NuVasive’s First-Quarter Revenue Slides 5.4 Percent

The global coronavirus pandemic affected NuVasive Inc.’s bottom line in the first quarter, ended March 31.
 
Revenue decreased by nearly $15 million; 
GAAP operating margin of 10.9 percent; Non-GAAP operating margin of 16.9 percent; and 
GAAP diluted earnings per share of $0.10; Non-GAAP diluted earnings per share of $0.48.
 
“First and foremost, I want to recognize the healthcare professionals who are battling COVID-19 on the front lines and whose work is truly heroic during this global healthcare crisis,” said J. Christopher Barry, CEO of NuVasive. “Additionally, I am proud of the resiliency demonstrated by NuVasive employees, as the company remains committed to supporting our surgeon partners and their patients during this time. NuVasive’s first quarter performance was consistent with the preliminary revenue results provided in the business update shared last month. The company began the quarter positioned to build upon the financial momentum delivered last year, but faced a decline in elective procedure volumes due to the COVID-19 pandemic. However, with a strong cash position, dedicated team and innovative technology in our pipeline, we are confident in the long-term trajectory of the business and our purpose to transform surgery, advance care and change lives.”

NuVasive reported first quarter 2020 total revenue of $259.9 million, a 5.4 percent decrease compared to $274.8 million for the first quarter 2019. On a constant currency basis, first quarter 2020 total revenue decreased 5.1 percent compared to the same period last year. 
 
For the first quarter 2020, both GAAP and non-GAAP gross profit was $188 million and GAAP and non-GAAP gross margin was 72.3 percent. These results compared to GAAP and non-GAAP gross profit of $200.3 million and GAAP and non-GAAP gross margin of 72.9 percent, for the Q1 2019.
 
The company reported GAAP net income of $5.3 million, or diluted earnings per share of $0.10, for the first quarter 2020 compared to GAAP net income of $9.4 million, or diluted earnings per share of $0.18, for the first quarter 2019. On a non-GAAP basis, the company reported net income of $25.4 million, or diluted earnings per share of $0.48, for the first quarter 2020 compared to non-GAAP net income of $27.6 million, or diluted earnings per share of $0.53, for the first quarter 2019. 
 
On April 14, NuVasive provided a business update related to COVID-19, including the following temporary actions to reduce operating expenses:

• Implementing compensation reductions for its board of directors and executive officers; 
• Controlling discretionary spend across the organization; and 
• Adjusting manufacturing capacity based on certain government directives and demand, while ensuring sufficient inventory levels to support current procedure volumes.

 
Additionally, on April 14, NuVasive withdrew its annual financial guidance for 2020. The COVID-19 pandemic has had a significant negative impact on elective procedure volumes. As visibility for spine surgery volumes for the remainder of the year is limited, and the company is not able to predict when or how quickly elective surgery volumes will recover, NuVasive is not providing further financial guidance for 2020 at this time.