding shares | 382,200,000 | ||||||
Contingent liability | $ 18,800,000 | $ 30,000,000 | |||||
Business combination additional consideration owed | $ 0 | $ 0 | |||||
Revenue from operation of NSO | $ 15,100,000 | $ 21,000,000 | |||||
Income (loss) from operation of NSO | 1,100,000 | (700,000) | |||||
Ellipse Technologies Inc [Member] | Fair Value Adjustment To Inventory [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Fair value adjustment of acquired inventory | $ (7,400,000) | (12,300,000) | |||||
Ellipse Technologies Inc [Member] | Acquisition Related Costs [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition costs related to merger | $ 4,000,000 | ||||||
Ellipse Technologies Inc [Member] | Business Transition Costs [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition costs related to merger | $ 4,000,000 | ||||||
Ellipse Technologies Inc [Member] | Technology-Based Intangible Assets [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets, weighted-average useful life | 7 years | ||||||
Ellipse Technologies Inc [Member] | Customer-Related Intangible Assets [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets, weighted-average useful life | 9 years | ||||||
Ellipse Technologies Inc [Member] | Trade Name Related Intangible Assets [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets, weighted-average useful life | 7 years | ||||||
Ellipse Technologies Inc [Member] | Traditional Working Capital Adjustments [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Escrow cash received | 600,000 | ||||||
Progentix Orthobiology [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Advanced loan accordance to loan agreement | $ 5,300,000 | $ 5,300,000 | |||||
Accrued interest rate of loan | 6.00% | 6.00% | |||||
Progentix Orthobiology [Member] | Preferred Stock Purchase Agreement [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Cash payment on purchase of outstanding shares | $ 10,000,000 | ||||||
Percentage of ownership Interests acquired | 40.00% |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | Feb. 11, 2016 | Jun. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||
Cash paid for purchase | $ 380,080 | |||
Definite-lived intangible assets: | ||||
Goodwill | $ 486,439 | $ 485,685 | ||
Ellipse Technologies Inc [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash paid for purchase | $ 381,579 | |||
Accounts receivable | 7,148 | |||
Inventory | 22,451 | |||
Other current assets | 1,855 | |||
Property, plant and equipment, net | 6,725 | |||
Definite-lived intangible assets: | ||||
Goodwill | 241,905 | |||
Deferred tax assets | 18,471 | |||
Other assets | 1,868 | |||
Contingent consideration liability | 18,800 | |||
Deferred tax liabilities | 75,160 | |||
Other liabilities assumed | 8,184 | |||
Total purchase price of assets acquired and liabilities assumed, net | 381,579 | |||
Ellipse Technologies Inc [Member] | Developed Technology [Member] | ||||
Definite-lived intangible assets: | ||||
Definite-lived intangible assets | 133,900 | |||
Ellipse Technologies Inc [Member] | Customer relationships [Member] | ||||
Definite-lived intangible assets: | ||||
Definite-lived intangible assets | 33,200 | |||
Ellipse Technologies Inc [Member] | Trade Names [Member] | ||||
Definite-lived intangible assets: | ||||
Definite-lived intangible assets | $ 16,200 |
Business Combinations unaudited
Business Combinations unaudited pro forma (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Business Combinations [Abstract] | ||||
Revenues | $ 260,573 | $ 236,270 | $ 510,437 | $ 457,282 |
Net income (loss) attributable to NuVasive, Inc. | $ 12,661 | $ 35,966 | $ 25,429 | $ 28,438 |
Net income per share attributable to NuVasive, Inc.: | ||||
Basic | $ 0.25 | $ 0.72 | $ 0.50 | $ 0.57 |
Diluted | $ 0.22 | $ 0.68 | $ 0.44 | $ 0.54 |
Business Combinations Total ass
Business Combinations Total assets and liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||
Total current assets | $ 592,228 | $ 575,443 | ||
Goodwill | 486,439 | 485,685 | ||
Non-controlling interest | 4,713 | 5,588 | ||
Variable Interest Entity [Member] | ||||
Business Acquisition [Line Items] | ||||
Non-controlling interest | 4,713 | 5,588 | $ 6,429 | $ 7,309 |
Variable Interest Entity [Member] | Progentix Orthobiology [Member] | ||||
Business Acquisition [Line Items] | ||||
Total current assets | 781 | 334 | ||
Identifiable intangible assets, net | 9,826 | 10,900 | ||
Goodwill | 12,654 | 12,654 | ||
Accounts payable and accrued expenses | 496 | 551 | ||
Deferred tax liabilities, net | 689 | 880 | ||
Non-controlling interest | $ 4,713 | $ 5,588 |
Reconciliation of Equity (Net A
Reconciliation of Equity (Net Assets) Attributable to the Non-controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Reconciliation of equity (net assets) attributable to the non-controlling interests | ||||
Non-controlling interest at beginning of period | $ 5,588 | |||
Less: Net loss attributable to the non-controlling interest | $ (432) | $ (423) | (875) | $ (880) |
Non-controlling interest at end of period | 4,713 | 4,713 | ||
Variable Interest Entity [Member] | ||||
