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NuVasive (NUVA) Q2 Earnings Meet Estimates, Margins Down
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NuVasive, Inc. delivered adjusted earnings per share (EPS) of 56 cents in the second quarter of 2023, up 19.1% year over year. The figure came in line with the Zacks Consensus Estimate.
One-time adjustments include expenses associated with certain amortization, litigation settlement, business transition costs and non-cash acquisition-related foreign currency impacts, among others.
GAAP EPS came in at 14 cents against the year-ago period’s loss of 2 cents per share.
Total Revenues
Revenues in the second quarter totaled $317.8 million, up 2.4% year over year on a reported basis and 3.1% at a constant exchange rate or CER. However, the top line missed the Zacks Consensus Estimate by 1.8%.
The performance in the quarter under review was driven by ongoing strong commercial execution, the further adoption of new products and continued procedure growth.
NuVasive reports under two distinct product lines — Spinal Hardware and Surgical Support.
In the reported quarter, the U.S. Spinal Hardware segment rose 5.5% year over year to $174.1 million. The Cervical business continued its proven and ongoing track record of achieving greater than 20% growth, led by the simplified cervical disc and Reliance Cervical.
The U.S. Surgical Support segment’s revenues were $65.1 million, a decrease of 9.3% compared to the previous year’s quarter. The decline resulted from lower biologics attachment rates as well as a payer mix in NuVasive Clinical Services or NCS.
International net sales for the second quarter were $78.6 million, representing a year-over-year increase of 6.8% (up 9.8% at CER). The organic growth was driven by Core Spine and led by double-digit growth in Europe, as well as solid contributions from Latin America and Asia Pacific.
Margin Details
In the reported quarter, the gross profit rose 1.6% year over year to $228.3 million. The gross margin contracted 53 basis points (bps) to 71.8%.
SG&A expenses rose 2% year over year to $163.9 million. R&D expenses rose 10.6% year over year to $28.7 million.
Overall, the adjusted operating profit was $35.8 million, down 6% from the year-ago figure. The adjusted operating margin saw a 100-bps contraction year over year to 11.3%.
Financial Details
The company exited the second quarter of 2023 with cash and cash equivalents of $80.7 million compared with $248.7 million as of Dec 31, 2022.
The cumulative net cash provided by operating activities at the end of the second quarter was $38.5 million compared with the prior-year period’s $68.1 million.
2023 Guidance
NuVasive reaffirmed its guidance for the full-year 2023.
The company continues to expect 2023 net sales growth of 6-8% on both a reported and constant-currency basis. The Zacks Consensus Estimate for the same is pegged at $1.29 billion.
Merger Update
On Feb 9, 2023, NuVasive and Globus Medical entered into a definitive agreement to combine the companies in an all-stock transaction. The planned combination received overwhelming support from both companies’ shareholders.
As communicated on May 3, the company received a second request from the Federal Trade Commission in connection with its review of the Globus merger. Despite the chances of potentially unfavorable outcomes related to FTC’s decision, NuVasive remains optimistic about closing the merger transaction in the third quarter of 2023, as indicated on the first-quarter 2023 earnings call.
Our Take
NuVasive exited the second quarter of 2023 with earnings matching estimates, while revenues lagged the same. Headwinds from the NCS business and Biologics resulted in a decline in U.S Surgical support revenues. The net sales performance was also negatively impacted by volatility in foreign exchange rates. A contraction of both margins in the quarter is discouraging.
On a positive note, the entire C360 portfolio of the U.S. Cervical business continued to deliver above-market growth, led by the increased surgeon adoption of the simplified cervical disc and Reliance Cervical. Across NUVA’s Specialized Orthopedics business, the re-entry of the Precise system in the United Kingdom and the CE Mark reinstatement of precise bone transport are encouraging.
During the quarter, the company made its commercial launch of the Pulse platform in several new European geographies and completed its first case in Singapore.
Zacks Rank and Key Picks
NuVasive currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.
