NUVA - Earnings call transcript Q2 2020

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Operator

Greetings and welcome to the NuVasive, Inc Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Suzanne Hatcher, Vice President of Internal and External Affairs. you. Thank

begin. may You

Suzanne Hatcher

filed to press quarter earlier release, on has is Welcome Securities with The Exchange and this earnings company's posted Commission. been and website earnings which our Form NuVasive's you. X-K XXXX the second call. afternoon, on Thank we issued

up as and Matt website Barry; if Then other begin also remarks with is differ implied to particular, posted statements. joining materialize be results or IR call. from duration In pandemic from our information could not by The during discussions portion I and those include based Q&A that prove and would and discussion. call risks assumptions Harbaugh. today's our that on financials. for business, involve and to do to are forward-looking operations our continues the cause expressed best pandemic on COVID-XX uncertainties, today's important financial Link, COVID-XX you on have uncertainty accompany us President of and open We're of Chris CFO, current or statements, which like prepared around the NuVasive's forward-looking will our to estimate reflects materially Matt during to We expectations will date. factors, note it's the correct, they commentary the that such significant the which CEO, supplemental there remind company's to with going impact of to evolve,

Principles, discussion found and financial any speaks or will NuVasive non-GAAP GAAP. no not Additional which of described per cost the and and and results their or the our financial filings as also that in sales, call earnings These Commission. goods Accounting and research measures measures. sold, free GAAP today’s supplementary directly are We risks most financial expenses, with NuVasive’s EBITDA. accordance to administrative assumes include This are are share, as flow like affect Securities Generally refer that, marketing generally these of call include Accepted Investor releases of the expenses, financial non-GAAP dates. Relations uncertainties to several update periodic NuVasive’s information a information, to margin, news development calculated in release With in website. cash margin, comparable measures over respective section may gross forward-looking operating future to the from turn I’d and news measures be Reconciliations Chris. with accessible obligation statements to may that Exchange the which and

Chris Barry

Good hope during for and Suzanne. everyone, safe your to us. stay continue and these you afternoon, thank joining you, healthy I family times. you, friends Thank all and of can

quarter, operational hospital and from second employees keeping the steps taking physical NuVasive build employees setting. and NuVasive important is into continue while including and our as particularly we our the our to second with to in now customers and Harbaugh, business, preliminary make I'd on strategies of shaping call the performance, will we remainder progress quarter that the health meet of to line forward performance will XX. agency of or financial local a normal, up live guidelines. through which cash new now extending and spread who government like over local operating to quarter to the turn within safety the the at who liquidity Moving third This July exceed position. second adjust share serve to in support the Matt the level demonstrated. on I commentary is safety and COVID-XX and of instituting to sites home results help for and our year globally, implementing announced the the a on options to amongst And employees have and with our related communities our within protocols work financial financial is also the then by impressed teams continue and minimize adaptability be further the I I our quarter discuss forefront. we productivity how priorities. to will turn discussing work quarter at XXXX the XXXX and processes

prior elective. As by as down on with was substantial cases a through expected med June. earnings volumes to experienced large volumes in The our last April hit and in drove XX% and business at May we good impact a call, from year. The nearly technology news surgery as COVID-XX due communicated the is tech rate continued a hardest improve nearly on sales procedure our and are supported of increased all companies, services temporary, but which to portion net considered throughout decline the month-to-date, pandemic significant

COVID-XX. represented steady Local fairly remained sales that While pockets to procedural the July to were the low for June exit double-digit June. still a from returned impact decline volumes and in geographical rate in year-over-year there net business, the month on in from similar based growth

regular the on to like us actively may continue basis short business partners surgeon our We a look engage over next the better gives a months. that understanding and few with data of what

the the business While procedural to by taper, uncertain year. to gradually remains the will to of it over and end the improved return trend whether growth quarter July, line into is it second is and have the understand important starting

based to patient optimistic start work the and of backlog hospital to remain for demand in reaching out them several many continue patients, into I pre with COVID-XX with, of volume control. spine our signaling ongoing surgery. of through willingness go levels, surgery While on better-than-anticipated factors, hospitals To an this for is

spine in deformity elective surgery cases. when fusions, resumed including uncertainty broadening clinical the a say fusion to occurring of On patient the cases first we're level future addition the simpler seeing a cases, continue of are partners and multilevel compared volumes. service complex variety to now greater creating volumes in surgeries of May, that to note, surgeon new and remain positive in hospitals many lines, suppressed, However, their

positive hospital varying operate procedures last in over hospital the cases in cities the within and certain in certain the recent situations weeks, and COVID-XX lack With few city. hospitals same government between that protocols localized increase uniformity mandates continue responses more with

Looking play may uncertain affect even Again, the unemployment COVID loss we pointing spine here that a recovery surgery signs that of some including to optimistic overall, coverage. long and issues but out. how to it's takeaway uncertain care, the see some I'm health the pre given further level is it take ahead, insurance broader it's variables will of need further how given positive market,

this to efforts innovation discussing Now, company's I other the year. priorities transition like and for the would remainder to of

less committed on of R& are start capabilities company. the in the the the online spine executing for on a campaign providers remain Last as on continue key growth our of leader level the technology to innovation resources investment than traditional continue map. strategic invasive efficiencies surgeons We more This Time for to of at includes system to all surgery budgeted benefits posterior which our surgery Evolve. Its focus important to stay, driver that be virtual and to titled, new reduced NuVasive technologies over including beginning is The focused to highly surgery of As year maintaining make and plan pandemic, month, of invasive of road blood progress time, our training the since solid NuVasive five-year are through continue to against launched operative enabling enhanced D hospitals communicated invasive our on position spinal XXXX ever health approaches, campaign to educate loss key and length differentiated and solutions spine. open less the hardware care less before. and the a

