Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 26, 2018 | |
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 | Sep. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | NUVA | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 51,422,448 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 75,112 | $ 72,803 |
Restricted cash and investments | 3,901 | |
Accounts receivable, net of allowances of $16,883 and $13,026, respectively | 191,571 | 200,220 |
Inventory, net | 271,347 | 247,138 |
Prepaid income taxes | 18,215 | 17,209 |
Prepaid expenses and other current assets | 23,408 | 18,792 |
Total current assets | 579,653 | 560,063 |
Property and equipment, net | 237,491 | 215,326 |
Intangible assets, net | 262,945 | 280,774 |
Goodwill | 560,401 | 536,926 |
Deferred tax assets | 4,939 | 6,440 |
Restricted cash and investments | 2,394 | 1,494 |
Other assets | 27,577 | 39,117 |
Total assets | 1,675,400 | 1,640,140 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 100,912 | 75,767 |
Contingent consideration liabilities | 2,207 | 18,952 |
Accrued payroll and related expenses | 47,798 | 55,618 |
Litigation liabilities | 8,316 | 8,150 |
Short-term borrowings | 5,000 | |
Income tax liabilities | 4,002 | 2,908 |
Total current liabilities | 168,235 | 161,395 |
Long-term senior convertible notes | 597,518 | 582,920 |
Deferred and income tax liabilities, non-current | 6,200 | 18,870 |
Other long-term liabilities | 99,826 | 77,539 |
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 September 30, 2018 and December 31, 2017, 56,566,654 and 56,164,060 issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 61 | 60 |
Additional paid-in capital | 1,380,519 | 1,363,549 |
Accumulated other comprehensive loss | (10,194) | (6,933) |
Retained earnings | 5,084 | 4,762 |
Treasury stock at cost; 5,114,438 shares and 5,001,886 shares at September 30, 2018 and December 31, 2017, respectively | (571,849) | (565,867) |
Total NuVasive, Inc. stockholders’ equity | 803,621 | 795,571 |
Non-controlling interest | 3,845 | |
Total equity | 803,621 | 799,416 |
Total liabilities and equity | $ 1,675,400 | $ 1,640,140 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 16,883 | $ 13,026 |
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 | 56,566,654 | 56,164,060 |
Common stock, shares outstanding | 56,566,654 | 56,164,060 |
Treasury stock at cost, shares | 5,114,438 | 5,001,886 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue | ||||
Total revenue | $ 271,301 | $ 247,051 | $ 813,387 | $ 755,463 |
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 74,160 | 65,507 | 225,030 | 193,136 |
Gross profit | 197,141 | 181,544 | 588,357 | 562,327 |
Operating expenses: | ||||
Sales, marketing and administrative | 141,211 | 125,649 | 433,635 | 404,984 |
Research and development | 15,254 | 12,720 | 44,601 | 37,706 |
Amortization of intangible assets | 12,349 | 11,630 | 37,402 | 35,040 |
Purchase of in-process research and development | 8,913 | 8,913 | ||
Litigation liability loss | 750 | 27,800 | 750 | |
Business transition costs | 1,443 | 345 | 7,694 | 1,769 |
Total operating expenses | 179,170 | 151,094 | 560,045 | 480,249 |
Interest and other expense, net: | ||||
Interest income | 130 | 79 | 380 | 355 |
Interest expense | (9,035) | (8,898) | (28,458) | (28,780) |
Other income (expense), net | 4,239 | (139) | (7,843) | (382) |
Total interest and other expense, net | (4,666) | (8,958) | (35,921) | (28,807) |
Income (loss) before income taxes | 13,305 | 21,492 | (7,609) | 53,271 |
Income tax benefit | 2,618 | 11,604 | 7,931 | 3,543 |
Consolidated net income | 15,923 | 33,096 | 322 | 56,814 |
Add back net loss attributable to non-controlling interest | (432) | (1,307) | ||
Net income attributable to NuVasive, Inc. | $ 15,923 | $ 33,528 | $ 322 | $ 58,121 |
Net income per share attributable to NuVasive, Inc.: | ||||
Basic | $ 0.31 | $ 0.66 | $ 0.01 | $ 1.14 |
Diluted | $ 0.30 | $ 0.64 | $ 0.01 | $ 1.03 |
Weighted average shares outstanding: | ||||
Basic | 51,439 | 50,747 | 51,341 | 50,799 |
Diluted | 53,189 | 52,794 | 52,296 | 56,304 |
Product [Member] | ||||
Revenue | ||||
Total revenue | $ 242,030 | $ 227,321 | $ 728,232 | $ 690,100 |
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 54,741 | 50,856 | 168,134 | 147,292 |
Service [Member] | ||||
Revenue | ||||
Total revenue | 29,271 | 19,730 | 85,155 | 65,363 |
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | $ 19,419 | $ 14,651 | $ 56,896 | $ 45,844 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Consolidated net income | $ 15,923 | $ 33,096 | $ 322 | $ 56,814 |
Other comprehensive (loss) income: | ||||
Unrealized loss on marketable securities, net of tax | (1) | |||
Translation adjustments, net of tax | (1,318) | 1,276 | (3,261) | 3,777 |
Other comprehensive (loss) income | (1,318) | 1,276 | (3,261) | 3,776 |
Total consolidated comprehensive income (loss) | 14,605 | 34,372 | (2,939) | 60,590 |
Net loss attributable to non-controlling interest | (432) | (1,307) | ||
Comprehensive income (loss) attributable to NuVasive, Inc. | $ 14,605 | $ 34,804 | $ (2,939) | $ 61,897 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities: | ||
Consolidated net income | $ 322 | $ 56,814 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 96,409 | 88,922 |
Purchase of in-process research and development | 8,913 | |
Amortization of non-cash interest | 14,986 | 15,676 |
Stock-based compensation | 22,062 | 14,984 |
Reserves on current assets | 11,116 | 1,745 |
Net loss on strategic investments | 3,867 | |
Other non-cash adjustments | 16,560 | 11,029 |
Deferred income taxes | (9,938) | (4,277) |
Changes in operating assets and liabilities, net of effects from acquisitions: | ||
Accounts receivable | 8,622 | (12,448) |
Inventory | (33,491) | (36,661) |
Contingent consideration liabilities | (300) | (11,200) |
Prepaid expenses and other current assets | (1,047) | 169 |
Accounts payable and accrued liabilities | 21,700 | (5,974) |
Accrued payroll and related expenses | (9,566) | 245 |
Litigation liability | 166 | 1,000 |
Income taxes | 108 | (1,195) |
Net cash provided by operating activities | 150,489 | 118,829 |
Investing activities: | ||
Acquisitions and investments | (52,555) | (62,371) |
Purchases of intangible assets | (7,682) | (2,270) |
Purchases of property and equipment | (78,405) | (97,030) |
Net cash used in investing activities | (138,642) | (161,671) |
Financing activities: | ||
Proceeds from the issuance of common stock | 5,563 | 5,517 |
Purchase of treasury stock | (2,817) | (11,709) |
Payment of contingent consideration | (18,700) | (18,800) |
Repurchases of convertible notes | (63,317) | |
Proceeds from revolving line of credit | 82,000 | 60,000 |
Repayments on revolving line of credit | (77,000) | (20,000) |
Other financing activities | (236) | (2,316) |
Net cash used in financing activities | (11,190) | (50,625) |
Effect of exchange rate changes on cash | (1,349) | 1,967 |
Decrease in cash, cash equivalents, restricted cash and investments | (692) | (91,500) |
Cash, cash equivalents, restricted cash and investments at beginning of period | 78,198 | 161,048 |
Cash, cash equivalents, restricted cash and investments at end of period | $ 77,506 | $ 69,548 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Statement Of Cash Flows [Abstract] | ||||
Cash and cash equivalents | $ 75,112 | $ 72,803 | $ 62,200 | |
Restricted cash and investments, current | 3,901 | 2,402 | ||
Restricted cash and investments, non-current | 2,394 | 1,494 | 4,946 | |
Total cash, cash equivalents, restricted cash and investments shown in the Unaudited Consolidated Statement of Cash Flows | $ 77,506 | $ 78,198 | $ 69,548 | $ 161,048 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
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. To assist with surgical procedures the Company offers a technology platform called 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 procedurally integrated solutions use innovative, technological advancements and the MAS platform to provide surgical efficiency, operative reliability, and procedural versatility. The Company offers a range of implants for spinal surgery, which include its branded CoRoent products and porous titanium and polyetheretherketone implants under its Advanced Materials Science portfolio, fixation devices such as customizable rods, plates and screws, bone allograft in patented saline packaging, allogeneic and synthetic biologics, and disposables used in IOM. The Company makes available MAS instrument sets, MaXcess and neuromonitoring systems to hospitals to facilitate surgeon access to the spine to perform restorative and fusion procedures using the Company’s implants and fixation devices. The Company sells MAS instrument sets, MaXcess and neuromonitoring 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, procedurally integrated 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 nine months ended September 30, 2018 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, 2017 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 and notes thereto include all adjustments that are of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. The Company has reclassified historically presented revenue and cost of revenue to conform to the current year presentation, which now reflects revenue and costs allocated to the Company’s product and service offerings. T Revenue from Contracts with Customers (“ASU 2014-09”) on January 1, 2018 adopted Accounting Standards Codification 606 Revenue from Contracts with Customers (“ASC 606”), electing full retrospective method of adoption. 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 February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases, which introduced ASC 842 – Leases, a new comprehensive lease accounting model that supersedes the current lease guidance under ASC 840 – Leases . The new accounting standard requires lessees to recognize right-of-use assets and corresponding lease liabilities for all leases with lease terms of greater than twelve months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new accounting standard will be effective for the Company starting in the first quarter of fiscal 2019. Early adoption is permitted. The Company is in the process of determining the impact the adoption will have on its Consolidated Financial Statements and expects significant changes relating to the recognition of right-of-use assets and liabilities associated with its operating leases on its Consolidated Balance Sheet. 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 January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging early adoption is permitted. In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging In March 2018, the FASB issued Accounting Standards Update No. 2018-05, Income taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement adds and modifies certain disclosure requirements for fair value measurements entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements In September 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangible – Goodwill and Other – Internal-Use Software requires a customer in a cloud computing arrangement to determine which implementation costs to capitalize as assets or expense as incurred capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use Recently Adopted Accounting Standards In May 2014, the FASB issued ASU 2014-09, an updated standard on revenue recognition. The standard effectively replaces Accounting Standards Codification 605 Revenue Recognition (“ASC 605”) with ASC 606. In summary, the changes to the guidance in revenue recognition under ASC 606 focuses on the existence of a contract with the customer (whether written, oral, or implied by an entity’s customary business practices), the concept that the performance obligation is fulfilled when the customer obtains control of the asset/service, versus the transfer of risk and reward, and the requirement that variable consideration (including rebates, discounts, etc.) and incremental costs must be estimated and recognized in the amount that is expected or most likely to be realized over the term of the contract fulfillment. Prior to the adoption of ASC 606, the Company recognized revenue in accordance with ASC 605 when all four of the following criteria were 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 was 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 accepted title. Revenue from the sale of instrument sets was recognized upon receipt of a purchase order and the subsequent shipment to customers who immediately accepted title. Revenue from neuromonitoring services was recognized in the period the service was performed for the amount of payment expected to be received. The Company adopted ASC 606 as of January 1, 2018, electing full retrospective method of adoption, which resulted in a change in its accounting policy for revenue recognition and related adjustments to the Consolidated Financial Statements for all periods presented. The Company applied the practical expedients permitted under ASC 606 for which (i) contracts with customers originating prior to January 1, 2016 do not require disclosure for the amount of consideration allocated to remaining performance obligations or an explanation of when the Company expects to recognize that amount as revenue; (ii) contracts beginning and completing in the same annual reporting period need not be restated; and (iii) hindsight for estimating variable consideration for completed contracts is permitted. The Company recognizes revenue from spinal surgery hardware and ancillary products at a point in time in two types of transactions: (i) procedural based transactions with products used during surgery defined as “charge sheet orders”, and (ii) shipping transactions which represent the stocking of product or the purchase of instrumentation to support future surgeries defined as “stocking and capital orders”. The Company also recognizes revenue at a point in time associated with surgical-related servicing procedures, including neuromonitoring services which are defined as “surgical-related services”. Other sources of revenue, such as leasing revenue and royalties, are immaterial to the Consolidated Financial Statements. For charge sheet orders, the sale occurs when the surgery is performed and a charge sheet is submitted to the Company by its sales representative identifying the products consumed during the surgery. The charge sheet, as signed by the hospital, serves as a confirmation and acknowledgement of the Company’s products consumed during a surgery. Under ASC 605, persuasive evidence of an arrangement and delivery of product was deemed to have occurred once the charge sheet was processed, and an associated authorization or acknowledgement from the customer was received. Under ASC 606, the Company’s charge sheet orders are considered to be a contract with a customer when a surgery is scheduled with the Company as requested by the hospital or surgeon, and the products are consumed during the surgery or implanted into the patient. Revenue recognition under ASC 606 occurs upon completion of the Company’s performance obligation, which occurs upon consumption of the products during surgery and receipt of the charge sheet. In the event that information related to the surgical event and consumption of product is not readily available the Company recognizes revenue upon a purchase order from the hospital or acknowledgment from the hospital indicating product use. For stocking and capital orders, under ASC 605, delivery was deemed to have occurred when the title, including all risks and rewards of ownership of the products specified in the sales agreement had passed to the buyer. Accordingly, title, including all risks and rewards of ownership, passed based on the shipping terms. Under ASC 606, the Company’s stocking and capital order performance obligation is considered to be satisfied when the hospital assumes control of the asset, either upon shipment or delivery depending on the terms, and ability to direct the use of the asset as appropriate without the Company’s consent. Under both ASC 605 and ASC 606, revenue from surgical-related services, such as neuromonitoring services, is recognized