NuVasive (NUVA) Earnings And Revenues Beat Estimates In Q3

NuVasive, Inc. (NASDAQ:NUVA) delivered third-quarter 2019 adjusted earnings per share (EPS) of 59 cents, reflecting a 5.4% rise from the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate by 9.3%. On a reported basis, EPS came in at 21 cents, highlighting a 30% decline from the year-ago number.

Revenues in the third quarter totaled $290.8 million, up 7.2% on a reported basis (up 7.5% at constant exchange rate or CER) year over year. The top line also beat the Zacks Consensus Estimate by 2.4%.

Geographical & Segmental Details

In the quarter under review, revenues at the U.S. Spinal Hardware business increased 9.5% year over year to $160 million. The upside was driven by solid uptick in case volume and tangible growth in both the XLIF and ALIF franchises, led by continued adoption of NuVasive's X360 system.

Revenues in the U.S. Surgical Support business were $71.9 million in the third quarter, down nearly 1% year over year. Within the Biologics segment, there was a 1% revenue decline from the year-ago quarter.

In the third quarter, the company registered international revenues of $59 million, reflecting 13.4% year-over-year growth at CER. The EMEA region witnessed a solid uptick, driven by substantial contribution from the United Kingdom and Spain. This was offset by sluggish growth in Asia Pacific and Latin America.

Margin Details

In the reported quarter, gross profit improved 8.5% year over year to $213.8 million. Gross profit margin expanded 85 basis points (bps) to 73.5%. Adjusted operating profit fell 2.8% from the year-ago period to $14 million. Accordingly, adjusted operating margin contracted 50 bps to 4.8% in the quarter under review.

Operational Update

The company exited the third quarter of 2019 with cash and cash equivalents of $163.4 million, compared with $128.4 million at the end of the second quarter. Year to date, net cash provided by operating activities totaled $160.6 million, compared with $150.5 million a year ago.

Guidance for 2019

NuVasive currently projects revenues for 2019 at the high end of the previously-projected range of $1.14-$1.16 billion. The Zacks Consensus Estimate for 2019 revenues is pegged at $1.15 billion, below the company’s guidance. However, the company raised its 2019 adjusted EPS to $2.35 to $2.40, compared with the prior guidance of $2.25 to $2.35. The Zacks Consensus Estimate for this metric stands at $2.32, below the guided range.

Our Take

NuVasive exited the third quarter of 2019 on a promising note. We are encouraged to note that the company witnessed solid revenue growth across its U.S. Spinal Hardware business, driven by increased surgeon adoption of lateral single-position surgery and X360 system. Robust sales figures in some of the key international markets buoy optimism. On the flip side, the slight revenue decline within the U.S. Surgical Support and Biologics segments and contraction in adjusted operating margin were disappointing.

Earnings of Other MedTech Majors at a Glance

NuVasive carries a Zacks Rank #2 (Buy).

Some other top-ranked companies, which posted solid results this earnings season, are Edwards Lifesciences (NYSE:EW) , Thermo Fisher Scientific (NYSE:TMO) and ResMed (NYSE:RMD) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the consensus estimate by 1.3%.

ResMed reported first-quarter fiscal 2020 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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