NuVasive's engagement, less techniques interacting As part the and and learning team targeted peer-to-peer professional of its clinical training has modules, webinar weekly new cadaveric development online courses through development resources, series. on invasive trainings expanded

care series Our by been recent thousands health of and received webinar viewed partners. have positively

increased requests have addition, seen quarter. the last In we globally over in-person training

room techniques single further spine involving correction our multi-step We're system deformities innovation spinal launched about the surgeons our fixation into Reliant posterior plane patients the new QX. operating the launched X current global year. to current from recently complex system that in Turning procedure, technologies for holistic to The suffering have portfolio. or the XD in launch and The excited unifies map. enabling in of overcome inefficiencies expands half pediatric will second deformity road

gaining In year. with in surgeons launches the traction addition, despite are still pandemic the shutdown earlier alpha surgery and elective

the retractor innovation the be next-generation will end interface MAS help cervical trauma deformity XXXX degenerative both address the commercially This also to and the fixation interior degenerative will year. surgeons workflow cervical functionality, help We're user off simplified offer to the an the a in streamline system. continue lateral to pathologies kick soon preparing surgeons cases. deformity and enhanced lateral of phase leader by better treat had latest to advancement plate We and and surgery access posterior our to launch system of alpha retractor and

its transforming out portfolio in peak continue the A, will entering market technology. O NuVasive with momentum rounding addition, TLIF coherent alpha clinical proprietary for course TLIF the into of launches this and TLIF our benefits In by

to Pulse Robotics a the and Finally, application. I'd give system like on update status Pulse

impact As and testing, shifted in and line. FDA wrap and up indicated half following is the to well of to software acquired time of This now as we obtain factors, Pulse, time testing to expect it have beta COVID-XX. updates due previously the as the clearances relates to including summer several first our compared XXXX, slightly XXXX line hardware

previously refine in system. pulled the hospitals communicated system the As further February, back for in beta we to testing

since for the environment, require anticipate To still the revenue our additional in current the back system, system application shift on of resources setting. XXX impact work above full for and further our testing and Pulse clinical instituted recognizing We previously beta (k) XXXX, line obtain the to to we from the opportunity remain allowed technology keep had additional in from in the that enhancements FDA confident We and half on time as robotic have time given to in release communicated. COVID-XX the time. market Pulse revenue line the of to time the commitment we've submissions clearances generation Pulse and system on

environment. some to COVID-XX the experienced We also related hiring challenges

first-in-man As a delay in the applications line. a of likely use robotics XXXX result, the time expect into we

to X time progress months better this line. milestones development next relative Our over inform to will the X

automation looking strategy. the and priority We frame bring imaging, as to opportunities navigation our for additional time robotics a is are key forward, for development also

manufacturing continue including the their Finally, patients. execute leading backlog from work them global to operations customers distribution demand help to through of and well,

high. growth this excellence on business leadership technologies, to international the launch improvements I plan to spine strategy. quarter. We'll deployment control chain life-changing with the to our Its the procedural and milestones was European The remains is benefits These Matt. is continue steps U.S. With turn both to chain continue patients spine warehouse pilot not purpose now navigate fundamentals in I'd position In achieved The help the company demand quarter throughout were long-term this going innovative important company's an the opportunity new warehouse MDR also leveraging our supply And supply critical to call the the can optimistic environment on to surgery over including we advance need centers. further spread around the impacted readiness, our focus and educate European packaging to market certification and are to addition, global made and operational automated reiterate procedures the address of volumes surge regulatory are obtained. scanning sterile third like and fulfill by long-term in of that, that world. and our a that, away. a optimization, with to several are stabilize to to With COVID-XX, while strategy fourth efforts sound. and improve want for enable less-invasive COVID-XX of distribution and are process in

Matt Harbaugh

good everyone. and Chris, Thanks, afternoon,

in news get on financial the information Before information noted for non-GAAP many me financial with a release on as refer supplemental further today's to well that earnings as let otherwise. the covered remind non-GAAP today's the release call of as we regarding Please you basis reconciliations. are unless www.nuvasive.com started financials, measures well

globe recovery were sales varying regions to levels by recovery. driven widespread basis, quarter as million, throughout XX.X% due constant net April's COVID-XX. the the down currency reported XX.X% represent of results the year-over-year on to These through a $XXX.X around from demonstrate as June, of elective For low XXXX, second continual reopen and quarter and a point began surgeries deferral the

such as million. month pandemic $XXX.X individual the recovery net throughout did of NuVasive's we growth product we let in hardware impacted to and pediatrics some reach Although within last year-over-year Spinal any the trend. net experienced the declined by further sales less Returning cervical the versus not improving quarter. XX% U.S. to by Certain in color. business sales portfolio, were portions quicker quarter, the results me year encouraged and were provide particular,