in the period the service is performed based on the delivery of a services report to the customer. The Company recognizes revenue for the amount of payment expected to be received. The Company bills either hospitals or insurance companies for different aspects of the service, as applicable. Revenue from hospitals is recognized based on agreed upon pricing. Revenue from insurance companies is recognized using the expected value method, as the Company bills at a gross rate which is generally not the rate ultimately collected. Under ASC 605, the Company has historically estimated the amounts of returns, trade-ins, discounts, rebates, credits or incentives as offsets to the total transaction price or revenue associated with the sale. In limited situations, when historical information was not available or reliable, the Company would defer revenue recognition until completion of all performance obligations. Under ASC 606, the Company analyzes sales that could include variable consideration, and estimates the expected or most likely amount of revenue after returns, trade-ins, discounts, rebates, credits, and incentives. In making these estimates, the Company considers whether the amount of variable consideration is constrained and is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company earns sales-based royalty revenue over time from sales of products using existing biologics intellectual property (“IP”) that is out-licensed to certain companies. Under ASC 605, royalty revenue was recognized as earned and when collection was reasonably assured and was generally estimated and recorded in the same period as the sales that generated the royalty obligation. ASC 606 provides an exception for sales or usage-based royalties from the guidance for accounting for variable consideration, allowing the royalty revenue from the license of IP to be recognized when the performance obligation has been satisfied and the subsequent sale has occurred. Therefore, the Company estimates monthly royalty revenue as its performance obligation is satisfied. The Company does not expect a significant impact to royalty revenue under the adoption of ASC 606 as it has historically estimated and accrued royalty revenue in the period earned. The Company historically expensed incremental costs, such as commissions associated with sales contracts, as incurred. Under ASU 2014-09, ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers was added along with ASC 606 to codify accounting guidance for the incremental costs to obtain or fulfill a contract with a customer. Under the guidance, the incremental costs must be deferred and recorded over the period in which the contract revenue is recognized. The Company typically does not associate quarterly or annual sales bonuses directly with a sale or master contract; however, commissions are directly associated with individual sales and expensed in the same period as the related contract revenue. The associated commissionable sales would not typically have a future benefit unless the revenue is recognized over time. The Company does not typically have situations where revenue is deferred in excess of one year. Given the practical expedient for contracts completing within one year, the Company does not expect these capitalized costs to be material in a given period. The cumulative effect of the change on retained earnings for the full retrospective method of adoption of ASC 606 was $0.3 million as of December 31, 2017. NUVASIVE, INC. CONSOLIDATED BALANCE SHEET (in thousands) (Unaudited) (Unaudited) As of December 31, 2017 As reported Adjustments As Adjusted Accounts receivable, gross $ 212,709 $ 537 [a] $ 213,246 Allowances on accounts receivable (13,669 ) 643 [b] (13,026 ) Inventory, net 247,245 (107 ) [c] 247,138 Other current assets 112,705 — 112,705 Total current assets 558,990 1,073 560,063 Remaining other assets 1,080,077 — 1,080,077 Total assets $ 1,639,067 $ 1,073 $ 1,640,140 Accounts payable and accrued liabilities 75,076 691 [d] 75,767 Accrued payroll and related expenses 55,582 36 [e] 55,618 Other current liabilities 30,010 — 30,010 Total current liabilities 160,668 727 161,395 Deferred and income tax liabilities, non-current 18,786 84 [f] 18,870 Other long-term liabilities 660,459 — 660,459 Total NuVasive, Inc. stockholders’ equity 795,309 262 [g] 795,571 Non-controlling interests 3,845 — 3,845 Total equity 799,154 262 799,416 Total liabilities and equity $ 1,639,067 $ 1,073 $ 1,640,140 [a] Represents cumulative impact from January 1, 2016 to the period presented on accounts receivable for the full retrospective method of adoption of ASC 606. [b] Represents cumulative impact from January 1, 2016 to the period presented on allowances on accounts receivable for the full retrospective method of adoption of ASC 606. [c] Represents cumulative impact from January 1, 2016 to the period presented on inventory for the full retrospective method of adoption of ASC 606. [d] Represents cumulative impact from January 1, 2016 to the period presented on commissions payable and accrued returns for the full retrospective method of adoption of ASC 606. [e] Represents cumulative impact from January 1, 2016 to the period presented on commissions payable for the full retrospective method of adoption of ASC 606. [f] Represents cumulative impact from January 1, 2016 to the period presented on deferred tax liabilities for the full retrospective method of adoption of ASC 606. [g] Represents cumulative impact from January 1, 2016 to the period presented on retained earnings for the full retrospective method of adoption of ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (Unaudited) As reported Adjustments As adjusted Three months ended September 30, 2017 Revenue Product revenue $ 227,701 $ (380 ) [a] $ 227,321 Service revenue 19,730 — 19,730 Total revenue 247,431 (380 ) 247,051 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 50,932 (76 ) [b] 50,856 Cost of services 14,651 — 14,651 Total cost of revenue 65,583 (76 ) 65,507 Gross profit 181,848 (304 ) 181,544 Operating expenses: Sales, marketing and administrative 125,800 (151 ) [c] 125,649 Other operating expenses 25,445 — 25,445 Total operating expenses 151,245 (151 ) 151,094 Total interest and other expense, net (8,958 ) — (8,958 ) Income tax benefit 11,540 64 [d] 11,604 Consolidated net income $ 33,185 $ (89 ) [e] $ 33,096 Add back net loss attributable to non-controlling interests $ (432 ) $ — $ (432 ) Net income attributable to NuVasive, Inc. $ 33,617 $ (89 ) [e] $ 33,528 Net income per share attributable to NuVasive, Inc.: Basic $ 0.66 $ (0.00 ) [f] $ 0.66 Diluted $ 0.64 $ (0.00 ) [f] $ 0.64 Comprehensive income attributable to NuVasive, Inc. $ 34,893 $ (89 ) [e] $ 34,804 [a] Represents net change in sales revenue for charge sheet orders recognized under ASC 606. [b] Represents net change in cost of products sold for charge sheet orders recognized under ASC 606. [c] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. [d] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [e] Represents change in net income and comprehensive income resulting from net change in charge sheet orders recognized under ASC 606. [f] Represents earnings per share impact resulting from net change in charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (Unaudited) As reported Adjustments As adjusted Nine months ended September 30, 2017 Revenue Product revenue $ 692,505 $ (2,405 ) [a] $ 690,100 Service revenue 65,363 — 65,363 Total revenue 757,868 (2,405 ) 755,463 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 147,773 (481 ) [b] 147,292 Cost of services 45,844 — 45,844 Total cost of revenue 193,617 (481 ) 193,136 Gross profit 564,251 (1,924 ) 562,327 Operating expenses: Sales, marketing and administrative 405,411 (427 ) [c] 404,984 Other operating expenses 75,265 — 75,265 Total operating expenses 480,676 (427 ) 480,249 Total interest and other expense, net (28,807 ) — (28,807 ) Income tax benefit 2,971 572 [d] 3,543 Consolidated net income $ 57,739 $ (925 ) [e] $ 56,814 Add back net loss attributable to non-controlling interests $ (1,307 ) $ — $ (1,307 ) Net income attributable to NuVasive, Inc. $ 59,046 $ (925 ) [e] $ 58,121 Net income per share attributable to NuVasive, Inc.: Basic $ 1.16 $ (0.02 ) [f] $ 1.14 Diluted $ 1.05 $ (0.02 ) [f] $ 1.03 Comprehensive income attributable to NuVasive, Inc. $ 62,822 $ (925 ) [e] $ 61,897 [a] Represents net change in sales revenue for charge sheet orders recognized under ASC 606. [b] Represents net change in cost of products sold for charge sheet orders recognized under ASC 606. [c] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. [d] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [e] Represents change in net income and comprehensive income resulting from net change in charge sheet orders recognized under ASC 606. [f] Represents earnings per share impact resulting from net change in charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) (Unaudited) Nine months ended September 30, 2017 As reported Adjustments As adjusted Consolidated net income $ 57,739 $ (925 ) [a] $ 56,814 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 1,741 4 [b] 1,745 Deferred income tax benefit (3,705 ) (572 ) [c] (4,277 ) Other adjustments to reconcile net income 130,611 — 130,611 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (14,796 ) 2,348 [d] (12,448 ) Inventory (36,180 ) (481 ) [e] (36,661 ) Prepaid expenses and other current assets 169 — 169 Accounts payable and accrued liabilities (17,057 ) (117 ) [f] (17,174 ) Litigation liability 1,000 — 1,000 Accrued payroll and related expenses 502 (257 ) [f] 245 Income taxes (1,195 ) — (1,195 ) Net cash provided by operating activities 118,829 — 118,829 Net cash used in investing activities (161,671 ) — (161,671 ) Net cash used in financing activities (50,625 ) — (50,625 ) Effect of exchange rate changes on cash 1,967 — 1,967 Decrease in cash, cash equivalents and restricted cash $ (91,500 ) $ — $ (91,500 ) [a] Represents change in net income resulting from charge sheet orders recognized under ASC 606. [b] Represents net change in allowances on accounts receivable for charge sheet orders recognized under ASC 606. [c] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [d] Represents net change in accounts receivable for charge sheet orders recognized under ASC 606. [e] Represents net change in inventory for charge sheet orders recognized under ASC 606. [f] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities provides a practicability exception for investments that do not have readily determinable fair values, practicability exception for measuring equity investments that do not have readily determinable fair market 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 In February 2017, the FASB issued Accounting Standards Update No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Compensation – Stock Compensation In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation – Stock Compensation Revenue Recognition In accordance with ASC 606 guidance, the Company recognizes revenue upon the transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. The principles in ASC 606 are applied using the following five steps: dentify the contract with a customer dentify the performance obligation(s) in the contract etermine the transaction price llocate the transaction price to the performance obligation(s) in the contract; ecognize revenue when (or as) the Company satisfies its performance obligation(s) Revenue from neuromonitoring services is recognized in the period the service is performed for the amount of consideration expected to be received. In certain cases, the Company does offer the ability for customers to lease instrumentation primarily on a non-sales type basis. Revenue associated with products holding rights of return or trade-in are recognized when the Company concludes there is not a risk of significant revenue reversal in future periods for the expected consideration in the transaction. Costs incurred by the Company associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, with the exception of contracts that complete within one year or less, in which case the associated costs are expensed as incurred. Inventory Net inventory as of September 30, 2018 primarily consisted of $258.3 million of finished goods, $5.3 million of work in progress and $7.7 million of raw materials. Net inventory as of December 31, 2017 consisted of $232.4 million of finished goods, $9.8 million of work in progress and $5.0 million of raw materials. Finished goods include specialized implants and disposables and are stated at the lower of cost or market determined by utilizing a standard cost method, which includes assessment of capitalized variances, which approximates the weighted average cost. Work in progress and raw materials represent the underlying material, and labor for work in progress, that ultimately yield finished goods upon completion and are subject to lower of cost or market. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary. 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 net of tax, unrealized gains or losses on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive loss were $10.2 million and $6.9 million at September 30, 2018 and December 31, 2017, respectively. Product Shipment Costs Product shipment costs, included in sales, marketing and administrative expense in the accompanying Unaudited Consolidated Statements of Operations, were $6.5 million and $18.9 million for the three and nine months ended September 30, 2018, respectively, and $6.0 million and $17.5 million for the three and nine months ended September 30, 2017, 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 material 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, contingent consideration fair value adjustments and other costs directly associated with such activities. The Company incurred $1.4 million and $7.7 million of such costs during the three and nine months ended September 30, 2018, respectively, which consisted primarily of acquisition, integration and business transition activities, but also includes $0.7 million and $1.5 million, respectively, of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. The Company incurred $0.3 million and $1.8 million of such costs during the three and nine months ended September 30, 2017, respectively, which consisted primarily of acquisition, integration and business transition activities, but also includes $(0.9) million and $(1.6) million, respectively, of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, Nine Months Ended September 30, ( in thousands, except per share data 2018 2017 2018 2017 Numerator: Net income attributable to NuVasive, Inc. $ 15,923 $ 33,528 $ 322 $ 58,121 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,439 50,747 51,341 50,799 Dilutive potential common stock outstanding: Stock options and employee stock purchase plan 41 129 37 163 Restricted stock units 1,059 875 701 1,216 Warrants — — — 1,991 Senior Convertible Notes 650 1,043 217 2,135 Weighted average common shares outstanding for diluted 53,189 52,794 52,296 56,304 Basic net income per share attributable to NuVasive, Inc. $ 0.31 $ 0.66 $ 0.01 $ 1.14 Diluted net income per share attributable to NuVasive, Inc. $ 0.30 $ 0.64 $ 0.01 $ 1.03 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 September 30, Nine Months Ended September 30, ( in thousands 2018 2017 2018 2017 Stock options, employee stock purchase plan, and restricted stock units 11 7 198 50 Warrants 10,865 10,865 10,865 10,865 Senior Convertible Notes — — 7,244 — Total 10,876 10,872 18,307 10,915 |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Financial Instruments and Fair Value Measurements | 3. Financial Instruments and Fair Value Measurements 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 (losses) gains, which include gains and losses from derivative instruments, were $(0.9) million and $(3.4) million for the three and nine months ended September 30, 2018, respectively, and $0.2 million and $(0.1) million for the three and nine months ended September 30, 2017, respectively, and are included in other income (expense), net in the Unaudited 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 September 30, 2018 and December 31, 2017 a notional principal amount of $16.8 million and $ 14.3 million, respectively, was outstanding to hedge currency risk relative to the Company’s foreign receivables and payables . Derivative instrument net gains (losses) on the Company’s forward exchange contracts were $0.2 million and $0.5 million for the three and nine months ended September 30, 2018, respectively, and $(0.4) million and $(1.7) million for the three and nine months ended September 30, 2017, respectively, and are included in other income (expense), net in the Unaudited Consolidated Statements of Operations. The fair value of the forward contract exchange derivative instrument asset (liability) was $0.1 million and $(0.1) million as of September 30, 2018 and December 31, 2017, respectively. 