Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 18, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | NUVASIVE INC | ||
Entity Central Index Key | 1,142,596 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | NUVA | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.7 | ||
Entity Common Stock, Shares Outstanding | 51,635,602 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 117,840 | $ 72,803 |
Restricted cash and investments | 3,901 | |
Accounts receivable, net of allowances of $16,171 and $13,026, respectively | 196,487 | 200,220 |
Inventory, net | 273,244 | 247,138 |
Prepaid income taxes | 16,905 | 17,209 |
Prepaid expenses and other current assets | 13,733 | 18,792 |
Total current assets | 618,209 | 560,063 |
Property and equipment, net | 238,841 | 215,326 |
Intangible assets, net | 252,048 | 280,774 |
Goodwill | 561,366 | 536,926 |
Deferred tax assets | 5,263 | 6,440 |
Restricted cash and investments | 2,395 | 1,494 |
Other assets | 29,737 | 39,117 |
Total assets | 1,707,859 | 1,640,140 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 105,877 | 75,767 |
Contingent consideration liabilities | 7,560 | 18,952 |
Accrued payroll and related expenses | 59,960 | 55,618 |
Litigation liabilities | 1,415 | 8,150 |
Income tax liabilities | 4,648 | 2,908 |
Total current liabilities | 179,460 | 161,395 |
Long-term senior convertible notes | 602,526 | 582,920 |
Deferred and income tax liabilities, non-current | 4,964 | 18,870 |
Other long-term liabilities | 86,384 | 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 December 31, 2018 and December 31, 2017, 56,648,077 and 56,164,060 issued and outstanding at December 31, 2018 and December 31, 2017, respectively | 61 | 60 |
Additional paid-in capital | 1,397,829 | 1,363,549 |
Accumulated other comprehensive loss | (8,628) | (6,933) |
Retained earnings | 17,241 | 4,762 |
Treasury stock at cost; 5,116,496 shares and 5,001,886 shares at December 31, 2018 and December 31, 2017, respectively | (571,978) | (565,867) |
Total NuVasive, Inc. stockholders’ equity | 834,525 | 795,571 |
Non-controlling interests | 3,845 | |
Total equity | 834,525 | 799,416 |
Total liabilities and equity | $ 1,707,859 | $ 1,640,140 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 16,171 | $ 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 | 56,648,077 | 56,164,060 |
Common stock, shares outstanding | 56,648,077 | 56,164,060 |
Treasury stock at cost, shares | 5,116,496 | 5,001,886 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||
Total revenue | $ 1,101,714 | $ 1,026,685 | $ 962,132 |
Cost of revenue (excluding below amortization of intangible assets) | |||
Total cost of revenue | 311,159 | 268,441 | 240,105 |
Gross profit | 790,555 | 758,244 | 722,027 |
Operating expenses: | |||
Sales, marketing and administrative | 575,836 | 539,507 | 533,600 |
Research and development | 61,695 | 50,425 | 47,999 |
Amortization of intangible assets | 50,670 | 48,039 | 42,001 |
Purchase of in-process research and development | 8,913 | ||
Litigation liability loss (gain) | 27,800 | 4,500 | (43,310) |
Business transition costs | 11,473 | 4,287 | 18,138 |
Total operating expenses | 736,387 | 646,758 | 598,428 |
Interest and other expense, net: | |||
Interest income | 586 | 440 | 1,091 |
Interest expense | (37,857) | (38,021) | (40,520) |
Loss on repurchases of convertible notes | (19,085) | ||
Other income (expense), net | (8,174) | (1,542) | (305) |
Total interest and other expense, net | (45,445) | (39,123) | (58,819) |
Income before income taxes | 8,723 | 72,363 | 64,780 |
Income tax benefit (expense) | 3,756 | 7,492 | (29,309) |
Consolidated net income | 12,479 | 79,855 | 35,471 |
Add back net loss attributable to non-controlling interests | (1,743) | (1,721) | |
Net income attributable to NuVasive, Inc. | $ 12,479 | $ 81,598 | $ 37,192 |
Net income per share attributable to NuVasive, Inc.: | |||
Basic | $ 0.24 | $ 1.60 | $ 0.74 |
Diluted | $ 0.24 | $ 1.48 | $ 0.69 |
Weighted average shares outstanding: | |||
Basic | 51,382 | 50,874 | 50,077 |
Diluted | 52,355 | 55,193 | 54,102 |
Product [Member] | |||
Revenue | |||
Total revenue | $ 986,458 | $ 938,981 | $ 893,544 |
Cost of revenue (excluding below amortization of intangible assets) | |||
Total cost of revenue | 234,509 | 207,307 | 195,605 |
Service [Member] | |||
Revenue | |||
Total revenue | 115,256 | 87,704 | 68,588 |
Cost of revenue (excluding below amortization of intangible assets) | |||
Total cost of revenue | $ 76,650 | $ 61,134 | $ 44,500 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Consolidated net income | $ 12,479 | $ 79,855 | $ 35,471 |
Other comprehensive (loss) income: | |||
Unrealized (loss) gain on marketable securities, net of tax | (1) | 330 | |
Translation adjustments, net of tax | (1,695) | 3,699 | 1,151 |
Other comprehensive (loss) income: | (1,695) | 3,698 | 1,481 |
Total consolidated comprehensive income | 10,784 | 83,553 | 36,952 |
Net loss attributable to non-controlling interests | 1,743 | 1,721 | |
Comprehensive income attributable to NuVasive, Inc. | $ 10,784 | $ 85,296 | $ 38,673 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings (Accumulated Deficit) [Member] | Treasury Stock [Member] | Total Nuvasive, Inc. Stockholders? Equity [Member] | Non-controlling Interest [Member] |
Adjustment for full retrospective adoption of accounting standard | $ 1,625 | $ 1,625 | $ 1,625 | |||||
Beginning Balance at Dec. 31, 2015 | 718,843 | $ 53 | $ 989,387 | $ (12,112) | (104,006) | $ (161,788) | 711,534 | $ 7,309 |
Beginning Balance, Shares at Dec. 31, 2015 | 52,616 | (3,316) | ||||||
Issuance of common stock under employee and director stock option and purchase plans | (15,357) | $ 2 | 60,720 | $ (76,079) | (15,357) | |||
Issuance of common stock under employee and director stock option and purchase plans, Shares | 2,480 | (1,443) | ||||||
Stock-based compensation expense | 24,981 | 24,981 | 24,981 | |||||
Tax benefits related to convertible note repurchase | 13,374 | 13,374 | 13,374 | |||||
Issuance of common stock in connection with royalty milestone achievement | 5,761 | 5,761 | 5,761 | |||||
Issuance of common stock in connection with royalty milestone achievement, Shares | 88 | |||||||
Issuance of common stock through conversion of notes payable, Shares | 1 | |||||||
Sale of warrants | 44,850 | 44,850 | 44,850 | |||||
Convertible note hedge | (111,150) | (111,150) | (111,150) | |||||
Equity component of convertible note issuance | 84,784 | 84,784 | 84,784 | |||||
Equity component of convertible note repurchase | (100,524) | (100,524) | (100,524) | |||||
Debt issuance costs attributable to convertible feature | (1,931) | (1,931) | (1,931) | |||||
Securities registration fees | (14) | (14) | (14) | |||||
Net income attributable to NuVasive, Inc. | 37,192 | 37,192 | 37,192 | |||||
Net loss attributable to non-controlling interests | (1,721) | (1,721) | ||||||
Other comprehensive income | 1,481 | 1,481 | 1,481 | |||||
Ending Balance at Dec. 31, 2016 | 702,194 | $ 55 | 1,010,238 | (10,631) | (65,189) | $ (237,867) | 696,606 | 5,588 |
Ending Balance, Shares at Dec. 31, 2016 | 55,185 | (4,759) | ||||||
Adjustment for modified retrospective adoption of accounting standard | (11,647) | (11,647) | (11,647) | |||||
Issuance of common stock under employee and director stock option and purchase plans | (1,877) | $ 1 | 15,569 | $ (17,447) | (1,877) | |||
Issuance of common stock under employee and director stock option and purchase plans, Shares | 743 | (243) | ||||||
Stock-based compensation expense | 22,062 | 22,062 | 22,062 | |||||
Issuance of common stock in connection with royalty milestone achievement | 5,131 | 5,131 | 5,131 | |||||
Issuance of common stock in connection with royalty milestone achievement, Shares | 90 | |||||||
Settlement of warrants | $ 3 | (3) | ||||||
Settlement of warrants, Shares | 3,657 | |||||||
Settlement of convertible note hedge | 310,553 | $ (310,553) | ||||||
Settlement of convertible note hedge, Shares | (4,161) | |||||||
Equity component of convertible note settlement | $ 1 | (1) | ||||||
Equity component of convertible note settlement, Shares | 650 | |||||||
Net income attributable to NuVasive, Inc. | 81,598 | 81,598 | 81,598 | |||||
Net loss attributable to non-controlling interests | (1,743) | (1,743) | ||||||
Other comprehensive income | 3,698 | 3,698 | 3,698 | |||||
Ending Balance at Dec. 31, 2017 | 799,416 | $ 60 | 1,363,549 | (6,933) | 4,762 | $ (565,867) | 795,571 | 3,845 |
Ending Balance, Shares at Dec. 31, 2017 | 56,164 | (5,002) | ||||||
Issuance of common stock under employee and director stock option and purchase plans | 5,199 | $ 1 | 11,309 | $ (6,111) | 5,199 | |||
Issuance of common stock under employee and director stock option and purchase plans, Shares | 466 | (114) | ||||||
Stock-based compensation expense | 27,353 | 27,353 | 27,353 | |||||
Issuance of common stock in connection with royalty milestone achievement | 4,719 | 4,719 | 4,719 | |||||
Issuance of common stock in connection with royalty milestone achievement, Shares | 18 | |||||||
Net income attributable to NuVasive, Inc. | 12,479 | 12,479 | 12,479 | |||||
Consideration paid in excess of non-controlling interests | (9,101) | (9,101) | (9,101) | |||||
Net loss attributable to non-controlling interests | (3,845) | $ (3,845) | ||||||
Other comprehensive income | (1,695) | (1,695) | (1,695) | |||||
Ending Balance at Dec. 31, 2018 | $ 834,525 | $ 61 | $ 1,397,829 | $ (8,628) | $ 17,241 | $ (571,978) | $ 834,525 | |
Ending Balance, Shares at Dec. 31, 2018 | 56,648 | (5,116) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities: | |||
Consolidated net income | $ 12,479 | $ 79,855 | $ 35,471 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 129,765 | 121,176 | 102,713 |
Purchase of in-process research and development | 8,913 | ||
Deferred income taxes | (11,396) | (12,838) | 26,292 |
Loss on repurchases of convertible notes | 19,085 | ||
Amortization of non-cash interest | 20,123 | 20,538 | 22,721 |
Stock-based compensation | 25,673 | 22,391 | 26,924 |
Net loss on strategic investments | 4,421 | ||
Reserves on current assets | 14,834 | 5,622 | 11,452 |
Other non-cash adjustments | 23,703 | 16,561 | 16,928 |
Changes in operating assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable | 4,562 | (26,610) | (33,421) |
Inventory | (38,646) | (35,867) | (22,624) |
Prepaid expenses and other current assets | (1,280) | (12,681) | (3,875) |
Accounts payable and accrued liabilities | 20,518 | (5,558) | 12,376 |
Contingent consideration liabilities | (300) | (11,200) | |
Accrued payroll and related expenses | 2,595 | 3,975 | 8,841 |
Litigation liability | 1,165 | 8,150 | (88,450) |
Income taxes | 2,054 | 3,455 | 23,652 |
Net cash provided by operating activities | 219,183 | 176,969 | 158,085 |
Investing activities: | |||
Acquisition of Ellipse Technologies, net of cash acquired | (380,080) | ||
Other acquisitions and investments | (55,266) | (62,370) | (108,591) |
Proceeds from other investments | 3,584 | ||
Purchases of intangible assets | (7,682) | (2,270) | (5,918) |
Purchases of property and equipment | (101,921) | (110,221) | (88,372) |
Purchases of marketable securities | (128,956) | ||
Proceeds from sales of marketable securities | 407,032 | ||
Net cash used in investing activities | (161,285) | (174,861) | (304,885) |
Financing activities: | |||
Proceeds from the issuance of common stock | 8,127 | 9,991 | 9,492 |
Payment of contingent consideration | (19,450) | (19,400) | (422) |
Purchase of treasury stock | (2,928) | (11,860) | (24,734) |
Proceeds from issuance of convertible debt, net of issuance costs | 634,140 | ||
Proceeds from sale of warrants | 44,850 | ||
Purchase of convertible note hedge | (111,150) | ||
Repurchases of convertible notes | (63,317) | (439,519) | |
Proceeds from revolving line of credit | 100,000 | 60,000 | 50,000 |
Repayments on revolving line of credit | (100,000) | (60,000) | (50,000) |
Other financing activities | (327) | (2,442) | (1,834) |
Net cash (used in) provided by financing activities | (14,578) | (87,028) | 110,823 |
Effect of exchange rate changes on cash | (1,283) | 2,070 | (929) |
Increase (decrease) in cash, cash equivalents and restricted cash | 42,037 | (82,850) | (36,906) |
Cash, cash equivalents and restricted cash at beginning of period | 78,198 | 161,048 | 197,954 |
Cash, cash equivalents and restricted cash at end of period | 120,235 | 78,198 | 161,048 |
Supplemental disclosure of non-cash transactions: | |||
Issuance of common stock in connection with royalty milestone achievement | 4,719 | 5,131 | 5,761 |
Supplemental cash flow information: | |||
Interest paid | 17,182 | 15,897 | 13,249 |
Income taxes paid (refunded) | $ 5,510 | $ 1,459 | $ (20,499) |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Statement Of Cash Flows [Abstract] | |||
Cash and cash equivalents | $ 117,840 | $ 72,803 | $ 153,643 |
Restricted cash, current | 3,901 | ||
Restricted cash, non-current | 2,395 | 1,494 | 7,405 |
Total cash, cash equivalents and restricted cash reported in the Consolidated Statements of Cash Flows | $ 120,235 | $ 78,198 | $ 161,048 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Significant Accounting Policies | 1. Organization and Significant Accounting Policies 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 porous titanium and polyetheretherketone (“PEEK”) 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 continues to develop a wide variety of projects which broaden its MAS and other product platforms and advance the applications of its unique technology into procedurally integrated surgical solutions that improve clinical and economic outcomes, including Pulse, a surgical automation platform which incorporates neuromonitoring, surgical planning, rod bending, imaging, navigation, and other automation. Pulse is a combined hardware and software platform designed to achieve surgical efficiencies via real-time feedback to aid in clinical decision making and to optimize the procedural workflow in the operating room. The Company continues to pursue business and technology acquisition targets and strategic relationships. Basis of Presentation and Principles of Consolidation The accompanying 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 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. These reclassifications had no impact on previously reported results of operations. Additionally, as required by Accounting Standards Update 2014-09 Revenue from Contracts with Customers Revenue from Contracts with Customers Use of Estimates To prepare financial statements in conformity with generally accepted accounting principles (“GAAP”) accepted in the United States, 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 Leases, Leases Leases In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses 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 Derivatives and Hedging 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 In September 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangible – Goodwill and Other – Internal-Use Software 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 buyer 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 As a result of the full retrospective method of adoption of ASC 606, the Company recorded a $1.6 million adjustment to January 1, 2016 accumulated deficit. The cumulative effect of the change on retained earnings as of December 31, 2017 for the full retrospective method of adoption of ASC 606 was $0.3 million. 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 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2017 and 2016, and the Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016. NUVASIVE, INC. CONSOLIDATED BALANCE SHEET (in thousands) 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) Year ended December 31, 2017 As reported Adjustments As adjusted Revenue Product revenue $ 941,816 $ (2,835 ) [a] $ 938,981 Service revenue 87,704 — 87,704 Total revenue 1,029,520 (2,835 ) 1,026,685 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 207,874 (567 ) [b] 207,307 Cost of services 61,134 — 61,134 Total cost of revenue 269,008 (567 ) 268,441 Gross profit 760,512 (2,268 ) 758,244 Operating expenses: Sales, marketing and administrative 539,913 (406 ) [c] 539,507 Other operating expenses 107,251 — 107,251 Total operating expenses 647,164 (406 ) 646,758 Total interest and other expense, net (39,123 ) — (39,123 ) Income tax benefit 7,038 454 [d] 7,492 Consolidated net income $ 81,263 $ (1,408 ) [e] $ 79,855 Add back net loss attributable to non-controlling interests $ (1,743 ) $ — $ (1,743 ) Net income attributable to NuVasive, Inc. $ 83,006 $ (1,408 ) [e] $ 81,598 Net income per share attributable to NuVasive, Inc.: Basic $ 1.63 $ (0.03 ) [f] $ 1.60 Diluted $ 1.50 $ (0.02 ) [f] $ 1.48 Comprehensive income attributable to NuVasive, Inc. $ 86,704 $ (1,408 ) [e] $ 85,296 [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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands) Year ended December 31, 2016 As reported Adjustments As adjusted Revenue Product revenue $ 893,484 $ 60 [a] $ 893,544 Service revenue 68,588 — 68,588 Total revenue 962,072 60 962,132 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 195,593 12 [b] 195,605 Cost of services 44,500 — 44,500 Total cost of revenue 240,093 12 240,105 Gross profit 721,979 48 722,027 Operating expenses: Sales, marketing and administrative 533,624 (24 ) [c] 533,600 Other operating expenses 64,828 — 64,828 Total operating expenses 598,452 (24 ) 598,428 Total interest and other expense, net (58,819 ) — (58,819 ) Income tax expense (29,282 ) (27 ) [d] (29,309 ) Consolidated net income $ 35,426 $ 45 [e] $ 35,471 Add back net loss attributable to non-controlling interests $ (1,721 ) $ — $ (1,721 ) Net income attributable to NuVasive, Inc. $ 37,147 $ 45 [e] $ 37,192 Net income per share attributable to NuVasive, Inc.: Basic $ 0.74 $ 0.00 [f] $ 0.74 Diluted $ 0.69 $ 0.00 [f] $ 0.69 Comprehensive income attributable to NuVasive, Inc. $ 38,628 $ 45 [e] $ 38,673 [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) Year ended December 31, 2017 As reported Adjustments As adjusted Consolidated net income $ 81,263 $ (1,408 ) [a] $ 79,855 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 5,718 (96 ) [b] 5,622 Deferred income tax benefit (12,384 ) (454 ) [c] (12,838 ) Other adjustments to reconcile net income 180,666 — 180,666 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (29,389 ) 2,779 [d] (26,610 ) Inventory (35,300 ) (567 ) [e] (35,867 ) Prepaid expenses and other current assets (12,681 ) [f] — (12,681 ) Accounts payable and accrued liabilities (16,617 ) (141 ) [g] (16,758 ) Litigation liability 8,150 — 8,150 Accrued payroll and related expenses 4,088 (113 ) [g] 3,975 Income taxes 3,455 — 3,455 Net cash provided by operating activities 176,969 — 176,969 Net cash used in investing activities (174,861 ) — (174,861 ) Net cash used in financing activities (87,028 ) — (87,028 ) Effect of exchange rate changes on cash 2,070 — 2,070 Decrease in cash, cash equivalents and restricted cash $ (82,850 ) $ — $ (82,850 ) [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] Recasted for adoption of ASU 2016-18 to exclude the impact of transfers to/from restricted cash balances. [g] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) Year ended December 31, 2016 As reported Adjustments As adjusted Consolidated net income $ 35,426 $ 45 [a] $ 35,471 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 11,408 44 [b] 11,452 Deferred income tax expense 26,265 27 [c] 26,292 Other adjustments to reconcile net income 188,371 — 188,371 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (33,250 ) (171 ) [d] (33,421 ) Inventory (22,636 ) 12 [e] (22,624 ) Prepaid expenses and other current assets (3,875 ) [f] — (3,875 ) Accounts payable and accrued liabilities 12,325 51 [g] 12,376 Litigation liability (88,450 ) — (88,450 ) Accrued payroll and related expenses 8,849 (8 ) [g] 8,841 Income taxes 23,652 — 23,652 Net cash provided by operating activities 158,085 — 158,085 Net cash used in investing activities (304,885 ) — (304,885 ) Net cash provided by financing activities 110,823 — 110,823 Effect of exchange rate changes on cash (929 ) — (929 ) Decrease in cash, cash equivalents and restricted cash $ (36,906 ) $ — $ (36,906 ) [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] Recasted for adoption of ASU 2016-18 to exclude the impact of transfers to/from restricted cash balances. [g] 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 In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory 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 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 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: (i) identify the contract with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). Specifically, revenue from the sale of implants and disposables is generally recognized at an amount that reflects the expected consideration upon notice that the Company’s products have been used in a surgical procedure or upon shipment to a third-party customer assuming control of the products. Revenue from neuromonitoring services is recognized in the period the service is performed for the amount of consideration expected to be received. Accounts Receivable and Related Valuation Accounts Accounts receivable in the accompanying Consolidated Balance Sheets are presented net of allowances for doubtful accounts. In addition, the Company establishes a liability for estimated sales returns and a reserve for price adjustments that are recorded as a reduction to revenue. The liability and reserve are maintained to account for the future product returns and price adjustments of products sold in the current period. Concentration of Credit Risk and Significant Customers Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, marketable securities and accounts receivable. