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NuVasive (NUVA) Earnings & Revenues Miss Estimates in Q3
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NuVasive, Inc. reported third-quarter 2016 adjusted earnings per share (EPS) of 40 cents, reflecting a 14.3% rise from the year-ago quarter. However, the figure missed the Zacks Consensus Estimate by a penny.
Solid revenue growth primarily led to the year-over-year improvement in earnings.
Including one-time items, the company reported third-quarter 2016 net income per share of 7 cents, highlighting a 71% rise from earnings of 24 cents in the year-ago quarter.
Revenues in the reported quarter increased 16.4% year over year to $239.6 million (up 18.9% at constant exchange rate or CER) but fell short of the Zacks Consensus Estimate of $244 million. The upside was driven by strong procedural growth in the U.S. as well as solid performance in Europe and Australia.
In the reported quarter, International business grew 37.6% year over year (up 23% at CER). Growth was significantly backed by strong contributions from core direct markets including Japan, Australia, New Zealand, the U.K., Italy and Germany.
The company reported an 18 basis point (bps) contraction in gross margin to 75.3% in the third quarter with a 20.4% increase in cost of goods sold. Sales, marketing and administrative expenses went up 19.3% to $131.9 million, while research and development expenses increased 36.2% to $12.5 million.
NuVasive posted adjusted operating income of $36.1 million in the reported quarter, reflecting a 14% rise from the year-ago number. Adjusted operating margin contracted 73 bps to 15% in the reported quarter.
The company exited the third quarter with cash, cash equivalents and short-term investments of $203.8 million, down from $317.1 million in the prior quarter.
Outlook
NuVasive has provided an update on its full-year 2016 guidance. This latest guidance takes into consideration the integration effect of NSO and Biotronic.
The company currently expects 2016 revenues of approximately $952 million (a decrease from the earlier guidance of $962 million), up 17.4% from 2015.The current Zacks Consensus Estimate of $962.5 million is above the projected range.
NuVasive has also provided its guidance for full-year 2016 adjusted earnings per share at $1.64 (unchanged), up approximately 1.31% from the 2015 EPS number. The current Zacks Consensus Estimate of $1.65 is above the company’s guidance. Additionally, adjusted operating margin for the year is projected at 16% (15.5%), up 60 bps on a year-over-year basis.
Our Take
NuVasive posted a disappointing third quarter, with both earnings and revenues missing the consensus mark.
On a positive note, the company saw double-digit growth in both Spinal Hardware and Surgical Support businesses, including NuVasive Specialized Orthopedics, or NSO, and Biotronic NeuroNetwork. Growth in the Spinal Hardware business reflects the strong acceptance of the platform across product areas within the Integrated Global Alignment (iGA) strategy, including Reline posterior fixation system, ALIF, Bendini and IOS.
Results were also driven by strength in NuVasive’s procedural offerings including posterior lumbar, anterior, lateral and cervical, and the integration of NSO portfolio which includes MAGEC for early onset scoliosis. The PRECICE technology for limb lengthening acquired with Ellipse Technologies is presently part of NSO which also witnessed strong sales in the quarter.
Surgical Support business results were driven by the inclusion of Biotronic, which was acquired in July. Results benefited from the inclusion of NSO and Biotronic, both acquired in 2016 as part of the company’s strategy to fortify its position in the spine market with complementary technologies.
In addition, the company witnessed growing U.S. MAGEC sales and is working closely with hospitals on opportunities for longer term contracts.
Zacks Rank & Key Picks
NuVasive currently holds a Zacks Rank #3 (Hold). Better-ranked medical stocks are GW Pharmaceuticals plc , Quidel Corp. (QDEL - Free Report) and Boston Scientific Corporation (BSX - Free Report) . GW Pharmaceuticals sports a Zacks Rank #1 (Strong Buy), while Quidel and Boston Scientific carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 69.6% year to date compared to the S&P 500’s 4.7% over the same period. The company’s four-quarter average earnings surprise is 41.6%.
Quidel rallied 23.5% in the past one year, higher than the S&P 500’s 2.4%. Over the next five years, the stock is estimated to record earnings growth rate of 20%, higher than the industry average of 14.8%.
Boston Scientific recorded 20.1% gain in the past one year, above the S&P 500’s 2.4%. The company has a trailing four-quarter average earnings surprise of 6.3%
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NuVasive (NUVA) Earnings & Revenues Miss Estimates in Q3
NuVasive, Inc. reported third-quarter 2016 adjusted earnings per share (EPS) of 40 cents, reflecting a 14.3% rise from the year-ago quarter. However, the figure missed the Zacks Consensus Estimate by a penny.
