It has been about a month since the last earnings report for NuVasive . Shares have added about 15.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NuVasive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NuVasive’s Q4 Earnings Top Estimates, Margin Declines
NuVasive’s delivered fourth-quarter 2020 adjusted earnings per share of 59 cents, down 19.2% from the year-ago figure. However, the figure beat the Zacks Consensus Estimate by 7.3%.
The one-time adjustments include expenses associated with certain ongoing litigation matters and amortization expenses, among others.
GAAP earnings per share came in at 3 cents, down from the year-ago earnings per share of 55 cents.
Full-year adjusted earnings per share was $1.23, reflecting a 50.2% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 3.4%.
Total Revenues
Revenues in the fourth quarter totaled $291.8 million, down 5.9% year over year on a reported basis (down 6.7% at CER). The top line lagged the Zacks Consensus Estimate by 2.2%.
The company registered strong international performance, especially in Asia Pacific, despite pandemic-led headwinds.
Full-year revenues were $1.05 billion, reflecting a 10.1% plunge from the year-ago period (down 10.2% at CER). Again, the metric lagged the Zacks Consensus Estimate by 0.9%.
Geographical & Segmental Details
In the reported quarter, U.S. Spinal Hardware business revenues fell 8.1% year over year to $155.2 million. The business was partly boosted by NuVasive’s thoracolumbar portfolio which was primarily driven by continued adoption of advanced material science implants. Also, strong results from the clinical evaluation of Modulus ALIF and Reline 3D within the company’s pediatric portfolio contributed to the growth. However, this was offset by a fall in case volumes due to the pandemic.
Revenues from the U.S. Surgical Support business were $67.4 million in the fourth quarter, down 12.9% year over year. The business experienced a decline in case volumes in the NuVasive Clinical Services business along with challenging billing and collections comparisons from the year-ago period. Further, there was a lack in levels of stocking orders within the company’s biologics or interoperative neuromonitoring product lines due to the pandemic’s resurgence creating additional pressure in late December.
In the quarter, the company registered international revenues of $69.2 million, reflecting an 8% year-over-year rise on a reported basis and 4.6% rise at CER. This resulted from strong contributions from Asia Pacific, which was driven by product launches in the cervical portfolio and lower impacts from COVID-19. However, parts of Europe continue to be heavily impacted by the pandemic, with the United Kingdom and Spain registering significant year-over-year declines.
Margin Details
In the reported quarter, gross profit declined 8.8% year over year to $207.2 million. Gross margin contracted 218 basis points (bps) to 70.9%.
Selling, general and administrative expenses declined 10% year over year to $144.3 million, whereas research and development (R&D) expenses climbed 13.9% year over year to $21.8 million.
Overall adjusted operating profit was $41.1 million, down 13.6% year over year. Adjusted operating margin was 14.1%, a 124-bps contraction year over year.
Operational Update
The company exited 2020 with cash and cash equivalents, and short-term marketable securities of $1.03 million compared with $213 million at the end of 2019.
Cumulative net cash provided by operating activities at the end of 2020 was $ 185.9 million compared with the prior-year period’s $235.3 million.
Guidance
NuVasive noted that due to the continued variability stemming from the pandemic, it is not providing any financial guidance for 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -23.24% due to these changes.
VGM Scores
At this time, NuVasive has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise NuVasive has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is NuVasive (NUVA) Up 15.4% Since Last Earnings Report?
It has been about a month since the last earnings report for NuVasive . Shares have added about 15.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NuVasive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NuVasive’s Q4 Earnings Top Estimates, Margin Declines
NuVasive’s delivered fourth-quarter 2020 adjusted earnings per share of 59 cents, down 19.2% from the year-ago figure. However, the figure beat the Zacks Consensus Estimate by 7.3%.
The one-time adjustments include expenses associated with certain ongoing litigation matters and amortization expenses, among others.
GAAP earnings per share came in at 3 cents, down from the year-ago earnings per share of 55 cents.
Full-year adjusted earnings per share was $1.23, reflecting a 50.2% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 3.4%.
Total Revenues
Revenues in the fourth quarter totaled $291.8 million, down 5.9% year over year on a reported basis (down 6.7% at CER). The top line lagged the Zacks Consensus Estimate by 2.2%.
The company registered strong international performance, especially in Asia Pacific, despite pandemic-led headwinds.
Full-year revenues were $1.05 billion, reflecting a 10.1% plunge from the year-ago period (down 10.2% at CER). Again, the metric lagged the Zacks Consensus Estimate by 0.9%.
Geographical & Segmental Details
In the reported quarter, U.S. Spinal Hardware business revenues fell 8.1% year over year to $155.2 million. The business was partly boosted by NuVasive’s thoracolumbar portfolio which was primarily driven by continued adoption of advanced material science implants. Also, strong results from the clinical evaluation of Modulus ALIF and Reline 3D within the company’s pediatric portfolio contributed to the growth. However, this was offset by a fall in case volumes due to the pandemic.
Revenues from the U.S. Surgical Support business were $67.4 million in the fourth quarter, down 12.9% year over year. The business experienced a decline in case volumes in the NuVasive Clinical Services business along with challenging billing and collections comparisons from the year-ago period. Further, there was a lack in levels of stocking orders within the company’s biologics or interoperative neuromonitoring product lines due to the pandemic’s resurgence creating additional pressure in late December.
In the quarter, the company registered international revenues of $69.2 million, reflecting an 8% year-over-year rise on a reported basis and 4.6% rise at CER. This resulted from strong contributions from Asia Pacific, which was driven by product launches in the cervical portfolio and lower impacts from COVID-19. However, parts of Europe continue to be heavily impacted by the pandemic, with the United Kingdom and Spain registering significant year-over-year declines.
Margin Details
In the reported quarter, gross profit declined 8.8% year over year to $207.2 million. Gross margin contracted 218 basis points (bps) to 70.9%.
Selling, general and administrative expenses declined 10% year over year to $144.3 million, whereas research and development (R&D) expenses climbed 13.9% year over year to $21.8 million.
Overall adjusted operating profit was $41.1 million, down 13.6% year over year. Adjusted operating margin was 14.1%, a 124-bps contraction year over year.
Operational Update
The company exited 2020 with cash and cash equivalents, and short-term marketable securities of $1.03 million compared with $213 million at the end of 2019.
Cumulative net cash provided by operating activities at the end of 2020 was $ 185.9 million compared with the prior-year period’s $235.3 million.
Guidance
NuVasive noted that due to the continued variability stemming from the pandemic, it is not providing any financial guidance for 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -23.24% due to these changes.
VGM Scores
At this time, NuVasive has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise NuVasive has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.