NuVasive, Inc.’s 2012 second quarter revenue of $154.4 million was up 16.1% on a reported basis from the previous year. The company also reported a profit of $2.9 million on a GAAP (generally accepted accounting principles) basis.
The company raised its revenue guidance for the full year by $10 million to approximately $625 million.
Aiming for #3
Company Chairman and CEO Alex Lukianov told analysts on July 25 that the company made strong improvements in profitability and expects to improve top line growth to become the #3 spine company in the world. Goldman Sachs gave NuVasive its #1 ranking for M&A (merger and acquisition) at the beginning of the month.
Growth Drivers
Growth was driven by a reported 17% rise in U.S. cervical sales as well as a 40% increase in international sales. Lumbar and biologics increases of 5% fell from the first quarter. Overall sales also slowed from 22% in the first quarter. Management noted that it believes that the spine market was stable but did not explain the slowdown.
Monitoring sales for the quarter were approximately $10 million resulting in lowered 2012 monitoring sales guidance by $3 million to $42 million due to lower reimbursement.
|
NuVasive, Inc. 2Q 2012 |
Sales ($ in millions) |
% Change |
|
Total Reported Sales |
$154.40 |
16.1% |
|
U.S. Lumbar |
$89.90 |
4.7% |
|
U.S. Cervical |
$14.80 |
17.0% |
|
U.S. Biologics |
$25.40 |
5.0% |
|
U.S. Monitoring |
$10.20 |
-1.9% |
|
International |
$14.10 |
41.0% |
Source: Wells Fargo Securities
Spine Market Update
BMO Capital Market analyst Joanne Wuensch reported that it was a solid quarter, but wondered if it was enough.
“We believe expectations were running hot and heavy that the company would beat (consensus), and in-line revenue may not be enough. The good news is that the spine market appears stable, and NuVasive continues to take share, ” wrote Wuensch in an investor note on July 26.
Wuensch continued that management believes the U.S. market is declining about 2%, and that OUS (outside the U.S.) markets are “showing modest growth rates.” “The good news is that there are continued signs of stability and that we are likely bumping along the bottom, and price declines have also stabilized and remain in the low-single digits. Unfortunately there are no immediate signs of relief, with payer pushback still an obstacle, and few catalysts likely to lead to accelerating volumes. That said, NuVasive continues to take share as the minimally invasive segment of the market grows.”
2012 Uncertainties
The company is still awaiting a final determination of the royalty rates that it must pay to Medtronic, Inc. Management now thinks this could take until the fourth quarter or later. Guidance is based on the rates suggested by the jury. The company is also still awaiting FDA approval of its PCM cervical disc and AttraX biologic. Neither of these products is factored into 2012 guidance.