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 periods presented. The fair values of the Company’s assets and liabilities, including cash equivalents, marketable securities, restricted investments, derivatives, and contingent obligations are measured at fair value on a recurring basis. As of September 30, 2018 and December 31, 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. Cash equivalents 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) September 30, 2018: Cash equivalents: Money market funds $ 24,000 $ 24,000 $ — $ — Total cash equivalents $ 24,000 $ 24,000 $ — $ — December 31, 2017: Cash equivalents: Money market funds $ 27,000 $ 27,000 $ — $ — Total cash equivalents $ 27,000 $ 27,000 $ — $ — 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 September 30, 2018 and December 31, 2017 approximate their related fair values due to the short-term maturities of these instruments. The fair value of certain financial instruments was measured and classified within Level 1 of the fair value hierarchy based on quoted prices. Fair Value of Senior Convertible Notes The fair value, based on a quoted market price (Level 1), of the Company’s outstanding Senior Convertible Notes due 2021 at September 30, 2018 and December 31, 2017, was $826.0 million and $779.5 million, respectively. See Note 6 to the Unaudited Consolidated Financial Statements for further discussion on the carrying value of the notes. 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 $57.2 million and $67.9 million as of September 30, 2018 and December 31, 2017, respectively, and were recorded in the Consolidated Balance Sheet commensurate with the respective payment terms. 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): Nine Months Ended September 30, ( in thousands 2018 2017 Fair value measurement at beginning of period $ 67,941 $ 67,501 Contingent consideration liability recorded upon acquisition 6,663 32,471 Change in fair value measurement 1,539 (1,830 ) Changes resulting from foreign currency fluctuations 17 70 Contingent consideration paid or settled (19,000 ) (30,000 ) Fair value measurement at end of period $ 57,160 $ 68,212 During the nine months ended September 30, 2018, the Company paid $19.0 million in outstanding milestone obligations associated with the LessRay acquisition, of which $9.0 million related to the achievement of a commercial milestone, and $10.0 million related to the achievement of a regulatory approval milestone. In accordance with the guidance outlined in ASU 2016-15, $18.7 million of the $19.0 million represented the initial purchase price allocation and is presented as a cash outflow for financing activities on the Unaudited Consolidated Statement of Cash Flows, and the remaining $0.3 million related to increased fair value adjustment is presented as a cash outflow in operating activities. During the nine months ended September 30, 2017, the Company recorded contingent consideration liabilities of $32.5 million in connection with certain acquisitions. Such acquisitions included the acquisition in September 2017 of a medical device company that manufactures interbody implants for spinal fusion using patented porous polyetheretherketone technology, which was incorporated into the Company’s interbody portfolio. The Company recorded a purchase accounting fair value estimate of $31.3 million for contingent consideration liabilities related to the achievement of certain manufacturing and commercial milestones. During the nine months ended September 30, 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 adjustment is presented as a cash outflow in operating activities. 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 September 30, 2018 and December 31, 2017. During the three months ended September 30, 2018, the Company expensed $8.9 million for a purchased in-process research and development asset which had no future alternative use. During the nine months ended September 30, 2018, the Company recorded an impairment charge of $9.0 million on a strategic investment. The impairment was recorded in other income (expense), net in the Unaudited Consolidated Statement of Operations. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,747 $ (123,618 ) $ 148,129 Manufacturing know-how and trade secrets 13 30,826 (17,330 ) 13,496 Trade name and trademarks 9 25,500 (13,059 ) 12,441 Customer relationships 9 143,652 (54,773 ) 88,879 Total intangible assets subject to amortization 9 $ 471,725 $ (208,780 ) $ 262,945 Intangible assets not subject to amortization: Goodwill $ 560,401 Total goodwill and intangible assets, net $ 823,346 Weighted- Average Amortization Period Gross Accumulated Intangible December 31, 2017: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (98,693 ) $ 173,055 Manufacturing know-how and trade secrets 13 30,653 (15,542 ) 15,111 Trade name and trademarks 9 25,200 (10,559 ) 14,641 Customer relationships 9 122,249 (44,282 ) 77,967 Total intangible assets subject to amortization 9 $ 449,850 $ (169,076 ) $ 280,774 Intangible assets not subject to amortization: Goodwill $ 536,926 Total goodwill and intangible assets, net $ 817,700 The following table summarizes the changes in the carrying value of the Company’s goodwill: ( in thousands December 31, 2017 Gross goodwill $ 545,226 Accumulated impairment loss (8,300 ) 536,926 Changes to gross goodwill Increases recorded in business combinations 26,303 Changes in purchase price allocation (1,075 ) Changes resulting from foreign currency fluctuations (1,753 ) 23,475 September 30, 2018 Gross goodwill 568,701 Accumulated impairment loss (8,300 ) $ 560,401 Total expense related to the amortization of intangible assets, which is recorded in both cost of revenue and operating expenses in the Unaudited Consolidated Statements of Operations depending on the functional nature of the intangible asset, was $13.3 million and $40.2 million for the three and nine months ended September 30, 2018, respectively, and $12.6 million and $37.8 million for the three and nine months ended September 30, 2017, respectively. Total future amortization expense related to intangible assets subject to amortization at September 30, 2018 is set forth in the table below: ( in thousands Remaining 2018 $ 13,170 2019 51,612 2020 50,990 2021 48,930 2022 41,519 Thereafter through 2031 56,724 Total future amortization expense $ 262,945 |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2018 | |
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 Acquisitions In January 2018, the Company acquired SafePassage, a privately-held provider of IOM services, which now operates as a wholly-owned subsidiary of the Company. The acquisition was not considered material to the overall Unaudited Consolidated Financial Statements. The Company’s NuVasive Clinical Services division (including SafePassage) represents the reported service revenue on the Unaudited Consolidated Statement of Operations. The Company has completed other acquisitions that were not considered material, individually or collectively, 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 are material to the overall financial statements. For certain acquisitions completed during the periods presented, the Company is still in the process of finalizing the purchase price allocation given the timing of the acquisitions 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 purchased 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”). The Company also loaned Progentix cumulatively a total of $5.3 million at an interest rate of 6% per year (the “Loan”) . for a term of ten years, whereby Progentix appointed the Company as its exclusive distributor for certain Progentix products. Following the Initial Investment, in accordance with authoritative guidance, the Company determined that Progentix was a variable interest entity (“VIE”), as it did not have the ability to finance its activities without additional subordinated financial support and its equity investors would not absorb their proportionate share of expected losses and would be limited in the receipt of the potential residual returns of Progentix. In January 2018, the Company completed the acquisition of the remaining 60% of the capital stock of Progentix (the “Non-Controlling Interest Acquisition”). Subsequent to the Non-Controlling Interest Acquisition, the Company owns 100% of the capital stock of Progentix, which now operates as its wholly-owned subsidiary and is no longer accounted for as a VIE or a separate reporting unit as of the date of the Non-Controlling Interest Acquisition. In accordance with authoritative guidance, The following is a reconciliation of equity (net assets) attributable to the non-controlling interest: Nine Months Ended September 30, ( in thousands 2018 2017 Non-controlling interest at beginning of period $ 3,845 $ 5,588 Acquired non-controlling interest reclassified to additional paid-in capital (3,845 ) — Less: Net loss attributable to the non-controlling interest — (1,307 ) Non-controlling interest at end of period $ — $ 4,281 Total assets and liabilities of Progentix as a VIE included in the accompanying Consolidated Balance Sheets are as follows: ( in thousands September 30, 2018 December 31, 2017 Total current assets $ — $ 670 Identifiable intangible assets, net — 8,752 Goodwill — 12,654 Accounts payable and accrued expenses — 562 Deferred tax liabilities, net — 331 Non-controlling interest — 3,845 NuVasive Clinical Services and Physician Practices The Company’s NuVasive Clinical Services division (including SafePassage), which provides IOM services to surgeons and healthcare facilities across the U.S., maintain contractual relationships with several physician practices (“PCs”). In accordance with authoritative guidance, the Company has determined that the PCs are VIEs and 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 | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Indebtedness | 6. Indebtedness The carrying values of the Company’s Senior Convertible Notes due 2021 are as follows: ( in thousands September 30, 2018 December 31, 2017 2.25% Senior Convertible Notes due 2021: Principal amount 650,000 650,000 Unamortized debt discount (44,380 ) (56,839 ) Unamortized debt issuance costs (8,102 ) (10,241 ) Total Senior Convertible Notes $ 597,518 $ 582,920 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 a 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 September September 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 of the 2021 Notes 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. 2.75% Senior Convertible Notes due 2017 In June 2011, the Company issued $402.5 million 2.75% July 1, 2017 (the “2017 Notes”) 23.7344 $1,000 $42.13 During 2016, the Company repurchased a majority of the 2017 Notes, which resulted in a cumulative loss of approximately $19.1 million recorded in other expense on the accompanying Consolidated Statements of Operations for the year ended December 31, 2016. In July 2017, the Company settled the remaining 2017 Notes upon maturity via combination settlement, which involved 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 interest expense recognized on the 2017 Notes during the nine months ended September 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. The effective interest rate on the 2017 Notes was 8.0%, which includes the interest on the notes, amortization of the debt discount and debt issuance costs. Interest on the 2017 Notes began accruing upon issuance and was payable semi-annually. Concurrently, with the offering of the 2017 Notes the Company also entered into transactions for a convertible note hedge (the “2017 Hedge”) and warrants (the “2017 Warrants”). The 2017 Hedge entitled the Company to purchase up to 9,553,096 shares of the Company’s common stock at an initial price of $42.13 per share. effect of inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. The 2017 Warrants entitled its holders 477,654 $988.51 20 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 September 30, 2018, the Company had $5.0 million outstanding under the 2017 Facility, at an interest rate of 3.88% (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 | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 7. Stock-Based Compensation The compensation cost that has been included in the Unaudited Consolidated Statements of Operations for all stock-based compensation arrangements was as follows: Three Months Ended September 30, Nine Months Ended September 30, ( in thousands 2018 2017 2018 2017 Sales, marketing and administrative expense (benefit) $ 10,095 $ (961 ) $ 19,539 $ 13,725 Research and development expense 863 438 2,201 1,005 Cost of revenue 110 96 322 254 Stock-based compensation expense (benefit) before taxes 11,068 (427 ) 22,062 14,984 Related income tax expense (benefit) (2,767 ) 162 (5,516 ) (5,694 ) Stock-based compensation expense (benefit), net of taxes $ 8,301 $ (265 ) $ 16,546 $ 9,290 At September 30, 2018, there was $46.2 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 2.1 years. Restricted Stock Units The Company issued approximately 32,000 and 182,000 shares of common stock, before net share settlement, upon vesting of RSUs (including PRSUs) during the three and nine months ended September 30, 2018 and issued approximately 359,000 shares of common stock in settlement of RSUs (including PRSUs) upon their vesting during the year ended December 31, 2017. 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 September 30, Nine Months Ended September 30, 2018 2017 2018 2017 ESPP Volatility 28 % 20 % 32 % 22 % Expected term (years) 0.5 0.5 0.5 0.5 Risk free interest rate 2.1 % 1.0 % 1.6 % 0.7 % Expected dividend yield — % — % — % — % Under the terms of the ESPP, the Company’s employees (referred to as “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 six-month offering period, or (ii) the respective purchase date. The Company has not granted any options since 2011. The Company issued approximately 23,000 and 126,000 shares of common stock, before net share settlement, upon the exercise of outstanding stock options during the three and nine months ended September 30, 2018 and issued approximately 232,000 shares of common stock, before net share settlement, upon the exercise of outstanding stock options during the year ended December 31, 2017. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
