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NuVasive (NUVA) Q2 Earnings Beat Estimates, Gross Margin Up

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NuVasive, Inc. (NUVA - Free Report) delivered second-quarter 2021 adjusted earnings per share (EPS) of 60 cents, a significant improvement from the year-ago adjusted loss per share of 40 cents. The figure also beat the Zacks Consensus Estimate by 39.5%.

The one-time adjustments include expenses associated with certain business transition costs and amortization expenses, among others.

GAAP EPS of 3 cents too was a huge improvement from the year-ago loss per share of 98 cents.

Total Revenues

Revenues in the second quarter totaled $294.8 million, up 44.8% year over year on a reported basis (up 43.3% at constant exchange rate or CER). The top line surpassed the Zacks Consensus Estimate by 3%.

The increase in revenues can be attributed to recovery from the COVID-19 pandemic across all procedural segments and continued strong international growth.

Geographical & Segmental Details

In the reported quarter, U.S. Spinal Hardware business revenues rose 40.7% year over year to $160.1 million. The business was primarily boosted by continued demand for products within NuVasive’s Advanced Materials Science portfolio.

NuVasive, Inc. Price, Consensus and EPS Surprise

NuVasive, Inc. Price, Consensus and EPS Surprise

NuVasive, Inc. price-consensus-eps-surprise-chart | NuVasive, Inc. Quote

Revenues from the U.S. Surgical Support business were $67.6 million in the second quarter, up 43.2% increase year over year. This sales growth was primarily attributed to increased surgical volumes in NuVasive’s hardware procedures.

In the quarter, the company registered international revenues of $67.2 million, reflecting a 57.5% year-over-year rise on a reported basis and 50.3% increase at CER. This strong growth was led by the company’s Europe, Japan and Asia-Pacific region and continued growth in NuVasive’s core Spine business despite pockets of COVID-19 impact.

Margin Details

In the reported quarter, gross profit improved 75.9% year over year to $216.6 million. Gross margin expanded 1299 basis points (bps) to 73.5%.

Selling, general and administrative expenses increased 24.5% year over year to $157.4 million, whereas research and development (R&D) expenses climbed 12.2% year over year to $21.8 million.

Overall adjusted operating profit was $37.4 million, up from the year-ago adjusted operating loss of $22.7 million.

Financial Details

The company exited second-quarter 2021 with cash and cash equivalents of $204.1 million compared with $233.9 million at the end of first-quarter 2021.

Cumulative net cash provided by operating activities at the end of second-quarter 2021 was $79.4 million compared with the prior-year period’s $33.1 million.

2021 Guidance

NuVasive has provided its financial outlook for full-year 2021.

The company currently expects to report revenues in the range of $1.19-$1.21 billion. The Zacks Consensus Estimate for the same is pegged at $1.2 billion.

Adjusted earnings per share are projected in the range of $2.25-$2.35, the Zacks Consensus Estimate for which is pegged at $2.16. Adjusted operating margin is estimated in the range of 14.4% to 14.9%.

Our Take

NuVasive exited the second quarter of 2021 with better-than-expected earnings and revenues. The year-over-year growth in earnings and revenues looks impressive as well. The results were primarily driven by strong international growth, particularly in Europe, Japan and Asia-Pacific region. The Surgical Support and Spinal Hardware segments in the United States too contributed to the top-line growth. Expansion of gross margin is another upside. NuVasive’s increasing investment in R&D to strengthen foothold in less-invasive surgeries looks impressive.

However, rising operating costs do not bode well.

Zacks Rank & Key Picks

NuVasive currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks which are slated to report earnings soon are AMN Healthcare Services Inc (AMN - Free Report) , ResMed Inc. (RMD - Free Report) and Globus Medical, Inc. (GMED - Free Report) , each sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank(Strong Buy) stocks here.

The Zacks Consensus Estimate for AMN Healthcare’s second-quarter 2021 adjusted EPS is currently pegged at $1.47. The consensus estimate for second-quarter revenues is pegged at $829.4 million.

The Zacks Consensus Estimate for Resmed’s fourth-quarter fiscal 2021 adjusted EPS is currently pegged at $1.24. The consensus estimate for fourth-quarter revenues is pegged at $778.1 million.

For Globus Medical, the Zacks Consensus Estimate for its second-quarter 2021 adjusted EPS is currently pegged at 45 cents. The consensus estimate for its revenues stands at $226.96 million.