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NuVasive (NUVA) Beats on Q1 Earnings, Retains 2017 View
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NuVasive, Inc. reported first-quarter 2017 adjusted earnings per share (EPS) of 38 cents, reflecting an 18.7% rise from the year-ago quarter. The figure also surpassed 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 first-quarter 2017 net income per share of 22 cents, reflecting considerable improvement from the loss of 7 cents in the year-ago quarter.
Revenues in the reported quarter increased 16.2% year over year to $249.8 million (up 16% at constant exchange rate or CER). The figure is almost in line with the Zacks Consensus Estimate. The upside was driven by strong procedural growth in the U.S. as well as robust performance in the international market.
In the reported quarter, the company’s U.S. Spinal Hardware business registered 10% growth year over year, U.S. Surgical Support business grew 20% and International business recorded 35% growth.
The company reported a 56 basis point (bps) year-over-year expansion in gross margin to 75.3% in the first quarter. Despite the 17.1% rise in gross profit to $188.2 million, there has been a 13.6% increase in cost of goods sold. According to the company, the low-margin Biotronic business impacted the quarter’s performance. Sales, marketing and administrative expenses went up 12.5% to $140.5 million, while research and development expenses increased 16.7% to $12.4 million.
NuVasive posted adjusted operating income of $35.3 million in the reported quarter, reflecting a 39.1% rise from the year-ago number. Adjusted operating margin expanded 233 bps to 14.1% in the quarter under review.
The company exited first-quarter 2017 with cash, cash equivalents and short-term investments of $134.0 million, down from $153.6 million at the end of fiscal 2016.
Outlook
NuVasive reiterated its full-year 2017 guidance, taking the integration effect of NSO and Biotronic into consideration.
The company continues to expect 2017 revenues to grow 10.7% to 11.7% at CER to approximately $1.065 billion, almost in line with the current Zacks Consensus Estimate of $1.07 billion.
NuVasive has also maintained its guidance for full-year 2017 adjusted earnings per share at $2.00. The current Zacks Consensus Estimate of $2.02 is slightly above the company’s guidance. Additionally, adjusted operating margin for the year is still expected at 17.1%, up 100 bps on a year-over-year basis.
For second-quarter 2017, management expects revenues of $262 million, which is below the Zacks Consensus Estimate of $267.9 million. The company also expects the second quarter’s adjusted EPS at around 44 cents, which is also below the Zacks Consensus Estimate of 48 cents.
Our Take
NuVasive exited the first quarter with earnings beating the Zacks Consensus Estimate and revenues meeting the mark. However, the year-over-year improvement on the top-line front is on account of strong procedural growth in the U.S. as well as internationally. Management is encouraged by NuVasive’s strong momentum in the U.S. business as well as its first-quarter international business, which has exceeded the company’s expectations.
The company’s expectation to deliver a higher adjusted operating profit margin of at least 100 bps in 2017 indicates its focus on operational efficiencies and in-house manufacturing facility. Coupled with several product launches planned for 2017, the company projects strong revenue acceleration for the rest of the year as well.
Zacks Rank & Key Picks
NuVasive currently bears a Zacks Rank #4 (Sell). Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , ZELTIQ Aesthetics, Inc. and Hill-Rom Holdings, Inc. . While Inogen and ZELTIQ Aesthetics sport a Zacks Rank #1 (Strong Buy), Hill-Rom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 62% in the last one year, compared with the S&P 500’s gain of 14.0%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
ZELTIQ Aesthetics surged 82.8% in the last one year, compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive of 12.30%.
Hill-Rom gained over 33.7% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 3.1%.
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NuVasive (NUVA) Beats on Q1 Earnings, Retains 2017 View
NuVasive, Inc. reported first-quarter 2017 adjusted earnings per share (EPS) of 38 cents, reflecting an 18.7% rise from the year-ago quarter. The figure also surpassed 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 first-quarter 2017 net income per share of 22 cents, reflecting considerable improvement from the loss of 7 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 16.2% year over year to $249.8 million (up 16% at constant exchange rate or CER). The figure is almost in line with the Zacks Consensus Estimate. The upside was driven by strong procedural growth in the U.S. as well as robust performance in the international market.
In the reported quarter, the company’s U.S. Spinal Hardware business registered 10% growth year over year, U.S. Surgical Support business grew 20% and International business recorded 35% growth.
The company reported a 56 basis point (bps) year-over-year expansion in gross margin to 75.3% in the first quarter. Despite the 17.1% rise in gross profit to $188.2 million, there has been a 13.6% increase in cost of goods sold. According to the company, the low-margin Biotronic business impacted the quarter’s performance. Sales, marketing and administrative expenses went up 12.5% to $140.5 million, while research and development expenses increased 16.7% to $12.4 million.
NuVasive posted adjusted operating income of $35.3 million in the reported quarter, reflecting a 39.1% rise from the year-ago number. Adjusted operating margin expanded 233 bps to 14.1% in the quarter under review.
The company exited first-quarter 2017 with cash, cash equivalents and short-term investments of $134.0 million, down from $153.6 million at the end of fiscal 2016.
Outlook
NuVasive reiterated its full-year 2017 guidance, taking the integration effect of NSO and Biotronic into consideration.
The company continues to expect 2017 revenues to grow 10.7% to 11.7% at CER to approximately $1.065 billion, almost in line with the current Zacks Consensus Estimate of $1.07 billion.
NuVasive has also maintained its guidance for full-year 2017 adjusted earnings per share at $2.00. The current Zacks Consensus Estimate of $2.02 is slightly above the company’s guidance. Additionally, adjusted operating margin for the year is still expected at 17.1%, up 100 bps on a year-over-year basis.
For second-quarter 2017, management expects revenues of $262 million, which is below the Zacks Consensus Estimate of $267.9 million. The company also expects the second quarter’s adjusted EPS at around 44 cents, which is also below the Zacks Consensus Estimate of 48 cents.
Our Take
NuVasive exited the first quarter with earnings beating the Zacks Consensus Estimate and revenues meeting the mark. However, the year-over-year improvement on the top-line front is on account of strong procedural growth in the U.S. as well as internationally. Management is encouraged by NuVasive’s strong momentum in the U.S. business as well as its first-quarter international business, which has exceeded the company’s expectations.
The company’s expectation to deliver a higher adjusted operating profit margin of at least 100 bps in 2017 indicates its focus on operational efficiencies and in-house manufacturing facility. Coupled with several product launches planned for 2017, the company projects strong revenue acceleration for the rest of the year as well.
Zacks Rank & Key Picks
NuVasive currently bears a Zacks Rank #4 (Sell). Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , ZELTIQ Aesthetics, Inc. and Hill-Rom Holdings, Inc. . While Inogen and ZELTIQ Aesthetics sport a Zacks Rank #1 (Strong Buy), Hill-Rom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 62% in the last one year, compared with the S&P 500’s gain of 14.0%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
ZELTIQ Aesthetics surged 82.8% in the last one year, compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive of 12.30%.
Hill-Rom gained over 33.7% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 3.1%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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