Reconciliation of equity (net assets) attributable to the non-controlling interests | ||||
Non-controlling interest at beginning of period | 5,588 | 7,309 | ||
Less: Net loss attributable to the non-controlling interest | (875) | (880) | ||
Non-controlling interest at end of period | $ 4,713 | $ 6,429 | $ 4,713 | $ 6,429 |
Carrying Value of Senior Conver
Carrying Value of Senior Convertible Notes (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Jun. 30, 2011 |
Debt Instrument [Line Items] | ||||
Senior Convertible Notes, Current Portion | $ 63,302,000 | $ 61,701,000 | ||
Long-term Senior Convertible Notes | 573,532,000 | 564,412,000 | ||
Total Senior Convertible Notes | 636,834,000 | 626,113,000 | ||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 63,302,000 | 63,317,000 | $ 402,500,000 | |
Unamortized debt discount | (1,417,000) | |||
Unamortized debt issuance costs | (199,000) | |||
Senior Convertible Notes, Current Portion | 63,302,000 | 61,701,000 | ||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 650,000,000 | 650,000,000 | $ 650,000,000 | |
Unamortized debt discount | (64,880,000) | (72,713,000) | ||
Unamortized debt issuance costs | (11,588,000) | (12,875,000) | ||
Long-term Senior Convertible Notes | $ 573,532,000 | $ 564,412,000 |
Carrying Value of Senior Conv45
Carrying Value of Senior Convertible Notes (Parenthetical) (Details) | Jun. 30, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Jun. 30, 2011 |
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate on convertible notes | 2.75% | 2.75% | 2.75% | |
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate on convertible notes | 2.25% | 2.25% | 2.25% |
Indebtedness (Details Textual)
Indebtedness (Details Textual) | Jul. 01, 2017USD ($)shares | Apr. 30, 2017USD ($) | Mar. 31, 2016USD ($)$ / shares | Jun. 30, 2011USD ($)$ / shares | Jun. 30, 2017USD ($)shares | Dec. 31, 2016USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)dshares | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2011USD ($)$ / sharesshares |
Debt Instrument [Line Items] | |||||||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 634,140,000 | ||||||||||
Proceeds from sale of warrants | 44,850,000 | ||||||||||
Payment for repurchase of additional notes | 343,835,000 | ||||||||||
Loss on repurchases of convertible notes | 17,444,000 | ||||||||||
Principal amount outstanding | $ 63,300,000 | $ 63,300,000 | |||||||||
Revolving Senior Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate on convertible notes | 2.97% | 2.97% | |||||||||
Credit facility, maximum borrowing capacity | $ 500,000,000 | ||||||||||
Credit facility, expiration date | 2022-04 | ||||||||||
Revolving loan outstanding | $ 20,000,000 | $ 20,000,000 | |||||||||
Revolving Senior Credit Facility [Member] | LIBOR [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility bear interest rate | 1.75% | ||||||||||
Revolving Senior Credit Facility [Member] | Federal Funds Effective Rate [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility bear interest rate | 0.50% | ||||||||||
Multicurrency Borrowings [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility, maximum borrowing capacity | $ 100,000,000 | ||||||||||
Standby Letters of Credit [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility, maximum borrowing capacity | 50,000,000 | ||||||||||
Swing Line Loans [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility, maximum borrowing capacity | $ 5,000,000 | ||||||||||
Series A Convertible Participating Preferred Stock [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of common stock shares preferred stock convertible into | shares | 20 | ||||||||||
2021 Warrants [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Proceeds from sale of warrants | $ 44,900,000 | ||||||||||
Warrant strike price | $ / shares | $ 80 | ||||||||||
2017 Warrants [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Proceeds from sale of warrants | $ 47,900,000 | ||||||||||
Warrant strike price | $ / shares | $ 988.51 | ||||||||||
Stock issued during period, shares | shares | 2,328,351 | ||||||||||
Number of warrants settled on net share basis | shares | 6,100,000 | 6,100,000 | |||||||||
Warrants outstanding | shares | 3,453,096 | 3,453,096 | |||||||||
2021 Hedge [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of common stock to be purchased | shares | 10,865,270 | ||||||||||
Derivative, maturity date | Mar. 15, 2021 | ||||||||||
2017 Hedge [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of common stock to be purchased | shares | 9,553,096 | ||||||||||
Cost of hedge transaction | $ 80,100,000 | ||||||||||
2017 Hedge [Member] | Other Expense [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Embedded derivative, gain (loss) reclassified to earnings | $ 37,100,000 | ||||||||||
Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Class of warrant or rights expiry month and year | 2017-09 | ||||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Unused line fee | 0.20% | ||||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | LIBOR [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility bear interest rate | 1.00% | ||||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | Base Rate [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility bear interest rate | 0.00% | ||||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | Eurocurrency [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility bear interest rate | 1.00% | ||||||||||
Minimum [Member] | 2021 Warrants [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Class of warrant or rights expiry month and year | 2021-06 | ||||||||||
Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Class of warrant or rights expiry month and year | 2018-01 | ||||||||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Unused line fee | 0.35% | ||||||||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | Base Rate [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility bear interest rate | 1.00% | ||||||||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | Eurocurrency [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility bear interest rate | 2.00% | ||||||||||
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 | shares | 477,654 | ||||||||||
Maximum [Member] | 2021 Warrants [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Class of warrant or rights expiry month and year | 2021-12 | ||||||||||
Additional Paid-in Capital [Member] | 2021 Hedge [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Cost of hedge transaction | 111,200,000 | 111,200,000 | |||||||||
Additional Paid-in Capital [Member] | 2017 Hedge [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Amount reclassified to stockholders' equity | $ 43,000,000 | ||||||||||
Common Shares [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of preferred or common stock into which the warrants is converted | shares | 9,553,080 | ||||||||||
Common Shares [Member] | Maximum [Member] | 2021 Warrants [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of preferred or common stock into which the warrants is converted | shares | 10,865,270 | 10,865,270 | |||||||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal amount | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | ||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 634,100,000 | ||||||||||
Interest rate on convertible notes | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% | ||||||
Debt instrument, maturity date | Mar. 15, 2021 | ||||||||||
Initial conversion rate adjustment, shares | 16.7158 | ||||||||||
Principal amount of debt considered for conversion rate | $ 1,000 | ||||||||||
Initial conversion price of convertible notes | $ / shares | $ 59.82 | ||||||||||
Contractual coupon interest expense | $ 3,700,000 | $ 3,700,000 | $ 7,300,000 | 4,300,000 | |||||||
Amortization of debt discount (premium) | 3,900,000 | 3,700,000 | 7,800,000 | 4,400,000 | |||||||
Amortization of debt issuance costs | $ 700,000 | 600,000 | $ 1,300,000 | 700,000 | |||||||
Effective interest rate | 5.80% | 5.80% | |||||||||
Debt redemption price percentage | 100.00% | ||||||||||
Principal payments due | $ 0 | $ 0 | |||||||||
Net proceeds of unsecured senior convertible notes | $ 345,200,000 | ||||||||||
Fair value of debt conversion cost | 64,880,000 | $ 72,713,000 | 64,880,000 | $ 72,713,000 | |||||||
Unamortized debt issuance costs | 11,588,000 | 12,875,000 | $ 11,588,000 | 12,875,000 | |||||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Scenario Two [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Consecutive trading days considered for debt conversion | d | 5 | ||||||||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of conversion price | 130.00% | ||||||||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Minimum [Member] | Scenario One [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Consecutive trading days considered for debt conversion | d | 20 | ||||||||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of conversion price | 98.00% | ||||||||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Maximum [Member] | Scenario One [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Consecutive trading days considered for debt conversion | d | 30 | ||||||||||
2.25% Senior Convertible Notes [Member] | Convertible Notes due 2021 [Member] | Additional Paid-in Capital [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Amount reclassified to stockholders' equity | 84,800,000 | ||||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal amount | $ 402,500,000 | $ 63,302,000 | $ 63,317,000 | $ 63,302,000 | $ 63,317,000 | ||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 359,200,000 | ||||||||||
Interest rate on convertible notes | 2.75% | 2.75% | 2.75% | 2.75% | 2.75% | ||||||
Debt instrument, maturity date | Jul. 1, 2017 | ||||||||||
Initial conversion rate adjustment, shares | 23.7344 | ||||||||||
Principal amount of debt considered for conversion rate | $ 1,000 | ||||||||||
Initial conversion price of convertible notes | $ / shares | $ 42.13 | ||||||||||
Contractual coupon interest expense | $ 400,000 | 900,000 | $ 900,000 | 3,300,000 | |||||||