$XX.X a alpha complex maintain from sales validate As the driver to and market surgical services responsive a at environment. for this surgical customers the with be including prior payer NuVasive for key pillar advancements and lift, demonstrates dynamics. a contributions the willingness a of NuVasive COVID-XX solutions primarily of long-term of and the to expect key quarter, over company's decline online, budgeted year. end more levels very was NuVasive's in differentiator our the came Modulus new cover and The driven strategy deformity XLIF result to latest several come The clinical throughout to a business, to improved utilize Equally, trend by the remains funding support this this support all year. surgeon during This patient as adopt and leadership. XXXX be further the continues to of for business, volumes in impact hospital million, continues the continue Net ongoing quarter, working while surgeries mix navigating time. less-invasive this team to goal continue improving remainder XX.X% products of the of R&D it uncertain and technology we U.S. outcomes. Innovation to

continued In during and to this addition, business NCS time. efficiencies operational drive

constant like Japan to New on XX.X% currency second Net trends and year-over-year In more and from is other continues the Similar our saw million to March International. and and parts earnings year-over-year evolve quarter, basis. last while the saw and and a we not sales evident and quarter, $XX.X is throughout in Northern impact XX.X% United Australia, to response to negatively Europe to on for Turning discussed call, on Zealand; reported the it Europe, pandemic. uniform Latin impacted. based Southern we as geographies solid regions were local declining across the recovery all were Kingdom particular, America performance the

continuing $XX resulting quarter, excess product After new hand, rest for around approximately decline decrease XX.X%, assumptions, the impacts. a obsolete of it towards our second cycles, uncertainties in and future prior pandemic assess product XX% life of when a This the adequacy introductions to was older inventory factors related compared inventory included product every quantities of including Turning million year. and demand, examining anticipated on of Non-GAAP the and margin to historical led turnover, We and quarter of focused primarily number in the to inbuilt previous gross from efforts the on quarter. was which our increase lines. P&L. reserves us reserve incremental for inventory

expenses previously some you which know, reductions SG&A from by operating April by decreased This the As to itself sales, prides Non-GAAP actions with $XXX.X innovation, deliberately expense million continual in NuVasive obsolete to expenses. taken product variable coupled could of $XX.X year by inherently products the end their on useful prior to compared COVID-XX driven on net life. prior impact decrease management million. primarily to was anticipated of

quarter. our over the point care. second this A investment, commitment earlier or we the continue the As totaled technologies in in actions of development $XX.X discretionary reduce for research increase sales and net approximately officers implemented we to organization. in shape future as compensation total million R&D quarter, year uncertain well or to Board expenses, prior noted reductions even that innovative further spine R&D across of and developing including environment as demonstrates executive our spend Non-GAAP X.X% expenses reducing XXX maintaining basis the to

loss non-GAAP for the or a or loss year. non-GAAP million prior year $XX.X $XX.X was gain quarter income million XX.X% of second in non-GAAP Second came quarter, a quarter $XX.X Non-GAAP or last a $X.XX tax $XX.X non-GAAP to per tax the tax at operating net compared in net non-GAAP diluted rate year. resulting million same $X.X to the per versus earnings million, the of in XX%. of negative compared prior X.X% of loss of non-GAAP as or share rate XX.X% In share of period margin diluted benefit of a $X.XX effective million the company in reported negative the

Turning share was period of second a for the results. of per or to million earnings loss to same net of diluted last GAAP quarter $X.XX GAAP income XXXX GAAP year. the net or $X.XX net GAAP loss $XX in diluted share compared million, $XX of per

was quarter the million cash flow for the year. versus Finally, $XX.X free prior million second $X.X in

expenditures at our capital remained impact collections maintaining Our our in a cash the while quarter working throughout of cash Notably, United mitigate on and flow operating same the stable focus was positive States. free to the in result time, both metrics. reducing capital of the strong, the particularly quarter, COVID-XX

opening response volumes region, XXXX, to is how volumes the for guidance in be III predict levels. guidance state we pandemic Phase can or hospital. reinstituting As stages given this this by when are relates the quickly return case remainder it unable of are even to will and time, at for The to of limited continues vary their company not and various countries time more to as to case at visibility normalized

We our on an garner administrators on basis to the evolving commercial recoveries local help are market with forecast our speaking and XXXX hospital shape ongoing for information and teams surgeons, to beyond.

from things give cash July, we third discuss we forward we where take to for patients saw NuVasive's exited in want with we the And April take continue this a the and some anticipate for I but turn into is if in from June. Obviously, are in turn worse, unless quarter. volumes will hold. The good seen things optimistic for insight current see continue we spine trends hospitals remained have thinking far are news lows From volume Before are the decline, that third push surgery we surgery. to and off the what we that stable that to a volumes how position, volumes I could quarter, about surgical worse. throughout

as return As market variables such normalized Chris rate sentiment, the more shared, coverage are loss many of directly at and the case that patient still volumes. could there insurance spine which impact effects of to unemployment

hand, May, and of to completed XXXX. cash the liquidity million further maintained ended to capital and steps position. In NuVasive with of credit an $XXX of XXXX cash cash took investments our debt short-term with NuVasive on turning position for and $XXX additional undrawn million solidify due late revolving equivalents convertible facility company's convertible March million. a preparation structure and notes the in in quarter Now $XXX strong cash, due in offering an $XXX notes million the repaying of along

second the In improvement facility and revolving overall in our case allows June. date further third improvement COVID-XX health most to company of than rate to originally its in NuVasive acute an anticipated XXXX. financial long-term amendment experienced approach determining far million this raise faster short-term access impacts flexibility us in on provide entered of of current the at May, leverage April along covenant confident This with In the additional but investments. navigate I the early a with into provides capital volume the quarters the conclusion, for with business, liquidity NuVasive financial and flexibility the $XXX pandemic are recognized to taking how credit am disciplined environment. we sheet balance for in the to financial to and ratios revolver additional in needs its plan improved our meet addition, the

