NuVasive Reports First Quarter 2009 Financial Results

- Increases 2009 Guidance for Revenue and Earnings per Share -








SAN DIEGO, April 22  /PRNewswire-FirstCall/ -- NuVasive, Inc. (NASDAQ: NUVA), a medical device company focused on developing products for minimally disruptive surgical treatments for the spine, announced today financial results for the quarter ended March 31, 2009.

NuVasive reported first quarter revenue of $80.0 million, a 56.3% increase over the $51.2 million for the first quarter 2008 and a 7.3% increase over the $74.6 million for the fourth quarter 2008.

Gross profit for the first quarter 2009 was $65.2 million and gross margin was 81.5%, compared to a gross profit of $42.1 million and a gross margin of 82.2% for the first quarter 2008. For fourth quarter 2008, gross profit was $61.1 million and gross margin was 82.0%.

Total operating expenses for the first quarter 2009 were $68.7 million compared to $50.5 million in the first quarter 2008 and $57.0 million in the fourth quarter 2008. Operating expenses include $1.9 million for Progentix and Cervitech acquisition costs and $1.6 million related to intellectual property litigation.

On a GAAP basis, the Company reported a net loss of $4.3 million, or $(0.12) per share, for the first quarter 2009.

On a non-GAAP basis, the Company reported net income of $7.3 million, or $0.19 per share, for the first quarter 2009. The non-GAAP earnings per share calculations for the first quarter exclude (i) stock based compensation of $6.7 million; (ii) amortization of acquired intangible assets of $1.3 million; (iii) acquisition related costs of $1.9 million; and (iv) intellectual property litigation costs of $1.6 million.

Cash, cash equivalents and short and long-term marketable securities were $203.5 million at March 31, 2009.

Today, the Company announced the acquisition of Cervitech Inc., a New Jersey based company focused on clinical approval of its PCM(R) cervical disc system, a motion preserving total disc replacement device. This strategic acquisition  provides NuVasive the potential to significantly accelerate its entry into the growing cervical disc replacement market.

Alex Lukianov, Chairman and Chief Executive Officer, said, "We are exceptionally pleased with our financial performance in the first quarter of 2009, specifically our increased profitability, which shows how NuVasive's continued revenue growth translates to earnings growth. We believe this dynamic is sustainable and we expect continued profitability improvements as the company grows. We have the strategy, the talent, and the infrastructure in place to drive toward our goal of being the #4 spine company in the world and we will get there by adhering to our core values of Absolute Responsiveness(R), outstanding customer service, and Cheetah Speed."

Mr. Lukianov continued, "Today, we are excited to announce the acquisition of Cervitech, which gives NuVasive the potential of rapid entry into the high growth segment of cervical disc replacement with the PCM investigational device. The PCM IDE clinical study is fully enrolled with two year follow-up data complete later this year. With that timing, we anticipate submission for FDA approval in the first quarter of 2010, which is significantly ahead of our current motion preservation R&D pipeline. The acquisition further strengthens our cervical product offering. We expect product revenue of $100 million annually within three years of U.S. commercialization."

  Updated 2009 Financial Guidance
  NuVasive is updating its full year 2009 financial guidance as follows:

  Revenue:

  --  $355 million to $360 million, including $30 million in Osteocel(R)
      Plus; up from previous guidance of $345 million to $350 million,
      including $28 million in Osteocel Plus

  Gross Margin:

  --  Gross Margin of 81% to 82%, consistent with previous guidance

  EPS:
  --  GAAP: loss per share of $(0.07) to $(0.05); compared to previous
      guidance of $(0.14) to $(0.12)
  --  Non-GAAP: earnings per share of $0.94 to $0.96; up from previous
      guidance of $0.83 to $0.85 per enclosed table

  --  Earnings per share of $0.11 to $0.13 excluding intellectual property
      litigation and acquisition related costs per enclosed table; up from
      previous guidance of $0.02 to $0.04

  Reconciliation of Non-GAAP Information


Management uses certain non-GAAP financial measures such as non-GAAP earnings per share, which exclude stock-based compensation, amortization of acquired intangible assets, intellectual property litigation expenses, and acquisition related costs. Management does not consider these costs in evaluating the continuing operations of the Company. Therefore, management calculates the non- GAAP financial measures provided in this earnings release excluding these costs and uses these non- GAAP financial measures to enable it to analyze further, and more consistently, the period-to-period financial performance of its core business operations. Management believes that providing investors with these non-GAAP measures gives them additional important information to enable them to assess, in the same way management assesses, the Company's current and future continuing operations. These non-GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different from non-GAAP measures used by other companies. Set forth below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measure.

                     Reconciliation of First Quarter 2009 Results

  (in thousands, except per share amounts)             $           Per Share

  GAAP net loss (A)                                $(4,302)         $(0.12)
  IP litigation costs                                1,629            0.04
  Acquisition related costs                          1,912            0.05
  Earnings excluding other adjustments                (761)          (0.02)
  Non-cash stock-based compensation                  6,682            0.18
  Amortization of acquired intangible assets         1,336            0.04
  Non-GAAP earnings (A)                             $7,257           $0.19
  Basic weighted shares outstanding                                 36,365
  Diluted weighted shares outstanding                               37,744

  A- GAAP loss per share is calculated using basic weighted shares outstanding;
     Non-GAAP earnings per share is calculated using diluted weighted shares
     outstanding.


