NuVasive Reports Third Quarter 2004 Financial Results
Third Quarter Highlights:
* Generated revenues of $10.2 million - up 68% year-over-year and 16%
quarter-over-quarter
* Gross profit increased to $7.6 million - up 72% year-over-year and 19%
* Surgeons trained on MAS platform increased to 155 year-to-date
* MAS revenue contribution increased to 79% of total revenue
* Announces launch of SpheRx(TM) Pedicle Screw System, MaXcess(TM)
Micro-Access and Neuro-Vision(R) Nerve Root Retractor
SAN DIEGO, Oct. 26 /PRNewswire-FirstCall/ -- NuVasive, Inc. (Nasdaq: NUVA), a medical device company focused on developing products for minimally disruptive surgical treatments for the spine, announced today third quarter financial results for the period ended September 30, 2004.
The Company reported third quarter revenues of $10.2 million, a 68% increase over the $6.1 million for the third quarter of 2003 and a 16% increase over the $8.8 million for the second quarter of 2004. Maximum Access Surgery (MAS) revenues for the third quarter were $8.0 million, an increase of 140% from the third quarter of 2003, and up 30% from the second quarter of 2004.
Gross profit for the third quarter of 2004 was $7.6 million with a gross margin of 74.2%, compared with a gross profit of $4.4 million with a gross margin of 72.3% in the third quarter of 2003. For the second quarter of 2004, gross profit was $6.3 million with a gross margin of 71.8%.
Total operating expenses for the third quarter of 2004 were $10.6 million, compared with $6.3 million in the third quarter of 2003 and $10.8 million for the second quarter of 2004. Total operating expenses, excluding stock-based compensation expense, for the third quarter of 2004 was $9.3 million, compared with $6.1 million in the third quarter of 2003 and $8.9 million for the second quarter of 2004. The quarter-over-quarter increase reflects continued investment in the marketing and enhancement of the Company's MAS platform, specifically its SpheRx(TM) pedicle screw system, MaXcess(TM) Micro-Access and Neuro-Vision(R) Nerve Root Retractor launched in the third quarter, and for the development of its total disc replacement (TDR) products.
On a GAAP basis for the three-month period ended September 30, 2004, the Company reported a net loss of $2.8 million, or $0.12 per share. On a pro forma basis, third quarter net loss excluding stock based compensation was $1.5 million, or $0.06 per share.
Cash, cash equivalents and short-term investments were $63.8 million at the end of the third quarter 2004.
Alexis V. Lukianov, Chairman, President and Chief Executive Officer, said, "Our third quarter results demonstrate the continued momentum in the adoption of our MAS products, which accounted for 79% of total revenues for the quarter up from 70% last quarter, driving incremental revenue growth of 16% and enhancing gross margin. We remain on track with our strategy of expanding market penetration of our leading spine surgery products and technologies as demonstrated by the increase in our blended average sales price per procedure to approximately $2,600 and the number of surgeons trained on our MAS platform to 155 year-to-date. We believe that the recent expansion of our product platform will further enhance this penetration and increase our top-line growth."
For the full year 2004, the Company is revising revenue guidance in the range of $37 million to $38 million from $36 million to $37 million.
NuVasive also announced the expansion of its MAS platform with the launch of three new products:
* SpheRx(TM) Pedicle Screw System
-- The patented SpheRx Pedicle Screw System is an efficient and unique
line of posterior instrumentation that enables straightforward
fixation in less disruptive procedures.
* MaXcess(TM) Micro-Access
-- The MaXcess Micro-Access System adds more surgical applications to
the platform by enabling minimally disruptive maximum access
approaches for lumbar stenosis decompression, foraminal discectomy
and posterior cervical foraminotomy.
* Neuro-Vision(R) Nerve Root Retractor
-- The NeuroVision Nerve Root Retractor combines stimulated and free run
EMG to monitor spinal nerves and alert the surgeon of physiologic
changes intraoperatively during nerve retraction.
The Company will premiere these new products at a management-hosted investor breakfast preceding the opening of the North American Spine Society (NASS) annual meeting in Chicago, IL on Wednesday, October 27, 2004 at 7:30 a.m. CDT / 8:30 a.m. EDT. The investor breakfast will include a panel presentation and interaction with leading spine surgeons on their MAS(TM) clinical experience. The panel will feature Paul McAfee, MD; Frank Phillips, MD; William Taylor, MD; and Franco Vigna, MD.
NuVasive will host a conference call today at 4:00 p.m. CDT / 5:00 p.m. EDT to discuss third quarter results. A live Web cast of the conference call will be available online from the investor relations page of NuVasive's corporate Web site at http://www.nuvasive.com. The dial-in numbers are (800) 247-9979 for domestic callers, and (973) 409-9254 for international callers. The reservation number for both is 5220349. The call will remain available on NuVasive's Web site, http://www.nuvasive.com, through November 26, 2004. A telephonic replay of the call will be available until November 9, 2004. The replay dial-in numbers are (877) 519-4471 for domestic callers and (973) 341- 3080 for international callers. Please use reservation code 5220349.