cautiously our the recovery from of surgeons NuVasive's are develop road to innovation this map and time this are patients. team's to works for momentum and delivering to optimistic by continue remain who guide the our to XXXX. alternative strategy We of using remainder approaches commitments shape on continue long-term and encouraged

and and overcoming in environment. you. strength change surgery, uphold to challenges throughout session. to turn Lastly, And to transform back resiliency within NuVasive opportunity is around with recognize advanced that, care uptick the the customers teams in new Q&A the their surgeon this to working It this commitment, like operator lives I want continues demand patients purpose to global of rally patients who take this call our the world. I'd the Thank and start meet to to over and for with collective our quarter the the to

Operator

[Operator Please with Instructions] line proceed with the your come David Our question. Stanley. from first of questions Lewis Morgan

DavidLewis

And with Chris more flesh part talked as out some remainder the Okay. it wants trend Thanks for in relates you've sort Thanks through in a been Or that maybe taking recovery just to I de versus in seeing to the peers stability mean much. then certain more stable how in related obviously us recovery versus we patients? wondering just patients of it novo you And to resurgence of areas? month of little the think of XQ. looking that the the reschedule I'm you the do 'XX pocket of relates assumptions just the any into understand for July, the year? June. as as kind help of consistent backlog your that, view go question. bit dynamics you're in to here. so reflects early about July that

ChrisBarry

David. Thanks, the for question. Thanks

as would continue continuous say, for through though, June will of if I of have that kind the month-over-month, sort recovery. uniformity seen statements, still July. you As a prepared we looking -- saw and to I that improvement talked about the through of some we're we

it crest that meaning volume tapered, yet And continued still although saw some that -- that to and lot was of to patients. a backlog acceleration truly June acceleration of has of I into seeing the volume. really you're the we the June. previous of although I think year So more to good we're normalized That's still July, through believe that volume, of recovery

now back to is X%, that I QX XX% volume. year's us question really get July. I mix The significant a previous seeing in volume of think less have in to you're in

out get question, but unemployment, think anywhere see, not challenging well. I previous you're There certain where year's have that near we seeing me, are certain volume for the going it's of potential in the the some resurgence how me I that's think to are of we are with I be frame. still, With potential impact insurance. to uncertainties by were to to specifically, although challenging in to variables of the see the loss go the those fully April election, of back think they that QX. fairly would don't markets, of the time markets everything some

they're may still So truly Florida the you're an half of area reflect the creative. That seeing September, October and year. We understand impact into California. being of don't like what in and into the back

So because was to I'm previous we by I'm as this optimistic uncertain and last that more to optimistic fourth at when back truly talked year's quarter. ability of. the still uncertainties spoke I But time than quarter I somewhat of volume climb those our into

MattHarbaugh

David, this Harbaugh. Yes, Matt is

is Harbaugh. Sorry, Matt this

Sorry, David.

DavidLewis

to more you're important Matt, me. ahead, Go

MattHarbaugh

at the a returning the things to at right was I say I is, where levels. points your would gets the core year, just really business back appears the really say not the What quarter, to And kind hard it is we're going quarter of made. which say to now more Chris normalized predict see QX fourth question, thinking No, all of are look all. that half would that your to at. And bit about we I stronger consensus, for than as just third to of kind we the when of

Operator

Thank you.

questions. your has Our of line the Matt of with from next proceed come Please Credit question Miksic Suisse.

MattMiksic

much. Thanks so

I Chris, on and that that's get beta is you putting parts. and that line. difficult. changing. to the time maybe the the you understand understand of docs time to one line? the -- Just done maybe on need to pipeline, could, I can other hold your I get feel moving could if some I follow-up, out, you reps at push the feedback what reps of but testing Pulse confident and the wanted time of you is follow-up, need allows -- there's lines and been could. to have more how commercial to comments laid the Access Just in help lot that, elements that been a this environment the you And centers you've us beta because quick maybe if guess, I point, if commercial

ChrisBarry

question. for Thanks the Sure.

to the of and previously in mentioned, the the licenses we As some last add some following level I that different, spring we partner summer expect early of including testing updates obtain XXXX discussed require the some did the beta not approvals. been and of updates drastically kind hardware line, factors, and quarter. required some although some updated up time wrap but additional does of communicated, software we all software Making our there. testing some time what's Again, component and FDA

little very to a time sure it built make have of last to we We've So bit there. of line. in that that couple staying over also the resources up time we're close

buffer to summer. back clinical some line, challenges are the obvious I of Now through there lines get those time as time process around from the in I think, into in year, maintaining FDA the and the we and provides things that environmental see level still the setting clearance COVID-XX progressed but all early that we the built communicated

COVID-XX buffer of the all I first I and to getting If beta plus the that of we that setting clinical around because sight you remember the right clear bit and done. on some these challenges of from queue. before, little plan the the sites mentioned a things get built just environment think have believe of half; things to testing, it was I our But line we we a of some

to independent NuVasive. It's a platform needs. guidance this feel customize But a each unique Obviously, is for optimized that, and It's about, a a providing process clearly access imaging, having wireless I surgical said of confident. very one innovative very open platform. So as a learning kind. workflow, or been unique we talked

every is think last as to through worked and we've several over because goes this But I our that now years, retire risk a point system. where quarters So up. and day fairly Bob we're getting confidence the it sophisticated the

don't had any to know, I the commercialization? So Matt if our sight of actual you line to comments pathway on

