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NuVasive (NUVA) Q1 Earnings Beat Estimates, 2022 View Up

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NuVasive, Inc. (NUVA - Free Report) delivered first-quarter 2022 adjusted earnings per share (EPS) of 54 cents, registering a 45.9% increase from the year-ago adjusted EPS of 37 cents. The figure surpassed the Zacks Consensus Estimate by 42.1%.

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

GAAP EPS of 35 cents shows a huge improvement from the year-ago loss per share of 15 cents.

Total Revenues

Revenues in the first quarter totaled $290.8 million, up 7.2% year over year on a reported basis and up 9.1% at constant exchange rate or CER. The top line beat the Zacks Consensus Estimate by 4.8%.

NuVasive, Inc. Price, Consensus and EPS Surprise

NuVasive, Inc. Price, Consensus and EPS Surprise

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

First-quarter revenue growth was driven by continued positive momentum from new products, including the Pulse platform and the cervical portfolio featuring the Simplify Cervical Disc.

Geographical & Segmental Details

In the reported quarter, U.S. Spinal Hardware business revenues rose 7.2% year over year to $155.6 million on strong performance by the thoracolumbar and cervical portfolios.

Revenues from the U.S. Surgical Support business were $63.6 million in the first quarter, up 3.8% year over year, led by strong sales of the Pulse platform within the Biologics business. However, this growth was somewhat offset by a year-over-year decline in NuVasive Clinical Services results.

In the quarter, the company’s international business delivered a strong performance, exhibiting double-digit growth across Europe, Latin America and Japan.

Margin Details

In the reported quarter, gross profit rose 6.1% year over year to $211.7 million. Gross margin contracted 73 basis points (bps) to 72.8%.

Selling, general and administrative expenses rose 9.8% year over year to $160.3 million, whereas research and development (R&D) expenses climbed 5.1% year over year to $23.4 million.

Overall adjusted operating profit was $28 million, down 10.3% from the year-ago figure. Adjusted operating margin saw a 189-bp contraction year over year to 9.6%.

Financial Details

The company exited the first quarter of 2022 with cash and cash equivalents of $205.3 million compared with $246.1 million at the end of 2021.

Cumulative net cash provided by operating activities at the end of the quarter was $6.5 million compared with the prior-year period’s $31.6 million.

2022 Guidance

NuVasive has updated its financial outlook for full-year 2022.

The company currently expects to report revenue growth in the range of 6-8% on a reported basis and 7.5-9.5% at CER (up from the previously projected 5-8% on a reported basis and 6-9% at CER). The Zacks Consensus Estimate for revenues is pegged at $1.22 billion.

Adjusted EPS is projected in the range of $2.15-$2.45 (up from the prior estimated $2.05−$2.35). The Zacks Consensus Estimate for the same is pegged at $2.16.

The company has maintained its adjusted operating margin guidance at the range of 13% to 14.5%.

Our Take

NuVasive exited the first quarter of 2022 on a bullish note, with earnings and revenues beating the Zacks Consensus Estimate. Strong sales performance across the U.S. Spinal Hardware and U.S. spinal hardware product lines instill optimism. The robust international performance also raises investor confidence. The improvement in procedure volumes during the quarter despite COVID-led impacts seems encouraging. The continued uptake of the Simplified Cervical Disc and the Pulse platform is an added upside. The raised revenue and adjusted EPS guidance for 2022 indicates this growth momentum will continue.

However, escalating operating expenses led to operating margin contraction, building pressure on the bottom line. The company also continued to experience inflationary impact in the quarter under review. A decline in short-term cash level is discouraging too.

Zacks Rank and Key Picks

NuVasive currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Alkermes plc (ALKS - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) .

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.

Medpace reported first-quarter 2022 adjusted EPS of $1.69, which surpassed the Zacks Consensus Estimate by 34.1%. Revenues of $330.9 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Medpace has a historical growth rate of 27.3%. MEDP’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.