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. The Company has a diverse customer base and no single customer represented greater than ten percent of sales or accounts receivable for any of the periods presented. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, restricted investments, derivatives, contingent consideration liabilities, accounts receivable, accounts payable, accrued expenses, and Senior Convertible Notes. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to 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 years presented. Cash and Cash Equivalents The Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. Inventory Net inventory as of December 31, 2018 consisted of $259.4 million of finished goods, $5.0 million of work in progress and $8.8 million of raw materials. Net inventory as of December 31, 2017 consisted of $232.3 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. Excess and Obsolete Inventory The Company provides an inventory reserve for estimated obsolescence and excess inventory based upon historical turnover and assumptions about future demand for its products and market conditions. The Company’s allograft products have shelf lives ranging from two to five years and are subject to demand fluctuations based on the availability and demand for alternative products. The Company’s inventory, which consists primarily of disposables and specialized implants, is at risk of obsolescence following the introduction and development of new or enhanced products. The Company’s estimates and assumptions for excess and obsolete inventory are reviewed and updated on a quarterly basis. The estimates the Company uses for demand are also used for near-term capacity planning and inventory purchasing and are consistent with its revenue forecasts. Increases in the reserve for excess and obsolete inventory result in a corresponding charge to cost of products sold. Historically, the Company’s reserves have been adequate to cover losses. Goodwill and Intangible Assets The Company’s goodwill represents the excess of the cost over the fair value of net assets acquired from its business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including capitalized Intangible assets acquired in a business combination that are used for in-process research and development activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon reaching the end of the relevant research and development project, the Company will amortize the acquired |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Details [Abstract] | |
Balance Sheet Details | 2. Balance Sheet Details Property and Equipment, net Property and equipment, net, consisted of the following: December 31, ( in thousands, except years Useful Life 2018 2017 Instrument sets 4 $ 326,831 $ 287,435 Machinery and equipment 5 to 7 58,585 49,142 Computer equipment and software 3 to 7 127,539 102,729 Leasehold improvements 2 to 15 32,973 23,532 Furniture and fixtures 3 to 7 8,961 8,311 Building and improvements 10 to 20 20,216 20,146 Land — 1,277 1,277 576,382 492,572 Less: accumulated depreciation and amortization (337,541 ) (277,246 ) $ 238,841 $ 215,326 Property and equipment mainly consisted of instrument sets, which surgeons and hospitals that purchase implants, biologics and disposables for use in individual surgical procedures. Depreciation expense was $75.4 million, $69.5 million, and $57.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. At December 31, 2018 and 2017, gross assets recorded under capital leases of $1.5 million and $1.8 million, respectively, are included in machinery and equipment. Depreciation of the assets under capital leases is included in depreciation expense. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Capitalized internal-use software costs include only those direct costs associated with the actual development or acquisition of computer software for internal use, including costs associated with the design, coding, installation, and testing of the system. At December 31, 2018 and 2017, the Company had $40.6 million and $29.9 million in unamortized capitalized internal-use software costs, respectively. Amortization expense related to capitalized internal-use software costs was $10.6 million, $10.1 million and $7.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. Goodwill and Intangible Assets Goodwill and intangible assets as of December 31, 2018 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (131,730 ) $ 140,018 Manufacturing know-how and trade secrets 13 30,814 (17,926 ) 12,888 Trade name and trademarks 9 25,500 (13,901 ) 11,599 Customer relationships 9 147,021 (59,478 ) 87,543 Total intangible assets subject to amortization 9 $ 475,083 $ (223,035 ) $ 252,048 Intangible assets not subject to amortization: Goodwill 561,366 Total goodwill and intangible assets, net $ 813,414 Goodwill and intangible assets as of December 31, 2017 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (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 Total expense related to the amortization of intangible assets which is recorded in either cost of goods sold or operating expenses in the Consolidated Statements of Operations depending on the functional nature of the intangible, was $54.4 million, $51.7 million and $45.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. During the year ended December 31, 2018, in connection with acquisitions, including changes in purchase price allocations, and other investments, the Company recorded additions to definite-lived intangible assets and goodwill of $26.2 million and $25.9 million, respectively. Goodwill recorded in business combinations is primarily attributable to synergies expected to arise after the acquisition. included in this Annual Report The changes to goodwill are comprised of the following: ( 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 26,959 Changes in purchase price allocation (1,075 ) Changes resulting from foreign currency fluctuations (1,444 ) 24,440 December 31, 2018 Gross goodwill 569,666 Accumulated impairment loss (8,300 ) $ 561,366 Total future amortization expense related to intangible assets subject to amortization at December 31, 2018 is set forth in the table below: ( in thousands 2019 $ 52,298 2020 51,675 2021 49,297 2022 41,834 2023 17,718 Thereafter through 2031 39,226 Total future amortization expense $ 252,048 Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: December 31, ( in thousands 2018 2017 Accrued expenses $ 70,386 $ 42,983 Other taxes payable 9,359 12,692 Accounts payable 8,799 4,366 Distributor commissions payable 8,194 7,697 Royalties payable 7,173 5,040 Other 1,966 2,989 Accounts payable and accrued liabilities $ 105,877 $ 75,767 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements The fair values of the Company’s assets and liabilities, including cash equivalents, marketable securities, restricted investments, derivatives, and contingent considerations are measured at fair value on a recurring basis. As of and , 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. Quoted Price in Significant Other Significant Active Market Observable Inputs Unobservable ( in thousands Total (Level 1) (Level 2) Inputs (Level 3) December 31, 2018 Cash equivalents: Money market funds $ 56,000 $ 56,000 $ — $ — Total cash equivalents $ 56,000 $ 56,000 $ — $ — 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 and cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other current liabilities as of December 31, 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. Certain financial instruments classified within Level 2 of the fair value hierarchy include the types of instruments that trade in markets that are not considered to be active, but are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The Company did not hold any financial instruments classified within Level 2 of the fair value hierarchy during the periods presented. Foreign Currency and Derivative Financial Instruments 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. The fair value is based on a quoted market price (Level 1). 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, which includes gains and losses from derivative instruments, were $(3.7) million, $(0.9) million and $(0.3) million for the years ended December 31, 2018, 2017 and 2016, respectively, and are included in other income (expense) in the Consolidated Statements of Operations. A s of December 31, 2018, 2017, and 2016 a notional principal amount of $26.8 million, $14.3 million, and $15.1 million respectively, was outstanding to hedge currency risk relative to foreign receivables and payables. Derivative instrument net (losses) gains on the Company’s forward exchange contracts were $0.5 million, $(1.9) million, and $0.7 million for the years ended December 31, 2018, 2017 and 2016, respectively, and are included in other income (expense) in the Consolidated Statements of Operations. December 31, 2018 December 31, 2017 The Company’s currency exposures vary, but are primarily concentrated in the pound sterling the Australian dollar, the Brazilian real, the Singapore dollar, and the yen The Company does not use derivative financial instruments for speculation or trading purposes or for activities other than risk management. The Company does not require and is not required to pledge collateral for these financial instruments and does not carry any master netting arrangements to mitigate the credit risk. 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 December 31, 2018 and December 31, 2017 was approximately $684.8 million and $779.5 million, respectively. See Note 5 to the Consolidated Financial Statements included in this Annual Report 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 $50.4 million December 31, 2018 December 31, 2017 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): ( in thousands 2018 2017 Fair value measurement at January 1 $ 67,941 $ 67,501 Contingent consideration liability recorded upon acquisition 3,543 32,559 Change in fair value measurement (1,517 ) (1,295 ) Changes resulting from foreign currency fluctuations 193 (224 ) Contingent consideration paid or settled (19,750 ) (30,600 ) Fair value measurement at December 31 $ 50,410 $ 67,941 During the year ended December 31, 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 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 year ended December 31, 2017, the Company recorded contingent consideration liabilities of $32.6 million in connection with certain acquisitions. Such acquisitions include the acquisition in September 2017 of a medical device company that developed interbody implants for spinal fusion using patented porous PEEK technology, which was incorporated into the Company’s portfolio of interbody implants. The Company recorded a purchase accounting fair value estimate of $31.4 million for contingent consideration liabilities related to the achievement of certain manufacturing and commercial milestones associated with that acquisition In the year ended December 31, 2017, t he Company paid the $30.0 million outstanding milestone obligation associated with the Ellipse Technologies acquisition. In accordance with the guidance outlined in ASU 2016-15, he initial purchase price allocation $11.2 million related to increased fair value adjustments 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 nonfinancial 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 December 31, 2018 and 2017. The Company has obligations under certain consultancy arrangements based on achievement of specified milestones. There was no accrual as of December 31, 2018 or 2017, related to these obligations. During the year ended December 31, 2018, the Company expensed $8.9 million for a purchased in-process research and development asset which had no future alternative use. The Company also recorded a net loss of $3.8 million on strategic investments during the year ended December 31, 2018. The net loss was recorded in other income (expense), net in the Consolidated Statement of Operations included in this Annual Report. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2018 | |
Business Combination Description [Abstract] | |
Business Combinations | 4. 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 Consolidated Financial Statements. The Company provides IOM services through various subsidiaries, including SafePassage, which conduct business as NuVasive Clinical Services. The revenue generated from IOM services and support is reported as service revenue on the Consolidated Statement of Operations. The Company has completed other acquisitions that were not considered material, individually or collectively, to the overall Consolidated Financial Statements during the periods presented. These acquisitions have been included in the 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”). Concurrently, with the Initial Investment, the Company and Progentix entered into a Distribution Agreement (as amended, the “Distribution Agreement”) 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 a wholly-owned subsidiary of the Company 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 non-controlling interest associated with Progentix was reclassified to additional paid-in capital, including the difference between the non-controlling interest and consideration paid. The Loan plus accrued interest and the related receivable between the Company and Progentix was still outstanding as of December 31, 2018. The following is a reconciliation of equity (net assets) attributable to the non-controlling interest: Year Ended December 31, ( in thousands 2018 2017 Non-controlling interests 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 interests — (1,743 ) Non-controlling interests at end of period $ — $ 3,845 Total assets and liabilities of Progentix as a VIE included in the accompanying Consolidated Balance Sheets are as follows: December 31, ( in thousands 2018 2017 Total current assets $ — $ 670 Identifiable intangible assets, net — 8,752 Goodwill — 12,654 Accounts payable & accrued expenses — 562 Deferred tax liabilities, net — 331 Non-controlling interests — 3,845 NuVasive Clinical Services and Physician Practices The Company provides IOM services through various subsidiaries, including SafePassage, which conduct business as NuVasive Clinical Services. In providing IOM services to surgeons and healthcare facilities across the U.S., the Company maintains 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 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 | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Indebtedness | 5. Indebtedness The carrying values of the Company’s Senior Convertible Notes due 2021 are as follows: ( in thousands December 31, 2018 December 31, 2017 2.25% Senior Convertible Notes due 2021: Principal amount $ 650,000 $ 650,000 Unamortized debt discount (40,117 ) (56,839 ) Unamortized debt issuance costs (7,357 ) (10,241 ) Total Senior Convertible Notes $ 602,526 $ 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 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 year ended December 31, 2018 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 principal amount of the unsecured Senior Convertible Notes with a stated interest rate of 2.75% and a maturity date of July 1, 2017 (the “2017 Notes”). The 2017 Notes provided for settlement in cash, stock, or a combination thereof, solely at the Company’s discretion. The initial conversion rate of the 2017 Notes was 23.7344 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $42.13 per share, subject to adjustments. The Company used the treasury share method for assumed conversion of the 2017 Notes to compute the weighted average shares of common stock outstanding for diluted earnings per share. 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 year ended December 31, 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 interest expense recognized on the 2017 Notes during the year ended December 31, 2016 includes $4.9 million, $7.5 million and $1.0 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. Prior to its maturity, an assumed exercise of the 2017 Hedge by the Company was considered anti-dilutive since the effect of inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. The 2017 Warrants entitled its holders to acquire up to 477,654 shares of the Company’s Series A Participating Preferred Stock at an initial strike price of $988.51 per share. Each share of Series A Participating Preferred Stock was convertible into 20 shares of the Company’s common stock, or up to 9,553,080 common shares in total. The 2017 Warrants were scheduled to expire on various dates from September 2017 through January 2018 with settlement in cash or net shares. The Company used the treasury share method for assumed conversion of its 2017 Warrants to compute the weighted average common shares outstanding for diluted earnings per share. In 2017, the Company exercised the 2017 Hedge and also entered into warrant termination agreements which settled the 2017 Warrants on a net share basis. 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. 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. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments | 6. Commitments Leases The Company leases office facilities and equipment under various operating and capital lease agreements. The initial terms of these leases range from 2 years to 17 years and generally provide for periodic rent increases and renewal options. Certain leases require the Company to pay taxes, insurance and maintenance. In connection with certain operating leases, the Company has security deposits recorded and maintained as restricted cash totaling $2.4 million and $5.4 million as of December 31, 2018 and 2017, respectively. Rent expense is recognized on a straight-line basis over the term of the lease. Accordingly, rent expense recognized in excess of rent paid is reflected as a liability in the accompanying Consolidated Balance Sheets. Rent expense, including costs directly associated with the facility leases, was approximately $12.8 million, $12.6 million, and $10.6 million for the years ended December 31, 2018, 2017, and 2016, respectively. The Company’s future minimum annual lease payments under capital and operating leases, including payments for costs directly associated with the facility leases, for years ending after December 31, 2018 are as follows: Capital Operating ( in thousands Leases Leases 2019 $ 534 $ 13,750 2020 507 13,007 2021 244 10,954 2022 24 10,578 2023 5 10,515 Thereafter — 116,684 Total minimum lease payments $ 1,314 $ 175,488 Less amount representing interest (59 ) Present value of obligations under capital leases 1,255 Less current portion (449 ) Long-term capital lease obligations $ 806 Licensing and Purchasing Agreements The Company has both minimum and contingent obligations to make payments of up to $75.2 if specified future events occur or conditions are met specify milestone payment timelines 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 applicable earnings. At December 31, 2018, future commitments for such key executives were approximately $15.0 million. In certain circumstances, the agreements call for the acceleration of equity vesting. Those figures are not reflected in the above information. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity Common Stock There were 120,000,000 shares of common stock authorized at December 31, 2018 and 2017. Preferred Stock There are 5,000,000 shares of preferred stock authorized and none issued or outstanding at December 31, 2018 and 2017. On June 28, 2011, in connection with the issuance of the 2017 Warrants, the Company amended its Restated Certificate of Incorporation to designate 477,654 shares of the Company’s authorized preferred stock, par value $0.001 per share, as Series A Participating Preferred Stock (the “Series A Preferred Stock”). The Series A Preferred Stock will automatically convert into shares of the Company’s common stock. The holders of Series A Preferred Stock (collectively, the Preferred Holders) are entitled to receive dividends when and if declared by the Board of Directors. The preferred dividends are payable in preference and in priority to any dividends on the Company’s common stock. Shares of Series A Preferred Stock are convertible into 20 shares of common stock, subject to certain anti-dilution adjustments. Preferred Holders vote on an equivalent basis with common stockholders on an as-converted basis. The Preferred Holders are entitled to receive liquidation preferences at the rate of $648.20 per share. Liquidation payments to the Preferred Holders have priority and are made in preference to any payments to the holders of common stock. Stock-based Compensation In March 2014, the Compensation Committee (the "Compensation Committee") of the Board of Directors of the Company adopted the 2014 Equity Incentive Plan of NuVasive, Inc. (the "2014 EIP"), replacing the 2004 Amended and Restated Equity Incentive Plan (the “2004 EIP”). No further awards may be granted under the 2004 EIP; however, that plan continues to govern all awards previously issued under it (of which awards remain outstanding). The 2014 EIP provides the Company with the ability to grant various types of equity awards to its workforce (including, without limitation, restricted stock units (“RSUs”), restricted stock awards, performance awards, and deferred stock awards). The 2014 EIP also provides for the issuance of performance RSUs (“PRSUs”) to be granted subject to time- and/or performance-based vesting requirements. In addition, the award agreements under the 2014 EIP generally provide for the acceleration of 50% of the unvested equity awards of all shareowners upon a change in control and the vesting of the remaining unvested equity awards for those shareowners that are involuntarily terminated within a year of the change in control. Each of the 2004 EIP and the 2014 EIP allow for “net share settlement” of certain equity awards whereby, in lieu of (i) making cash payments in satisfaction of the exercise price owed respective to non-qualified stock option awards, or (ii) open market selling award shares to generate cash proceeds for use in satisfaction of statutory tax obligations respective to an award’s settlement or exercise, the company offsets the award shares being settled in a respective transaction by the number of shares of company stock with a value equal to the respective obligation, and, in the case of taxes, making a cash payment to the respective taxing authority on behalf of the shareowner using Company cash. The net share settlement is accounted for with the cost of any award shares that are net settled being included in treasury stock and reported as a reduction in total equity at the time of settlement. In connection with the acquisition of Ellipse Technologies in February 2016, the Company assumed the Ellipse Technologies, Inc. 2015 Incentive Award Plan and the shares thereunder, subject to an equity exchange adjustment, for future awards by the Company. The compensation cost that has been included in the Consolidated Statements of Operations for the Company’s stock-based compensation plans was as follows: Year Ended December 31, ( in thousands 2018 2017 2016 Sales, marketing and administrative expense $ 22,190 $ 20,596 $ 25,466 Research and development expense 3,052 1,445 1,231 Cost of goods sold 431 350 227 Stock-based compensation expense before taxes 25,673 22,391 26,924 Related income tax benefits (6,418 ) (8,509 ) (10,770 ) Stock-based compensation expense, net of taxes $ 19,255 $ 13,882 $ 16,154 As of December 31, 2018, there was $25.1 million and $14.4 million of unrecognized compensation expense for RSUs and PRSUs, respectively, which is expected to be recognized over a weighted-average period of approximately 1.9 years and 2.6 years, respectively. In addition, as of December 31, 2018, there was $0.9 million of unrecognized compensation expense for shares expected to be issued under the ESPP which is expected to be recognized through April 2019. There was no unamortized expense for stock options as of December 31, 2018. Restricted Stock Units The total fair value of RSUs that vested during the year ended December 31, 2018, 2017, and 2016 was $8.8 million, $19.9 million and $31.2 million, respectively. Following is a summary of RSU activity for the year ended December 31, 2018: Weighted Average Number of Grant Date ( in thousands, except per share amounts Shares Fair Value Outstanding at December 31, 2017 996 $ 52.90 Granted 467 55.55 Vested (169 ) 42.94 Forfeited (180 ) 55.63 Outstanding at December 31, 2018 1,114 $ 55.25 For the majority of RSUs, shares are issued on the vesting dates net of the amount of shares needed to satisfy statutory tax withholding requirements to be paid by the Company on behalf of the employees. The total shares withheld related to vested RSUs were approximately 42,000, 103,000, and 227,000 in 2018 2017 , and 2016 , respectively, and were based on the value of the awards on their vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities related to vesting RSUs were $2.2 million, $7.2 million and $11.4 million in 2018 , 2017 and 2016 , respectively. Performance-Based Restricted Stock Units The Company has granted PRSUs since 2012 for which the ultimate issuance amount is determined by the Company’s Compensation Committee upon its certification of Company performance against a pre-determined matrix, including targets for revenue, operating margin, earnings per share and total shareholder return over pre-determined periods of time. Share payout levels range from 0% to 312.5% depending on the respective terms of an award. Based upon the company’s actual performance against the performance conditions, approximately 21,000, 76,000 and 145,000 shares of common stock vested pursuant to PRSUs in 2018, 2017 and 2016, respectively. In 2015, the Company granted PRSU awards with five-year cliff vesting terms to Gregory T. Lucier, in connection with his appointment as the Company’s Chief Executive Officer, for which the performance criteria was not based on Company or market specific performance metrics, and as such, the Company recorded the award as a long-term liability as expensed over the service period. No amounts have been paid out on this award, or are expected to become due until 2020. In November 2018, J. Christopher Barry succeeded Mr. Lucier as the Company’s Chief Executive Officer, and Mr. Lucier remained on the Company’s Board of Directors and entered into an agreement to provide services to the Company as a consultant. The PRSU awards granted to Mr. Lucier will continue to vest in accordance with the continued services provided by Mr. Lucier as a consultant and as a member of the Company’s Board of Directors through the vesting date. The total fair value of PRSUs vested during 2018, 2017, 2016 and was $2.1 million, $10.3 million and $12.6 million, respectively. Following is a summary of PRSU activity for the year ended December 31, 2018: Maximum Number ( in thousands, except per share amounts Shares of Shares Eligible to be Issued Average Grant Date Fair Value Outstanding at December 31, 2017 765 1,462 $ 52.62 Awarded at target 369 479 54.86 Vested (21 ) (21 ) 48.73 Forfeited (126 ) (262 ) 55.39 Outstanding at December 31, 2018 987 1,658 $ 56.88 For the majority of PRSUs, shares are issued on the vesting dates net of the amount of shares needed to satisfy statutory tax withholding requirements to be paid by the Company on behalf of the employees. The total shares withheld related to vesting PRSUs were approximately 8,000, 35,000 and 58,000 in 2018 2017 and 2016 respectively, and were based on the value of the awards on their vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities related to vesting PRSUs were $0.4 million, $2.5 million, and 2.7 million in 2018 2017 , and 2016 respectively. Stock Options The Company has not granted any stock options since 2011. The stock options previously granted are exercisable for a period of up to ten years after the date of grant. The aggregate intrinsic value of outstanding stock options at December 31, 2018 is based on the Company’s closing stock price on December 31, 2018 of $49.56. The Company received $1.3 million, $2.4 million and $3.0 million in proceeds from the exercise of stock options during the years ended December 31, 2018, 2017 and 2016, respectively. The total intrinsic value of stock options exercised was $2.5 million, $8.3 million, and $29.0 million during the years ended December 31, 2018, 2017 and 2016, respectively. There were no stock options that vested during the year ended December 31, 2018, 2017 or 2016. Following is a summary of stock option activity for the year ended December 31, 2018 under all stock plans: Weighted-Average Remaining Weighted Contractual Aggregate Avg. Exercise Term Intrinsic ( in thousands, except years and per share amounts Shares Price (Years) Value Outstanding at December 31, 2017 178 $ 35.41 1.33 $ 4,105 Exercised (128 ) 35.28 Cancelled (1 ) 34.49 Outstanding at December 31, 2018 49 35.76 1.52 $ 680 Exercisable at December 31, 2018 49 $ 35.76 1.52 $ 680 Vested or expected to vest at December 31, 2018 49 $ 35.76 1.52 $ 680 For the majority of stock options, shares are issued on the exercise dates net of the amount of shares needed to satisfy each of the exercise price (in lieu of cash) and statutory tax withholding requirements, the latter to be paid by the Company on behalf of the employee. The total shares withheld related to exercised stock options were approximately 65,000, 105,000, and 1,157,000 in 2018 , 2017 , and 2016, respectively, and were based on the value of the stock options on their exercise dates as determined by the Company’s closing stock price. Total cash payments for the employees’ tax obligations to the taxing authorities related to exercised stock options were $0.4 million, $2.1 million, and $10.7 million in 2018 2017 , and 2016, respectively. Employee Stock Purchase Plan The NuVasive, Inc. 2004 Amended and Restated Employee Stock Purchase Plan (the “ESPP”), provides eligible employees with a means of acquiring equity in the Company at a discounted purchase price using their own accumulated payroll deductions. Under the terms of the ESPP, employees can elect to have up to 15% of their annual compensation, up to a maximum of $21,250 per year, withheld to purchase shares of Company common stock for a purchase price equal to 154,000 The weighted average assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows: Year Ended December 31, 2018 2017 2016 ESPP Volatility 33 % 26 % 29 % Expected term (years) 0.5 0.5 0.5 Risk free interest rate 1.8 % 0.9 % 0.4 % Expected dividend yield — % — % — % Common Stock Reserved for Future Issuance The following table summarizes common shares reserved for issuance on exercise or conversion at December 31, 2018 ( in thousands Issued and outstanding stock options 49 Issued and outstanding RSUs and PRSUs 2,183 Available for issuance under the ESPP 1,093 Available for future grant 3,752 2021 Notes 14,396 2021 Warrants 32,596 Total shares reserved for future issuance 54,069 Pursuant to the terms of the 2014 EIP, shares subject to awards granted under the 2004 EIP may be utilized for future grants of awards under the 2014 EIP, to the extent such awards are terminated, cancelled or they expire, or shares subject thereto are withheld to cover taxes. During the year ended December 31, 2016, the Company filed a registration statement with the Securities and Exchange Commission with respect to 2.2 million of such shares for future issuance under the 2014 EIP. These shares are reflected in the number of shares available for future grants. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes Total income before income taxes summarized by region for the years ended December 31 is as follows: Year Ended December 31, ( in thousands 2018 2017 2016 United States $ 8,939 $ 76,480 $ 77,610 Foreign (216 ) (4,117 ) (12,830 ) Total income before income taxes $ 8,723 $ 72,363 $ 64,780 The income tax (benefit) provision for the years ended December 31 consists of the following: Year Ended December 31, ( in thousands 2018 2017 2016 Current: Federal $ (4,188 ) $ 5,972 $ (14,837 ) State 2,043 776 1,283 Foreign 5,972 2,793 2,350 Total current provision 3,827 9,541 (11,204 ) Deferred: Federal (5,944 ) (1,565 ) 40,363 State (7,092 ) (4,276 ) 1,455 Foreign (98,795 ) (2,223 ) (2,583 ) Total deferred provision (111,831 ) (8,064 ) 39,235 Changes in tax rate 258 (14,668 ) (216 ) Changes in valuation allowance 103,990 5,699 1,494 Total (benefit) provision $ (3,756 ) $ (7,492 ) $ 29,309 The differences between the income tax provision at the United States federal statutory tax rate and the Company’s effective tax rate for the years ended December 31 are the following: Year Ended December 31, ( in thousands 2018 2017 2016 Tax provision at federal statutory rate $ 1,832 $ 25,327 $ 22,673 Valuation allowance 103,990 5,703 1,494 Net tax benefit on international restructuring (97,028 ) — — Income tax reserves (6,717 ) 1,184 759 Income tax credits and incentives (5,525 ) (3,462 ) (3,426 ) Return to provision adjustments (4,180 ) (2,443 ) (1,188 ) Compensation expense 2,008 (5,619 ) (8,013 ) Globalization initiative 1,264 306 6,290 Nondeductible meals and entertainment 769 922 1,013 Foreign tax rate differences from federal statutory rate (688 ) 378 605 Change in tax rates 258 (14,668 ) (216 ) Acquisition related charges (221 ) (489 ) 5,167 State income tax 90 3,553 3,245 Recovery of tax basis in United States subsidiary — (19,540 ) — Other 392 1,356 906 Total (benefit) provision $ (3,756 ) $ (7,492 ) $ 29,309 Significant components of the Company’s deferred tax assets and liabilities at December 31 are composed of the following: December 31, ( in thousands 2018 2017 Deferred tax assets: Amortization $ 106,769 $ 6,742 General business and other credit carryforwards 25,846 18,928 Stock-based compensation 14,914 13,502 Inventory 12,385 10,075 Net operating loss carryforwards 7,516 14,991 Deferred rent 4,628 2,532 Original issue discount 3,322 4,606 Other 23,241 14,859 Gross deferred tax assets 198,621 86,235 Less valuation allowance (120,233 ) (16,247 ) Net deferred tax assets 78,388 69,988 Deferred tax liabilities: Acquired intangibles (42,767 ) (53,076 ) Depreciation (32,851 ) (23,132 ) Other (1,843 ) (1,752 ) Total deferred tax liabilities (77,461 ) (77,960 ) Consolidated net deferred tax assets (liabilities) $ 927 $ (7,972 ) Add deferred tax liability, net, attributable to non-controlling interests — 199 Net deferred tax assets (liabilities) $ 927 $ (7,773 ) The following table summarizes the activity related to the Company’s unrecognized tax benefits: Year Ended December 31, ( in thousands 2018 2017 2016 Gross unrecognized tax benefits at January 1 $ 25,356 $ 23,322 $ 12,448 Increases in tax positions for prior years 499 1,692 1,716 Decreases in tax positions for prior years (756 ) (24 ) (270 ) Increases in tax positions for current year relating to ongoing operations 1,913 968 6,205 Decreases in tax positions as a result of a lapse of statute of limitations (6,446 ) (402 ) — Increases in tax positions for current year relating to acquisitions 169 — 3,223 Decreases in tax positions due to settlements with taxing authorities (1,190 ) (200 ) — Gross unrecognized tax benefits at December 31 $ 19,545 $ 25,356 $ 23,322 At December 31, 2018, 2017, and 2016, $18.1 million, $24.1 million, and $12.5 million, respectively, of the Company’s total unrecognized tax benefits, if recognized, would impact the effective income tax rate. In accordance with the disclosure requirements as described in ASC Topic 740, Income Taxes The Company believes it is reasonably possible that approximately $0.8 million of its remaining unrecognized tax positions may be recognized by the end of 2019 as certain statute of limitations expire, the amount of which is primarily attributable to tax positions involving the valuation of intercompany transactions. In November 2018, the Company completed a reorganization of its international intellectual property company structure. This international restructuring generated a step-up in local tax basis, which under ASC Topic 740-10-25-20 ASU 2016-16, The Company is subject to routine compliance reviews on various tax matters around the world in the ordinary course of business. Currently, income tax audits are being conducted in the state of New York, the state of Louisiana and Germany. U.S. and most foreign jurisdictions remain subject to examination in all years due to prior year net operating losses and R&D credits. During 2018 the Company completed its tax accounting in connection with the Tax Cuts and Jobs Act (the “Act”) which was enacted into law on December 22, 2017. In 2018, the Company recorded approximately $0.3 million of tax expense attributable to 2017 during SAB 118 measurement period, which would have increased the 2017 effective tax rate by 0.5%. The Company has elected an accounting policy to treat the tax impact of the global intangible low taxed income provision of the Act as a future period charge rather than a current component of deferred taxes. The Company has a net deficit in earnings and profits from its foreign subsidiaries as of December 31, 2018. In the event the Company is required to repatriate funds from outside of the United States, such repatriation would not generate additional United States tax liabilities, but could be subject to local laws and customs generating immaterial tax consequences in the subsidiaries’ jurisdictions. At December 31, 2018, the Company had $2.3 million, $71.8 million and $6.8 million of federal, state and foreign net operating loss carryforwards, respectively, which will begin to expire in 2020. Valuation allowance reserves of $53.8 million are recorded against California net operating losses of $53.8 million due to uncertainty surrounding their realization. There were also federal and California income tax credit carryforwards of $22.3 million and $25.9 million, respectively. The federal credits will begin to expire in 2027. The California credits can be carried forward indefinitely. Valuation allowance reserves of $25.9 million are recorded against the California credits due to uncertainty surrounding their realization. Due to the “change of ownership” provision of the Tax Reform Act of 1986, utilization of the Company’s net operating loss and credit carryforwards may be subject to an annual limitation against taxable income in future periods. As a result of any future ownership changes, the annual limitation of loss and credit carryforwards may cause them to expire before ultimately becoming available to reduce future income tax liabilities. |
Business Segment, Product, and
Business Segment, Product, and Geographic Information | 12 Months Ended |