MattHarbaugh

Chris. Yes,

against progress have are milestones. I points, major all critical the be think to on -- you which make we to continued hit able

the respect variability the next I time our into time think that, into consideration and of has our appropriately to of first some But environment, for which the into line for we've appropriately half that updated line has level certainly consideration our milestone. given year the been I in access taken confident time, feel with accommodated current like. summer

as will I towards as this point, feel our forward. to -- Chris, continue end. we like resourced and approach time to commented, So at And that that look work line derisked we appropriately we've you

MattMiksic

a on That's super just And helpful. follow-up. quickly then

efficiencies Just differently any or of to that, part be continuous doing color and part help with efficient be of been in helping in and you're that have surgeons centers kind have brings you a more of the the strategies and can centers been interactions helping provide whether of a this this system on things environment? digital a environment XXXX keep some catalyst been up

ChrisBarry

first on embracing the this I take Matt have I'll comment and it, are I'll crisis. how by our are XXXX how accentuated part been of surgeon partners customers and then our and has actually that, think,

to partners top-notch historically support delivering first done prided our the was going a an we've people was education in that And I that us setting. spot for and They us clinical organization. bright think development the coming that professional through clinical work San on-site continuing ourselves on team. basically impediment a and I with that or Diego, staff. the one-on-one hospital providing engagement, education. think, us for And limitation has clearly, an On to been, our this certain we've in as question, support specifically NuVasive,

our think, We was capability the our very the series capability I and creative. with team So accelerated webinar developed. really, that the digital team online

ongoing Our sessions. virtual training

overwhelmingly has mean, to of surgeons their I positive. And -- and been were receptivity the response things incredible those me. the of All our numbers

that population, and just much So been higher, which driven it surgeon let's of training more, -- out requests we're what this seeing, one-on-one say, is has now also vetted a has our for coming crisis. never

us a Now be capabilities into build and us clinical the we're still CPD, what and we'll best limited, for team practice upon practice will professional and they forward. work somewhat think best something but I development did, for our going a that went our

also strategy. but better enhances I that domestic So of up capability our part our gears I that's is not needed. for really us only it the some of we expansion global that programs, the believe education believe

So the XXXX, And want to I core I'm dividends pay do it's future. on capability will we've please? with that shown. and how for a talk in Matt, impressed creativity team us the the has you think responded the

MattHarbaugh

Yes.

So comments the made, made, Chris. I'll echo you again, you all

trade historical well technologies these and showcasing conferences, been so customers done shift think education, but a shows all and about sort a our of pivoting the of in to dramatic the engagement critical. a team environment traditional of products the have with as to digital to I digital virtual sort and have our has model our platform which and has and also been and strategies how shifted commercial respect and both think through platforms remarkable training with job to digital developing

existing procedural faculty As of training to has approach, and leveraging also faculty pillar been helped that it that but different our our and train indication sort of build education, applications strategy, relates XLIF criteria. digital XXXX, terms a and -- has within the and training, develop both of the our key editorial in for clinical

at And engage of experience of and terms prepared new ability environment if Chris' to training. of while groups you all surgeons know, comments, have the year and in of part a not As limitations to were early some many of cause for training the customer open center. this we our you, showcase to

and center didactic well share to broadcast able platform and training the both individuals. sites training U.S. the been that globe. groups And out have and learners and the facility technology that around other as that small a from of to We as is across to allows center and cadaveric aspect do experience us

and And to elective training weeks up, trainings concerns are higher so associated surgeries. certainly, bring the market respect curriculum, that facilities several non-NuVasive leveraging customers a local, a opened then a we're and has we've traditional scheduled shift. to over of further seen months our pretty mitigate utilizing the of that closer risk we've number With as obviously seen and up, we've And the resumption resumption opened of seen with last significant travel. our higher to and

for but starting targeted We who in process development training our team in engagements the incorporating development the practice a types out and not our Pacific. XXXX Asia activities activities including to do permissive environment of in surgeons leverage have or XXXX organization, are XLIF field interested to been able either as and we're focused with more training to to and get U.S., and and commercial just those in well their that's see Europe and as open on

Operator

Thank you.

Our with proceed next questions Cowen. come from the question. line of Please Josh Jennings your with

JoshJennings

July, if about June as intra-quarter that case about force It your cases afternoon. where Hi, you follow-up, more in ask for you some then degenerative sales trend you during getting where relative you relative like that your well. just hoping pre-COVID you think those by are revenue more to And sit and exiting just complex multilevel into trends. to mix. today? NuVasive? about per you it Because just is that and on thanks, look was cases, the I you're mentioned think sounds Can the into pace you're on par? recovery as help good downturn, Chris, asking treated us And seeing And you sales July the about incentivization. to to force start

be taking support April about growth Are May can the them XXXX into them think the here How period thinking about Anything we in thinking help growth force You XXXX? questions. incentivizing and you of half for move are those Thanks this sequential help targets, about as into targets? that back year-over-year great. during incentivization you us would you months. sales

