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NuVasive's (NUVA) Q1 Earnings Beat Estimates, Revenues Miss

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NuVasive, Inc. (NUVA - Free Report) delivered first-quarter 2020 adjusted earnings per share (EPS) of 48 cents, reflecting a 9.4% decline from the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate by 37.1%. The one-time adjustments include expenses associated with certain ongoing litigation matters and amortization expenses among others.

On a reported basis, EPS came in at 10 cents, reflecting 44.4% decline from the year-ago number.

The year-over-yeardecline can be attributed to significantly lower revenues on a year-over-year basis due to the coronavirus outbreak.

Revenues in the first quarter totaled $259.9 million, down 5.4% year over year on a reported basis (down 5.1% at constant exchange rate or CER). The top line also lagged the Zacks Consensus Estimate by 2.6%.

Geographical & Segmental Details

In the reported quarter, the U.S. Spinal Hardware business revenues declined 6.3% year over year to $138.5 million. The company noted that in the first two months of the quarter, NuVasive's X360 system was tracking to deliver solid year-over-year growth. However, starting in mid-March, the U.S. Spinal Hardware business witnessed significant deferrals in elective surgical procedures due to COVID-19.

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 $64.3 million in the first quarter, down 10.9% year over year. Here too, Case volumes tracked up year over year in January and February. The business experienced a slowdown in volumes in mid-March due to the pandemic.

In the March-end quarter, the company registered international revenues of $57.1 million, reflecting 4.1% year-over-year growth at CER.This was driven by mid-double-digit growth in Asia-Pacific, led by Japan, where COVID-19 impact was nominal in this period.

Margin Details

In the reported quarter, gross profit declined 6.1% year over year to $188 million. Gross margin contracted 54 basis points (bps) to 72.3%. Adjusted operating profit improved 5% from the year-ago period to $39.5 million. Accordingly, adjusted operating margin expanded 151 bps to 15.2% in the January-March quarter.

Operational Update

The company exited the first quarter with cash and cash equivalents of $511.9 million compared with $213 million at the end of 2019. First-quarter net cash, provided by operating activities, totaled $5.2 million compared with the prior year period’s $24.5 million.

Guidance for 2020

On Apr 14, 2020, while announcing its COVID-19 business update, NuVasive noted that it iscurrently unable to predict the time and rate of recovery of its elective surgery volumes. This compelled the company to withdraw its 2020 guidance.

Our Take

NuVasive witnessed a significant fall in elective procedure volumes in the first quarter, which is expected to intensify in second-quarter 2020.

Given the adverse impact of the coronavirus pandemic on demand for elective surgical procedures, NuVasive is adopting measures to control its expenses and overcome the situation. However, given that technological innovation is the key growth driver, NuVasive intends to maintain its levels of R&D investment.

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

Earnings of Other Medical Majors at a Glance

Aphria Inc. reported third-quarter fiscal 2020 adjusted EPS of 2 cents in contrast to the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million outpaced the consensus estimate by 14.6%. The company carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen Inc. (BIIB - Free Report) currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.

Eli Lilly and Company (LLY - Free Report) delivered first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.

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