Solid revenue growth primarily led to the year-over-year improvement in earnings.
Including one-time items, the company reported third-quarter 2016 net income per share of 7 cents, highlighting a 71% rise from earnings of 24 cents in the year-ago quarter.
NUVASIVE INC Price, Consensus and EPS Surprise
NUVASIVE INC Price, Consensus and EPS Surprise | NUVASIVE INC Quote
Revenues in the reported quarter increased 16.4% year over year to $239.6 million (up 18.9% at constant exchange rate or CER) but fell short of the Zacks Consensus Estimate of $244 million. The upside was driven by strong procedural growth in the U.S. as well as solid performance in Europe and Australia.
In the reported quarter, International business grew 37.6% year over year (up 23% at CER). Growth was significantly backed by strong contributions from core direct markets including Japan, Australia, New Zealand, the U.K., Italy and Germany.
The company reported an 18 basis point (bps) contraction in gross margin to 75.3% in the third quarter with a 20.4% increase in cost of goods sold. Sales, marketing and administrative expenses went up 19.3% to $131.9 million, while research and development expenses increased 36.2% to $12.5 million.
NuVasive posted adjusted operating income of $36.1 million in the reported quarter, reflecting a 14% rise from the year-ago number. Adjusted operating margin contracted 73 bps to 15% in the reported quarter.
The company exited the third quarter with cash, cash equivalents and short-term investments of $203.8 million, down from $317.1 million in the prior quarter.
Outlook
NuVasive has provided an update on its full-year 2016 guidance. This latest guidance takes into consideration the integration effect of NSO and Biotronic.
The company currently expects 2016 revenues of approximately $952 million (a decrease from the earlier guidance of $962 million), up 17.4% from 2015.The current Zacks Consensus Estimate of $962.5 million is above the projected range.
NuVasive has also provided its guidance for full-year 2016 adjusted earnings per share at $1.64 (unchanged), up approximately 1.31% from the 2015 EPS number. The current Zacks Consensus Estimate of $1.65 is above the company’s guidance. Additionally, adjusted operating margin for the year is projected at 16% (15.5%), up 60 bps on a year-over-year basis.
Our Take
NuVasive posted a disappointing third quarter, with both earnings and revenues missing the consensus mark.
On a positive note, the company saw double-digit growth in both Spinal Hardware and Surgical Support businesses, including NuVasive Specialized Orthopedics, or NSO, and Biotronic NeuroNetwork. Growth in the Spinal Hardware business reflects the strong acceptance of the platform across product areas within the Integrated Global Alignment (iGA) strategy, including Reline posterior fixation system, ALIF, Bendini and IOS.
Results were also driven by strength in NuVasive’s procedural offerings including posterior lumbar, anterior, lateral and cervical, and the integration of NSO portfolio which includes MAGEC for early onset scoliosis. The PRECICE technology for limb lengthening acquired with Ellipse Technologies is presently part of NSO which also witnessed strong sales in the quarter.
Surgical Support business results were driven by the inclusion of Biotronic, which was acquired in July. Results benefited from the inclusion of NSO and Biotronic, both acquired in 2016 as part of the company’s strategy to fortify its position in the spine market with complementary technologies.
In addition, the company witnessed growing U.S. MAGEC sales and is working closely with hospitals on opportunities for longer term contracts.
Zacks Rank & Key Picks
NuVasive currently holds a Zacks Rank #3 (Hold). Better-ranked medical stocks are GW Pharmaceuticals plc , Quidel Corp. (QDEL - Free Report) and Boston Scientific Corporation (BSX - Free Report) . GW Pharmaceuticals sports a Zacks Rank #1 (Strong Buy), while Quidel and Boston Scientific carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 69.6% year to date compared to the S&P 500’s 4.7% over the same period. The company’s four-quarter average earnings surprise is 41.6%.
Quidel rallied 23.5% in the past one year, higher than the S&P 500’s 2.4%. Over the next five years, the stock is estimated to record earnings growth rate of 20%, higher than the industry average of 14.8%.
Boston Scientific recorded 20.1% gain in the past one year, above the S&P 500’s 2.4%. The company has a trailing four-quarter average earnings surprise of 6.3%
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>