Dec. 31, 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. Revenue by product line was as follows: Year Ended December 31, ( in thousands 2018 2017 2016 Spinal Hardware $ 788,650 $ 737,534 $ 683,703 Surgical Support 313,064 289,151 278,429 Total Revenue $ 1,101,714 $ 1,026,685 $ 962,132 Revenue and property and equipment, net, by geographic area were as follows: Revenue Property Year Ended December 31, December 31, ( in thousands 2018 2017 2016 2018 2017 United States $ 896,152 $ 850,410 $ 831,778 $ 200,404 $ 179,891 International (excludes Puerto Rico) 205,562 176,275 130,354 38,437 35,435 Total $ 1,101,714 $ 1,026,685 $ 962,132 $ 238,841 $ 215,326 |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Contingencies [Abstract] | |
Contingencies | 10. 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 year ended December 31, 2018 During the year ended December 31, 2017, the Company paid $4.5 million for the settlement of fees associated with the outcome of the litigation matter with . During the year December 31, 2016, the Company settled its ongoing litigation with Medtronic. As a result of the settlement, the Company paid $45.0 million to Medtronic and accordingly recorded a gain of $43.3 million related to the settlement by reducing its previous accrual of $88.3 million related to the matter. 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. On December 6, 2018, the court issued an order and judgment granting final approval of the settlement. The settlement of $7.9 million was fully funded by insurance proceeds and includes the dismissal of all claims against the Company and the named individuals in the lawsuit without any liability or wrongdoing attributed to them. The Company no longer has any remaining liability related to this matter as of December 31, 2018. 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 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 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. The Company has paid the settlement amount and no longer has any remaining liability related to this matter as of December 31, 2018. |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2018 | |
Regulatory Matter [Abstract] | |
Regulatory Matters | 11. 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 in regards to this matter. No assurance can be given as to the timing or outcome of this investigation. As of December 31, 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 sought 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. In February 2019, the Company received notice that the OIG had concluded its investigation and is not pursuing the matter further. |
Quarterly Data (unaudited)
Quarterly Data (unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Data (unaudited) | 12. Quarterly Data (unaudited) The following quarterly financial data, in the opinion of management, reflects all adjustments, consisting of normal recurring adjustments necessary, for a fair presentation of results for the periods presented: Year Ended December 31, 2018 (1) (2) (3) ( in thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 260,522 $ 281,564 $ 271,301 $ 288,327 Gross profit 186,708 204,508 197,141 202,198 Consolidated net (loss) income (27,132 ) 11,531 15,923 12,157 Basic net (loss) income per common (0.53 ) 0.22 0.31 0.24 Diluted net (loss) income per common share (0.53 ) 0.22 0.30 0.23 Year Ended December 31, 2017 (4) First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 249,013 $ 259,399 $ 247,051 $ 271,222 Gross profit 187,570 193,213 181,544 195,917 Consolidated net income 11,983 11,735 33,096 23,041 Net income attributable to NuVasive, Inc. 12,426 12,167 33,528 23,477 Basic net income per common share attributable to NuVasive, Inc. 0.25 0.24 0.66 0.46 Diluted net income per common share attributable to NuVasive, Inc. 0.22 0.21 0.64 0.45 (1) The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. (2) The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. (3) Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc (4) The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 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 porous titanium and polyetheretherketone (“PEEK”) 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 continues to develop a wide variety of projects which broaden its MAS and other product platforms and advance the applications of its unique technology into procedurally integrated surgical solutions that improve clinical and economic outcomes, including Pulse, a surgical automation platform which incorporates neuromonitoring, surgical planning, rod bending, imaging, navigation, and other automation. Pulse is a combined hardware and software platform designed to achieve surgical efficiencies via real-time feedback to aid in clinical decision making and to optimize the procedural workflow in the operating room. The Company continues to pursue business and technology acquisition targets and strategic relationships. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying 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 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. These reclassifications had no impact on previously reported results of operations. Additionally, as required by Accounting Standards Update 2014-09 Revenue from Contracts with Customers Revenue from Contracts with Customers |
Use of Estimates | Use of Estimates To prepare financial statements in conformity with generally accepted accounting principles (“GAAP”) accepted in the United States, 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 Leases, Leases Leases In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses 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 Derivatives and Hedging 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 In September 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangible – Goodwill and Other – Internal-Use Software 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 buyer 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 As a result of the full retrospective method of adoption of ASC 606, the Company recorded a $1.6 million adjustment to January 1, 2016 accumulated deficit. The cumulative effect of the change on retained earnings as of December 31, 2017 for the full retrospective method of adoption of ASC 606 was $0.3 million. 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 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2017 and 2016, and the Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016. NUVASIVE, INC. CONSOLIDATED BALANCE SHEET (in thousands) 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) Year ended December 31, 2017 As reported Adjustments As adjusted Revenue Product revenue $ 941,816 $ (2,835 ) [a] $ 938,981 Service revenue 87,704 — 87,704 Total revenue 1,029,520 (2,835 ) 1,026,685 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 207,874 (567 ) [b] 207,307 Cost of services 61,134 — 61,134 Total cost of revenue 269,008 (567 ) 268,441 Gross profit 760,512 (2,268 ) 758,244 Operating expenses: Sales, marketing and administrative 539,913 (406 ) [c] 539,507 Other operating expenses 107,251 — 107,251 Total operating expenses 647,164 (406 ) 646,758 Total interest and other expense, net (39,123 ) — (39,123 ) Income tax benefit 7,038 454 [d] 7,492 Consolidated net income $ 81,263 $ (1,408 ) [e] $ 79,855 Add back net loss attributable to non-controlling interests $ (1,743 ) $ — $ (1,743 ) Net income attributable to NuVasive, Inc. $ 83,006 $ (1,408 ) [e] $ 81,598 Net income per share attributable to NuVasive, Inc.: Basic $ 1.63 $ (0.03 ) [f] $ 1.60 Diluted $ 1.50 $ (0.02 ) [f] $ 1.48 Comprehensive income attributable to NuVasive, Inc. $ 86,704 $ (1,408 ) [e] $ 85,296 [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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands) Year ended December 31, 2016 As reported Adjustments As adjusted Revenue Product revenue $ 893,484 $ 60 [a] $ 893,544 Service revenue 68,588 — 68,588 Total revenue 962,072 60 962,132 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 195,593 12 [b] 195,605 Cost of services 44,500 — 44,500 Total cost of revenue 240,093 12 240,105 Gross profit 721,979 48 722,027 Operating expenses: Sales, marketing and administrative 533,624 (24 ) [c] 533,600 Other operating expenses 64,828 — 64,828 Total operating expenses 598,452 (24 ) 598,428 Total interest and other expense, net (58,819 ) — (58,819 ) Income tax expense (29,282 ) (27 ) [d] (29,309 ) Consolidated net income $ 35,426 $ 45 [e] $ 35,471 Add back net loss attributable to non-controlling interests $ (1,721 ) $ — $ (1,721 ) Net income attributable to NuVasive, Inc. $ 37,147 $ 45 [e] $ 37,192 Net income per share attributable to NuVasive, Inc.: Basic $ 0.74 $ 0.00 [f] $ 0.74 Diluted $ 0.69 $ 0.00 [f] $ 0.69 Comprehensive income attributable to NuVasive, Inc. $ 38,628 $ 45 [e] $ 38,673 [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) Year ended December 31, 2017 As reported Adjustments As adjusted Consolidated net income $ 81,263 $ (1,408 ) [a] $ 79,855 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 5,718 (96 ) [b] 5,622 Deferred income tax benefit (12,384 ) (454 ) [c] (12,838 ) Other adjustments to reconcile net income 180,666 — 180,666 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (29,389 ) 2,779 [d] (26,610 ) Inventory (35,300 ) (567 ) [e] (35,867 ) Prepaid expenses and other current assets (12,681 ) [f] — (12,681 ) Accounts payable and accrued liabilities (16,617 ) (141 ) [g] (16,758 ) Litigation liability 8,150 — 8,150 Accrued payroll and related expenses 4,088 (113 ) [g] 3,975 Income taxes 3,455 — 3,455 Net cash provided by operating activities 176,969 — 176,969 Net cash used in investing activities (174,861 ) — (174,861 ) Net cash used in financing activities (87,028 ) — (87,028 ) Effect of exchange rate changes on cash 2,070 — 2,070 Decrease in cash, cash equivalents and restricted cash $ (82,850 ) $ — $ (82,850 ) [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] Recasted for adoption of ASU 2016-18 to exclude the impact of transfers to/from restricted cash balances. [g] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) Year ended December 31, 2016 As reported Adjustments As adjusted Consolidated net income $ 35,426 $ 45 [a] $ 35,471 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 11,408 44 [b] 11,452 Deferred income tax expense 26,265 27 [c] 26,292 Other adjustments to reconcile net income 188,371 — 188,371 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (33,250 ) (171 ) [d] (33,421 ) Inventory (22,636 ) 12 [e] (22,624 ) Prepaid expenses and other current assets (3,875 ) [f] — (3,875 ) Accounts payable and accrued liabilities 12,325 51 [g] 12,376 Litigation liability (88,450 ) — (88,450 ) Accrued payroll and related expenses 8,849 (8 ) [g] 8,841 Income taxes 23,652 — 23,652 Net cash provided by operating activities 158,085 — 158,085 Net cash used in investing activities (304,885 ) — (304,885 ) Net cash provided by financing activities 110,823 — 110,823 Effect of exchange rate changes on cash (929 ) — (929 ) Decrease in cash, cash equivalents and restricted cash $ (36,906 ) $ — $ (36,906 ) [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] Recasted for adoption of ASU 2016-18 to exclude the impact of transfers to/from restricted cash balances. [g] 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 In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory 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 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 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: (i) identify the contract with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). Specifically, revenue from the sale of implants and disposables is generally recognized at an amount that reflects the expected consideration upon notice that the Company’s products have been used in a surgical procedure or upon shipment to a third-party customer assuming control of the products. Revenue from neuromonitoring services is recognized in the period the service is performed for the amount of consideration expected to be received. |
Accounts Receivable and Related Valuation Accounts | Accounts Receivable and Related Valuation Accounts Accounts receivable in the accompanying Consolidated Balance Sheets are presented net of allowances for doubtful accounts. In addition, the Company establishes a liability for estimated sales returns and a reserve for price adjustments that are recorded as a reduction to revenue. The liability and reserve are maintained to account for the future product returns and price adjustments of products sold in the current period. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, marketable securities and accounts receivable. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. The Company has a diverse customer base and no single customer represented greater than ten percent of sales or accounts receivable for any of the periods presented. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, restricted investments, derivatives, contingent consideration liabilities, accounts receivable, accounts payable, accrued expenses, and Senior Convertible Notes. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to 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 years presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. |
Inventory | Inventory Net inventory as of December 31, 2018 consisted of $259.4 million of finished goods, $5.0 million of work in progress and $8.8 million of raw materials. Net inventory as of December 31, 2017 consisted of $232.3 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. Excess and Obsolete Inventory The Company provides an inventory reserve for estimated obsolescence and excess inventory based upon historical turnover and assumptions about future demand for its products and market conditions. The Company’s allograft products have shelf lives ranging from two to five years and are subject to demand fluctuations based on the availability and demand for alternative products. The Company’s inventory, which consists primarily of disposables and specialized implants, is at risk of obsolescence following the introduction and development of new or enhanced products. The Company’s estimates and assumptions for excess and obsolete inventory are reviewed and updated on a quarterly basis. The estimates the Company uses for demand are also used for near-term capacity planning and inventory purchasing and are consistent with its revenue forecasts. Increases in the reserve for excess and obsolete inventory result in a corresponding charge to cost of products sold. Historically, the Company’s reserves have been adequate to cover losses. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company’s goodwill represents the excess of the cost over the fair value of net assets acquired from its business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including capitalized Intangible assets acquired in a business combination that are used for in-process research and development activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon reaching the end of the relevant research and development project, the Company will amortize the acquired IPR&D over its estimated useful life or expense the acquired in-process research and development should the research and development project be unsuccessful with no future alternative use. Goodwill and IPR&D are not amortized; however, they are assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. The goodwill or IPR&D are considered to be impaired if the Company determines that the carrying value of the reporting unit or IPR&D exceeds its respective fair value. The Company performs its goodwill impairment analysis at the reporting unit level, which aligns with the Company’s reporting structure and availability of discrete financial information. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections . Key assumptions for these projections include revenue growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The revenue and margin growth is based on increased sales of new and existing products as the Company maintains investments in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation, including timing and probability of regulatory approvals for Company products to be commercialized. The Company’s market capitalization is also considered as a part of its analysis. The Company’s annual evaluation for impairment of goodwill consists of one reporting unit. In accordance with the Company’s policy, the Company completed its most recent annual evaluation for impairment as of October 1, 2018 using the qualitative assessment and determined that no impairment existed. In addition, no indicators of impairments were noted through and consequently, no impairment charge has been recorded during the year. Intangible assets with a finite life, such as acquired technology, customer relationships, manufacturing know-how, licensed technology, supply agreements and certain trade names and trademarks, are amortized on a straight-line basis over their estimated useful life, ranging from 1 to 17 years. In determining the useful lives of intangible assets, the Company considers the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors. For technology based intangible assets, the Company considers the expected life cycles of products which incorporate the corresponding technology. Trademarks and trade names that are related to products are assigned lives consistent with the period in which the products bearing each brand are expected to be sold. The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company reduces the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. See Note 2 to the Consolidated Financial Statements included in this Annual Report for further discussion on goodwill and intangible assets. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 2 to 20 years. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Leased property meeting certain capital lease criteria is capitalized, and the net present value of the related lease payments is recorded as a liability. Amortization of assets under capital leases is recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated future undiscounted cash flows relating to the asset are less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of an asset exceeds its fair value. |
Income Taxes | Income Taxes The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. During 2018 the Company completed its tax accounting in connection with the Act which was enacted into law on December 22, 2017. In 2018, the Company recorded approximately $0.3 million of tax expense attributable to 2017 during the SAB 118 measurement period, which would have increased the 2017 effective tax rate by 0.5%. The Company has elected an accounting policy to treat the tax impact of the global intangible low taxed income provision of the Act as a future period charge rather than a current component of deferred taxes. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. Based on the Company’s review, it concluded that it was more likely than not that the Company would be able to realize the future benefits of its domestic and foreign deferred tax assets, with the exceptions of the state of California, Malta and Brazil. This conclusion was based on historical and projected operating performance, as well as the Company’s expectation that its operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets within the statutory carryover periods. Due to low state apportionment, large net operating losses and the generation of sizeable research credits in California, the Company concluded that it is not more likely than not that it will be able to utilize its California deferred tax assets. Therefore, the Company has maintained a full valuation allowance on its California deferred tax assets as of December 31, 2018. Due to a history of losses in Malta and Brazil, and the lack of alternative sources of future taxable income, the Company has established a full valuation allowance against these entities’ deferred tax assets as of December 31, 2018. The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be required. See Note 8 to the Consolidated Financial Statements included in this Annual Report for further discussion on income taxes. |