ChrisBarry

least the at I'm at and going question, mix with that now a is I it to cases, of lines coming just brings generally where to the going engaged. pre-COVID which out us look so full-service is more fusion levels, volume promising Josh. to – which of to a lot simpler now It's to one, it in Link now of per speak more at. just revenue case, Thanks, pick have the so line the normalized. so cases really It's this closest I'm Matt I'll is Matt more a skewed June, it, optimism cases, are was way we're that robust seeing

and So roughly pre-COVID revenue this. we're me Matt, case. in on per at check you – a roughly We're can level

one. As to the I'll far sales speak let force, as you Matt, that

MattHarbaugh

Yes.

an and steady per adolescent pre back would procedures. to deformity a case of are earlier little of the recovery and patients, of We per to sub of and Just and the to number levels sort adult comments, indicator saw rebound or back population levels. bit complex the revenue of revenue per case sort pediatric, some more confirm flow of we've with COVID complex in start line our your include We've seen the a with through now. seen some which risk that lower of of case

the would we dimensions Fortunately, for sales the recovery the we us, incentives half as primary of as incentive see the volume. back and in think the want our of I targeting about design naturally think to compensation, fully supports about it recovery we that and think recovery force relates – compensation appropriate through participating to year, really two activities and in when

activities it conversions. year supplier to share invasive focus of So become for And the teams. that's technology existing then, breadth less all to in and invasive our cases of are continue because within to we preferred part of reflected as compensation to market supported design those and the and instances, execute also technology the our plans we some maybe had look, coming a competitive of in shifting procedures. support portfolio, able we want to on all had relates minimally And against into types further

of look I certainly support improvement the And the would United to and into believe year just that the said, U.S., we so across the as but no not Chris continued the XXXX. the growth But and expect half markets incentivized States, through material back as changes. the outside incentives we

Operator

you. Thank

with Our proceed comes O'Brien your question line Please from Piper Matthew the next Sandler. of with question.

MatthewO'Brien

Good afternoon. Thanks for taking the question.

commentary. Pulse the on point finer a put Robotics to Just

Globus to a the first on side. delay You're not company Robotics did. the suffer

at I Medtronic been system when were There think, Robotic surgical with there. there. the have you Chris, delays

not I I that's the been issues, little surprising. to the is is But when been hear overly because the commentary that's fix. hardware that's me fixable, a concerning but to So software stuff bit difficult software think area more

time have So for that being system get to of taking share. the summer that frame. XXXX software then do how figured how out products strongly to the are robot, you this get of a And how to maybe a continuing there waiting you share Can with to in Thank about on really few piece delay months, enough to related? market share of forward position the keep be and the the market? you much without that a is feel other you for able going companies market focus robot, having take that in And to XXXX a get out couple convicted as and you. cervical that to on equation be you're

ChrisBarry

In learning Great Yes. lot I had to become particular companies Meditech a for Hill -- case, a better this becomes question. software think clearly, the level year. think actually software we this of a lot component And and Achilles developer. how a

the So changes change. to component are the related software

But then software change does to that overall this we feel is the extension very That software go within some a very adjust. to component spurred several first. to had stable, when out system, been stable. change pull as got back Pulse running get the that We about the pulled and XXX(k) the obviously robotics of developed we're over and back. then a but didn't pulled requirements in of figured integrated gap of Robotics we mitigate so architecture We the level case. left that But And that pathways, program. to good the as we on resources really an has software system the with application you the bit created. our We're have a the that now Pulse

the resource and much stability situation maintaining Now I sit I also today, some and had that to here our with as we commitment organizational COVID-XX changes financial as had the understanding could.

over a robotic next X All being more of that the the application we'll lot about said, X months. to know

when not to time we we get do earlier much chance to about can line what a better robotic have back feel date. the I So pull into really will more an assessment

it's today, not that As I delight. it sit just it's -- here does create --

markets. certain in to at in grow don't Now application. hurting we're they're environment least some now, the current laser But capital having one not today's and given Right navigation, the they're robotics, opportunity our that, continue an us to today, se We're few cover. their cost. has without and the focused, of that get strategies. today's me At seeing restraints take is they robotic we're we're of and to the said our least all -- wrong, us of automation not share some favor But environment, things -- represent dedicated but although environment our robotic per able probably today, business. work level

know. don't we last, will that long how Now

as of and creative. on the our bringing assessments making talented So And we're we as year, the most year, not successful. half first being last the of first the new can products. got fairly on engineers be we working into We've But half into as I'm projects. a look of I half we talent next have of significant concerned won't those on overly next the that and aggressive sure as making amount

where we're new we're well products continue this cervical to in receptivity that We the very growth and good in XXXX launched market. signs showing year are our seeing The great we've do and technologies. in and later proliferate continue our of QX, portfolio to launching

products can see we get for these There in we And we our these be works gap gaps situation are actually favor regard. in need portfolio. to confident in within onto mitigate time. projects our the think this But I the the that to COVID-XX market. So clear, I'm

strategy timelines if we're it's bring question not can. Our where, it's when close these so a for are inclusive we technologies, we can of proceduralization of pulling as and as lever these us, every to

Operator

Thank you.

line proceed Our with next question. Rose your with Kyle from comes question of Canaccord. the Please