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 nine months ended September 30, 2018, the Company treated the tax impact of the following significant items as discrete events for which the tax effect was recognized separately from the application of the annual effective tax rate: tax benefits associated with the release of uncertain tax positions, return to provision adjustments, and favorable audit settlements offset by tax expenses related to net shortfalls on share-based payments and limitations on certain officer’s compensation. The Company’s effective tax rate recorded for the nine months ended September 30, 2018 was 104%. On December 22, 2017, President Trump signed U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Act”), which became effective January 1, 2018. Due to insufficient guidance on certain aspects of the Act, such as officer’s compensation, as well as uncertainty around the GAAP treatment associated with many other parts of the Act, such as the implementation of certain international provisions, the Company recorded certain provisional amounts related to the revaluation and realization of its deferred taxes in its December 31, 2017 tax provision. During the nine months ended September 30, 2018, the Company further analyzed the impact of the Act on certain executive compensation related deferred taxes as well as the federal tax rate revaluation impact on certain other existing deferred taxes and determined that an aggregate write-down of approximately $0.3 million was required, which would have increased the 2017 full year effective tax rate by 0.5% and the fourth quarter 2017 effective tax rate by 1.7%. The Company is continuing to analyze the impact of the Act during which adjustments to the 2017 year-end provisional calculation will be subject to change during the Staff Accounting Bulletin No. 118 measurement period. As the Company finalizes its analysis and adjusts its tax balances accordingly, it will describe the issue and impact on previously recorded provisional amounts. At September 30, 2018, the Company has not completed its accounting for the tax effects of the global intangible low-taxed income (“GILTI”), foreign derived intangible income, and base erosion and anti-abuse tax provisions of the Act on current year tax expense; however, the Company has made a reasonable estimate and determined that these provisions will have no impact on its 2018 results. Because the Company continues to evaluate the impact of the Act’s GILTI provisions, it has yet to elect an accounting policy to treat the tax impact as either a future period charge or as a current component of deferred taxes. 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 a decrease in gross unrecognized tax benefits of approximately $7.2 million during the nine months ended September 30, 2018, primarily related to decreases in uncertain tax position reserves as a result of the expiration of applicable statute of limitations offset by increases in uncertain tax position reserves for the current year relating to ongoing operations. The Company believes it is reasonably possible that approximately $0.7 million of its remaining unrecognized tax benefits may be recognized within the next twelve months as certain statute of limitations expire, the amount of which is primarily attributable to tax positions involving the valuation of intercompany transactions. 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 with U.S. federal and Germany. U.S. states and most foreign jurisdictions remain subject to examination in all years due to prior year net operating losses and research and development credits. |
Business Segment, Product, and
Business Segment, Product, and Geographic Information | 9 Months Ended |
Sep. 30, 2018 | |
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. The Company has reclassified historically presented product line revenue to conform to the current period presentation. reclassification had no impact on previously reported results of operations Revenue by product line was as follows: Three Months Ended September 30, Nine Months Ended September 30, ( in thousands 2018 2017 2018 2017 Spinal hardware $ 193,626 $ 180,670 $ 581,587 $ 540,482 Surgical support 77,675 66,381 231,800 214,981 Total revenue $ 271,301 $ 247,051 $ 813,387 $ 755,463 Revenue and property and equipment, net, by geographic area were as follows: Revenue Property and Equipment, Net Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31, ( in thousands 2018 2017 2018 2017 2018 2017 United States $ 221,318 $ 200,606 $ 661,570 $ 629,935 $ 200,877 $ 179,891 International (excludes Puerto Rico) 49,983 46,445 151,817 125,528 36,614 35,435 Total $ 271,301 $ 247,051 $ 813,387 $ 755,463 $ 237,491 $ 215,326 |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments | 10. Commitments Licensing and Purchasing Agreements As of September 30, 2018 the Company has obligations under certain consulting arrangements to pay up to approximately $48.0 million in the aggregate in the event that specified revenue-based milestones are achieved prior to 2027. 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 either a research and development expense or a cost of revenue depending on the nature of the arrangement and are recognized ratably as and if milestones are achieved. These agreements expire on various dates through 2027. 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 such executives are terminated for reasons other than cause, as defined in those agreements and plans. Certain agreements call for payments that are based on historical compensation, and accordingly, the amount of the contractual commitment will change over time commensurate with the executive’s earnings. At September 30, 2018, future commitments for such key executives were approximately $23.7 million. In certain circumstances, the agreements call for the acceleration of equity vesting. Those figures are not reflected in the above information. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
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 and when warranted, take legal action against others. Furthermore, the Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. During the nine months ended September 30, 2018, the Company settled its ongoing litigation and related matters with Madsen Medical, Inc 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 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 commenced. 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 (the “Ninth Circuit”) on April 5, 2017 and the plaintiffs filed an opposition to the petition. On August 15, 2017, the Ninth Circuit denied the Company’s petition. The Company filed a motion for summary judgment on September 8, 2017. On February 1, 2018, the court entered an order denying the Company’s motion for summary judgment. On February 13, 2018, the Company entered into a memorandum of understanding with the plaintiffs to settle the case for $7.9 million. On March 23, 2018, the parties executed a stipulation of settlement, which was preliminarily approved by the court on June 11, 2018. A hearing on the final approval of the settlement by the court has been scheduled for November 19, 2018. The Company expects the settlement will be fully funded by insurance proceeds. The settlement includes the dismissal of all claims against the Company and the named individuals in the lawsuit without any liability or wrongdoing attributed to them. There can be no assurance that a settlement will be finalized and approved or as to the ultimate outcome of this litigation. However, in connection with the proposed settlement and in accordance with authoritative guidance, the Company has recorded the loss contingency of $7.9 million as a current litigation liability and the expected insurance proceeds of $7.9 million as a current receivable in the Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017. 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 appealed both the verdict and the court’s subsequent award of attorney’s fees and costs. The U.S. Court of Appeals for the Ninth Circuit held oral argument on April 12, 2018. During pendency of the appeal, the Company secured a bond to cover the amount of the judgment and attorneys’ fees and costs. As of December 31, 2017, the Company believed that the outcome of the case did not constitute a probable nor an estimable loss associated with the litigation, but rather a reasonably possible loss. The Company, based on its own assessment as well as that of outside counsel, believed that it was probable upon appeal the judgment would be vacated. Accordingly, the Company did not record a loss contingency at December 31, 2017, but 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. Following the April 12, 2018 oral argument, the Company believed that the prior judgments against it, in part or as a whole, may be upheld. Accordingly, at March 31, 2018, the Company believed that the outcome of the case constituted a probable loss. While the actual amount of the probable loss was not known, the Company assessed a range of potential loss in accordance with Accounting Standards Codification 450, Contingencies, which would be from zero to $29.0 million, and recorded an additional estimated loss contingency in the amount of $29.0 million as a current litigation liability in the Unaudited Consolidated Balance Sheet as of March 31, 2018, resulting in an aggregate litigation liability of $29.0 million accrued for this matter. In May 2018, the Company entered into an agreement to settle all outstanding matters with MMI for $27.8 million. As a result of the settlement, the Company adjusted its litigation liability from $29.0 million to $27.8 million, which resulted in a $1.2 million gain which was recorded in the Unaudited Consolidated Statement of Operations during the three months ended June 30, 2018. The Company has paid the settlement amount and no longer has any remaining liability related to this matter as of September 30, 2018. |
Regulatory Matters
Regulatory Matters | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018, 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 September 30, 2018, 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 | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events On October 15, 2018, the Company’s Board of Directors (the “Board”) approved the appointment of J. Christopher Barry to succeed Gregory T. Lucier as the Company’s Chief Executive Officer and the election of Mr. Barry to the Board, effective November 5, 2018. Mr. Lucier will continue to serve as Chairman of the Board. |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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. To assist with surgical procedures the Company offers a technology platform called 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 procedurally integrated solutions use innovative, technological advancements and the MAS platform to provide surgical efficiency, operative reliability, and procedural versatility. The Company offers a range of implants for spinal surgery, which include its branded CoRoent products and porous titanium and polyetheretherketone implants under its Advanced Materials Science portfolio, fixation devices such as customizable rods, plates and screws, bone allograft in patented saline packaging, allogeneic and synthetic biologics, and disposables used in IOM. The Company makes available MAS instrument sets, MaXcess and neuromonitoring systems to hospitals to facilitate surgeon access to the spine to perform restorative and fusion procedures using the Company’s implants and fixation devices. The Company sells MAS instrument sets, MaXcess and neuromonitoring 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, procedurally integrated 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 nine months ended September 30, 2018 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, 2017 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 and notes thereto include all adjustments that are of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. The Company has reclassified historically presented revenue and cost of revenue to conform to the current year presentation, which now reflects revenue and costs allocated to the Company’s product and service offerings. T Revenue from Contracts with Customers (“ASU 2014-09”) on January 1, 2018 adopted Accounting Standards Codification 606 Revenue from Contracts with Customers (“ASC 606”), electing full retrospective method of adoption. |
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 Accounting Pronouncements Not Yet Adopted And Recently Adopted Accounting Standards | Recent Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases, which introduced ASC 842 – Leases, a new comprehensive lease accounting model that supersedes the current lease guidance under ASC 840 – Leases . The new accounting standard requires lessees to recognize right-of-use assets and corresponding lease liabilities for all leases with lease terms of greater than twelve months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new accounting standard will be effective for the Company starting in the first quarter of fiscal 2019. Early adoption is permitted. The Company is in the process of determining the impact the adoption will have on its Consolidated Financial Statements and expects significant changes relating to the recognition of right-of-use assets and liabilities associated with its operating leases on its Consolidated Balance Sheet. 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 January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging early adoption is permitted. In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging In March 2018, the FASB issued Accounting Standards Update No. 2018-05, Income taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement adds and modifies certain disclosure requirements for fair value measurements entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements In September 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangible – Goodwill and Other – Internal-Use Software requires a customer in a cloud computing arrangement to determine which implementation costs to capitalize as assets or expense as incurred capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use Recently Adopted Accounting Standards In May 2014, the FASB issued ASU 2014-09, an updated standard on revenue recognition. The standard effectively replaces Accounting Standards Codification 605 Revenue Recognition (“ASC 605”) with ASC 606. In summary, the changes to the guidance in revenue recognition under ASC 606 focuses on the existence of a contract with the customer (whether written, oral, or implied by an entity’s customary business practices), the concept that the performance obligation is fulfilled when the customer obtains control of the asset/service, versus the transfer of risk and reward, and the requirement that variable consideration (including rebates, discounts, etc.) and incremental costs must be estimated and recognized in the amount that is expected or most likely to be realized over the term of the contract fulfillment. Prior to the adoption of ASC 606, the Company recognized revenue in accordance with ASC 605 when all four of the following criteria were 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 was 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 accepted title. Revenue from the sale of instrument sets was recognized upon receipt of a purchase order and the subsequent shipment to customers who immediately accepted title. Revenue from neuromonitoring services was recognized in the period the service was performed for the amount of payment expected to be received. The Company adopted ASC 606 as of January 1, 2018, electing full retrospective method of adoption, which resulted in a change in its accounting policy for revenue recognition and related adjustments to the Consolidated Financial Statements for all periods presented. The Company applied the practical expedients permitted under ASC 606 for which (i) contracts with customers originating prior to January 1, 2016 do not require disclosure for the amount of consideration allocated to remaining performance obligations or an explanation of when the Company expects to recognize that amount as revenue; (ii) contracts beginning and completing in the same annual reporting period need not be restated; and (iii) hindsight for estimating variable consideration for completed contracts is permitted. The Company recognizes revenue from spinal surgery hardware and ancillary products at a point in time in two types of transactions: (i) procedural based transactions with products used during surgery defined as “charge sheet orders”, and (ii) shipping transactions which represent the stocking of product or the purchase of instrumentation to support future surgeries defined as “stocking and capital orders”. The Company also recognizes revenue at a point in time associated with surgical-related servicing procedures, including neuromonitoring services which are defined as “surgical-related services”. Other sources of revenue, such as leasing revenue and royalties, are immaterial to the Consolidated Financial Statements. For charge