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NuVasive (NUVA) Q2 Earnings Meet Estimates, Margins Down
NuVasive, Inc. delivered adjusted earnings per share (EPS) of 56 cents in the second quarter of 2023, up 19.1% year over year. The figure came in line with the Zacks Consensus Estimate.
One-time adjustments include expenses associated with certain amortization, litigation settlement, business transition costs and non-cash acquisition-related foreign currency impacts, among others.
GAAP EPS came in at 14 cents against the year-ago period’s loss of 2 cents per share.
Total Revenues
Revenues in the second quarter totaled $317.8 million, up 2.4% year over year on a reported basis and 3.1% at a constant exchange rate or CER. However, the top line missed the Zacks Consensus Estimate by 1.8%.
The performance in the quarter under review was driven by ongoing strong commercial execution, the further adoption of new products and continued procedure growth.
NuVasive, Inc. Price, Consensus and EPS Surprise
NuVasive, Inc. price-consensus-eps-surprise-chart | NuVasive, Inc. Quote
Geographical & Segmental Details
NuVasive reports under two distinct product lines — Spinal Hardware and Surgical Support.
In the reported quarter, the U.S. Spinal Hardware segment rose 5.5% year over year to $174.1 million. The Cervical business continued its proven and ongoing track record of achieving greater than 20% growth, led by the simplified cervical disc and Reliance Cervical.
The U.S. Surgical Support segment’s revenues were $65.1 million, a decrease of 9.3% compared to the previous year’s quarter. The decline resulted from lower biologics attachment rates as well as a payer mix in NuVasive Clinical Services or NCS.
International net sales for the second quarter were $78.6 million, representing a year-over-year increase of 6.8% (up 9.8% at CER). The organic growth was driven by Core Spine and led by double-digit growth in Europe, as well as solid contributions from Latin America and Asia Pacific.
Margin Details
In the reported quarter, the gross profit rose 1.6% year over year to $228.3 million. The gross margin contracted 53 basis points (bps) to 71.8%.
SG&A expenses rose 2% year over year to $163.9 million. R&D expenses rose 10.6% year over year to $28.7 million.
Overall, the adjusted operating profit was $35.8 million, down 6% from the year-ago figure. The adjusted operating margin saw a 100-bps contraction year over year to 11.3%.
Financial Details
The company exited the second quarter of 2023 with cash and cash equivalents of $80.7 million compared with $248.7 million as of Dec 31, 2022.
The cumulative net cash provided by operating activities at the end of the second quarter was $38.5 million compared with the prior-year period’s $68.1 million.
2023 Guidance
NuVasive reaffirmed its guidance for the full-year 2023.
The company continues to expect 2023 net sales growth of 6-8% on both a reported and constant-currency basis. The Zacks Consensus Estimate for the same is pegged at $1.29 billion.
Merger Update
On Feb 9, 2023, NuVasive and Globus Medical entered into a definitive agreement to combine the companies in an all-stock transaction. The planned combination received overwhelming support from both companies’ shareholders.
As communicated on May 3, the company received a second request from the Federal Trade Commission in connection with its review of the Globus merger. Despite the chances of potentially unfavorable outcomes related to FTC’s decision, NuVasive remains optimistic about closing the merger transaction in the third quarter of 2023, as indicated on the first-quarter 2023 earnings call.
Our Take
NuVasive exited the second quarter of 2023 with earnings matching estimates, while revenues lagged the same. Headwinds from the NCS business and Biologics resulted in a decline in U.S Surgical support revenues. The net sales performance was also negatively impacted by volatility in foreign exchange rates. A contraction of both margins in the quarter is discouraging.
On a positive note, the entire C360 portfolio of the U.S. Cervical business continued to deliver above-market growth, led by the increased surgeon adoption of the simplified cervical disc and Reliance Cervical. Across NUVA’s Specialized Orthopedics business, the re-entry of the Precise system in the United Kingdom and the CE Mark reinstatement of precise bone transport are encouraging.
During the quarter, the company made its commercial launch of the Pulse platform in several new European geographies and completed its first case in Singapore.
Zacks Rank and Key Picks
NuVasive currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.