Loss Contingencies | Loss Contingencies An estimated loss contingency is accrued and disclosed in the Company’s financial statements if it is probable or disclosed if it is reasonably possible 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 and only discloses those matters it considers material to its overall financial position. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. The Company is involved in a number of legal actions arising in the normal course of business. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, that could require significant expenditures or result in lost revenues. 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. See Note 10 to the Consolidated Financial Statements included in this Annual Report for further discussion on legal proceedings. |
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 $8.6 million, $6.9 million, and $10.6 million at December 31, 2018, 2017, and 2016, respectively. |
Research and Development | Research and Development Research and development costs are expensed as incurred. To the extent the Company purchases research and development assets with a future alternative use the Company will capitalize and amortize the assets over its useful life. |
Product Shipment Costs | Product Shipment Costs Product shipment costs, included in sales, marketing and administrative expense in the accompanying Consolidated Statements of Operations, were $25.4 million, $24.0 million, and $24.5 million for the years ended December 31, 2018, 2017, and 2016, respectively. The majority of the Company’s shipping costs are related to providing instrument sets for surgical procedures, 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 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 $11.5 million of such costs during the year ended December 31, 2018 During the year ended December 31, 2017, the Company incurred $4.3 million of such costs, which consisted primarily of acquisition and integration activities, offset by $(1.3) million of fair value adjustments on contingent consideration liabilities associated with the Company’s 2017 and 2016 acquisitions. During the year ended December 31, 2016, the Company incurred $18.1 million of business transition costs, which consisted primarily of acquisition and integration activities, and $7.3 million of fair value adjustments on contingent consideration liabilities associated with the Company’s 2016 acquisitions. |
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense for equity-classified awards, principally related to restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”), is measured at the grant date based on the estimated fair value of the award. The fair value of equity instruments that are expected to vest is recognized and amortized over the requisite service period. The Company has granted awards with up to five year graded or cliff vesting terms . The fair value of RSUs including PRSUs with pre-defined performance criteria pre-defined performance criteria is adjusted with the probability of achievement of such performance criteria at each period end Stock-based compensation expense is adjusted from the grant date to exclude expense for awards that are expected to be forfeited. The forfeiture estimate is adjusted as necessary through the vesting date so that full compensation cost is recognized only for awards that vest. The Company assesses the reasonableness of the estimated forfeiture rate at least annually, with any change to be made on a cumulative basis in the period the estimated forfeiture rates change. The Company considered its historical experience of pre-vesting forfeitures on awards by each homogenous group of shareowners as the basis to arrive at its estimated annual pre-vesting forfeiture rates. The Company estimates the fair value of stock options issued under its equity incentive plans and shares issued to shareowners under its employee stock purchase plan (“ESPP”) using a Black-Scholes option-pricing model on the date of grant. The Black-Scholes option-pricing model incorporates various and highly sensitive assumptions including expected volatility, expected term and risk-free interest rates. The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options and ESPP offering period which is derived from historical experience. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future . See Note 7 to the Consolidated Financial Statements included in this Annual Report for further discussion on stockholder equity and stock-based compensation. |
Net Income Per Share | Net Income Per Share The Company computes basic net income per share using the weighted-average number of common shares outstanding during the period. Diluted net income per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, unvested RSUs, including those with performance and market conditions, warrants, and the shares to be issued upon the conversion of the Senior Convertible Notes. The contingently issuable shares are included in basic net income per share as of the date that all necessary conditions have been satisfied and are included in the denominator for dilutive calculation for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, ( in thousands, except per share data 2018 2017 2016 Numerator: Net income attributable to NuVasive, Inc. $ 12,479 $ 81,598 $ 37,192 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,382 50,874 50,077 Dilutive potential common stock outstanding: Stock options and ESPP 36 141 314 RSUs 760 1,083 1,273 Warrants — 1,494 1,297 Senior Convertible Notes 177 1,601 1,141 Weighted average common shares outstanding for diluted 52,355 55,193 54,102 Basic net income per share attributable to NuVasive, Inc. $ 0.24 $ 1.60 $ 0.74 Diluted net income per share attributable to NuVasive, Inc. $ 0.24 $ 1.48 $ 0.69 The following weighted outstanding common stock equivalents were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Year Ended December 31, ( in thousands 2018 2017 2016 Stock options, ESPP, and RSUs 162 147 912 Warrants 10,865 10,865 13,253 Senior Convertible Notes 5,433 2,716 7,550 Total 16,460 13,728 21,715 |
Organization and Significant _3
Organization and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 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 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2017 and 2016, and the Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016. NUVASIVE, INC. CONSOLIDATED BALANCE SHEET (in thousands) 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) Year ended December 31, 2017 As reported Adjustments As adjusted Revenue Product revenue $ 941,816 $ (2,835 ) [a] $ 938,981 Service revenue 87,704 — 87,704 Total revenue 1,029,520 (2,835 ) 1,026,685 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 207,874 (567 ) [b] 207,307 Cost of services 61,134 — 61,134 Total cost of revenue 269,008 (567 ) 268,441 Gross profit 760,512 (2,268 ) 758,244 Operating expenses: Sales, marketing and administrative 539,913 (406 ) [c] 539,507 Other operating expenses 107,251 — 107,251 Total operating expenses 647,164 (406 ) 646,758 Total interest and other expense, net (39,123 ) — (39,123 ) Income tax benefit 7,038 454 [d] 7,492 Consolidated net income $ 81,263 $ (1,408 ) [e] $ 79,855 Add back net loss attributable to non-controlling interests $ (1,743 ) $ — $ (1,743 ) Net income attributable to NuVasive, Inc. $ 83,006 $ (1,408 ) [e] $ 81,598 Net income per share attributable to NuVasive, Inc.: Basic $ 1.63 $ (0.03 ) [f] $ 1.60 Diluted $ 1.50 $ (0.02 ) [f] $ 1.48 Comprehensive income attributable to NuVasive, Inc. $ 86,704 $ (1,408 ) [e] $ 85,296 [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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands) Year ended December 31, 2016 As reported Adjustments As adjusted Revenue Product revenue $ 893,484 $ 60 [a] $ 893,544 Service revenue 68,588 — 68,588 Total revenue 962,072 60 962,132 Cost of revenue (excluding amortization of intangible assets) Cost of products sold 195,593 12 [b] 195,605 Cost of services 44,500 — 44,500 Total cost of revenue 240,093 12 240,105 Gross profit 721,979 48 722,027 Operating expenses: Sales, marketing and administrative 533,624 (24 ) [c] 533,600 Other operating expenses 64,828 — 64,828 Total operating expenses 598,452 (24 ) 598,428 Total interest and other expense, net (58,819 ) — (58,819 ) Income tax expense (29,282 ) (27 ) [d] (29,309 ) Consolidated net income $ 35,426 $ 45 [e] $ 35,471 Add back net loss attributable to non-controlling interests $ (1,721 ) $ — $ (1,721 ) Net income attributable to NuVasive, Inc. $ 37,147 $ 45 [e] $ 37,192 Net income per share attributable to NuVasive, Inc.: Basic $ 0.74 $ 0.00 [f] $ 0.74 Diluted $ 0.69 $ 0.00 [f] $ 0.69 Comprehensive income attributable to NuVasive, Inc. $ 38,628 $ 45 [e] $ 38,673 [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) Year ended December 31, 2017 As reported Adjustments As adjusted Consolidated net income $ 81,263 $ (1,408 ) [a] $ 79,855 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 5,718 (96 ) [b] 5,622 Deferred income tax benefit (12,384 ) (454 ) [c] (12,838 ) Other adjustments to reconcile net income 180,666 — 180,666 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (29,389 ) 2,779 [d] (26,610 ) Inventory (35,300 ) (567 ) [e] (35,867 ) Prepaid expenses and other current assets (12,681 ) [f] — (12,681 ) Accounts payable and accrued liabilities (16,617 ) (141 ) [g] (16,758 ) Litigation liability 8,150 — 8,150 Accrued payroll and related expenses 4,088 (113 ) [g] 3,975 Income taxes 3,455 — 3,455 Net cash provided by operating activities 176,969 — 176,969 Net cash used in investing activities (174,861 ) — (174,861 ) Net cash used in financing activities (87,028 ) — (87,028 ) Effect of exchange rate changes on cash 2,070 — 2,070 Decrease in cash, cash equivalents and restricted cash $ (82,850 ) $ — $ (82,850 ) [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] Recasted for adoption of ASU 2016-18 to exclude the impact of transfers to/from restricted cash balances. [g] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. NUVASIVE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) Year ended December 31, 2016 As reported Adjustments As adjusted Consolidated net income $ 35,426 $ 45 [a] $ 35,471 Adjustments to reconcile net income to net cash provided by operating activities: Reserves on current assets 11,408 44 [b] 11,452 Deferred income tax expense 26,265 27 [c] 26,292 Other adjustments to reconcile net income 188,371 — 188,371 Changes in operating assets and liabilities, net of effects from acquisitions: Accounts receivable (33,250 ) (171 ) [d] (33,421 ) Inventory (22,636 ) 12 [e] (22,624 ) Prepaid expenses and other current assets (3,875 ) [f] — (3,875 ) Accounts payable and accrued liabilities 12,325 51 [g] 12,376 Litigation liability (88,450 ) — (88,450 ) Accrued payroll and related expenses 8,849 (8 ) [g] 8,841 Income taxes 23,652 — 23,652 Net cash provided by operating activities 158,085 — 158,085 Net cash used in investing activities (304,885 ) — (304,885 ) Net cash provided by financing activities 110,823 — 110,823 Effect of exchange rate changes on cash (929 ) — (929 ) Decrease in cash, cash equivalents and restricted cash $ (36,906 ) $ — $ (36,906 ) [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] Recasted for adoption of ASU 2016-18 to exclude the impact of transfers to/from restricted cash balances. [g] Represents net change in accrued sales commissions for charge sheet orders recognized under ASC 606. |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, ( in thousands, except per share data 2018 2017 2016 Numerator: Net income attributable to NuVasive, Inc. $ 12,479 $ 81,598 $ 37,192 Denominator for basic and diluted net income per share: Weighted average common shares outstanding for basic 51,382 50,874 50,077 Dilutive potential common stock outstanding: Stock options and ESPP 36 141 314 RSUs 760 1,083 1,273 Warrants — 1,494 1,297 Senior Convertible Notes 177 1,601 1,141 Weighted average common shares outstanding for diluted 52,355 55,193 54,102 Basic net income per share attributable to NuVasive, Inc. $ 0.24 $ 1.60 $ 0.74 Diluted net income per share attributable to NuVasive, Inc. $ 0.24 $ 1.48 $ 0.69 |
Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share | The following weighted outstanding common stock equivalents were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Year Ended December 31, ( in thousands 2018 2017 2016 Stock options, ESPP, and RSUs 162 147 912 Warrants 10,865 10,865 13,253 Senior Convertible Notes 5,433 2,716 7,550 Total 16,460 13,728 21,715 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Details [Abstract] | |
Property and Equipment Net | Property and Equipment, net Property and equipment, net, consisted of the following: December 31, ( in thousands, except years Useful Life 2018 2017 Instrument sets 4 $ 326,831 $ 287,435 Machinery and equipment 5 to 7 58,585 49,142 Computer equipment and software 3 to 7 127,539 102,729 Leasehold improvements 2 to 15 32,973 23,532 Furniture and fixtures 3 to 7 8,961 8,311 Building and improvements 10 to 20 20,216 20,146 Land — 1,277 1,277 576,382 492,572 Less: accumulated depreciation and amortization (337,541 ) (277,246 ) $ 238,841 $ 215,326 |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill and intangible assets as of December 31, 2018 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (in years) Amount Amortization Assets, net Intangible assets subject to amortization: Developed technology 8 $ 271,748 $ (131,730 ) $ 140,018 Manufacturing know-how and trade secrets 13 30,814 (17,926 ) 12,888 Trade name and trademarks 9 25,500 (13,901 ) 11,599 Customer relationships 9 147,021 (59,478 ) 87,543 Total intangible assets subject to amortization 9 $ 475,083 $ (223,035 ) $ 252,048 Intangible assets not subject to amortization: Goodwill 561,366 Total goodwill and intangible assets, net $ 813,414 Goodwill and intangible assets as of December 31, 2017 consisted of the following: Weighted- Average Amortization Period Gross Accumulated Intangible ( in thousands, except years (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 |
Changes to Goodwill | The changes to goodwill are comprised of the following: ( 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 26,959 Changes in purchase price allocation (1,075 ) Changes resulting from foreign currency fluctuations (1,444 ) 24,440 December 31, 2018 Gross goodwill 569,666 Accumulated impairment loss (8,300 ) $ 561,366 |
Future Amortization Expense Related to Intangible Assets | Total future amortization expense related to intangible assets subject to amortization at December 31, 2018 is set forth in the table below: ( in thousands 2019 $ 52,298 2020 51,675 2021 49,297 2022 41,834 2023 17,718 Thereafter through 2031 39,226 Total future amortization expense $ 252,048 |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: December 31, ( in thousands 2018 2017 Accrued expenses $ 70,386 $ 42,983 Other taxes payable 9,359 12,692 Accounts payable 8,799 4,366 Distributor commissions payable 8,194 7,697 Royalties payable 7,173 5,040 Other 1,966 2,989 Accounts payable and accrued liabilities $ 105,877 $ 75,767 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 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) December 31, 2018 Cash equivalents: Money market funds $ 56,000 $ 56,000 $ — $ — Total cash equivalents $ 56,000 $ 56,000 $ — $ — 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): ( in thousands 2018 2017 Fair value measurement at January 1 $ 67,941 $ 67,501 Contingent consideration liability recorded upon acquisition 3,543 32,559 Change in fair value measurement (1,517 ) (1,295 ) Changes resulting from foreign currency fluctuations 193 (224 ) Contingent consideration paid or settled (19,750 ) (30,600 ) Fair value measurement at December 31 $ 50,410 $ 67,941 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 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: Year Ended December 31, ( in thousands 2018 2017 Non-controlling interests 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 interests — (1,743 ) Non-controlling interests at end of period $ — $ 3,845 |
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: December 31, ( in thousands 2018 2017 Total current assets $ — $ 670 Identifiable intangible assets, net — 8,752 Goodwill — 12,654 Accounts payable & accrued expenses — 562 Deferred tax liabilities, net — 331 Non-controlling interests — 3,845 |
Indebtedness (Tables)
Indebtedness (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2018 December 31, 2017 2.25% Senior Convertible Notes due 2021: Principal amount $ 650,000 $ 650,000 Unamortized debt discount (40,117 ) (56,839 ) Unamortized debt issuance costs (7,357 ) (10,241 ) Total Senior Convertible Notes $ 602,526 $ 582,920 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future Minimum Annual Lease Payments under Capital and Operating Leases | The Company’s future minimum annual lease payments under capital and operating leases, including payments for costs directly associated with the facility leases, for years ending after December 31, 2018 are as follows: Capital Operating ( in thousands Leases Leases 2019 $ 534 $ 13,750 2020 507 13,007 2021 244 10,954 2022 24 10,578 2023 5 10,515 Thereafter — 116,684 Total minimum lease payments $ 1,314 $ 175,488 Less amount representing interest (59 ) Present value of obligations under capital leases 1,255 Less current portion (449 ) Long-term capital lease obligations $ 806 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Compensation Costs Included in Consolidated Statement of Operations for All Stock-based Compensation Arrangements | The compensation cost that has been included in the Consolidated Statements of Operations for the Company’s stock-based compensation plans was as follows: Year Ended December 31, ( in thousands 2018 2017 2016 Sales, marketing and administrative expense $ 22,190 $ 20,596 $ 25,466 Research and development expense 3,052 1,445 1,231 Cost of goods sold 431 350 227 Stock-based compensation expense before taxes 25,673 22,391 26,924 Related income tax benefits (6,418 ) (8,509 ) (10,770 ) Stock-based compensation expense, net of taxes $ 19,255 $ 13,882 $ 16,154 |
Summary of Restricted Stock Units | Following is a summary of RSU activity for the year ended December 31, 2018: Weighted Average Number of Grant Date ( in thousands, except per share amounts Shares Fair Value Outstanding at December 31, 2017 996 $ 52.90 Granted 467 55.55 Vested (169 ) 42.94 Forfeited (180 ) 55.63 Outstanding at December 31, 2018 1,114 $ 55.25 |
Schedule of Performance-Based Restricted Stock Units | Following is a summary of PRSU activity for the year ended December 31, 2018: Maximum Number ( in thousands, except per share amounts Shares of Shares Eligible to be Issued Average Grant Date Fair Value Outstanding at December 31, 2017 765 1,462 $ 52.62 Awarded at target 369 479 54.86 Vested (21 ) (21 ) 48.73 Forfeited (126 ) (262 ) 55.39 Outstanding at December 31, 2018 987 1,658 $ 56.88 |
Summary of Stock Option Activity under All Stock Plans | Following is a summary of stock option activity for the year ended December 31, 2018 under all stock plans: Weighted-Average Remaining Weighted Contractual Aggregate Avg. Exercise Term Intrinsic ( in thousands, except years and per share amounts Shares Price (Years) Value Outstanding at December 31, 2017 178 $ 35.41 1.33 $ 4,105 Exercised (128 ) 35.28 Cancelled (1 ) 34.49 Outstanding at December 31, 2018 49 35.76 1.52 $ 680 Exercisable at December 31, 2018 49 $ 35.76 1.52 $ 680 Vested or expected to vest at December 31, 2018 49 $ 35.76 1.52 $ 680 |
Weighted Average Assumptions Used to Estimate Fair Value of Stock Options Granted and Stock Purchase Rights under ESPP | The weighted average assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows: Year Ended December 31, 2018 2017 2016 ESPP Volatility 33 % 26 % 29 % Expected term (years) 0.5 0.5 0.5 Risk free interest rate 1.8 % 0.9 % 0.4 % Expected dividend yield — % — % — % |
Common Stock Reserved for Future Issuance | Common Stock Reserved for Future Issuance The following table summarizes common shares reserved for issuance on exercise or conversion at December 31, 2018 ( in thousands Issued and outstanding stock options 49 Issued and outstanding RSUs and PRSUs 2,183 Available for issuance under the ESPP 1,093 Available for future grant 3,752 2021 Notes 14,396 2021 Warrants 32,596 Total shares reserved for future issuance 54,069 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Before Income Taxes By Region | Total income before income taxes summarized by region for the years ended December 31 is as follows: Year Ended December 31, ( in thousands 2018 2017 2016 United States $ 8,939 $ 76,480 $ 77,610 Foreign (216 ) (4,117 ) (12,830 ) Total income before income taxes $ 8,723 $ 72,363 $ 64,780 |