sheet orders, the sale occurs when the surgery is performed and a charge sheet is submitted to the Company by its sales representative identifying the products consumed during the surgery. The charge sheet, as signed by the hospital, serves as a confirmation and acknowledgement of the Company’s products consumed during a surgery. Under ASC 605, persuasive evidence of an arrangement and delivery of product was deemed to have occurred once the charge sheet was processed, and an associated authorization or acknowledgement from the customer was received. Under ASC 606, the Company’s charge sheet orders are considered to be a contract with a customer when a surgery is scheduled with the Company as requested by the hospital or surgeon, and the products are consumed during the surgery or implanted into the patient. Revenue recognition under ASC 606 occurs upon completion of the Company’s performance obligation, which occurs upon consumption of the products during surgery and receipt of the charge sheet. In the event that information related to the surgical event and consumption of product is not readily available the Company recognizes revenue upon a purchase order from the hospital or acknowledgment from the hospital indicating product use. For stocking and capital orders, under ASC 605, delivery was deemed to have occurred when the title, including all risks and rewards of ownership of the products specified in the sales agreement had passed to the buyer. Accordingly, title, including all risks and rewards of ownership, passed based on the shipping terms. Under ASC 606, the Company’s stocking and capital order performance obligation is considered to be satisfied when the hospital assumes control of the asset, either upon shipment or delivery depending on the terms, and ability to direct the use of the asset as appropriate without the Company’s consent. Under both ASC 605 and ASC 606, revenue from surgical-related services, such as neuromonitoring services, is recognized in the period the service is performed based on the delivery of a services report to the customer. The Company recognizes revenue for the amount of payment expected to be received. The Company bills either hospitals or insurance companies for different aspects of the service, as applicable. Revenue from hospitals is recognized based on agreed upon pricing. Revenue from insurance companies is recognized using the expected value method, as the Company bills at a gross rate which is generally not the rate ultimately collected. Under ASC 605, the Company has historically estimated the amounts of returns, trade-ins, discounts, rebates, credits or incentives as offsets to the total transaction price or revenue associated with the sale. In limited situations, when historical information was not available or reliable, the Company would defer revenue recognition until completion of all performance obligations. Under ASC 606, the Company analyzes sales that could include variable consideration, and estimates the expected or most likely amount of revenue after returns, trade-ins, discounts, rebates, credits, and incentives. In making these estimates, the Company considers whether the amount of variable consideration is constrained and is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company earns sales-based royalty revenue over time from sales of products using existing biologics intellectual property (“IP”) that is out-licensed to certain companies. Under ASC 605, royalty revenue was recognized as earned and when collection was reasonably assured and was generally estimated and recorded in the same period as the sales that generated the royalty obligation. ASC 606 provides an exception for sales or usage-based royalties from the guidance for accounting for variable consideration, allowing the royalty revenue from the license of IP to be recognized when the performance obligation has been satisfied and the subsequent sale has occurred. Therefore, the Company estimates monthly royalty revenue as its performance obligation is satisfied. The Company does not expect a significant impact to royalty revenue under the adoption of ASC 606 as it has historically estimated and accrued royalty revenue in the period earned. The Company historically expensed incremental costs, such as commissions associated with sales contracts, as incurred. Under ASU 2014-09, ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers was added along with ASC 606 to codify accounting guidance for the incremental costs to obtain or fulfill a contract with a customer. Under the guidance, the incremental costs must be deferred and recorded over the period in which the contract revenue is recognized. The Company typically does not associate quarterly or annual sales bonuses directly with a sale or master contract; however, commissions are directly associated with individual sales and expensed in the same period as the related contract revenue. The associated commissionable sales would not typically have a future benefit unless the revenue is recognized over time. The Company does not typically have situations where revenue is deferred in excess of one year. Given the practical expedient for contracts completing within one year, the Company does not expect these capitalized costs to be material in a given period. The cumulative effect of the change on retained earnings for the full retrospective method of adoption of ASC 606 was $0.3 million as of December 31, 2017. NUVASIVE, INC. CONSOLIDATED BALANCE SHEET (in thousands) (Unaudited) (Unaudited) As of December 31, 2017 As reported Adjustments As Adjusted Accounts receivable, gross $ 212,709 $ 537 [a] $ 213,246 Allowances on accounts receivable (13,669 ) 643 [b] (13,026 ) Inventory, net 247,245 (107 ) [c] 247,138 Other current assets 112,705 — 112,705 Total current assets 558,990 1,073 560,063 Remaining other assets 1,080,077 — 1,080,077 Total assets $ 1,639,067 $ 1,073 $ 1,640,140 Accounts payable and accrued liabilities 75,076 691 [d] 75,767 Accrued payroll and related expenses 55,582 36 [e] 55,618 Other current liabilities 30,010 — 30,010 Total current liabilities 160,668 727 161,395 Deferred and income tax liabilities, non-current 18,786 84 [f] 18,870 Other long-term liabilities 660,459 — 660,459 Total NuVasive, Inc. stockholders’ equity 795,309 262 [g] 795,571 Non-controlling interests 3,845 — 3,845 Total equity 799,154 262 799,416 Total liabilities and equity $ 1,639,067 $ 1,073 $ 1,640,140 [a] Represents cumulative impact from January 1, 2016 to the period presented on accounts receivable for the full retrospective method of adoption of ASC 606. [b] Represents cumulative impact from January 1, 2016 to the period presented on allowances on accounts receivable for the full retrospective method of adoption of ASC 606. [c] Represents cumulative impact from January 1, 2016 to the period presented on inventory for the full retrospective method of adoption of ASC 606. [d] Represents cumulative impact from January 1, 2016 to the period presented on commissions payable and accrued returns for the full retrospective method of adoption of ASC 606. [e] Represents cumulative impact from January 1, 2016 to the period presented on commissions payable for the full retrospective method of adoption of ASC 606. [f] Represents cumulative impact from January 1, 2016 to the period presented on deferred tax liabilities for the full retrospective method of adoption of ASC 606. [g] Represents cumulative impact from January 1, 2016 to the period presented on retained earnings for the full retrospective method of adoption of ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (Unaudited) As reported Adjustments As adjusted Three months ended September 30, 2017 Revenue Product revenue $ 227,701 $ (380 ) [a] $ 227,321 Service revenue 19,730 — 19,730 Total revenue 247,431 (380 ) 247,051 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 50,932 (76 ) [b] 50,856 Cost of services 14,651 — 14,651 Total cost of revenue 65,583 (76 ) 65,507 Gross profit 181,848 (304 ) 181,544 Operating expenses: Sales, marketing and administrative 125,800 (151 ) [c] 125,649 Other operating expenses 25,445 — 25,445 Total operating expenses 151,245 (151 ) 151,094 Total interest and other expense, net (8,958 ) — (8,958 ) Income tax benefit 11,540 64 [d] 11,604 Consolidated net income $ 33,185 $ (89 ) [e] $ 33,096 Add back net loss attributable to non-controlling interests $ (432 ) $ — $ (432 ) Net income attributable to NuVasive, Inc. $ 33,617 $ (89 ) [e] $ 33,528 Net income per share attributable to NuVasive, Inc.: Basic $ 0.66 $ (0.00 ) [f] $ 0.66 Diluted $ 0.64 $ (0.00 ) [f] $ 0.64 Comprehensive income attributable to NuVasive, Inc. $ 34,893 $ (89 ) [e] $ 34,804 [a] Represents net change in sales revenue for charge sheet orders recognized under ASC 606. [b] Represents net change in cost of products sold for charge sheet orders recognized under ASC 606. [c] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. [d] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [e] Represents change in net income and comprehensive income resulting from net change in charge sheet orders recognized under ASC 606. [f] Represents earnings per share impact resulting from net change in charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (Unaudited) As reported Adjustments As adjusted Nine months ended September 30, 2017 Revenue Product revenue $ 692,505 $ (2,405 ) [a] $ 690,100 Service revenue 65,363 — 65,363 Total revenue 757,868 (2,405 ) 755,463 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 147,773 (481 ) [b] 147,292 Cost of services 45,844 — 45,844 Total cost of revenue 193,617 (481 ) 193,136 Gross profit 564,251 (1,924 ) 562,327 Operating expenses: Sales, marketing and administrative 405,411 (427 ) [c] 404,984 Other operating expenses 75,265 — 75,265 Total operating expenses 480,676 (427 ) 480,249 Total interest and other expense, net (28,807 ) — (28,807 ) Income tax benefit 2,971 572 [d] 3,543 Consolidated net income $ 57,739 $ (925 ) [e] $ 56,814 Add back net loss attributable to non-controlling interests $ (1,307 ) $ — $ (1,307 ) Net income attributable to NuVasive, Inc. $ 59,046 $ (925 ) [e] $ 58,121 Net income per share attributable to NuVasive, Inc.: Basic $ 1.16 $ (0.02 ) [f] $ 1.14 Diluted $ 1.05 $ (0.02 ) [f] $ 1.03 Comprehensive income attributable to NuVasive, Inc. $ 62,822 $ (925 ) [e] $ 61,897 [a] Represents net change in sales revenue for charge sheet orders recognized under ASC 606. [b] Represents net change in cost of products sold for charge sheet orders recognized under ASC 606. [c] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. [d] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [e] Represents change in net income and comprehensive income resulting from net change in charge sheet orders recognized under ASC 606. [f] Represents earnings per share impact resulting from net change in charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) (Unaudited) Nine months ended September 30, 2017 As reported Adjustments As adjusted Consolidated net income $ 57,739 $ (925 ) [a] $ 56,814 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 1,741 4 [b] 1,745 Deferred income tax benefit (3,705 ) (572 ) [c] (4,277 ) Other adjustments to reconcile net income 130,611 — 130,611 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (14,796 ) 2,348 [d] (12,448 ) Inventory (36,180 ) (481 ) [e] (36,661 ) Prepaid expenses and other current assets 169 — 169 Accounts payable and accrued liabilities (17,057 ) (117 ) [f] (17,174 ) Litigation liability 1,000 — 1,000 Accrued payroll and related expenses 502 (257 ) [f] 245 Income taxes (1,195 ) — (1,195 ) Net cash provided by operating activities 118,829 — 118,829 Net cash used in investing activities (161,671 ) — (161,671 ) Net cash used in financing activities (50,625 ) — (50,625 ) Effect of exchange rate changes on cash 1,967 — 1,967 Decrease in cash, cash equivalents and restricted cash $ (91,500 ) $ — $ (91,500 ) [a] Represents change in net income resulting from charge sheet orders recognized under ASC 606. [b] Represents net change in allowances on accounts receivable for charge sheet orders recognized under ASC 606. [c] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [d] Represents net change in accounts receivable for charge sheet orders recognized under ASC 606. [e] Represents net change in inventory for charge sheet orders recognized under ASC 606. [f] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities provides a practicability exception for investments that do not have readily determinable fair values, practicability exception for measuring equity investments that do not have readily determinable fair market 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 In February 2017, the FASB issued Accounting Standards Update No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Compensation – Stock Compensation In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation – Stock Compensation |
Revenue Recognition | Revenue Recognition In accordance with ASC 606 guidance, the Company recognizes revenue upon the transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. The principles in ASC 606 are applied using the following five steps: dentify the contract with a customer dentify the performance obligation(s) in the contract etermine the transaction price llocate the transaction price to the performance obligation(s) in the contract; ecognize revenue when (or as) the Company satisfies its performance obligation(s) Revenue from neuromonitoring services is recognized in the period the service is performed for the amount of consideration expected to be received. In certain cases, the Company does offer the ability for customers to lease instrumentation primarily on a non-sales type basis. Revenue associated with products holding rights of return or trade-in are recognized when the Company concludes there is not a risk of significant revenue reversal in future periods for the expected consideration in the transaction. Costs incurred by the Company associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, with the exception of contracts that complete within one year or less, in which case the associated costs are expensed as incurred. |
Inventory | Inventory Net inventory as of September 30, 2018 primarily consisted of $258.3 million of finished goods, $5.3 million of work in progress and $7.7 million of raw materials. Net inventory as of December 31, 2017 consisted of $232.4 million of finished goods, $9.8 million of work in progress and $5.0 million of raw materials. Finished goods include specialized implants and disposables and are stated at the lower of cost or market determined by utilizing a standard cost method, which includes assessment of capitalized variances, which approximates the weighted average cost. Work in progress and raw materials represent the underlying material, and labor for work in progress, that ultimately yield finished goods upon completion and are subject to lower of cost or market. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary. |
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 net of tax, unrealized gains or losses on the Company’s marketable securities and foreign currency translation adjustments. The cumulative translation adjustments included in accumulated other comprehensive loss were $10.2 million and $6.9 million at September 30, 2018 and December 31, 2017, respectively. |
Product Shipment Costs | Product Shipment Costs Product shipment costs, included in sales, marketing and administrative expense in the accompanying Unaudited Consolidated Statements of Operations, were $6.5 million and $18.9 million for the three and nine months ended September 30, 2018, respectively, and $6.0 million and $17.5 million for the three and nine months ended September 30, 2017, 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 material 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, contingent consideration fair value adjustments and other costs directly associated with such activities. The Company incurred $1.4 million and $7.7 million of such costs during the three and nine months ended September 30, 2018, respectively, which consisted primarily of acquisition, integration and business transition activities, but also includes $0.7 million and $1.5 million, respectively, of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. The Company incurred $0.3 million and $1.8 million of such costs during the three and nine months ended September 30, 2017, respectively, which consisted primarily of acquisition, integration and business transition activities, but also includes $(0.9) million and $(1.6) million, respectively, of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. |