NuVasive is a medical device company focusing on the design, development and marketing of products for use in minimally disruptive surgical treatments for the spine. NuVasive's Maximum Access Surgery (MAS(TM)) product platform includes the NeuroVision(R) nerve avoidance system, MaXcess(TM) spine access system, and specialized implants. NuVasive also offers classic fusion implant products for use in spine surgery and has an R&D pipeline emphasizing motion preservation products such as total disc replacement (TDR).
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause NuVasive's results to differ materially from historical results or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates" and similar words. These statements may include, among others, plans, strategies and objectives of management for future operations; any statements regarding proposed new products, services or developments; any statements regarding future economic conditions or financial or operating performance; statements of belief and any statements of assumptions underlying any of the foregoing. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to, the rapidly changing and competitive nature of the medical device industry, NuVasive's ability to convince surgeons to use its products, the ability of patients to obtain third-party reimbursement for surgical procedures employing NuVasive's products, risks related to government regulation of medical devices, risks related to NuVasive's ability to effectively manage the growth of its business, risks related to ownership and enforcement of intellectual property rights, NuVasive's ability to successfully develop new products, and other risks and uncertainties more fully described in NuVasive's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 13, 2004, and NuVasive's Prospectus filed pursuant to Rule 424 under the Securities Act of 1933, as amended, with the Securities and Exchange Commission on May 13, 2004. NuVasive's public filings with the Securities and Exchange Commission are available at www.sec.gov. NuVasive assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.
Three Months Ended  Nine Months Ended
September 30,      September 30,
2004     2003      2004     2003
MAS                                $8,043   $3,351   $19,017   $8,051
Classic Fusion                      2,141    2,725     7,564    7,969
Total revenues                  10,184    6,076    26,581   16,020
Cost of goods sold                      2,624    1,683     7,309    4,940
Gross profit                            7,560    4,393    19,272   11,080
Research and development            2,164    1,476     6,246    4,301
Sales and marketing                 4,881    3,329    13,164    8,446
General and administrative          2,254    1,339     6,226    4,623
Stock-based compensation            1,266      193     5,244      337
Total operating expenses        10,565    6,337    30,880   17,707
Interest income                           282       40       385       97
Interest expense net                      (33)     (61)     (215)    (169)
Other income (expense), net                --      128       (11)     135
Net loss                              $(2,756) $(1,837) $(11,449) $(6,564)
Historical net loss per share:
Basic and diluted                  $(0.12)  $(0.45)   $(0.89)  $(1.62)
Weighted average shares- basic
and diluted                       23,494    4,076    12,859    4,047
Pro-forma information:
Operating expenses                  $10,565   $6,337   $30,880  $17,707
Stock-based compensation              1,266      193     5,244      337
Pro-forma operating expenses
excluding stock-based
compensation                        $9,299   $6,144   $25,636  $17,370
Net loss                            $(2,756) $(1,837) $(11,449) $(6,564)
Net loss excluding stock-based
compensation                      $(1,490) $(1,644)  $(6,205) $(6,227)
Pro-forma basic and diluted net
loss per share excluding
stock-based compensation           $(0.06)  $(0.40)   $(0.48)  $(1.54)
and diluted                      23,494    4,076    12,859    4,047
September 30,      December 31,
2004              2003
Cash and cash equivalents                  $18,238            $5,631
Short-term investments                      45,535             4,017
Accounts receivable, net                     5,570             3,728
Inventory, net                               7,328             5,048
current assets                                643               428
Total current assets                            77,314            18,852
Property and equipment, net                      3,449             3,390
Notes receivable from employee                      --                21
Other assets                                        76               108
Total Assets                                   $80,839           $22,371
Accounts payable and accrued
liabilities                                $5,341            $5,036
Accrued payroll and related
expenses                                    2,421             2,242
Current portion of notes payable                --             3,493
Current portion of obligations
under capital leases                          107               306
Total current liabilities                        7,869            11,077
Notes payable, less current portion                 --             1,202
Obligations under capital leases,
less current portion                               --                22
Preferred stock                                 --                32
Common stock                                    24                 4
Additional paid-in capital                 152,896            75,044
Notes receivable from
stockholders                                   --              (188)
Deferred compensation                       (4,246)             (566)
Accumulated deficit                        (75,704)          (64,256)
Total stockholders' equity                      72,970            10,070
Total liabilities and stockholders'
equity                                        $80,839           $22,371
Kevin C. O'Boyle
Investors/Media:
Stephanie Carrington/Greg Tiberend
646-536-7017/7005
scarrington@theruthgroup.com
gtiberend@theruthgroup.com