Amortization of debt discount (premium) | 700,000 | 1,300,000 | 1,400,000 | 5,000,000 | |||||||
Amortization of debt issuance costs | $ 100,000 | $ 200,000 | $ 200,000 | $ 700,000 | |||||||
Effective interest rate | 8.00% | 8.00% | 8.00% | 8.00% | |||||||
Principal amount of debt instruments offering to repurchase | $ 276,800,000 | $ 62,300,000 | $ 62,300,000 | ||||||||
Payment for repurchase of additional notes | 96,300,000 | ||||||||||
Fair value of debt conversion cost | 1,417,000 | 1,417,000 | |||||||||
Unamortized debt issuance costs | $ 199,000 | 199,000 | |||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | Other Expense [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Loss on repurchases of convertible notes | $ 17,400,000 | $ 19,100,000 | |||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | Scenario Two [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Consecutive trading days considered for debt conversion | d | 5 | ||||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of conversion price | 130.00% | ||||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | Minimum [Member] | Scenario One [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Consecutive trading days considered for debt conversion | d | 20 | ||||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of conversion price | 98.00% | ||||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | Maximum [Member] | Scenario One [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Consecutive trading days considered for debt conversion | d | 30 | ||||||||||
2017 Notes [Member] | Subsequent Event [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Repayment of outstanding principal amount including accrued interest | $ 64,000,000 | ||||||||||
Shares issued for settlement of conversion value over principal amount | shares | 650,070 | ||||||||||
2017 Hedge [Member] | Subsequent Event [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stock issued during period, shares | shares | 4,160,789 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Costs Included in Statement of Income for all Stock-based Compensation Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense before taxes | $ 8,394 | $ 7,865 | $ 15,411 | $ 12,357 |
Related income tax benefits | (3,190) | (3,146) | (5,856) | (4,943) |
Stock-based compensation expense, net of taxes | 5,204 | 4,719 | 9,555 | 7,414 |
Sales, Marketing and Administrative Expense [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense before taxes | 7,891 | 7,415 | 14,686 | 11,846 |
Research and Development Expense [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense before taxes | 428 | 397 | 567 | 406 |
Cost of Goods Sold [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense before taxes | $ 75 | $ 53 | $ 158 | $ 105 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options granted | 0 | ||
Number of common stock issued to exercise stock options | 23,000 | 162,000 | 1,556,000 |
ESPP [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Maximum percentage of annual compensation | 15.00% | 15.00% | |
Maximum amount withheld to purchase shares of the company | $ 21,250 | ||
Percentage of issuance price of stock under the stock issuance program | 85.00% | ||
ESPP [Member] | Maximum [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
ESPP offering period | 2 years | ||
ESPP [Member] | Minimum [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
ESPP offering period | 6 months | ||
Performance Based Restricted Stock Units (PRSUs) [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unamortized cost related to share-based compensation | $ 62,700,000 | $ 62,700,000 | |
Weighted average contractual term | 2 years 3 months 19 days | ||
Restricted Stock Units [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unamortized cost related to share-based compensation | $ 62,700,000 | $ 62,700,000 | |
Weighted average contractual term | 2 years 3 months 19 days | ||
Number of shares of common stock issued upon vesting of RSUs | 16,000 | 316,000 | 772,000 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Assumptions Used to Estimate Fair Value of Stock Purchase Rights under ESPP (Details) - ESPP [Member] | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Weighted average assumptions used to estimate fair value of stock options granted and stock purchase rights under ESPP | ||||
Volatility | 21.00% | 31.00% | 23.00% | 31.00% |
Expected term (years) | 6 months | 6 months | 6 months | 7 months 6 days |
Risk free interest rate | 0.80% | 0.40% | 0.60% | 0.30% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Tax benefit related to excess share-based payments and certain losses | $ 0 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 26.00% |
Deferred tax assets, in process research and development | $ 500,000 |
Business Segment, Product and51
Business Segment, Product and Geographic Information (Details Textual) | 6 Months Ended |
Jun. 30, 2017segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Business Segment, Product and52