Description of Business and B_3
Description of Business and Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Impacts of ASC 606 Adoption on the Company's Previously Filed Unaudited Consolidated Financial Statements | The following tables summarize in a condensed presentation the impact of the adoption of ASC 606 on the Company’s previously reported Consolidated Balance Sheet as of December 31, 2017, the Unaudited Consolidated Statement of Operations and Comprehensive Income for the three and nine months ended September 30, 2017, and the Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30, 2017. NUVASIVE, INC. CONSOLIDATED BALANCE SHEET (in thousands) (Unaudited) (Unaudited) As of December 31, 2017 As reported Adjustments As Adjusted Accounts receivable, gross $ 212,709 $ 537 [a] $ 213,246 Allowances on accounts receivable (13,669 ) 643 [b] (13,026 ) Inventory, net 247,245 (107 ) [c] 247,138 Other current assets 112,705 — 112,705 Total current assets 558,990 1,073 560,063 Remaining other assets 1,080,077 — 1,080,077 Total assets $ 1,639,067 $ 1,073 $ 1,640,140 Accounts payable and accrued liabilities 75,076 691 [d] 75,767 Accrued payroll and related expenses 55,582 36 [e] 55,618 Other current liabilities 30,010 — 30,010 Total current liabilities 160,668 727 161,395 Deferred and income tax liabilities, non-current 18,786 84 [f] 18,870 Other long-term liabilities 660,459 — 660,459 Total NuVasive, Inc. stockholders’ equity 795,309 262 [g] 795,571 Non-controlling interests 3,845 — 3,845 Total equity 799,154 262 799,416 Total liabilities and equity $ 1,639,067 $ 1,073 $ 1,640,140 [a] Represents cumulative impact from January 1, 2016 to the period presented on accounts receivable for the full retrospective method of adoption of ASC 606. [b] Represents cumulative impact from January 1, 2016 to the period presented on allowances on accounts receivable for the full retrospective method of adoption of ASC 606. [c] Represents cumulative impact from January 1, 2016 to the period presented on inventory for the full retrospective method of adoption of ASC 606. [d] Represents cumulative impact from January 1, 2016 to the period presented on commissions payable and accrued returns for the full retrospective method of adoption of ASC 606. [e] Represents cumulative impact from January 1, 2016 to the period presented on commissions payable for the full retrospective method of adoption of ASC 606. [f] Represents cumulative impact from January 1, 2016 to the period presented on deferred tax liabilities for the full retrospective method of adoption of ASC 606. [g] Represents cumulative impact from January 1, 2016 to the period presented on retained earnings for the full retrospective method of adoption of ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (Unaudited) As reported Adjustments As adjusted Three months ended September 30, 2017 Revenue Product revenue $ 227,701 $ (380 ) [a] $ 227,321 Service revenue 19,730 — 19,730 Total revenue 247,431 (380 ) 247,051 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 50,932 (76 ) [b] 50,856 Cost of services 14,651 — 14,651 Total cost of revenue 65,583 (76 ) 65,507 Gross profit 181,848 (304 ) 181,544 Operating expenses: Sales, marketing and administrative 125,800 (151 ) [c] 125,649 Other operating expenses 25,445 — 25,445 Total operating expenses 151,245 (151 ) 151,094 Total interest and other expense, net (8,958 ) — (8,958 ) Income tax benefit 11,540 64 [d] 11,604 Consolidated net income $ 33,185 $ (89 ) [e] $ 33,096 Add back net loss attributable to non-controlling interests $ (432 ) $ — $ (432 ) Net income attributable to NuVasive, Inc. $ 33,617 $ (89 ) [e] $ 33,528 Net income per share attributable to NuVasive, Inc.: Basic $ 0.66 $ (0.00 ) [f] $ 0.66 Diluted $ 0.64 $ (0.00 ) [f] $ 0.64 Comprehensive income attributable to NuVasive, Inc. $ 34,893 $ (89 ) [e] $ 34,804 [a] Represents net change in sales revenue for charge sheet orders recognized under ASC 606. [b] Represents net change in cost of products sold for charge sheet orders recognized under ASC 606. [c] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. [d] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [e] Represents change in net income and comprehensive income resulting from net change in charge sheet orders recognized under ASC 606. [f] Represents earnings per share impact resulting from net change in charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) (Unaudited) As reported Adjustments As adjusted Nine months ended September 30, 2017 Revenue Product revenue $ 692,505 $ (2,405 ) [a] $ 690,100 Service revenue 65,363 — 65,363 Total revenue 757,868 (2,405 ) 755,463 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 147,773 (481 ) [b] 147,292 Cost of services 45,844 — 45,844 Total cost of revenue 193,617 (481 ) 193,136 Gross profit 564,251 (1,924 ) 562,327 Operating expenses: Sales, marketing and administrative 405,411 (427 ) [c] 404,984 Other operating expenses 75,265 — 75,265 Total operating expenses 480,676 (427 ) 480,249 Total interest and other expense, net (28,807 ) — (28,807 ) Income tax benefit 2,971 572 [d] 3,543 Consolidated net income $ 57,739 $ (925 ) [e] $ 56,814 Add back net loss attributable to non-controlling interests $ (1,307 ) $ — $ (1,307 ) Net income attributable to NuVasive, Inc. $ 59,046 $ (925 ) [e] $ 58,121 Net income per share attributable to NuVasive, Inc.: Basic $ 1.16 $ (0.02 ) [f] $ 1.14 Diluted $ 1.05 $ (0.02 ) [f] $ 1.03 Comprehensive income attributable to NuVasive, Inc. $ 62,822 $ (925 ) [e] $ 61,897 [a] Represents net change in sales revenue for charge sheet orders recognized under ASC 606. [b] Represents net change in cost of products sold for charge sheet orders recognized under ASC 606. [c] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. [d] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [e] Represents change in net income and comprehensive income resulting from net change in charge sheet orders recognized under ASC 606. [f] Represents earnings per share impact resulting from net change in charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) (Unaudited) Nine months ended September 30, 2017 As reported Adjustments As adjusted Consolidated net income $ 57,739 $ (925 ) [a] $ 56,814 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 1,741 4 [b] 1,745 Deferred income tax benefit (3,705 ) (572 ) [c] (4,277 ) Other adjustments to reconcile net income 130,611 — 130,611 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (14,796 ) 2,348 [d] (12,448 ) Inventory (36,180 ) (481 ) [e] (36,661 ) Prepaid expenses and other current assets 169 — 169 Accounts payable and accrued liabilities (17,057 ) (117 ) [f] (17,174 ) Litigation liability 1,000 — 1,000 Accrued payroll and related expenses 502 (257 ) [f] 245 Income taxes (1,195 ) — (1,195 ) Net cash provided by operating activities 118,829 — 118,829 Net cash used in investing activities (161,671 ) — (161,671 ) Net cash used in financing activities (50,625 ) — (50,625 ) Effect of exchange rate changes on cash 1,967 — 1,967 Decrease in cash, cash equivalents and restricted cash $ (91,500 ) $ — $ (91,500 ) [a] Represents change in net income resulting from charge sheet orders recognized under ASC 606. [b] Represents net change in allowances on accounts receivable for charge sheet orders recognized under ASC 606. [c] Represents deferred income tax liability on net change associated with charge sheet orders recognized under ASC 606. [d] Represents net change in accounts receivable for charge sheet orders recognized under ASC 606. [e] Represents net change in inventory for charge sheet orders recognized under ASC 606. [f] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, Nine Months Ended September 30, ( in thousands, except per share data 2018 2017 2018 2017 Numerator: Net income attributable to NuVasive, Inc. $ 15,923 $ 33,528 $ 322 $ 58,121 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,439 50,747 51,341 50,799 Dilutive potential common stock outstanding: Stock options and employee stock purchase plan 41 129 37 163 Restricted stock units 1,059 875 701 1,216 Warrants — — — 1,991 Senior Convertible Notes 650 1,043 217 2,135 Weighted average common shares outstanding for diluted 53,189 52,794 52,296 56,304 Basic net income per share attributable to NuVasive, Inc. $ 0.31 $ 0.66 $ 0.01 $ 1.14 Diluted net income per share attributable to NuVasive, Inc. $ 0.30 $ 0.64 $ 0.01 $ 1.03 |
Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income (Loss) 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 September 30, Nine Months Ended September 30, ( in thousands 2018 2017 2018 2017 Stock options, employee stock purchase plan, and restricted stock units 11 7 198 50 Warrants 10,865 10,865 10,865 10,865 Senior Convertible Notes — — 7,244 — Total 10,876 10,872 18,307 10,915 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis | Cash equivalents 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) September 30, 2018: Cash equivalents: Money market funds $ 24,000 $ 24,000 $ — $ — Total cash equivalents $ 24,000 $ 24,000 $ — $ — December 31, 2017: Cash equivalents: Money market funds $ 27,000 $ 27,000 $ — $ — Total cash equivalents $ 27,000 $ 27,000 $ — $ — |
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): Nine Months Ended September 30, ( in thousands 2018 2017 Fair value measurement at beginning of period $ 67,941 $ 67,501 Contingent consideration liability recorded upon acquisition 6,663 32,471 Change in fair value measurement 1,539 (1,830 ) Changes resulting from foreign currency fluctuations 17 70 Contingent consideration paid or settled (19,000 ) (30,000 ) Fair value measurement at end of period $ 57,160 $ 68,212 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,747 $ (123,618 ) $ 148,129 Manufacturing know-how and trade secrets 13 30,826 (17,330 ) 13,496 Trade name and trademarks 9 25,500 (13,059 ) 12,441 Customer relationships 9 143,652 (54,773 ) 88,879 Total intangible assets subject to amortization 9 $ 471,725 $ (208,780 ) $ 262,945 Intangible assets not subject to amortization: Goodwill $ 560,401 Total goodwill and intangible assets, net $ 823,346 Weighted- Average Amortization Period Gross Accumulated Intangible December 31, 2017: (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (98,693 ) $ 173,055 Manufacturing know-how and trade secrets 13 30,653 (15,542 ) 15,111 Trade name and trademarks 9 25,200 (10,559 ) 14,641 Customer relationships 9 122,249 (44,282 ) 77,967 Total intangible assets subject to amortization 9 $ 449,850 $ (169,076 ) $ 280,774 Intangible assets not subject to amortization: Goodwill $ 536,926 Total goodwill and intangible assets, net $ 817,700 |
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, 2017 Gross goodwill $ 545,226 Accumulated impairment loss (8,300 ) 536,926 Changes to gross goodwill Increases recorded in business combinations 26,303 Changes in purchase price allocation (1,075 ) Changes resulting from foreign currency fluctuations (1,753 ) 23,475 September 30, 2018 Gross goodwill 568,701 Accumulated impairment loss (8,300 ) $ 560,401 |
Future amortization expense related to intangible assets | Total future amortization expense related to intangible assets subject to amortization at September 30, 2018 is set forth in the table below: ( in thousands Remaining 2018 $ 13,170 2019 51,612 2020 50,990 2021 48,930 2022 41,519 Thereafter through 2031 56,724 Total future amortization expense $ 262,945 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combination Description [Abstract] | |
Reconciliation of equity attributable to the non-controlling interests | The following is a reconciliation of equity (net assets) attributable to the non-controlling interest: Nine Months Ended September 30, ( in thousands 2018 2017 Non-controlling interest at beginning of period $ 3,845 $ 5,588 Acquired non-controlling interest reclassified to additional paid-in capital (3,845 ) — Less: Net loss attributable to the non-controlling interest — (1,307 ) Non-controlling interest at end of period $ — $ 4,281 |
Summary of assets and liabilities included in the accompanying consolidated balance sheet | Total assets and liabilities of Progentix as a VIE included in the accompanying Consolidated Balance Sheets are as follows: ( in thousands September 30, 2018 December 31, 2017 Total current assets $ — $ 670 Identifiable intangible assets, net — 8,752 Goodwill — 12,654 Accounts payable and accrued expenses — 562 Deferred tax liabilities, net — 331 Non-controlling interest — 3,845 |
Indebtedness (Tables)
Indebtedness (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Carrying Value of Senior Convertible Notes | The carrying values of the Company’s Senior Convertible Notes due 2021 are as follows: ( in thousands September 30, 2018 December 31, 2017 2.25% Senior Convertible Notes due 2021: Principal amount 650,000 650,000 Unamortized debt discount (44,380 ) (56,839 ) Unamortized debt issuance costs (8,102 ) (10,241 ) Total Senior Convertible Notes $ 597,518 $ 582,920 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 Unaudited Consolidated Statements of Operations for all stock-based compensation arrangements was as follows: Three Months Ended September 30, Nine Months Ended September 30, ( in thousands 2018 2017 2018 2017 Sales, marketing and administrative expense (benefit) $ 10,095 $ (961 ) $ 19,539 $ 13,725 Research and development expense 863 438 2,201 1,005 Cost of revenue 110 96 322 254 Stock-based compensation expense (benefit) before taxes 11,068 (427 ) 22,062 14,984 Related income tax expense (benefit) (2,767 ) 162 (5,516 ) (5,694 ) Stock-based compensation expense (benefit), net of taxes $ 8,301 $ (265 ) $ 16,546 $ 9,290 |
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 September 30, Nine Months Ended September 30, 2018 2017 2018 2017 ESPP Volatility 28 % 20 % 32 % 22 % Expected term (years) 0.5 0.5 0.5 0.5 Risk free interest rate 2.1 % 1.0 % 1.6 % 0.7 % Expected dividend yield — % — % — % — % |
Business Segment, Product and G
Business Segment, Product and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Product Lines | Revenue by product line was as follows: Three Months Ended September 30, Nine Months Ended September 30, ( in thousands 2018 2017 2018 2017 Spinal hardware $ 193,626 $ 180,670 $ 581,587 $ 540,482 Surgical support 77,675 66,381 231,800 214,981 Total revenue $ 271,301 $ 247,051 $ 813,387 $ 755,463 |
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 September 30, Nine Months Ended September 30, September 30, December 31, ( in thousands 2018 2017 2018 2017 2018 2017 United States $ 221,318 $ 200,606 $ 661,570 $ 629,935 $ 200,877 $ 179,891 International (excludes Puerto Rico) 49,983 46,445 151,817 125,528 36,614 35,435 Total $ 271,301 $ 247,051 $ 813,387 $ 755,463 $ 237,491 $ 215,326 |
Description of Business and B_4
Description of Business and Basis of Presentation (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||
Cumulative effect of change on retained earnings | $ 5,084 | $ 5,084 | $ 4,762 | ||
Inventory, finished goods | 258,300 | 258,300 | 232,400 | ||
Inventory, work in progress | 5,300 | 5,300 | 9,800 | ||
Inventory, raw materials | 7,700 | 7,700 | 5,000 | ||
Translation Adjustment Functional to Reporting Currency, Net of Tax | 10,200 | 10,200 | 6,900 | ||
Product shipment costs | 74,160 | $ 65,507 | 225,030 | $ 193,136 | |
Business transition costs | 1,443 | 345 | 7,694 | 1,769 | |
2017 and 2016 Acquisitions [Member] | |||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||
Business transition costs | 700 | (900) | 1,500 | (1,600) | |
Product Shipment [Member] | |||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||
Product shipment costs | $ 6,500 | 6,000 | $ 18,900 | 17,500 | |