Components of Income Tax (Benefit) Provision | The income tax (benefit) provision for the years ended December 31 consists of the following: Year Ended December 31, ( in thousands 2018 2017 2016 Current: Federal $ (4,188 ) $ 5,972 $ (14,837 ) State 2,043 776 1,283 Foreign 5,972 2,793 2,350 Total current provision 3,827 9,541 (11,204 ) Deferred: Federal (5,944 ) (1,565 ) 40,363 State (7,092 ) (4,276 ) 1,455 Foreign (98,795 ) (2,223 ) (2,583 ) Total deferred provision (111,831 ) (8,064 ) 39,235 Changes in tax rate 258 (14,668 ) (216 ) Changes in valuation allowance 103,990 5,699 1,494 Total (benefit) provision $ (3,756 ) $ (7,492 ) $ 29,309 |
Reconciliation of Income Tax from Statutory Tax Rate to Effective Income Tax Rate | The differences between the income tax provision at the United States federal statutory tax rate and the Company’s effective tax rate for the years ended December 31 are the following: Year Ended December 31, ( in thousands 2018 2017 2016 Tax provision at federal statutory rate $ 1,832 $ 25,327 $ 22,673 Valuation allowance 103,990 5,703 1,494 Net tax benefit on international restructuring (97,028 ) — — Income tax reserves (6,717 ) 1,184 759 Income tax credits and incentives (5,525 ) (3,462 ) (3,426 ) Return to provision adjustments (4,180 ) (2,443 ) (1,188 ) Compensation expense 2,008 (5,619 ) (8,013 ) Globalization initiative 1,264 306 6,290 Nondeductible meals and entertainment 769 922 1,013 Foreign tax rate differences from federal statutory rate (688 ) 378 605 Change in tax rates 258 (14,668 ) (216 ) Acquisition related charges (221 ) (489 ) 5,167 State income tax 90 3,553 3,245 Recovery of tax basis in United States subsidiary — (19,540 ) — Other 392 1,356 906 Total (benefit) provision $ (3,756 ) $ (7,492 ) $ 29,309 |
Significant Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities at December 31 are composed of the following: December 31, ( in thousands 2018 2017 Deferred tax assets: Amortization $ 106,769 $ 6,742 General business and other credit carryforwards 25,846 18,928 Stock-based compensation 14,914 13,502 Inventory 12,385 10,075 Net operating loss carryforwards 7,516 14,991 Deferred rent 4,628 2,532 Original issue discount 3,322 4,606 Other 23,241 14,859 Gross deferred tax assets 198,621 86,235 Less valuation allowance (120,233 ) (16,247 ) Net deferred tax assets 78,388 69,988 Deferred tax liabilities: Acquired intangibles (42,767 ) (53,076 ) Depreciation (32,851 ) (23,132 ) Other (1,843 ) (1,752 ) Total deferred tax liabilities (77,461 ) (77,960 ) Consolidated net deferred tax assets (liabilities) $ 927 $ (7,972 ) Add deferred tax liability, net, attributable to non-controlling interests — 199 Net deferred tax assets (liabilities) $ 927 $ (7,773 ) |
Summary of Unrecognized Tax Benefits | The following table summarizes the activity related to the Company’s unrecognized tax benefits: Year Ended December 31, ( in thousands 2018 2017 2016 Gross unrecognized tax benefits at January 1 $ 25,356 $ 23,322 $ 12,448 Increases in tax positions for prior years 499 1,692 1,716 Decreases in tax positions for prior years (756 ) (24 ) (270 ) Increases in tax positions for current year relating to ongoing operations 1,913 968 6,205 Decreases in tax positions as a result of a lapse of statute of limitations (6,446 ) (402 ) — Increases in tax positions for current year relating to acquisitions 169 — 3,223 Decreases in tax positions due to settlements with taxing authorities (1,190 ) (200 ) — Gross unrecognized tax benefits at December 31 $ 19,545 $ 25,356 $ 23,322 |
Business Segment, Product and G
Business Segment, Product and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Product Lines | Revenue by product line was as follows: Year Ended December 31, ( in thousands 2018 2017 2016 Spinal Hardware $ 788,650 $ 737,534 $ 683,703 Surgical Support 313,064 289,151 278,429 Total Revenue $ 1,101,714 $ 1,026,685 $ 962,132 |
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 Year Ended December 31, December 31, ( in thousands 2018 2017 2016 2018 2017 United States $ 896,152 $ 850,410 $ 831,778 $ 200,404 $ 179,891 International (excludes Puerto Rico) 205,562 176,275 130,354 38,437 35,435 Total $ 1,101,714 $ 1,026,685 $ 962,132 $ 238,841 $ 215,326 |
Quarterly Data (unaudited) (Tab
Quarterly Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly financial data | The following quarterly financial data, in the opinion of management, reflects all adjustments, consisting of normal recurring adjustments necessary, for a fair presentation of results for the periods presented: Year Ended December 31, 2018 (1) (2) (3) ( in thousands, except per share amounts First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 260,522 $ 281,564 $ 271,301 $ 288,327 Gross profit 186,708 204,508 197,141 202,198 Consolidated net (loss) income (27,132 ) 11,531 15,923 12,157 Basic net (loss) income per common (0.53 ) 0.22 0.31 0.24 Diluted net (loss) income per common share (0.53 ) 0.22 0.30 0.23 Year Ended December 31, 2017 (4) First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 249,013 $ 259,399 $ 247,051 $ 271,222 Gross profit 187,570 193,213 181,544 195,917 Consolidated net income 11,983 11,735 33,096 23,041 Net income attributable to NuVasive, Inc. 12,426 12,167 33,528 23,477 Basic net income per common share attributable to NuVasive, Inc. 0.25 0.24 0.66 0.46 Diluted net income per common share attributable to NuVasive, Inc. 0.22 0.21 0.64 0.45 (1) The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. (2) The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. (3) Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc (4) The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Organization and Significant _4
Organization and Significant Accounting Policies (Details Textual) | Oct. 01, 2018USD ($) | Dec. 31, 2018USD ($)Customersegment | Dec. 31, 2017USD ($)Customer$ / shares | Dec. 31, 2016USD ($)Customer | Dec. 31, 2015USD ($) | Jan. 01, 2019USD ($) | Jan. 01, 2017USD ($) |
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Cumulative effect of change on retained earnings | $ 17,241,000 | $ 4,762,000 | |||||
Adjustment to accumulated deficit | $ 1,625,000 | ||||||
Customer represented greater than 10 percent | Customer | 0 | 0 | 0 | ||||
Inventory, finished goods | $ 259,400,000 | $ 232,300,000 | |||||
Inventory, raw materials | 8,800,000 | 5,000,000 | |||||
Inventory, work in progress | $ 5,000,000 | $ 9,800,000 | |||||
Number of Reportable Units | segment | 1 | ||||||
Impairment of goodwill and intangible assets | $ 0 | ||||||
Impairment charges related to goodwill | $ 0 | ||||||
Tax cuts and jobs act 2017, executive compensation related deferred taxes and federal tax revaluation impact write-down | 300,000 | ||||||
Tax cuts and jobs act 2017, increase in effective income tax rate due to deferred tax and federal tax revaluation impact write-down | 0.50% | ||||||
Translation Adjustment Functional to Reporting Currency, Net of Tax | 8,600,000 | $ 6,900,000 | $ 10,600,000 | ||||
Product shipment costs | 311,159,000 | 268,441,000 | 240,105,000 | ||||
Business transition costs | $ 11,473,000 | 4,287,000 | 18,138,000 | ||||
Performance-Based Restricted Stock Units (PRSUs) [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Vesting period for the award | 5 years | 5 years | |||||
New Jersey [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Business transition costs | 7,300,000 | ||||||
2017 and 2016 Acquisitions [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Business transition costs | $ (1,500,000) | (1,300,000) | |||||
Product Shipment [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Product shipment costs | $ 25,400,000 | 24,000,000 | 24,500,000 | ||||
Minimum [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Finite-Lived intangible assets, useful life | 1 year | ||||||
Property and equipment, useful life | 2 years | ||||||
Maximum [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Finite-Lived intangible assets, useful life | 17 years | ||||||
Property and equipment, useful life | 20 years | ||||||
ASU 2016-02 [Member] | Subsequent Event [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Right-of-use assets | $ 62,000,000 | ||||||
Right-of-use liabilities | $ 75,000,000 | ||||||
Accounting Standards Update 2014-09 [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Product shipment costs | 268,441,000 | 240,105,000 | |||||
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Cumulative effect of change on retained earnings | 300,000 | ||||||
Product shipment costs | (567,000) | 12,000 | |||||
Accounting Standards Update 2014-09 [Member] | Retained Earnings (Accumulated Deficit) [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Adjustment to accumulated deficit | $ 1,600 | ||||||
ASU 2016-16 [Member] | Adjustments for New Accounting Principle, Early Adoption [Member] | |||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | |||||||
Retrospective adjustment to deferred tax assets and accumulated deficit | $ 11,600,000 | ||||||
Decrease in Income tax expense | $ (3,900,000) | ||||||
Increase in basic earnings per share | $ / shares | $ 0.08 | ||||||
Increase in diluted earnings per share | $ / shares | $ 0.07 |
Organization and Significant _5
Organization and Significant Accounting Policies - Summary of Condensed Presentation Impact of Adoption of ASC 606 Adoption on the Company's Previously Reported Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Allowances on accounts receivable | $ (16,171) | $ (13,026) |
Inventory, net | 273,244 | 247,138 |
Total current assets | 618,209 | 560,063 |
Other assets | 29,737 | 39,117 |
Total assets | 1,707,859 | 1,640,140 |
Accounts payable and accrued liabilities | 105,877 | 75,767 |
Accrued payroll and related expenses | 59,960 | 55,618 |
Total current liabilities | 179,460 | 161,395 |
Deferred and income tax liabilities, non-current | 4,964 | 18,870 |
Other long-term liabilities | 86,384 | 77,539 |
Total NuVasive, Inc. stockholders’ equity | 834,525 | 795,571 |
Non-controlling interests | 3,845 | |
Total equity | 834,525 | 799,416 |
Total liabilities and equity | $ 1,707,859 | 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 interests | 3,845 | |
Total equity | 799,416 | |
Total liabilities and equity | 1,640,140 | |
Accounting Standards Update 2014-09 [Member] | As 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 interests | 3,845 | |
Total equity | 799,154 | |
Total liabilities and equity | 1,639,067 | |
Accounting Standards Update 2014-09 [Member] | Adjustments [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 |
Organization and Significant _6
Organization and Significant Accounting Policies - 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 | 12 Months Ended | |||||||||||||||||
Dec. 31, 2018 | [1],[2],[3] | Sep. 30, 2018 | [1],[2],[3] | Jun. 30, 2018 | [1],[2],[3] | Mar. 31, 2018 | [1],[2],[3] | Dec. 31, 2017 | [4] | Sep. 30, 2017 | [4] | Jun. 30, 2017 | [4] | Mar. 31, 2017 | [4] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||||||||||||||||||
Total revenue | $ 288,327 | $ 271,301 | $ 281,564 | $ 260,522 | $ 271,222 | $ 247,051 | $ 259,399 | $ 249,013 | $ 1,101,714 | $ 1,026,685 | $ 962,132 | ||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | 311,159 | 268,441 | 240,105 | ||||||||||||||||
Gross profit | 202,198 | 197,141 | 204,508 | 186,708 | 195,917 | 181,544 | 193,213 | 187,570 | 790,555 | 758,244 | 722,027 | ||||||||
Operating expenses: | |||||||||||||||||||
Sales, marketing and administrative | 575,836 | 539,507 | 533,600 | ||||||||||||||||
Total operating expenses | 736,387 | 646,758 | 598,428 | ||||||||||||||||
Total interest and other expense, net | (45,445) | (39,123) | (58,819) | ||||||||||||||||
Income tax benefit | 3,756 | 7,492 | (29,309) | ||||||||||||||||
Consolidated net income | $ 12,157 | $ 15,923 | $ 11,531 | $ (27,132) | 23,041 | 33,096 | 11,735 | 11,983 | 12,479 | 79,855 | 35,471 | ||||||||
Add back net loss attributable to non-controlling interests | (1,743) | (1,721) | |||||||||||||||||
Net income attributable to NuVasive, Inc. | $ 23,477 | $ 33,528 | $ 12,167 | $ 12,426 | $ 12,479 | $ 81,598 | $ 37,192 | ||||||||||||
Net income per share attributable to NuVasive, Inc.: | |||||||||||||||||||
Basic | $ 0.24 | $ 0.31 | $ 0.22 | $ (0.53) | $ 0.46 | $ 0.66 | $ 0.24 | $ 0.25 | $ 0.24 | $ 1.60 | $ 0.74 | ||||||||
Diluted | $ 0.23 | $ 0.30 | $ 0.22 | $ (0.53) | $ 0.45 | $ 0.64 | $ 0.21 | $ 0.22 | $ 0.24 | $ 1.48 | $ 0.69 | ||||||||
Comprehensive income attributable to NuVasive, Inc. | $ 10,784 | $ 85,296 | $ 38,673 | ||||||||||||||||
Product [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 986,458 | 938,981 | 893,544 | ||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | 234,509 | 207,307 | 195,605 | ||||||||||||||||
Service [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 115,256 | 87,704 | 68,588 | ||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | $ 76,650 | 61,134 | 44,500 | ||||||||||||||||
Accounting Standards Update 2014-09 [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 1,026,685 | 962,132 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | 268,441 | 240,105 | |||||||||||||||||
Gross profit | 758,244 | 722,027 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||
Sales, marketing and administrative | 539,507 | 533,600 | |||||||||||||||||
Other operating expenses | 107,251 | 64,828 | |||||||||||||||||
Total operating expenses | 646,758 | 598,428 | |||||||||||||||||
Total interest and other expense, net | (39,123) | (58,819) | |||||||||||||||||
Income tax benefit | 7,492 | (29,309) | |||||||||||||||||
Consolidated net income | 79,855 | 35,471 | |||||||||||||||||
Add back net loss attributable to non-controlling interests | (1,743) | (1,721) | |||||||||||||||||
Net income attributable to NuVasive, Inc. | $ 81,598 | $ 37,192 | |||||||||||||||||
Net income per share attributable to NuVasive, Inc.: | |||||||||||||||||||
Basic | $ 1.60 | $ 0.74 | |||||||||||||||||
Diluted | $ 1.48 | $ 0.69 | |||||||||||||||||
Comprehensive income attributable to NuVasive, Inc. | $ 85,296 | $ 38,673 | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | As Reported [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 1,029,520 | 962,072 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | 269,008 | 240,093 | |||||||||||||||||
Gross profit | 760,512 | 721,979 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||
Sales, marketing and administrative | 539,913 | 533,624 | |||||||||||||||||
Other operating expenses | 107,251 | 64,828 | |||||||||||||||||
Total operating expenses | 647,164 | 598,452 | |||||||||||||||||
Total interest and other expense, net | (39,123) | (58,819) | |||||||||||||||||
Income tax benefit | 7,038 | (29,282) | |||||||||||||||||
Consolidated net income | 81,263 | 35,426 | |||||||||||||||||
Add back net loss attributable to non-controlling interests | (1,743) | (1,721) | |||||||||||||||||
Net income attributable to NuVasive, Inc. | $ 83,006 | $ 37,147 | |||||||||||||||||
Net income per share attributable to NuVasive, Inc.: | |||||||||||||||||||
Basic | $ 1.63 | $ 0.74 | |||||||||||||||||
Diluted | $ 1.50 | $ 0.69 | |||||||||||||||||
Comprehensive income attributable to NuVasive, Inc. | $ 86,704 | $ 38,628 | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | Adjustments [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | (2,835) | 60 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | (567) | 12 | |||||||||||||||||
Gross profit | (2,268) | 48 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||
Sales, marketing and administrative | (406) | (24) | |||||||||||||||||
Total operating expenses | (406) | (24) | |||||||||||||||||
Income tax benefit | 454 | (27) | |||||||||||||||||
Consolidated net income | (1,408) | 45 | |||||||||||||||||
Net income attributable to NuVasive, Inc. | $ (1,408) | $ 45 | |||||||||||||||||
Net income per share attributable to NuVasive, Inc.: | |||||||||||||||||||
Basic | $ (0.03) | $ 0 | |||||||||||||||||
Diluted | $ (0.02) | $ 0 | |||||||||||||||||
Comprehensive income attributable to NuVasive, Inc. | $ (1,408) | $ 45 | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | Product [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 938,981 | 893,544 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | 207,307 | 195,605 | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | Product [Member] | As Reported [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 941,816 | 893,484 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | 207,874 | 195,593 | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | Product [Member] | Adjustments [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | (2,835) | 60 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | (567) | 12 | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | Service [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 87,704 | 68,588 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | 61,134 | 44,500 | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | Service [Member] | As Reported [Member] | |||||||||||||||||||
Revenue | |||||||||||||||||||
Total revenue | 87,704 | 68,588 | |||||||||||||||||
Cost of revenue (excluding below amortization of intangible assets) | |||||||||||||||||||
Total cost of revenue | $ 61,134 | $ 44,500 | |||||||||||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc. | ||||||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[3] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[4] | The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Organization and Significant _7
Organization and Significant Accounting Policies - Summary of Condensed Presentation Impact of Adoption of ASC 606 Adoption on the Company's Previously Reported Unaudited Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2018 | [1],[2],[3] | Sep. 30, 2018 | [1],[2],[3] | Jun. 30, 2018 | [1],[2],[3] | Mar. 31, 2018 | [1],[2],[3] | Dec. 31, 2017 | [4] | Sep. 30, 2017 | [4] | Jun. 30, 2017 | [4] | Mar. 31, 2017 | [4] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||||||||||||||||
Consolidated net (loss) income | $ 12,157 | $ 15,923 | $ 11,531 | $ (27,132) | $ 23,041 | $ 33,096 | $ 11,735 | $ 11,983 | $ 12,479 | $ 79,855 | $ 35,471 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Reserves on current assets | 14,834 | 5,622 | 11,452 | ||||||||||||||||
Deferred income tax (benefit) expense | (11,396) | (12,838) | 26,292 | ||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||||||
Accounts receivable | 4,562 | (26,610) | (33,421) | ||||||||||||||||
Inventory | (38,646) | (35,867) | (22,624) | ||||||||||||||||
Prepaid expenses and other current assets | (1,280) | (12,681) | (3,875) | ||||||||||||||||
Accounts payable and accrued liabilities | 20,518 | (5,558) | 12,376 | ||||||||||||||||
Litigation liability | 1,165 | 8,150 | (88,450) | ||||||||||||||||
Accrued payroll and related expenses | 2,595 | 3,975 | 8,841 | ||||||||||||||||
Income taxes | 2,054 | 3,455 | 23,652 | ||||||||||||||||
Net cash provided by operating activities | 219,183 | 176,969 | 158,085 | ||||||||||||||||
Net cash used in investing activities | (161,285) | (174,861) | (304,885) | ||||||||||||||||
Net cash used in financing activities | (14,578) | (87,028) | 110,823 | ||||||||||||||||
Effect of exchange rate changes on cash | $ (1,283) | 2,070 | (929) | ||||||||||||||||
Accounting Standards Update 2014-09 [Member] | |||||||||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||||||||||||||||
Consolidated net (loss) income | 79,855 | 35,471 | |||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Reserves on current assets | 5,622 | 11,452 | |||||||||||||||||
Deferred income tax (benefit) expense | (12,838) | 26,292 | |||||||||||||||||
Other adjustments to reconcile net income | 180,666 | 188,371 | |||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||||||
Accounts receivable | (26,610) | (33,421) | |||||||||||||||||
Inventory | (35,867) | (22,624) | |||||||||||||||||
Prepaid expenses and other current assets | (12,681) | (3,875) | |||||||||||||||||
Accounts payable and accrued liabilities | (16,758) | 12,376 | |||||||||||||||||
Litigation liability | 8,150 | (88,450) | |||||||||||||||||