                      Reconciliation of Full Year 2009 Guidance

                                                    Range for Year Ending
                                                      December 31, 2009
  (in thousands, except per share amounts)            Low           High

  GAAP net loss per share (A)                       $(0.07)        $(0.05)
  IP litigation costs                                 0.13           0.13
  Acquisition related costs                           0.05           0.05
  Earnings per share excluding other adjustments      0.11           0.13
  Non-cash stock-based compensation                   0.70           0.70
  Amortization of acquired intangible assets          0.13           0.13
  Non-GAAP earnings per share (A)                    $0.94          $0.96
  Basic weighted shares outstanding                 37,200         37,200
  Diluted weighted shares outstanding               38,750         38,750

  A- GAAP loss per share is calculated using basic weighted shares outstanding;
     Non-GAAP earnings per share is calculated using diluted weighted shares
     outstanding.
  Conference Call


NuVasive will hold a conference call today at 5:30 p.m. ET / 2:30 p.m. PT to discuss the results. The dial-in numbers are 1-877-407-4018 for domestic callers and 1-201-689-8471 for international. A live webcast of the conference call will be available online from the investor relations page of the Company's corporate website at http://www.nuvasive.com/.

After the live webcast, the call will remain available on NuVasive's website, http://www.nuvasive.com/, through May 22, 2009. In addition, a telephonic replay of the call will be available until May 6, 2009. The replay dial-in numbers are 1-877-660-6853 for domestic callers and 1-201-612-7415 for international callers. Please use account number 3055 and conference ID number 320044.

About NuVasive

NuVasive is a medical device company focused on the design, development, and marketing of products for the surgical treatment of spine disorders. The Company's product portfolio is focused primarily on the $4.6 billion U.S. spine implant market. Additionally, the Company has expanded into the $1.5 billion global biologics market, the $1.5 billion international market, and is developing products for the emerging motion preservation market.

NuVasive's principal product offering is based on its Maximum Access Surgery, or MAS(R) platform. The MAS platform combines four categories of products that collectively minimize soft tissue disruption during spine surgery with maximum visualization and safe, easy reproducibility for the surgeon: NeuroVision(R), a proprietary software-driven nerve avoidance system; MaXcess(R), a unique split-blade retractor system; a wide variety of specialized implants; and several biologic fusion enhancers. MAS significantly reduces surgery time and returns patients to activities of daily living much faster than conventional approaches. Having redefined spine surgery with the MAS platform's lateral approach, known as eXtreme Lateral Interbody Fusion, or XLIF(R), NuVasive has built an entire spine franchise. With nearly 50 products today spanning lumbar, thoracic and cervical applications, the Company will continue to expand and evolve its offering predicated on its R&D focus and dedication to outstanding service levels supported by a culture of Absolute Responsiveness(R).

NuVasive cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause NuVasive's results to differ materially from historical results or those expressed or implied by such forward-looking statements. The potential risks and uncertainties, relative to the proposed acquisition, include, but are not limited to: the risk that the parties may not consummate the transaction in the expected timeframe or that intervening factors may cause the parties to alter the terms (financial or otherwise)of the transaction; the risk that NuVasive may not be able to achieve expected synergies and strategic benefits from the technology owned by the acquired company; and the risk that NuVasive will not be able to successfully integrate the operations of the acquired company. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to: the uncertain process of seeking regulatory approval or clearance for NuVasive's products or devices, including risks that such process could be significantly delayed; the risk that the Company may not be successful in integrating acquired technology or products; the possibility that the FDA may require significant changes to NuVasive's products or clinical studies; the risk that the Company's revenue or profitability projections may prove incorrect because of unexpected difficulty in generating sales or achieving anticipated profitability; the risk that products may not perform as intended and may therefore not achieve commercial success; the risk that competitors may develop superior products or may have a greater market position enabling more successful commercialization; the risk that additional clinical data may call into question the benefits of NuVasive's products to patients, hospitals and surgeons; and other risks and uncertainties more fully described in NuVasive's press releases and periodic filings with the Securities and Exchange Commission. NuVasive's public filings with the Securities and Exchange Commission are available at http://www.sec.gov/. NuVasive assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.