Accounting Standards Update 2014-09 [Member] | |||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||
Product shipment costs | $ 65,507 | $ 193,136 | |||
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | |||||
Schedule Of Description Of Business And Basis Of Presentation [Line Items] | |||||
Cumulative effect of change on retained earnings | $ 300 |
Description of Business and B_5
Description of Business and Basis of Presentation - Summary of Condensed Presentation Impact of Adoption of ASC 606 Adoption on the Company's Previously Reported Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Allowances on accounts receivable | $ (16,883) | $ (13,026) |
Inventory, net | 271,347 | 247,138 |
Total current assets | 579,653 | 560,063 |
Other assets | 27,577 | 39,117 |
Total assets | 1,675,400 | 1,640,140 |
Accounts payable and accrued liabilities | 100,912 | 75,767 |
Accrued payroll and related expenses | 47,798 | 55,618 |
Total current liabilities | 168,235 | 161,395 |
Deferred and income tax liabilities, non-current | 6,200 | 18,870 |
Other long-term liabilities | 99,826 | 77,539 |
Total NuVasive, Inc. stockholders’ equity | 803,621 | 795,571 |
Non-controlling interest | 3,845 | |
Total equity | 803,621 | 799,416 |
Total liabilities and equity | $ 1,675,400 | 1,640,140 |
Accounting Standards Update 2014-09 [Member] | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Accounts receivable, gross | 213,246 | |
Allowances on accounts receivable | (13,026) | |
Inventory, net | 247,138 | |
Other current assets | 112,705 | |
Total current assets | 560,063 | |
Other assets | 1,080,077 | |
Total assets | 1,640,140 | |
Accounts payable and accrued liabilities | 75,767 | |
Accrued payroll and related expenses | 55,618 | |
Other current liabilities | 30,010 | |
Total current liabilities | 161,395 | |
Deferred and income tax liabilities, non-current | 18,870 | |
Other long-term liabilities | 660,459 | |
Total NuVasive, Inc. stockholders’ equity | 795,571 | |
Non-controlling interest | 3,845 | |
Total equity | 799,416 | |
Total liabilities and equity | 1,640,140 | |
Accounting Standards Update 2014-09 [Member] | Scenario, Previously Reported [Member] | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Accounts receivable, gross | 212,709 | |
Allowances on accounts receivable | (13,669) | |
Inventory, net | 247,245 | |
Other current assets | 112,705 | |
Total current assets | 558,990 | |
Other assets | 1,080,077 | |
Total assets | 1,639,067 | |
Accounts payable and accrued liabilities | 75,076 | |
Accrued payroll and related expenses | 55,582 | |
Other current liabilities | 30,010 | |
Total current liabilities | 160,668 | |
Deferred and income tax liabilities, non-current | 18,786 | |
Other long-term liabilities | 660,459 | |
Total NuVasive, Inc. stockholders’ equity | 795,309 | |
Non-controlling interest | 3,845 | |
Total equity | 799,154 | |
Total liabilities and equity | 1,639,067 | |
Accounting Standards Update 2014-09 [Member] | Restatement Adjustment [Member] | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Accounts receivable, gross | 537 | |
Allowances on accounts receivable | 643 | |
Inventory, net | (107) | |
Total current assets | 1,073 | |
Total assets | 1,073 | |
Accounts payable and accrued liabilities | 691 | |
Accrued payroll and related expenses | 36 | |
Total current liabilities | 727 | |
Deferred and income tax liabilities, non-current | 84 | |
Total NuVasive, Inc. stockholders’ equity | 262 | |
Total equity | 262 | |
Total liabilities and equity | $ 1,073 |
Description of Business and B_6
Description of Business and Basis of Presentation - Summary of Condensed Presentation Impact of Adoption of ASC 606 on the Company's Previously Reported Unaudited Consolidated Statement of Operations and Comprehensive Income (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue | ||||
Total revenue | $ 271,301 | $ 247,051 | $ 813,387 | $ 755,463 |
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 74,160 | 65,507 | 225,030 | 193,136 |
Gross profit | 197,141 | 181,544 | 588,357 | 562,327 |
Operating expenses: | ||||
Sales, marketing and administrative | 141,211 | 125,649 | 433,635 | 404,984 |
Total operating expenses | 179,170 | 151,094 | 560,045 | 480,249 |
Total interest and other expense, net | (4,666) | (8,958) | (35,921) | (28,807) |
Income tax benefit | 2,618 | 11,604 | 7,931 | 3,543 |
Consolidated net income | 15,923 | 33,096 | 322 | 56,814 |
Add back net loss attributable to non-controlling interest | (432) | (1,307) | ||
Net income attributable to NuVasive, Inc. | $ 15,923 | $ 33,528 | $ 322 | $ 58,121 |
Net income per share attributable to NuVasive, Inc.: | ||||
Basic | $ 0.31 | $ 0.66 | $ 0.01 | $ 1.14 |
Diluted | $ 0.30 | $ 0.64 | $ 0.01 | $ 1.03 |
Comprehensive income attributable to NuVasive, Inc. | $ 14,605 | $ 34,804 | $ (2,939) | $ 61,897 |
Product [Member] | ||||
Revenue | ||||
Total revenue | 242,030 | 227,321 | 728,232 | 690,100 |
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 54,741 | 50,856 | 168,134 | 147,292 |
Service [Member] | ||||
Revenue | ||||
Total revenue | 29,271 | 19,730 | 85,155 | 65,363 |
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | $ 19,419 | 14,651 | $ 56,896 | 45,844 |
Accounting Standards Update 2014-09 [Member] | ||||
Revenue | ||||
Total revenue | 247,051 | 755,463 | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 65,507 | 193,136 | ||
Gross profit | 181,544 | 562,327 | ||
Operating expenses: | ||||
Sales, marketing and administrative | 125,649 | 404,984 | ||
Other operating expenses | 25,445 | 75,265 | ||
Total operating expenses | 151,094 | 480,249 | ||
Total interest and other expense, net | (8,958) | (28,807) | ||
Income tax benefit | 11,604 | 3,543 | ||
Consolidated net income | 33,096 | 56,814 | ||
Add back net loss attributable to non-controlling interest | (432) | (1,307) | ||
Net income attributable to NuVasive, Inc. | $ 33,528 | $ 58,121 | ||
Net income per share attributable to NuVasive, Inc.: | ||||
Basic | $ 0.66 | $ 1.14 | ||
Diluted | $ 0.64 | $ 1.03 | ||
Comprehensive income attributable to NuVasive, Inc. | $ 34,804 | $ 61,897 | ||
Accounting Standards Update 2014-09 [Member] | Product [Member] | ||||
Revenue | ||||
Total revenue | 227,321 | 690,100 | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 50,856 | 147,292 | ||
Accounting Standards Update 2014-09 [Member] | Service [Member] | ||||
Revenue | ||||
Total revenue | 19,730 | 65,363 | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 14,651 | 45,844 | ||
Accounting Standards Update 2014-09 [Member] | Scenario, Previously Reported [Member] | ||||
Revenue | ||||
Total revenue | 247,431 | 757,868 | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 65,583 | 193,617 | ||
Gross profit | 181,848 | 564,251 | ||
Operating expenses: | ||||
Sales, marketing and administrative | 125,800 | 405,411 | ||
Other operating expenses | 25,445 | 75,265 | ||
Total operating expenses | 151,245 | 480,676 | ||
Total interest and other expense, net | (8,958) | (28,807) | ||
Income tax benefit | 11,540 | 2,971 | ||
Consolidated net income | 33,185 | 57,739 | ||
Add back net loss attributable to non-controlling interest | (432) | (1,307) | ||
Net income attributable to NuVasive, Inc. | $ 33,617 | $ 59,046 | ||
Net income per share attributable to NuVasive, Inc.: | ||||
Basic | $ 0.66 | $ 1.16 | ||
Diluted | $ 0.64 | $ 1.05 | ||
Comprehensive income attributable to NuVasive, Inc. | $ 34,893 | $ 62,822 | ||
Accounting Standards Update 2014-09 [Member] | Scenario, Previously Reported [Member] | Product [Member] | ||||
Revenue | ||||
Total revenue | 227,701 | 692,505 | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 50,932 | 147,773 | ||
Accounting Standards Update 2014-09 [Member] | Scenario, Previously Reported [Member] | Service [Member] | ||||
Revenue | ||||
Total revenue | 19,730 | 65,363 | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | 14,651 | 45,844 | ||
Accounting Standards Update 2014-09 [Member] | Restatement Adjustment [Member] | ||||
Revenue | ||||
Total revenue | (380) | (2,405) | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | (76) | (481) | ||
Gross profit | (304) | (1,924) | ||
Operating expenses: | ||||
Sales, marketing and administrative | (151) | (427) | ||
Total operating expenses | (151) | (427) | ||
Income tax benefit | 64 | 572 | ||
Consolidated net income | (89) | (925) | ||
Net income attributable to NuVasive, Inc. | $ (89) | $ (925) | ||
Net income per share attributable to NuVasive, Inc.: | ||||
Basic | $ 0 | $ (0.02) | ||
Diluted | $ 0 | $ (0.02) | ||
Comprehensive income attributable to NuVasive, Inc. | $ (89) | $ (925) | ||
Accounting Standards Update 2014-09 [Member] | Restatement Adjustment [Member] | Product [Member] | ||||
Revenue | ||||
Total revenue | (380) | (2,405) | ||
Cost of revenue (excluding below amortization of intangible assets) | ||||
Total cost of revenue | $ (76) | $ (481) |
Description of Business and B_7
Description of Business and Basis of Presentation - Summary of Condensed Presentation Impact of Adoption of ASC 606 Adoption on the Company's Previously Reported Unaudited Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Consolidated net income | $ 15,923 | $ 33,096 | $ 322 | $ 56,814 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Reserves on current assets | 11,116 | 1,745 | ||
Deferred income tax benefit | (9,938) | (4,277) | ||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||
Accounts receivable | 8,622 | (12,448) | ||
Inventory | (33,491) | (36,661) | ||
Prepaid expenses and other current assets | (1,047) | 169 | ||
Accounts payable and accrued liabilities | 21,700 | (5,974) | ||
Litigation liability | 166 | 1,000 | ||
Accrued payroll and related expenses | (9,566) | 245 | ||
Income taxes | 108 | (1,195) | ||
Net cash provided by operating activities | 150,489 | 118,829 | ||
Net cash used in investing activities | (138,642) | (161,671) | ||
Net cash used in financing activities | (11,190) | (50,625) | ||
Effect of exchange rate changes on cash | (1,349) | 1,967 | ||
Decrease in cash, cash equivalents, restricted cash and investments | $ (692) | (91,500) | ||
Accounting Standards Update 2014-09 [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Consolidated net income | 33,096 | 56,814 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Reserves on current assets | 1,745 | |||
Deferred income tax benefit | (4,277) | |||
Other adjustments to reconcile net income | 130,611 | |||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||
Accounts receivable | (12,448) | |||
Inventory | (36,661) | |||
Prepaid expenses and other current assets | 169 | |||
Accounts payable and accrued liabilities | (17,174) | |||
Litigation liability | 1,000 | |||
Accrued payroll and related expenses | 245 | |||
Income taxes | (1,195) | |||
Net cash provided by operating activities | 118,829 | |||
Net cash used in investing activities | (161,671) | |||
Net cash used in financing activities | (50,625) | |||
Effect of exchange rate changes on cash | 1,967 | |||
Decrease in cash, cash equivalents, restricted cash and investments | (91,500) | |||
Accounting Standards Update 2014-09 [Member] | Scenario, Previously Reported [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Consolidated net income | 33,185 | 57,739 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Reserves on current assets | 1,741 | |||
Deferred income tax benefit | (3,705) | |||
Other adjustments to reconcile net income | 130,611 | |||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||
Accounts receivable | (14,796) | |||
Inventory | (36,180) | |||
Prepaid expenses and other current assets | 169 | |||
Accounts payable and accrued liabilities | (17,057) | |||
Litigation liability | 1,000 | |||
Accrued payroll and related expenses | 502 | |||
Income taxes | (1,195) | |||
Net cash provided by operating activities | 118,829 | |||
Net cash used in investing activities | (161,671) | |||
Net cash used in financing activities | (50,625) | |||
Effect of exchange rate changes on cash | 1,967 | |||
Decrease in cash, cash equivalents, restricted cash and investments | (91,500) | |||
Accounting Standards Update 2014-09 [Member] | Restatement Adjustment [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Consolidated net income | $ (89) | (925) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Reserves on current assets | 4 | |||
Deferred income tax benefit | (572) | |||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||
Accounts receivable | 2,348 | |||
Inventory | (481) | |||
Accounts payable and accrued liabilities | (117) | |||
Accrued payroll and related expenses | $ (257) |
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net income attributable to NuVasive, Inc. | $ 15,923 | $ 33,528 | $ 322 | $ 58,121 |
Denominator for basic and diluted net income per share: | ||||
Weighted average common shares outstanding for basic | 51,439 | 50,747 | 51,341 | 50,799 |
Dilutive potential common stock outstanding: | ||||
Warrants | 1,991 | |||
Senior Convertible Notes | 650 | 1,043 | 217 | 2,135 |
Weighted average common shares outstanding for diluted | 53,189 | 52,794 | 52,296 | 56,304 |
Basic net income per share attributable to NuVasive, Inc. | $ 0.31 | $ 0.66 | $ 0.01 | $ 1.14 |
Diluted net income per share attributable to NuVasive, Inc. | $ 0.30 | $ 0.64 | $ 0.01 | $ 1.03 |
Stock Options and Employee Stock Purchase Plan [Member] | ||||
Dilutive potential common stock outstanding: | ||||
Stock options and employee stock purchase plan | 41 | 129 | 37 | 163 |
Restricted Stock Units [Member] | ||||
Dilutive potential common stock outstanding: | ||||
Stock options and employee stock purchase plan | 1,059 | 875 | 701 | 1,216 |
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of earnings per share | 10,876 | 10,872 | 18,307 | 10,915 |
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 | 11 | 7 | 198 | 50 |
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 | 10,865 |
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 | 7,244 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements (Details Textual) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)investment | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)investment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)investment | |
Business Acquisition [Line Items] | ||||||
Net currency exchange gains (losses) from derivatives instruments | $ (900,000) | $ 200,000 | $ (3,400,000) | $ (100,000) | ||
Unrealized loss position investment | investment | 0 | 0 | 0 | |||
Impairment charges recorded for earnings | $ 0 | $ 0 | ||||
Contingent consideration liability | $ 2,207,000 | 2,207,000 | 18,952,000 | |||
Increased fair value adjustments | (300,000) | (11,200,000) | ||||
Purchased in-process research and development asset | 8,913,000 | 8,913,000 | ||||
Impairment charge on strategic investment | 9,000,000 | |||||
LessRay Software Technology Inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Payments of outstanding milestone obligation | 19,000,000 | |||||
Payments of outstanding milestone related to achievement of commercial milestone | 9,000,000 | |||||
Payments of outstanding milestone related to achievement of regulatory approval milestone | 10,000,000 | |||||
LessRay Software Technology Inc [Member] | ASU 2016-15 [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Payments for initial purchase price allocation | 18,700,000 | |||||
Increased fair value adjustments | (300,000) | |||||
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 Liabilities [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Contingent consideration liability | 57,200,000 | 57,200,000 | 67,900,000 | |||
Contingent consideration liabilities with acquisitions | 32,500,000 | |||||
Contingent consideration liability recorded upon acquisition | $ 31,300,000 | 6,663,000 | 32,471,000 | |||
Quoted Price in Active Market (Level 1) [Member] | Senior Convertible Notes due 2021 [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Debt instrument, fair value disclosure | 826,000,000 | 826,000,000 | 779,500,000 | |||
Foreign Exchange Forward [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Notional principal amount | 16,800,000 | 16,800,000 | 14,300,000 | |||