Accrued payroll and related expenses | 3,975 | 8,841 | |||||||||||||||||
Income taxes | 3,455 | 23,652 | |||||||||||||||||
Net cash provided by operating activities | 176,969 | 158,085 | |||||||||||||||||
Net cash used in investing activities | (174,861) | (304,885) | |||||||||||||||||
Net cash used in financing activities | (87,028) | 110,823 | |||||||||||||||||
Effect of exchange rate changes on cash | 2,070 | (929) | |||||||||||||||||
Decrease in cash, cash equivalents and restricted cash | (82,850) | (36,906) | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | As Reported [Member] | |||||||||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||||||||||||||||
Consolidated net (loss) income | 81,263 | 35,426 | |||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Reserves on current assets | 5,718 | 11,408 | |||||||||||||||||
Deferred income tax (benefit) expense | (12,384) | 26,265 | |||||||||||||||||
Other adjustments to reconcile net income | 180,666 | 188,371 | |||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||||||
Accounts receivable | (29,389) | (33,250) | |||||||||||||||||
Inventory | (35,300) | (22,636) | |||||||||||||||||
Prepaid expenses and other current assets | (12,681) | (3,875) | |||||||||||||||||
Accounts payable and accrued liabilities | (16,617) | 12,325 | |||||||||||||||||
Litigation liability | 8,150 | (88,450) | |||||||||||||||||
Accrued payroll and related expenses | 4,088 | 8,849 | |||||||||||||||||
Income taxes | 3,455 | 23,652 | |||||||||||||||||
Net cash provided by operating activities | 176,969 | 158,085 | |||||||||||||||||
Net cash used in investing activities | (174,861) | (304,885) | |||||||||||||||||
Net cash used in financing activities | (87,028) | 110,823 | |||||||||||||||||
Effect of exchange rate changes on cash | 2,070 | (929) | |||||||||||||||||
Decrease in cash, cash equivalents and restricted cash | (82,850) | (36,906) | |||||||||||||||||
Accounting Standards Update 2014-09 [Member] | Adjustments [Member] | |||||||||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||||||||||||||||
Consolidated net (loss) income | (1,408) | 45 | |||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Reserves on current assets | (96) | 44 | |||||||||||||||||
Deferred income tax (benefit) expense | (454) | 27 | |||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||||||
Accounts receivable | 2,779 | (171) | |||||||||||||||||
Inventory | (567) | 12 | |||||||||||||||||
Accounts payable and accrued liabilities | (141) | 51 | |||||||||||||||||
Accrued payroll and related expenses | $ (113) | $ (8) | |||||||||||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc. | ||||||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[3] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[4] | The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Organization and Significant _8
Organization and Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2018 | [2],[3],[4] | Sep. 30, 2018 | [2],[3],[4] | Jun. 30, 2018 | [2],[3],[4] | Mar. 31, 2018 | [2],[3],[4] | Dec. 31, 2017 | [1] | Sep. 30, 2017 | [1] | Jun. 30, 2017 | [1] | Mar. 31, 2017 | [1] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | |||||||||||||||||||
Net income attributable to NuVasive, Inc. | $ 23,477 | $ 33,528 | $ 12,167 | $ 12,426 | $ 12,479 | $ 81,598 | $ 37,192 | ||||||||||||
Denominator for basic and diluted net income per share: | |||||||||||||||||||
Weighted average common shares outstanding for basic | 51,382 | 50,874 | 50,077 | ||||||||||||||||
Dilutive potential common stock outstanding: | |||||||||||||||||||
Warrants | 1,494 | 1,297 | |||||||||||||||||
Senior Convertible Notes | 177 | 1,601 | 1,141 | ||||||||||||||||
Weighted average common shares outstanding for diluted | 52,355 | 55,193 | 54,102 | ||||||||||||||||
Basic net income per share attributable to NuVasive, Inc. | $ 0.24 | $ 0.31 | $ 0.22 | $ (0.53) | $ 0.46 | $ 0.66 | $ 0.24 | $ 0.25 | $ 0.24 | $ 1.60 | $ 0.74 | ||||||||
Diluted net income per share attributable to NuVasive, Inc. | $ 0.23 | $ 0.30 | $ 0.22 | $ (0.53) | $ 0.45 | $ 0.64 | $ 0.21 | $ 0.22 | $ 0.24 | $ 1.48 | $ 0.69 | ||||||||
Stock Options and Employee Stock Purchase Plan [Member] | |||||||||||||||||||
Dilutive potential common stock outstanding: | |||||||||||||||||||
Incremental common shares from sharebased payments | 36 | 141 | 314 | ||||||||||||||||
Restricted Stock Units [Member] | |||||||||||||||||||
Dilutive potential common stock outstanding: | |||||||||||||||||||
Incremental common shares from sharebased payments | 760 | 1,083 | 1,273 | ||||||||||||||||
[1] | The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[2] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc. | ||||||||||||||||||
[3] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[4] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Organization and Significant _9
Organization and Significant Accounting Policies - Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share | 16,460 | 13,728 | 21,715 |
Stock Options, ESPP 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 | 162 | 147 | 912 |
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 | 13,253 |
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 | 5,433 | 2,716 | 7,550 |
Balance Sheet Details - Propert
Balance Sheet Details - Property and Equipment Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment net | ||
Property and equipment, gross | $ 576,382 | $ 492,572 |
Less: accumulated depreciation and amortization | (337,541) | (277,246) |
Property and equipment, net | $ 238,841 | 215,326 |
Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 2 years | |
Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 20 years | |
Instrument sets [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 4 years | |
Property and equipment, gross | $ 326,831 | 287,435 |
Machinery and equipment [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 58,585 | 49,142 |
Machinery and equipment [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 5 years | |
Machinery and equipment [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Computer equipment and software [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 127,539 | 102,729 |
Computer equipment and software [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 3 years | |
Computer equipment and software [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Leasehold improvements [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 32,973 | 23,532 |
Leasehold improvements [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 2 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 15 years | |
Furniture and fixtures [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 8,961 | 8,311 |
Furniture and fixtures [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 3 years | |
Furniture and fixtures [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Building and improvements [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 20,216 | 20,146 |
Building and improvements [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 10 years | |
Building and improvements [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 20 years | |
Land [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 1,277 | $ 1,277 |
Balance Sheet Details (Details
Balance Sheet Details (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Balance Sheet Details [Abstract] | |||
Depreciation expense | $ 75.4 | $ 69.5 | $ 57.1 |
Assets recorded under capital leases | 1.5 | 1.8 | |
Capitalized internal use software development costs | 40.6 | 29.9 | |
Capitalized internal use software amortization | 10.6 | 10.1 | 7.4 |
Amortization expense related to intangible assets | 54.4 | $ 51.7 | $ 45.6 |
Definite-lived intangible assets | 26.2 | ||
Goodwill | $ 25.9 |
Balance Sheet Details - Goodwil
Balance Sheet Details - Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 475,083 | $ 449,850 |
Accumulated Amortization | (223,035) | (169,076) |
Intangible Assets, net | 252,048 | 280,774 |
Intangible assets not subject to amortization: | ||
Goodwill | 561,366 | 536,926 |
Total goodwill and intangible assets, net | $ 813,414 | $ 817,700 |
Developed Technology [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 8 years | 8 years |
Gross Amount | $ 271,748 | $ 271,748 |
Accumulated Amortization | (131,730) | (98,693) |
Intangible Assets, net | $ 140,018 | $ 173,055 |
Manufacturing know-how and trade secrets [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 13 years | 13 years |
Gross Amount | $ 30,814 | $ 30,653 |
Accumulated Amortization | (17,926) | (15,542) |
Intangible Assets, net | $ 12,888 | $ 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 | (13,901) | (10,559) |
Intangible Assets, net | $ 11,599 | $ 14,641 |
Customer relationships [Member] | ||
Intangible assets subject to amortization: | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Amount | $ 147,021 | $ 122,249 |
Accumulated Amortization | (59,478) | (44,282) |
Intangible Assets, net | $ 87,543 | $ 77,967 |
Balance Sheet Details - Changes
Balance Sheet Details - Changes to Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Gross goodwill | $ 569,666 | $ 545,226 |
Accumulated impairment loss | (8,300) | (8,300) |
Goodwill | 561,366 | $ 536,926 |
Changes to gross goodwill | ||
Increases recorded in business combinations | 26,959 | |
Changes in purchase price allocation | (1,075) | |
Changes resulting from foreign currency fluctuations | (1,444) | |
Goodwill period increase (decrease) | $ 24,440 |
Balance Sheet Details - Future
Balance Sheet Details - Future Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Future amortization expense related to intangible assets | ||
2,019 | $ 52,298 | |
2,020 | 51,675 | |
2,021 | 49,297 | |
2,022 | 41,834 | |
2,023 | 17,718 | |
Thereafter through 2031 | 39,226 | |
Intangible Assets, net | $ 252,048 | $ 280,774 |
Balance Sheet Details - Account
Balance Sheet Details - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts payable and accrued liabilities | ||
Accrued expenses | $ 70,386 | $ 42,983 |
Other taxes payable | 9,359 | 12,692 |
Accounts payable | 8,799 | 4,366 |
Distributor commissions payable | 8,194 | 7,697 |
Royalties payable | 7,173 | 5,040 |
Other | 1,966 | 2,989 |
Accounts payable and accrued liabilities | $ 105,877 | $ 75,767 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Textual) | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($) | Dec. 31, 2018USD ($)investment | Dec. 31, 2017USD ($)investment | Dec. 31, 2016USD ($) | |
Business Acquisition [Line Items] | ||||
Unrealized loss position investment | investment | 0 | 0 | ||
Impairment charges recorded for earnings | $ 0 | $ 0 | ||
Net currency exchange gains (losses) from derivatives instruments | (3,700,000) | (900,000) | $ (300,000) | |
Contingent consideration liabilities | 7,560,000 | 18,952,000 | ||
Increased fair value adjustments | (300,000) | (11,200,000) | ||
Purchased in-process research and development asset | 8,913,000 | |||
Net loss on strategic investments | 3,800,000 | |||
Non-Financial Assets and Liabilities Measured on a Nonrecurring Basis [Member] | ||||
Business Acquisition [Line Items] | ||||
Accrual related to capital lease obligations | 0 | 0 | ||
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 liabilities | 50,400,000 | 67,900,000 | ||
Additions to contingent consideration liabilities with acquisitions | 32,600,000 | |||
Contingent consideration liability recorded upon acquisition | $ 31,400,000 | 3,543,000 | 32,559,000 | |
Convertible Notes due 2021 [Member] | Quoted Price in Active Market (Level 1) [Member] | ||||
Business Acquisition [Line Items] | ||||
Debt instrument, fair value disclosure | 684,800,000 | 779,500,000 | ||
Foreign Exchange Forward [Member] | ||||
Business Acquisition [Line Items] | ||||
Notional principal amount | 26,800,000 | 14,300,000 | 15,100,000 | |
Foreign Exchange Forward [Member] | Other Current Assets or Other Current Liabilities [Member] | ||||
Business Acquisition [Line Items] | ||||
Fair value of derivative instrument asset (liability) | (300,000) | (100,000) | ||
Foreign Exchange Forward [Member] | Other (Expense) Income [Member] | ||||
Business Acquisition [Line Items] | ||||
Net (losses) gains recognized on derivative instruments | $ 500,000 | $ (1,900,000) | $ 700,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - Fair Value Measurements on Recurring Basis [Member] - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | $ 56,000 | $ 27,000 |
Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | 56,000 | 27,000 |
Quoted Price in Active Market (Level 1) [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | 56,000 | 27,000 |
Quoted Price in Active Market (Level 1) [Member] | Money Market Funds [Member] | ||
Cash Equivalents and Marketable Securities | ||
Total cash equivalents | $ 56,000 | $ 27,000 |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Fair Value of Liabilities Measured on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Details) - Contingent Consideration Liabilities [Member] - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 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 | $ 31,400 | 3,543 | 32,559 |
Change in fair value measurement | (1,517) | (1,295) | |
Changes resulting from foreign currency fluctuations | 193 | (224) | |
Contingent consideration paid or settled | (19,750) | (30,600) | |
Fair value measurement at end of period | $ 50,410 | $ 67,941 |
Business Combinations (Details
Business Combinations (Details Textual) - Progentix Orthobiology [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 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 | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of equity attributable to the non-controlling interests | |||
Non-controlling interests at beginning of period | $ 3,845 | ||
Less: net loss attributable to the non-controlling interests | $ (1,743) | $ (1,721) | |
Non-controlling interests at end of period | 3,845 | ||
Variable Interest Entity [Member] | |||
Reconciliation of equity attributable to the non-controlling interests | |||
Non-controlling interests 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 interests | (1,743) | ||
Non-controlling interests at end of period | $ 3,845 | $ 5,588 |
Business Combinations Total ass
Business Combinations Total assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Total current assets | $ 618,209 | $ 560,063 | |
Goodwill | $ 561,366 | 536,926 | |
Deferred tax liabilities, net | 7,773 | ||
Non-controlling interests | 3,845 | ||
Variable Interest Entity [Member] | |||
Business Acquisition [Line Items] | |||
Non-controlling interests | 3,845 | $ 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 & accrued expenses | 562 | ||
Deferred tax liabilities, net | 331 | ||
Non-controlling interests | $ 3,845 |
Carrying Value of Senior Conver
Carrying Value of Senior Convertible Notes (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2016 |
Debt Instrument [Line Items] | |||
Total Senior Convertible Notes | $ 602,526,000 | $ 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 | (40,117,000) | (56,839,000) | |
Unamortized debt issuance costs | $ (7,357,000) | $ (10,241,000) |
Carrying Value of Senior Conv_2
Carrying Value of Senior Convertible Notes (Parenthetical) (Details) | Dec. 31, 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 | 12 Months Ended | |||||
Apr. 30, 2017USD ($) | Mar. 31, 2016USD ($)$ / shares | Jun. 30, 2011USD ($)$ / shares | Dec. 31, 2018USD ($)d$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2011$ / sharesshares | |
Debt Instrument [Line Items] | |||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 634,140,000 | ||||||
Stock price | $ / shares | $ 49.56 | ||||||
Cash proceeds from the sale of warrants | 44,850,000 | ||||||
Cumulative loss on repurchase of senior convertible notes | 19,085,000 | ||||||
Revolving Senior Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility, maximum borrowing capacity | $ 500,000,000 | ||||||
Credit facility, expiration date | 2022-04 | ||||||
Revolving loan outstanding | $ 0 | $ 0 | |||||
Revolving Senior Credit Facility [Member] | Federal Funds Effective Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility bear interest rate | 0.50% | ||||||
Revolving Senior Credit Facility [Member] | LIBOR [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility bear interest rate | 1.00% | ||||||
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 | ||||||
2017 Warrants [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Warrant strike price | $ / shares | $ 988.51 | ||||||
2017 Warrants [Member] | Series A Convertible Participating Preferred Stock [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of common stock shares preferred stock convertible into | shares | 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 | ||||||
Minimum [Member] | 2017 Warrants [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Class of warrant or rights expiry month and year | 2017-09 | ||||||
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] | 2017 Warrants [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Class of warrant or rights expiry month and year | 2018-01 | ||||||
Maximum [Member] | 2017 Warrants [Member] | Series A Convertible Participating Preferred Stock [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of preferred or common stock into which the warrants is converted | shares | 477,654 | ||||||
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 | ||||||
Common Shares [Member] | Maximum [Member] | 2017 Warrants [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of preferred or common stock into which the warrants is converted | shares | 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 | ||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 634,100,000 | ||||||
Interest rate on convertible notes | 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 | $ 14,600,000 | $ 14,600,000 | 11,500,000 | ||||
Amortization of debt discount (premium) | 16,700,000 | 15,900,000 | 12,100,000 | ||||
Amortization of debt issuance costs | $ 2,900,000 | 2,600,000 | 1,900,000 | ||||
Effective interest rate | 5.80% | ||||||
Debt redemption price percentage | 100.00% | ||||||
Principal payments due | $ 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 | 4,900,000 | |||||
Amortization of debt discount (premium) | 1,400,000 | 7,500,000 | |||||
Amortization of debt issuance costs | $ 200,000 | 1,000,000 | |||||
Effective interest rate | 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 |
Commitments (Details Textual)
Commitments (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Line Items] | |||
Restricted cash for security deposit | $ 2.4 | $ 5.4 | |
Rent expense | 12.8 | $ 12.6 | $ 10.6 |
Licensing and Purchasing Agreements [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Maximum payment the company has minimum and contingent obligations to make due to several purchase agreements | 75.2 | ||
Executive Severance Plans [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Other commitments, future minimum payments, remainder of fiscal year | $ 15 | ||
Minimum [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Initial terms of lease | 2 years | ||
Maximum [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Initial terms of lease | 17 years |
Commitments - Future Minimum Le
Commitments - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Capital Leases | |
2,019 | $ 534 |
2,020 | 507 |
2,021 | 244 |
2,022 | 24 |
2,023 | 5 |
Total minimum lease payments | 1,314 |
Less amount representing interest | (59) |
Present value of obligations under capital leases | 1,255 |
Less current portion | (449) |
Long-term capital lease obligations | 806 |
Operating Leases | |
2,019 | 13,750 |
2,020 | 13,007 |
2,021 | 10,954 |
2,022 | 10,578 |
2,023 | 10,515 |
Thereafter | 116,684 |
Total minimum lease payments | $ 175,488 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 28, 2011 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock, shares authorized | 120,000,000 | 120,000,000 | |||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | |||
Preferred stock, shares issued | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||
Closing price of stock | $ 49.56 | ||||
Proceeds from exercise of stock options | $ 1,300,000 | $ 2,400,000 | $ 3,000,000 | ||
Total intrinsic value | $ 2,500,000 | $ 8,300,000 | $ 29,000,000 | ||