Business Segment, Product and Geographic Information - Schedule of Revenue by Product Lines (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Entity Wide Information Revenue From External Customer [Line Items] | ||||
Total Revenue | $ 260,573 | $ 236,210 | $ 510,437 | $ 451,314 |
Spinal Hardware [Member] | ||||
Entity Wide Information Revenue From External Customer [Line Items] | ||||
Total Revenue | 183,589 | 171,242 | 357,293 | 323,199 |
Surgical Support [Member] | ||||
Entity Wide Information Revenue From External Customer [Line Items] | ||||
Total Revenue | $ 76,984 | $ 64,968 | $ 153,144 | $ 128,115 |
Business Segment, Product and53
Business Segment, Product and Geographic Information - Schedule of Revenue and Net Property and Equipment by Geographical Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||
Revenue | $ 260,573 | $ 236,210 | $ 510,437 | $ 451,314 | |
Property and Equipment, Net | 214,601 | 214,601 | $ 181,524 | ||
United States | |||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||
Revenue | 217,147 | 200,599 | 431,354 | 388,949 | |
Property and Equipment, Net | 177,657 | 177,657 | 148,227 | ||
International [Member] | |||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||
Revenue | 43,426 | $ 35,611 | 79,083 | $ 62,365 | |
Property and Equipment, Net | $ 36,944 | $ 36,944 | $ 33,297 |
Commitments (Details Textual)
Commitments (Details Textual) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Licensing and Purchasing Agreements [Member] | |
Commitments And Contingencies Disclosure [Line Items] | |
Obligation under consultancy arrangements | $ 20.4 |
Revenue-based milestone period | achieved prior to 2024 |
Executive Severance Plans [Member] | |
Commitments And Contingencies Disclosure [Line Items] | |
Other commitments, future minimum payments, remainder of fiscal year | $ 32.6 |
Contingencies (Details)
Contingencies (Details) | Jul. 05, 2016USD ($) | Mar. 18, 2016USD ($) | Feb. 19, 2016USD ($) | May 31, 2013USD ($) | Mar. 31, 2012USD ($) | Sep. 30, 2011USD ($)patent | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Loss Contingencies [Line Items] | |||||||||||
Litigation accrual adjustment | $ 43,310,000 | $ 43,310,000 | |||||||||
Litigation case description | the court sustained the Company’s demurrer and provided the plaintiff thirty days to file an amended complaint. | ||||||||||
Medtronic Litigation [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Company's patents in phases of litigation | patent | 1 | ||||||||||
Litigation, damages awarded | $ 101,200,000 | ||||||||||
Company's cash and investment in escrow | $ 113,300,000 | ||||||||||
Release of funds from escrow | $ 114,100,000 | ||||||||||
Loss contingency, settlement agreement, consideration paid | $ 7,500,000 | 45,000,000 | 45,000,000 | $ 45,000,000 | |||||||
Litigation accrual adjustment | 43,300,000 | 43,300,000 | |||||||||
Medtronic Litigation [Member] | Maximum [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation accrual | 88,300,000 | 88,300,000 | |||||||||
Medtronic Litigation [Member] | Minimum [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation accrual | $ 45,000,000 | $ 45,000,000 | |||||||||
Madsen Medical, Inc. Litigation [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Jury award | $ 27,800,000 | ||||||||||
Loss contingency, settlement agreement, court | On March 18, 2016, the trial court entered judgment in favor of MMI in the amount of $27.8 million, which amount excluded the $14.0 million disgorgement awarded by the jury. | ||||||||||
Loss contingency, estimate of possible loss | $ 0 | ||||||||||
Damages accrued for breach of contract | $ 300,000 | ||||||||||
Madsen Medical, Inc. Litigation [Member] | Loss Profits for Tortious Interference [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Jury award | $ 7,500,000 | ||||||||||
Madsen Medical, Inc. Litigation [Member] | Unjust Enrichment [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Jury award | 14,000,000 | ||||||||||
Madsen Medical, Inc. Litigation [Member] | Punitive Damages [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Jury award | 20,000,000 | ||||||||||
Madsen Medical, Inc. Litigation [Member] | Damages for Breach of Contract [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Jury award | $ 300,000 | ||||||||||
Madsen Medical, Inc. Litigation [Member] | Attorney Fees And Costs [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Jury award | $ 1,100,000 |
Subsequent Events (Details Text
Subsequent Events (Details Textual) - USD ($) $ in Millions | Jul. 01, 2017 | Jun. 30, 2017 |
2017 Warrants [Member] | ||
Subsequent Event [Line Items] | ||
Stock issued during period, shares | 2,328,351 | |
Number of warrants settled on net share basis | 6,100,000 | |
Warrants outstanding | 3,453,096 | |
Subsequent Event [Member] | 2017 Notes [Member] | ||
Subsequent Event [Line Items] | ||
Repayment of outstanding principal amount including accrued interest | $ 64 | |
Shares issued for settlement of conversion value over principal amount | 650,070 | |
Subsequent Event [Member] | 2017 Hedge [Member] | ||
Subsequent Event [Line Items] | ||
Stock issued during period, shares | 4,160,789 |