Foreign Exchange Forward [Member] | Other Current Assets or Other Current Liabilities [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Fair value of derivative instrument asset (liability) | 100,000 | 100,000 | $ (100,000) | |||
Foreign Exchange Forward [Member] | Other (Expense) Income [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Net gains (losses) recognized on derivative instruments | $ 200,000 | $ (400,000) | $ 500,000 | $ (1,700,000) |
Financial Instruments and Fai_4
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 | Sep. 30, 2018 | Dec. 31, 2017 |
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | $ 24,000 | $ 27,000 |
Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 24,000 | 27,000 |
Quoted Price in Active Market (Level 1) [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | 24,000 | 27,000 |
Quoted Price in Active Market (Level 1) [Member] | Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents and marketable securities | $ 24,000 | $ 27,000 |
Financial Instruments and Fai_5
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 | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Fair value measurement at beginning of period | $ 67,941 | $ 67,501 | |
Contingent consideration liability recorded upon acquisition | $ 31,300 | 6,663 | 32,471 |
Change in fair value measurement | 1,539 | (1,830) | |
Changes resulting from foreign currency fluctuations | 17 | 70 | |
Contingent consideration paid or settled | (19,000) | (30,000) | |
Fair value measurement at end of period | $ 68,212 | $ 57,160 | $ 68,212 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 471,725 | $ 449,850 |
Accumulated Amortization | (208,780) | (169,076) |
Intangible Assets, net | 262,945 | 280,774 |
Intangible assets not subject to amortization: | ||
Goodwill | 560,401 | 536,926 |
Total goodwill and intangible assets, net | $ 823,346 | $ 817,700 |
Developed Technology [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 8 years | 8 years |
Gross Amount | $ 271,747 | $ 271,748 |
Accumulated Amortization | (123,618) | (98,693) |
Intangible Assets, net | $ 148,129 | $ 173,055 |
Manufacturing know-how and trade secrets [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 13 years | 13 years |
Gross Amount | $ 30,826 | $ 30,653 |
Accumulated Amortization | (17,330) | (15,542) |
Intangible Assets, net | $ 13,496 | $ 15,111 |
Trade name and trademarks [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 25,500 | $ 25,200 |
Accumulated Amortization | (13,059) | (10,559) |
Intangible Assets, net | $ 12,441 | $ 14,641 |
Customer relationships [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 143,652 | $ 122,249 |
Accumulated Amortization | (54,773) | (44,282) |
Intangible Assets, net | $ 88,879 | $ 77,967 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Changes in the Carrying Value of Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Gross goodwill | $ 568,701 | $ 545,226 |
Accumulated impairment loss | (8,300) | (8,300) |
Goodwill | 560,401 | $ 536,926 |
Changes to gross goodwill | ||
Increases recorded in business combinations | 26,303 | |
Changes in purchase price allocation | (1,075) | |
Changes resulting from foreign currency fluctuations | (1,753) | |
Goodwill period increase (decrease) | $ 23,475 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Amortization expense related to intangible assets | $ 13.3 | $ 12.6 | $ 40.2 | $ 37.8 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Future Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Future amortization expense related to intangible assets | ||
Remaining 2,018 | $ 13,170 | |
2,019 | 51,612 | |
2,020 | 50,990 | |
2,021 | 48,930 | |
2,022 | 41,519 | |
Thereafter through 2031 | 56,724 | |
Intangible Assets, net | $ 262,945 | $ 280,774 |
Business Combinations (Details
Business Combinations (Details Textual) - Progentix Orthobiology [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2009 | Jan. 31, 2018 | |
Business Acquisition [Line Items] | |||
Percentage of ownership Interests acquired | 60.00% | ||
Advanced loan accordance to loan agreement | $ 5,300,000 | ||
Accrued interest rate of loan | 6.00% | ||
Ownership percentage | 100.00% | ||
Preferred Stock Purchase Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Percentage of ownership Interests acquired | 40.00% | ||
Cash payment on purchase of outstanding shares | $ 10,000,000 |
Reconciliation of Equity Attrib
Reconciliation of Equity Attributable to the Non-controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of equity attributable to the non-controlling interests | |||
Non-controlling interest at beginning of period | $ 3,845 | ||
Less: Net loss attributable to the non-controlling interest | $ (432) | $ (1,307) | |
Variable Interest Entity [Member] | |||
Reconciliation of equity attributable to the non-controlling interests | |||
Non-controlling interest at beginning of period | 3,845 | 5,588 | |
Acquired non-controlling interest reclassified to additional paid-in capital | $ (3,845) | ||
Less: Net loss attributable to the non-controlling interest | (1,307) | ||
Non-controlling interest at end of period | $ 4,281 | $ 4,281 |
Business Combinations Total ass
Business Combinations Total assets and liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||
Total current assets | $ 579,653 | $ 560,063 | ||
Goodwill | $ 560,401 | 536,926 | ||
Non-controlling interest | 3,845 | |||
Variable Interest Entity [Member] | ||||
Business Acquisition [Line Items] | ||||
Non-controlling interest | 3,845 | $ 4,281 | $ 5,588 | |
Variable Interest Entity [Member] | Progentix Orthobiology [Member] | ||||
Business Acquisition [Line Items] | ||||
Total current assets | 670 | |||
Identifiable intangible assets, net | 8,752 | |||
Goodwill | 12,654 | |||
Accounts payable and accrued expenses | 562 | |||
Deferred tax liabilities, net | 331 | |||
Non-controlling interest | $ 3,845 |
Carrying Value of Senior Conver
Carrying Value of Senior Convertible Notes Due 2021 (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Mar. 31, 2016 |
Debt Instrument [Line Items] | |||
Total Senior Convertible Notes | $ 597,518,000 | $ 582,920,000 | |
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 | (44,380,000) | (56,839,000) | |
Unamortized debt issuance costs | $ (8,102,000) | $ (10,241,000) |
Carrying Value of Senior Conv_2
Carrying Value of Senior Convertible Notes Due 2021 (Parenthetical) (Details) | Sep. 30, 2018 | Dec. 31, 2017 | Mar. 31, 2016 |
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) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Apr. 30, 2017USD ($) | Mar. 31, 2016USD ($)$ / shares | Jun. 30, 2011USD ($)$ / shares | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($)shares | Sep. 30, 2018USD ($)d$ / sharesshares | Sep. 30, 2017USD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2011$ / sharesshares | Dec. 31, 2017USD ($) | |
Revolving Senior Credit Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate on convertible notes | 3.88% | 3.88% | ||||||||
Credit facility, maximum borrowing capacity | $ 500,000,000 | |||||||||
Credit facility, expiration date | 2022-04 | |||||||||
Loan outstanding | $ 5,000,000 | $ 5,000,000 | ||||||||
Revolving Senior Credit Facility [Member] | LIBOR [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Credit facility bear interest rate | 1.00% | 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 | |||||||||
2021 Warrants [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Cash proceeds from the sale of warrants | $ 44,900,000 | |||||||||
Warrant strike price | $ / shares | $ 80 | |||||||||
Warrants Two Thousand Seventeen | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Class of warrant or rights expiry month and year | 2017-09 | |||||||||
Warrant strike price | $ / shares | $ 988.51 | $ 988.51 | ||||||||
Warrants Two Thousand Seventeen | Series A Convertible Participating Preferred Stock [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of common stock shares preferred stock convertible into | shares | 20 | 20 | ||||||||
2021 Hedge [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of common stock to be purchased | shares | 10,865,270 | |||||||||
Stock price | $ / shares | $ 59.82 | |||||||||
Derivative, maturity date | Mar. 15, 2021 | |||||||||
2017 Hedge [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of common stock to be purchased | shares | 9,553,096 | |||||||||
Stock price | $ / shares | $ 42.13 | |||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Unused line fee | 0.20% | |||||||||
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] | 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] | 2021 Warrants [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Class of warrant or rights expiry month and year | 2021-12 | |||||||||
Maximum [Member] | Warrants Two Thousand Seventeen | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Class of warrant or rights expiry month and year | 2018-01 | |||||||||
Maximum [Member] | Warrants Two Thousand Seventeen | 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 | 477,654 | ||||||||
Additional Paid-in Capital [Member] | 2021 Hedge [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Cost of hedge transaction | $ 111,200,000 | |||||||||
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 | ||||||||
Common Shares [Member] | Maximum [Member] | Warrants Two Thousand Seventeen | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of preferred or common stock into which the warrants is converted | shares | 9,553,080 | 9,553,080 | ||||||||
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 | ||||||
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% | ||||||
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 | $ 11,000,000 | $ 11,000,000 | ||||||
Amortization of debt discount (premium) | 4,200,000 | 4,000,000 | 12,500,000 | 11,800,000 | ||||||
Amortization of debt issuance costs | $ 700,000 | 700,000 | $ 2,100,000 | 2,000,000 | ||||||
Effective interest rate | 5.80% | 5.80% | ||||||||
Debt redemption price percentage | 100.00% | |||||||||
Principal payments due | $ 0 | 0 | ||||||||
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 | |||||||||
Interest rate on convertible notes | 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 | 900,000 | |||||||||
Amortization of debt discount (premium) | 1,400,000 | |||||||||
Amortization of debt issuance costs | $ 200,000 | |||||||||
Effective interest rate | 8.00% | 8.00% | ||||||||
2.75% Senior Convertible Notes [Member] | Convertible Notes due 2017 [Member] | Other Expense [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Cumulative loss on repurchase of senior convertible notes | $ 19,100,000 |
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense (benefit) before taxes | $ 11,068 | $ (427) | $ 22,062 | $ 14,984 |
Related income tax expense (benefit) | (2,767) | 162 | (5,516) | (5,694) |
Stock-based compensation expense (benefit), net of taxes | 8,301 | (265) | 16,546 | 9,290 |
Sales, Marketing and Administrative Expense (Benefit) [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense (benefit) before taxes | 10,095 | (961) | 19,539 | 13,725 |
Research and Development Expense [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense (benefit) before taxes | 863 | 438 | 2,201 | 1,005 |
Cost of Revenue [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense (benefit) before taxes | $ 110 | $ 96 | $ 322 | $ 254 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
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 | 126,000 | 232,000 |
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 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 | $ 46,200,000 | $ 46,200,000 | |
Weighted average contractual term | 2 years 1 month 6 days | ||
Restricted Stock Units [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unamortized cost related to share-based compensation | $ 46,200,000 | $ 46,200,000 | |
Weighted average contractual term | 2 years 1 month 6 days | ||
Number of shares of common stock issued upon vesting of RSUs | 32,000 | 182,000 | 359,000 |
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Weighted average assumptions used to estimate fair value of stock options granted and stock purchase rights under ESPP | ||||
Volatility | 28.00% | 20.00% | 32.00% | 22.00% |
Expected term (years) | 6 months | 6 months | 6 months | 6 months |
Risk free interest rate | 2.10% | 1.00% | 1.60% | 0.70% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 104.00% | ||
Tax cuts and jobs act 2017, executive compensation related deferred taxes and federal tax revaluation impact write-down | $ 0.3 | ||
Tax cuts and jobs act 2017, increase in effective income tax rate due to deferred tax and federal tax revaluation impact write-down | 1.70% | 0.50% | |
Decrease in gross unrecognized tax benefits | (7.2) | ||
Remaining unrecognized tax benefits | $ 0.7 |
Business Segment, Product and_2
Business Segment, Product and Geographic Information (Details Textual) | 9 Months Ended |
Sep. 30, 2018segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Business Segment, Product and_3
Business Segment, Product and Geographic Information - Schedule of Revenue by Product Lines (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Entity Wide Information Revenue From External Customer [Line Items] | ||||
Total revenue | $ 271,301 | $ 247,051 | $ 813,387 | $ 755,463 |
Spinal Hardware [Member] | ||||
Entity Wide Information Revenue From External Customer [Line Items] | ||||
Total revenue | 193,626 | 180,670 | 581,587 | 540,482 |
Surgical Support [Member] | ||||
Entity Wide Information Revenue From External Customer [Line Items] | ||||
Total revenue | $ 77,675 | $ 66,381 | $ 231,800 | $ 214,981 |
Business Segment, Product and_4
Business Segment, Product and Geographic Information - Schedule of Revenue and Net Property and Equipment by Geographical Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||
Revenue | $ 271,301 | $ 247,051 | $ 813,387 | $ 755,463 | |
Property and Equipment, Net | 237,491 | 237,491 | $ 215,326 | ||
United States | |||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||
Revenue | 221,318 | 200,606 | 661,570 | 629,935 | |
Property and Equipment, Net | 200,877 | 200,877 | 179,891 | ||
International [Member] | |||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||
Revenue | 49,983 | $ 46,445 | 151,817 | $ 125,528 | |
Property and Equipment, Net | $ 36,614 | $ 36,614 | $ 35,435 |
Commitments (Details Textual)
Commitments (Details Textual) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Licensing and Purchasing Agreements [Member] | |
Commitments And Contingencies Disclosure [Line Items] | |
Obligation under consultancy arrangements | $ 48 |
Revenue-based milestone period | achieved prior to 2027 |
Executive Severance Plans [Member] | |
Commitments And Contingencies Disclosure [Line Items] | |
Other commitments, future minimum payments, remainder of fiscal year | $ 23.7 |
Contingencies (Details)
Contingencies (Details) - USD ($) | Feb. 13, 2018 | Jul. 05, 2016 | Mar. 18, 2016 | Feb. 19, 2016 | May 31, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Mar. 31, 2018 |
Loss Contingencies [Line Items] | |||||||||||
Litigation accrual | $ 8,316,000 | $ 8,150,000 | |||||||||
Litigation accrual adjustment | $ (750,000) | (27,800,000) | $ (750,000) | ||||||||
Madsen Medical, Inc. Litigation [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Settlement agreement, consideration | $ 27,800,000 | $ 27,800,000 | |||||||||
Litigation accrual | $ 27,800,000 | $ 29,000,000 | |||||||||
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. | ||||||||||
Litigation accrual adjustment | $ 1,200,000 | ||||||||||
Madsen Medical, Inc. Litigation [Member] | Minimum [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Loss contingency, estimate of possible loss | 0 | 0 | |||||||||
Madsen Medical, Inc. Litigation [Member] | Maximum [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Loss contingency, estimate of possible loss | $ 29,000,000 | ||||||||||
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 | ||||||||||
Securities Litigation [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Settlement agreement, consideration | $ 7,900,000 | ||||||||||
Litigation accrual | $ 7,900,000 | 7,900,000 | |||||||||
Expected insurance proceeds | $ 7,900,000 | $ 7,900,000 |