Total stock options vested | 0 | 0 | 0 | ||
Total shares reserved for future issuance | 54,069,000 | ||||
ESPP [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 900,000 | ||||
Maximum percentage of annual compensation | 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 | ||||
Number of share purchased under ESPP | 151,000 | 154,000 | 152,000 | ||
Total shares reserved for future issuance | 1,093,000 | ||||
2014 Equity Incentive Plan [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Percentage of acceleration of stock options in case of change in control | 50.00% | ||||
Total shares reserved for future issuance | 2,200,000 | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 25,100,000 | ||||
Weighted average contractual term | 1 year 10 months 24 days | ||||
Fair value of restricted stock units vested | $ 8,800,000 | $ 19,900,000 | $ 31,200,000 | ||
Total shares withheld related to statutory tax | 42,000 | 103,000 | 227,000 | ||
Payments of employees tax obligations | $ 2,200,000 | $ 7,200,000 | $ 11,400,000 | ||
Vested during the period | 169,000 | ||||
Performance-Based Restricted Stock Units (PRSUs) [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 14,400,000 | ||||
Weighted average contractual term | 2 years 7 months 6 days | ||||
Fair value of restricted stock units vested | $ 2,100,000 | $ 10,300,000 | $ 12,600,000 | ||
Total shares withheld related to statutory tax | 8,000 | 35,000 | 58,000 | ||
Payments of employees tax obligations | $ 400,000 | $ 2,500,000 | $ 2,700,000 | ||
Vested during the period | 21,000 | 76,000 | 145,000 | ||
Vesting period for the awards | 5 years | 5 years | |||
Performance-Based Restricted Stock Units (PRSUs) [Member] | Minimum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Share payout levels | 0.00% | ||||
Performance-Based Restricted Stock Units (PRSUs) [Member] | Maximum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Share payout levels | 312.50% | ||||
Stock Options [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 0 | ||||
Total shares withheld related to statutory tax | 65,000 | 105,000 | 1,157,000 | ||
Payments of employees tax obligations | $ 400,000 | $ 2,100,000 | $ 10,700,000 | ||
Total shares reserved for future issuance | 49,000 | ||||
Series A Preferred Stock [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Preferred stock, shares authorized | 477,654 | ||||
Preferred stock, par value | $ 0.001 | ||||
Shares issued on conversion | 20 | ||||
Preferred stock, liquidation preference per share | $ 648.20 |
Stockholders' Equity - Stock Co
Stockholders' Equity - Stock Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | $ 25,673 | $ 22,391 | $ 26,924 |
Related income tax benefits | (6,418) | (8,509) | (10,770) |
Stock-based compensation expense, net of taxes | 19,255 | 13,882 | 16,154 |
Sales, Marketing and Administrative Expense [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | 22,190 | 20,596 | 25,466 |
Research and Development Expense [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | 3,052 | 1,445 | 1,231 |
Cost of Goods Sold [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | $ 431 | $ 350 | $ 227 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Award Activity (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Weighted average grant date fair value outstanding, Beginning balance | $ / shares | $ 52.90 |
Weighted average grant date fair value, Granted | $ / shares | 55.55 |
Weighted average grant date fair value, Vested | $ / shares | 42.94 |
Weighted average grant date fair value, Forfeited | $ / shares | 55.63 |
Weighted average grant date fair value outstanding, Ending balance | $ / shares | $ 55.25 |
Restricted Stock Units | |
Number of shares outstanding, Beginning balance | shares | 996 |
Number of shares, Granted | shares | 467 |
Number of shares, Vested | shares | (169) |
Number of shares, Forfeited | shares | (180) |
Number of shares outstanding, Ending balance | shares | 1,114 |
Stockholders' Equity - Performa
Stockholders' Equity - Performance-Based Restricted Stock Award Activity (Details) - Performance-Based Restricted Stock Units (PRSUs) [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of shares outstanding, Beginning balance | 765,000 | ||
Shares, Awarded at target | 369,000 | ||
Number of shares, Vested | (21,000) | (76,000) | (145,000) |
Number of shares, Forfeited | (126,000) | ||
Number of shares outstanding, Ending balance | 987,000 | 765,000 | |
Maximum Number of Shares Eligible to be Issued, Outstanding, Beginning balance | 1,462,000 | ||
Maximum Number of Shares Eligible to be Issued, Awarded at target | 479,000 | ||
Maximum Number of Shares Eligible to be Issued, Vested | (21,000) | ||
Maximum Number of Shares Eligible to be Issued, Forfeited | (262,000) | ||
Maximum Number of Shares Eligible to be Issued, Outstanding, Ending balance | 1,658,000 | 1,462,000 | |
Weighted average grant date fair value outstanding, Beginning balance | $ 52.62 | ||
Average Grant Date Fair Value, Awarded at target | 54.86 | ||
Average Grant Date Fair Value, Vested | 48.73 | ||
Average Grant Date Fair Value, Forfeited | 55.39 | ||
Weighted average grant date fair value outstanding, Ending balance | $ 56.88 | $ 52.62 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of stock option activity under all stock plans | ||
Underlying shares outstanding, Beginning balance | 178 | |
Underlying shares, exercised | (128) | |
Underlying shares, cancelled | (1) | |
Underlying shares outstanding, Ending balance | 49 | 178 |
Underlying shares exercisable, Ending balance | 49 | |
Underlying shares vested or expected to vest, Ending balance | 49 | |
Weighted average exercise price outstanding, Beginning balance | $ 35.41 | |
Weighted Average Exercise Price, exercised | 35.28 | |
Weighted Average Exercise Price, cancelled | 34.49 | |
Weighted Average Exercise Price outstanding, Ending balance | 35.76 | $ 35.41 |
Weighted Average Exercise Price option exercisable, Ending balance | 35.76 | |
Weighted Average Exercise price vested or expected to vest, Ending balance | $ 35.76 | |
Weighted Average Remaining Contractual Term outstanding, Beginning balance | 1 year 6 months 7 days | 1 year 3 months 29 days |
Weighted Average Remaining Contractual Term exercisable, Ending balance | 1 year 6 months 7 days | |
Weighted Average Remaining Contractual Term vested or expected to vest, Ending balance | 1 year 6 months 7 days | |
Aggregate Intrinsic Value outstanding | $ 680 | $ 4,105 |
Aggregate intrinsic value exercisable | 680 | |
Aggregate intrinsic value vested or expected to vest | $ 680 |
Stockholders' Equity - Assumpti
Stockholders' Equity - Assumptions Table (Details) - ESPP [Member] | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted average assumptions used to estimate fair value of stock options granted and stock purchase rights under ESPP | |||
Volatility | 33.00% | 26.00% | 29.00% |
Expected term (years) | 6 months | 6 months | 6 months |
Risk free interest rate | 1.80% | 0.90% | 0.40% |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Reserved for Future Issuance (Details) shares in Thousands | Dec. 31, 2018shares |
Common stock options: | |
Shares reserved for future issuance | 54,069 |
Stock Options [Member] | |
Common stock options: | |
Shares reserved for future issuance | 49 |
Restricted Stock Units And Performance-Based Restricted Stock Units [Member] | |
Common stock options: | |
Shares reserved for future issuance | 2,183 |
Available for Future Grant [Member] | |
Common stock options: | |
Shares reserved for future issuance | 3,752 |
ESPP [Member] | |
Common stock options: | |
Shares reserved for future issuance | 1,093 |
2.25% Senior Convertible Notes due 2021 [Member] | |
Common stock options: | |
Shares reserved for future issuance | 14,396 |
Senior Convertible Warrants Due 2021 [Member] | |
Common stock options: | |
Shares reserved for future issuance | 32,596 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Before Income Taxes By Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summarized details of income before income taxes by region | |||
United States | $ 8,939 | $ 76,480 | $ 77,610 |
Foreign | (216) | (4,117) | (12,830) |
Income before income taxes | $ 8,723 | $ 72,363 | $ 64,780 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax (Benefit) Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||
Federal | $ (4,188) | $ 5,972 | $ (14,837) |
State | 2,043 | 776 | 1,283 |
Foreign | 5,972 | 2,793 | 2,350 |
Total current provision | 3,827 | 9,541 | (11,204) |
Deferred: | |||
Federal | (5,944) | (1,565) | 40,363 |
State | (7,092) | (4,276) | 1,455 |
Foreign | (98,795) | (2,223) | (2,583) |
Total deferred provision | (111,831) | (8,064) | 39,235 |
Changes in tax rate | 258 | (14,668) | (216) |
Changes in valuation allowance | 103,990 | 5,699 | 1,494 |
Total (benefit) provision | $ (3,756) | $ (7,492) | $ 29,309 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax from Statutory Tax Rate to Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Tax provision at federal statutory rate | $ 1,832 | $ 25,327 | $ 22,673 |
Valuation allowance | 103,990 | 5,703 | 1,494 |
Net tax benefit on international restructuring | (97,028) | ||
Income tax reserves | (6,717) | 1,184 | 759 |
Income tax credits and incentives | (5,525) | (3,462) | (3,426) |
Return to provision adjustments | (4,180) | (2,443) | (1,188) |
Compensation expense | 2,008 | (5,619) | (8,013) |
Globalization initiative | 1,264 | 306 | 6,290 |
Nondeductible meals and entertainment | 769 | 922 | 1,013 |
Foreign tax rate differences from federal statutory rate | (688) | 378 | 605 |
Changes in tax rate | 258 | (14,668) | (216) |
Acquisition related charges | (221) | (489) | 5,167 |
State income tax | 90 | 3,553 | 3,245 |
Recovery of tax basis in United States subsidiary | (19,540) | ||
Other | 392 | 1,356 | 906 |
Total (benefit) provision | $ (3,756) | $ (7,492) | $ 29,309 |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Amortization | $ 106,769 | $ 6,742 |
General business and other credit carryforwards | 25,846 | 18,928 |
Stock-based compensation | 14,914 | 13,502 |
Inventory | 12,385 | 10,075 |
Net operating loss carryforwards | 7,516 | 14,991 |
Deferred rent | 4,628 | 2,532 |
Original issue discount | 3,322 | 4,606 |
Other | 23,241 | 14,859 |
Gross deferred tax assets | 198,621 | 86,235 |
Less valuation allowance | (120,233) | (16,247) |
Net deferred tax assets | 78,388 | 69,988 |
Deferred tax liabilities: | ||
Acquired intangibles | (42,767) | (53,076) |
Depreciation | (32,851) | (23,132) |
Other | (1,843) | (1,752) |
Total deferred tax liabilities | (77,461) | (77,960) |
Consolidated net deferred tax assets | 927 | |
Deferred Tax Liabilities Including Portion Attributable To Non Controlling Interest | (7,972) | |
Add deferred tax liability, net, attributable to non-controlling interests | 199 | |
Net deferred tax assets | $ 927 | |
Net deferred tax liabilities | $ (7,773) |
Income Taxes - Summary of Unrec
Income Taxes - Summary of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation Of Unrecognized Tax Benefits Excluding Amounts Pertaining To Examined Tax Returns Roll Forward | |||
Gross unrecognized tax benefits at beginning of period | $ 25,356 | $ 23,322 | $ 12,448 |
Increases in tax positions for prior years | 499 | 1,692 | 1,716 |
Decreases in tax positions for prior years | (756) | (24) | (270) |
Increases in tax positions for current year relating to ongoing operations | 1,913 | 968 | 6,205 |
Decreases in tax positions as a result of a lapse of statute of limitations | (6,446) | (402) | |
Increases in tax positions for current year relating to acquisitions | 169 | 3,223 | |
Decreases in tax positions due to settlements with taxing authorities | (1,190) | (200) | |
Gross unrecognized tax benefits period end | $ 19,545 | $ 25,356 | $ 23,322 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 30, 2018 | |
Income Taxes [Line Items] | ||||
Unrecognized tax benefits that would impact effective tax | $ 18,100 | $ 24,100 | $ 12,500 | |
Income tax, penalties and interest (benefit) expense | (500) | (100) | $ 300 | |
Income tax, penalties and interest accrued | 100 | 400 | ||
Remaining unrecognized tax positions | 800 | |||
Deferred tax assets | 198,621 | 86,235 | ||
Valuation allowance for deferred tax assets | 120,233 | $ 16,247 | ||
Income tax benefit associated with change in tax rate | 300 | |||
Increase in effective tax rate | 0.50% | |||
California Tax Authority [Member] | ||||
Income Taxes [Line Items] | ||||
Valuation allowance reserves recorded against net operating losses | 53,800 | |||
Net operating losses | 53,800 | |||
Net research and development carryforwards | 25,900 | |||
Valuation allowance reserves on tax credit carry forward amount | 25,900 | |||
Federal Tax Authority [Member] | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 2,300 | |||
Operating loss carryforwards expiration year | 2,020 | |||
Net research and development carryforwards | $ 22,300 | |||
Federal tax credit carryforwards, expiration year | 2,027 | |||
State and Local Jurisdiction [Member] | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 71,800 | |||
Operating loss carryforwards expiration year | 2,020 | |||
Foreign Tax Authority [Member] | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 6,800 | |||
Operating loss carryforwards expiration year | 2,020 | |||
ASU 2016-16 [Member] | ||||
Income Taxes [Line Items] | ||||
Deferred tax assets | $ 100,800 | |||
Valuation allowance for deferred tax assets | $ 96,700 |
Business Segment, Product and_2
Business Segment, Product and Geographic Information (Details Textual) | 12 Months Ended |
Dec. 31, 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 | 12 Months Ended | |||||||||||||||||
Dec. 31, 2018 | [1],[2],[3] | Sep. 30, 2018 | [1],[2],[3] | Jun. 30, 2018 | [1],[2],[3] | Mar. 31, 2018 | [1],[2],[3] | Dec. 31, 2017 | [4] | Sep. 30, 2017 | [4] | Jun. 30, 2017 | [4] | Mar. 31, 2017 | [4] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Entity Wide Information Revenue From External Customer [Line Items] | |||||||||||||||||||
Total revenue | $ 288,327 | $ 271,301 | $ 281,564 | $ 260,522 | $ 271,222 | $ 247,051 | $ 259,399 | $ 249,013 | $ 1,101,714 | $ 1,026,685 | $ 962,132 | ||||||||
Spinal Hardware [Member] | |||||||||||||||||||
Entity Wide Information Revenue From External Customer [Line Items] | |||||||||||||||||||
Total revenue | 788,650 | 737,534 | 683,703 | ||||||||||||||||
Surgical Support [Member] | |||||||||||||||||||
Entity Wide Information Revenue From External Customer [Line Items] | |||||||||||||||||||
Total revenue | $ 313,064 | $ 289,151 | $ 278,429 | ||||||||||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc. | ||||||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[3] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[4] | The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Business Segment, Product and_4
Business Segment, Product and Geographic Information - Schedule of Revenue and Net Property and Equipment by Geographical Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | [1],[2],[3] | Jun. 30, 2018 | [1],[2],[3] | Mar. 31, 2018 | [1],[2],[3] | Dec. 31, 2017 | Sep. 30, 2017 | [4] | Jun. 30, 2017 | [4] | Mar. 31, 2017 | [4] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||||||||||||||||
Revenue | $ 288,327 | [1],[2],[3] | $ 271,301 | $ 281,564 | $ 260,522 | $ 271,222 | [4] | $ 247,051 | $ 259,399 | $ 249,013 | $ 1,101,714 | $ 1,026,685 | $ 962,132 | ||||||
Property and Equipment, Net | 238,841 | 215,326 | 238,841 | 215,326 | |||||||||||||||
United States | |||||||||||||||||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||||||||||||||||
Revenue | 896,152 | 850,410 | 831,778 | ||||||||||||||||
Property and Equipment, Net | 200,404 | 179,891 | 200,404 | 179,891 | |||||||||||||||
International [Member] | |||||||||||||||||||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||||||||||||||||||
Revenue | 205,562 | 176,275 | $ 130,354 | ||||||||||||||||
Property and Equipment, Net | $ 38,437 | $ 35,435 | $ 38,437 | $ 35,435 | |||||||||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc. | ||||||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[3] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[4] | The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Contingencies (Details)
Contingencies (Details) - USD ($) | Dec. 06, 2018 | Feb. 13, 2018 | Jul. 05, 2016 | Mar. 18, 2016 | Feb. 19, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | May 31, 2018 | Mar. 31, 2018 |
Loss Contingencies [Line Items] | ||||||||||
Litigation accrual | $ 1,415,000 | $ 8,150,000 | ||||||||
Litigation accrual adjustment | (27,800,000) | (4,500,000) | $ 43,310,000 | |||||||
Madsen Medical, Inc. Litigation [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Settlement agreement, consideration | 27,800,000 | |||||||||
Litigation accrual | $ 27,800,000 | $ 29,000,000 | ||||||||
Litigation accrual adjustment | $ 27,800,000 | |||||||||
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 | |||||||||
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 | |||||||||
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 | |||||||||
Medtronic Litigation [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Settlement agreement, consideration | $ 4,500,000 | |||||||||
Litigation accrual adjustment | 43,300,000 | |||||||||
Medtronic Litigation [Member] | Minimum [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Litigation accrual | 45,000,000 | |||||||||
Medtronic Litigation [Member] | Maximum [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Litigation accrual | $ 88,300,000 | |||||||||
Securities Litigation [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Settlement agreement, consideration | $ 7,900,000 | |||||||||
Settlement funded by insurance proceeds | $ 7,900,000 |
Quarterly Data (unaudited) (Det
Quarterly Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2018 | [1],[2],[3] | Sep. 30, 2018 | [1],[2],[3] | Jun. 30, 2018 | [1],[2],[3] | Mar. 31, 2018 | [1],[2],[3] | Dec. 31, 2017 | [4] | Sep. 30, 2017 | [4] | Jun. 30, 2017 | [4] | Mar. 31, 2017 | [4] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||
Revenue | $ 288,327 | $ 271,301 | $ 281,564 | $ 260,522 | $ 271,222 | $ 247,051 | $ 259,399 | $ 249,013 | $ 1,101,714 | $ 1,026,685 | $ 962,132 | ||||||||
Gross profit | 202,198 | 197,141 | 204,508 | 186,708 | 195,917 | 181,544 | 193,213 | 187,570 | 790,555 | 758,244 | 722,027 | ||||||||
Consolidated net (loss) income | $ 12,157 | $ 15,923 | $ 11,531 | $ (27,132) | 23,041 | 33,096 | 11,735 | 11,983 | 12,479 | 79,855 | 35,471 | ||||||||
Net income attributable to NuVasive, Inc. | $ 23,477 | $ 33,528 | $ 12,167 | $ 12,426 | $ 12,479 | $ 81,598 | $ 37,192 | ||||||||||||
Basic net (loss) income per common | $ 0.24 | $ 0.31 | $ 0.22 | $ (0.53) | $ 0.46 | $ 0.66 | $ 0.24 | $ 0.25 | $ 0.24 | $ 1.60 | $ 0.74 | ||||||||
Diluted net (loss) income per common share | $ 0.23 | $ 0.30 | $ 0.22 | $ (0.53) | $ 0.45 | $ 0.64 | $ 0.21 | $ 0.22 | $ 0.24 | $ 1.48 | $ 0.69 | ||||||||
[1] | Consolidated financial results include a litigation charge of $27.8 million in connection with the settlement of all outstanding litigation matters with Madsen Medical, Inc. | ||||||||||||||||||
[2] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 does not contain any results attributable to non-controlling interests. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[3] | The unaudited quarterly financial data set forth for the year ended December 31, 2018 includes the operations and results of the Company’s 2018 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. | ||||||||||||||||||
[4] | The unaudited quarterly financial data set forth for the year ended December 31, 2017 includes the operations and results of the Company’s 2017 acquisitions from their respective dates of acquisition. See Note 4 to the Consolidated Financial Statements included in this Annual Report for further discussion. |
Quarterly Data (unaudited) (Par
Quarterly Data (unaudited) (Paranthetical) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information [Line Items] | |||
Litigation charge in connection with settlement | $ (27,800) | $ (4,500) | $ 43,310 |
Madsen Medical, Inc. Litigation [Member] | |||
Quarterly Financial Information [Line Items] | |||
Litigation charge in connection with settlement | $ 27,800 |