NuVasive Expects First Quarter Revenues to Decline at Least 5 Percent
By PR Newswire | 04.15.20
Company is reducing compensation for its Board of Directors and executive management in the wake of COVID-19.
"NuVasive has a strong cash position, including more than $500 million in cash on hand at the end of the first quarter, and we are confident in the long-term opportunities for the company. In the near-term, we expect to continue seeing lower elective procedure volumes as a result of the COVID-19 pandemic and government stay-at-home orders. The actions we are taking to control expenses will help ensure NuVasive is positioned to successfully navigate this market environment," said J. Christopher Barry, CEO of NuVasive. "We believe that the strength of our team as well as our innovative technology will enable our business to normalize quickly once we emerge from this unprecedented event. We remain committed to supporting our employees, surgeon partners and communities during this challenging time."
Expense Control Measures in Response to COVID-19
The safety and wellbeing of employees is the priority during this healthcare pandemic. The NuVasive senior management team continually evaluates the situation to ensure it meets the guiding principle of protecting the health of not only its employees and distributors, but also the communities we work in and serve.
Given the impact of the COVID-19 pandemic on demand for elective surgical procedures, NuVasive is taking 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.
As technology innovation is a key pillar to the company's ongoing and long-term market leadership, NuVasive intends to maintain its levels of R&D investment during this period. In addition, while many procedures are considered elective, certain spine surgeries are essential. From an operations continuity standpoint, NuVasive is managing its distribution and commercial teams to support their surgeon partners now and in the future when surgeries start to ramp back up globally.
Preliminary First Quarter 2020 Results
Based on preliminary, unaudited financial results, the company estimates first quarter 2020 revenue to be in the range of $259 million to $261 million, reflecting approximately a 5 percent to 5.7 percent decline compared to $274.8 million for the first quarter 2019. This reflects the impact of a global decline in elective surgical procedures starting in mid-March as a result of the COVID-19 pandemic and government stay-at-home orders. The company is currently conducting its financial close procedures for the first quarter of 2020 and is unable to provide a more precise estimate of its financial results at this time. NuVasive will report its full financial results for the first quarter of 2020 during its earnings announcement planned for May 6. As of March 31, 2020, the company had cash on hand of more than $500 million, and a revolving credit facility of $550 million, which was undrawn as of March 31.
Withdrawal of 2020 Financial Guidance
The decline in elective procedure volumes observed in the first quarter is expected to continue to have a significant negative impact in the second quarter of 2020. 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. Accordingly, NuVasive is withdrawing its annual financial guidance for 2020, which was provided on Feb. 20.