  Contact:                           Investors:
  Kevin C. O'Boyle                   Patrick F. Williams
  EVP & Chief Financial Officer      Vice President, Finance
  NuVasive, Inc.                      & Investor Relations
  858-909-1998                       NuVasive, Inc.
       858-638-5511
                                     

                                     Media:
                                     Jason Rando
                                     The Ruth Group
                                     646-536-7025
                                     



                                   NuVasive, Inc.
               Unaudited Condensed Consolidated Statement of Operations
                       (in thousands, except per share data)

                                                Three Months Ended March 31,
                                                     2009           2008

  Revenues                                         $80,008        $51,184
  Cost of goods sold                                14,774          9,095
  Gross profit                                      65,234         42,089

  Operating expenses:
     Sales, marketing and administrative            58,481         39,317
     Research and development                       10,193          6,976
     In-process research and development                 -          4,176
  Total operating expenses                          68,674         50,469

  Interest income and other, net                       776          1,160
  Interest expense                                  (1,868)          (434)
  Net loss attributable to noncontrolling interests    230              -
  Total other income/ (expenses)                      (862)           726

  Net loss attributable to NuVasive, Inc.          $(4,302)       $(7,654)

  Net loss per share:
     Basic and diluted                              $(0.12)        $(0.22)
     Weighted average shares - basic and diluted    36,365         35,411

  Stock-based compensation is included in operating
   expenses in the following categories:
     Sales, marketing and administrative            $5,241         $4,504
     Research and development                        1,441            646
                                                    $6,682         $5,150



                                 NuVasive, Inc.
                   Unaudited Condensed Consolidated Balance Sheets
                                 (in thousands)

                                                    March 31,   December 31,
                                                      2009          2008
  ASSETS
  Current assets:
    Cash and cash equivalents                      $144,761        $132,318
    Short-term marketable securities                 40,330          45,738
    Accounts receivable, net                         50,032          51,622
    Inventory, net                                   82,236          68,834
    Prepaid expenses and other current assets         2,675           3,466
  Total current assets                              320,034         301,978
  Property and equipment, net                        75,399          73,686
  Long-term marketable securities                    18,430          45,305
  Goodwill                                           32,194           2,332
  Intangible assets, net                             70,550          54,767
  Other assets                                        8,491           9,338
  Total assets                                     $525,098        $487,406

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable and accrued liabilities        $31,096         $26,633
    Accrued payroll and related expenses             15,372          17,132
    Acquisition related milestone liabilities        24,653               -
    Royalties payable                                 2,204           1,722
  Total current liabilities                          73,325          45,487
  Senior convertible notes                          230,000         230,000
  Other long-term liabilities                        16,550          24,288

  Commitments and contingencies

  Noncontrolling interests                           14,770               -

  Stockholders' equity:
      Common stock                                       36              36
      Additional paid-in capital                    391,122         383,293
      Accumulated other comprehensive (loss)
       income                                          (665)           (190)
      Accumulated deficit                          (200,040)       (195,508)
  Total stockholders' equity                        190,453         187,631
  Total liabilities and stockholders' equity       $525,098        $487,406



                                NuVasive, Inc.
           Unaudited Condensed Consolidated Statements of Cash Flows
                                (in thousands)

                                                            Three Months
                                                           Ended March 31,
                                                           2009      2008

  Operating activities:
  Net loss                                              $(4,302)  $(7,654)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation and amortization                         5,488     3,883
    In-process research and development                       -     4,176
    Stock-based compensation                              6,682     5,150
    Other non-cash adjustments                              842       (47)
    Noncontrolling interests                               (230)        -
    Changes in operating assets and liabilities:
      Accounts receivable                                 1,361    (2,929)
      Inventory                                         (14,100)   (9,306)
      Prepaid expenses and other current assets             609    (1,040)
      Accounts payable and accrued liabilities           10,052     5,260
      Accrued payroll and related expenses               (1,777)   (1,728)
  Net cash provided by/(used in) operating activities     4,625    (4,235)
  Investing activities:
  Cash paid for acquisitions                                  -    (6,256)
  Investment in Progentix                               (10,000)        -
  Acquisition related milestone payments                (10,000)        -
  Purchases of property and equipment                    (5,567)  (11,369)
  Purchases of short-term marketable securities          (7,658)   (3,005)
  Sales of short-term marketable securities              27,725    17,300
  Purchases of long-term marketable securities           (6,758)   (8,582)
  Sales of long-term marketable securities               18,975     2,000
  Other assets                                                -       740
  Net cash provided by/(used in) investing activities     6,717    (9,172)
  Financing activities:
  Payments of long-term liabilities                           -         -
  Issuance of convertible debt,  net of costs                 -   222,414
  Purchase of convertible note hedges                         -   (45,758)
  Sale of warrants                                            -    31,786
  Issuance of common stock                                1,160     1,579
  Net cash provided by financing activities               1,160   210,021
  Effect of exchange rate changes on cash                   (59)        -
  Increase in cash and cash equivalents                  12,443   196,614
  Cash and cash equivalents at beginning of year        132,318    61,915
  Cash and cash equivalents at end of year             $144,761  $258,529
  Supplemental disclosure of non-cash transactions:
  Leasehold improvements paid by lessor                            $2,848


DATASOURCE: NuVasive, Inc.



CONTACT:  Kevin C. O'Boyle, EVP & Chief Financial Officer of NuVasive,

Inc., [phone], , or Investors, Patrick

F. Williams, Vice President, Finance & Investor Relations of NuVasive, Inc.,

[phone], , or Media, Jason Rando of The

Ruth Group, [phone], 



Web Site:  http://www.nuvasive.com/ 

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