KyleRose

for much very questions. you Thank the Great. taking

commercial understand the delay. the if One, just help you of two-part some line how understand there. reasoning questions, me. Paul's Just us could Maybe the about think question also with you for model for the I in

or the utilization on model total towards of talked side joint model the leasing. Some or competitors, the the looking maybe side robotics about increasingly have placement the customers on

increased As market. well the as some outpatient interest in

parts there. the that in around Just XXXX and see that provided And an you. some you you to you've perspective? other using color the of application also opportunity percentage the from then, of Thank Pulse wondering the if historically, business. give wanted or robotics commercial then surgeons to could model capture update see us how a I

ChrisBarry

Matt, several a can don't changes the over there's XXXX speak I been in cover the then, months. any course piece. seen to him the last lot. know, I'll we've first that again, Sure. of And have I

As far commercial lot models. as more placement model, yeah, seeing a the you're

that will hangover think will of I a revenue the – from opinion, facing. gaps continue significant will hospitals have as have in some they're my that

I a think placement precipitate will can. That they'll capital where model. be constraining they

place share the than think, more spine market, at and of Now, fragmentation opportunity. that, for share more me, it's having I willing said more some systems I'm for wallet, to share. the specifically, the point an of market, greater predictable for

– our ultimately, and as geography and that – our we’ll proceduralization strategy, surgical to capabilities, most the system we’re capture possible our hardware I to the the technology as of as the the -- So monitoring want whole then patient to we create consider best and leverage to technology, to much Pulse possible robotic outcomes. application part really try parcel

hasn't. of we're that volume entirety into the for So relative fragmentation as competition, already our already portfolio. going as within continue. spine placement our looking I I And the – the to get our current spine coming continue signals more that, the commitments. I our increase of with would It flexible point in we're I market you’ve it. robotics, to market, before, but will guess, as in, the the mean, with exchange position that to environment we'll as coming and across I and will be idea accelerate to you within said world the proliferate possible think think, seen the – in including specifically all system And

you any we've on Matt, XXXX and comment to want changes So, seen?

ChrisBarry

Yes.

The who continue the procedural that a training perspective, I question. comments, in to and in to of specifically we've respect how see with seen from is for a change will to caveat a beam, been have leakage. say, decrease able customers shift So them any access seen prior to with Chris, impact with increased your material we've and those already respect obviously don't we're strategy. What I or benefit and QX, that covered pull-through to pretty though, our think profound our we've interact of trained, we

we So range continue the procedure we address to their position surgeons for a entire capturing cases. single pathologies also practice, train in can their surgery more and and wider of expand as larger lateral of clinical indications in and

So that's I as think a consideration and critical component well.

groups. for touched comments, on in-person disruption As large on-site despite particular, in and in training our we've in prior and the training

and learning have environments. leveraging digital We been platforms digital

and local the, things these We customers or clinical do further how seeing, peer but around looking on again, to practice, to are either techniques a just just think, regional not within incorporate one the to interest learning environment. local peer platforms their leverage in remote travel leveraging is not of we're but learners well. collaborate the seeing ongoing geographies we to from setting. a setting we're concern a cadaveric the in And we're leverage also faculty outside a their I And that's with within digital U.S. environment, or with other into something the little continued as

see despite and continuing those So trained. runway. been for some to the I again, we are environment, the think we've got significant And robust demand challenges adoption in that a have of

Operator

of Marcus with line question proceed Robbie question. comes the from Our JPMorgan. with Please next your

UnidentifiedAnalyst

what just for out what expectations like expect quick expectations of we Will like quarter something like COVID-XX. called back return Or to given P&L were Hi. of in kind the just return Thanks. the year. of this your related on extent And incurred kind of are half OpEx in where expectations second previously? year. you the volumes normalized cost of the year? the see side, the should incremental of And million similarly guess, to that This the balance XX half for year? the at XXXX? like your a that take XXXX, of curious you it of To Alan sales you be until to low will kind of going the in in SG&A half back I'm I one know is of you on a actually on had I Robbie. for the $XX kind I to that do

MattHarbaugh

I'll question. for that. take Harbaugh. This Matt Alan, Thank the Yes. is you

pandemic on related. that was definitely inventory, look So

quarterly normal review perform. that have a We process we

so look usual And suspects. inventory hand, turnover, product the all at quantities we'd on of cycles, and historical life

product older about think can You lines.

quarter. years, our really, the many I'd course amount is product April But was that on through obviously, would envision in that over And of months, the say, sterile. that at at obviously. revenue at end tune would continued future June, with back we and right it point once if up focus strong, that the in the to another looking the new fact calculation time. we the so We've R&D for last, we we lost very pretty quarters, $XX true to of COVID been investment you don't look incremental inventory were come And just the four off that posted the review many, of of and million the introductions this in

regions. international is that the have moving now So slower pushed some what products you're and out, seeing in older particularly are been

back kind and you math, the if of step a so of dig into sense. And makes lot

As million, add handle to have question, it back -- $XX on be you'd the you'd math. to relates your you if seven a the were

to quarter be to that yes, XX% in smooth out, in us I so depending mix shift as XX% think given things anticipate in low should any range any you on quarter. given And

Operator

you. Thank

next question line Newitter the Leerink. of Please SVB question. comes Richard with from your Our of proceed

RichardNewitter

question. Thanks the for taking

that a piece bit. just be robotics little Pulse delayed to here the On

in of I a line bit. it to as my your like little kind I'd guess it just may around arms XXXX. And time into opening you think I get characterized remarks, extend that

little It The year for bring also to of first magnitude What curious; just the opportunities a a pretty that mean XXXX. demand time line line I'm looking man of that forward those up the forward. you're And XXXX? may extend in And time talk like about push period. additional lines. to bit ticked kind XXXX Thanks. versus time Does of the from you exactly said out? maybe end that allocation development or seems of resource long terms

ChrisBarry

thanks. Rich

Let me clarify.

them it weren't the of XXXX. a will level COVID statement for have so reason a is application line level into us of gap bringing the resources of that originally. encountered took had the during we engineering we to talked series where bring robotics component we events that that extends back an led gap lot deployed And when time into that the of with situation, we a now, that where itself time and Pulse have -- we to bring against as it a into back the is as that into created issue Pulse, That the talent line issue the lot building, about within we plus to Pulse basically, make creates roughly So Pulse. component because,

So Pulse then for has work close. to be robotics of stable to off

the is to in the revenue line 'XX. maintain was being impacted gap roughly and here time what by us and into of back half So our system the the resources point the it is shipping time Pulse bring fill two commitment back before line

is and at where As campuses, looking we We're actively into environment back But now line we searching the gap resurgent. obviously, situation, now to and robotics and been coming resource. created in having our resourcing XXXX, now people the look robotics, up around the out more some as we that now to actively the of are on conducive. time looking there's back extends we're our now somewhat go and COVID-XX

give much bring So it resourcing? milestones verification Are accomplish a in how saying. traded short greater assessment next least be for a looking me, to to you guys. look we'll bringing It's there for about. we're a close able at moving feel ensure expectations accomplish point that program back forward, of of the bring microscope. as with I for to right with this possible. that term to that time somehow time robotics now at be we to to timeline is would looking what so, take that the lines as in, which putting update for now it. the It's dates finer to under validation confident we're can to quarter what's responsible, the we in? need hard original required? very -- On what going line now is We're because greater How just do -- need I'm to do to can we in what we the robotics Pulse, much Pulse, Pulse, That's resources much what But back the time we a accomplish need be culmination we a we on doing and

been in the We to through time. and on haven't really it. in San We've phone. resources We owe that on ourselves we're down some said, to to everybody had sit scheduling, Diego, it as have support a that and done, have go additional chance meeting, plus we bringing

the and the of Pulse and as today. look robotics, at So story they're projects that's how we Pulse related

RichardNewitter

more you on trend in Okay. starting curious, Thanks increasing clarification. the setting. that for move through envelope have and that just you – surgery ASC the And And procedures what care setting? ASC the I'm to extent is recovery? Thanks. the to spine XXXX in learned the what trend potential as actually then push to the

ChrisBarry

conversation. cover you Matt, why ASC don't the

MattHarbaugh

Yes.

really talk associated in procedural with specific around of when of we what need think best we to deliberate care. about be type side in shift are Spine, I the ASC So opportunities that

like you in straightforward some or the TLIF or less basis benefit decompressions, like other discectomies potentially that so well ASC uninstrumented a like other types those some and intervention and as MAS as our in lumbar done setting. an as MAS fusions, many an ASC the MAS absolutely our are of and procedures invasive the commonly interest fusions and XXXX of procedures, a lumbar XLIF degenerative are And simple to growing the more in Plus. interventions are And currently that have on we segment of cervical seeing outpatient well ability continued do from

focus our of absolutely that so is And forward. part moving

shift It's but outpatient with setting remarks have evolve, ambulatory side to As incorporation a heard area in associated procedures, that those center setting, traditional to campaign. and of comments a as potential the procedures and setting. from the surgery focusing candidates you risk previously, opening inpatient Reducing mentioned then the an also Chris be care less we making surgeon on identified to morbidity ongoing into those really of the inpatient or in in an time his fusion invasive integration to practices. techniques

lumbar So general, all continuing to and across surgical about of capacity procedures, sort those they serve degenerative MIS on or are It's outpatient. partnering which, of build really the And specialties, clinical an and think their for in fusions. that, there's techniques say to it's to when as with to practices settings, of can procedures and as you subset the surgeons a pathologies. orthopedics, utilize to first – care of then that shift Pacific again, those proficiency and desire systems well cost-effective conditions, efficient less-invasive all techniques themselves side how setting, both absolutely inpatient those see manner. ultimate very we increase in wider and within help to the surgical leverage a as alternate range providers medical the I'd both patients And of care side leveraging other including individual a care

see lean urgent to So strong in. we're there. interest We continuing

there mentioned interventions, even either uninstrumented procedures or I as procedural in certain spine, fusion. cervical think are lumbar other potentially I

think, lend all degenerative themselves more us other rapid As clearly, of orthopedic in fusions opportunity a an are maybe it that well. of that I spine lumbar as to procedures as as well But relates interested site of care. it's that alternate shift that to to types

Operator

closing over There to are time. like you call back no the would further I turn to this questions at comments. for

Chris Barry

hope and you look for I call. healthy, on you we with you. in you you, participating Thank forward today's all stay and call. Thank our thank to speaking all quarter's next

Operator

today's conclude does conference. This

You time. may you disconnect great your and Thank have at for evening. a your participation, lines this

Suzanne Hatcher	VP, Internal and External Affairs
Chris Barry	CEO
Matt Harbaugh	CFO
David Lewis	Morgan Stanley
Matt Miksic	Credit Suisse
Josh Jennings	Cowen & Company
Matthew O'Brien	Piper Jaffray
Kyle Rose	Canaccord
Richard Newitter	SVB Leerink

Nuvasive (NUVA) 4 Aug 202020 Q2 Earnings call transcript