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NuVasive reported 1Q20 orthopedic revenue of USD $259.9 million, -5.4% vs. 1Q19. Sales performed to expectations through mid-March, but experienced a sharp decline that persisted through April due to the deferral of elective procedures. International sales growth was driven in large part by strength in Japan, but a state of emergency declared there could impact 2Q sales. Company leadership declined to quantify the reduction in total April sales, but indicated a decline of -70% was “in the general ballpark.” NuVasive believes that 2Q will be the low-point for the year, followed by a gradual recovery in 3Q and then incremental improvement in 4Q that continues in 2021.
The company does not expect a fundamental shift in ASC usage as part of the recovery period. Echoing previous comments by Stryker, NuVasive President Matt Link said that he does not see a considerable capacity for ASCs to handle an influx of new procedures. Instead, they’ll continue to grow the number of procedures routinely performed in that setting, like laminectomies and cervical fusions. He characterized NuVasive’s presence in ASCs as single digits as it relates to total revenue.
NuVasive has a strong cash position with more than $500 million cash on hand, as well as untapped access to a $550 million revolver. The company has implemented cost reduction measures that include compensation reductions for the Board of Directors and executive officers, constraining discretionary spending and adjusting production efforts to align with the drop in procedure volume. The company is not reducing spending in terms of innovation and product development, as R&D costs increased in absolute terms and as a percentage of sales compared to 1Q19. Developmental work on Pulse and its robotic component remain on track, as do plans for end-of-year launches of several new cervical products.
“Even under the best-case circumstances, we’re not returning to an environment that’s COVID-free. When you start to think about protocols across the service line, how are they going to continue to protect healthcare providers and patients? How they’re going to limit the potential impact of a secondary rebound is critically important. That is, without question, going to impact volumes at the service line level. They’ll be inherently less efficient.” – Matt Link, NuVasive President
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Spine | $226.4 | $239.6 | ($13.2) | (5.5%) |
| Trauma | $10.0 | $10.3 | ($0.3) | (3.2%) |
| Orthobiologics | $23.5 | $24.8 | ($1.4) | (5.6%) |
| Total | $259.9 | $274.8 | ($14.9) | (5.4%) |
Geographic Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $204.0 | $222.8 | ($18.8) | (8.4%) |
| OUS | $55.8 | $52.0 | $3.9 | 7.5% |
| EMEA | $34.6 | $33.8 | $0.9 | 2.5% |
| Asia Pacific | $16.2 | $13.0 | $3.2 | 24.7% |
| Rest of World | $5.0 | $5.2 | ($0.2) | (3.3%) |
| Total | $259.9 | $274.8 | ($14.9) | (5.4%) |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $259.9 | |
| Cost of Sales | $71.9 | 27.7% |
| R & D | $18.3 | 7% |
| Selling and Admin | $130.2 | 50.1% |
| Other | $34.2 | 13.2% |
| Net Earnings | $5.3 | 2% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
NuVasive reported 1Q20 orthopedic revenue of USD $259.9 million, -5.4% vs. 1Q19. Sales performed to expectations through mid-March, but experienced a sharp decline that persisted through April due to the deferral of elective procedures. International sales growth was driven in large part by strength in Japan, but a state of emergency declared...
NuVasive reported 1Q20 orthopedic revenue of USD $259.9 million, -5.4% vs. 1Q19. Sales performed to expectations through mid-March, but experienced a sharp decline that persisted through April due to the deferral of elective procedures. International sales growth was driven in large part by strength in Japan, but a state of emergency declared there could impact 2Q sales. Company leadership declined to quantify the reduction in total April sales, but indicated a decline of -70% was “in the general ballpark.” NuVasive believes that 2Q will be the low-point for the year, followed by a gradual recovery in 3Q and then incremental improvement in 4Q that continues in 2021.
The company does not expect a fundamental shift in ASC usage as part of the recovery period. Echoing previous comments by Stryker, NuVasive President Matt Link said that he does not see a considerable capacity for ASCs to handle an influx of new procedures. Instead, they’ll continue to grow the number of procedures routinely performed in that setting, like laminectomies and cervical fusions. He characterized NuVasive’s presence in ASCs as single digits as it relates to total revenue.
NuVasive has a strong cash position with more than $500 million cash on hand, as well as untapped access to a $550 million revolver. The company has implemented cost reduction measures that include compensation reductions for the Board of Directors and executive officers, constraining discretionary spending and adjusting production efforts to align with the drop in procedure volume. The company is not reducing spending in terms of innovation and product development, as R&D costs increased in absolute terms and as a percentage of sales compared to 1Q19. Developmental work on Pulse and its robotic component remain on track, as do plans for end-of-year launches of several new cervical products.
“Even under the best-case circumstances, we’re not returning to an environment that’s COVID-free. When you start to think about protocols across the service line, how are they going to continue to protect healthcare providers and patients? How they’re going to limit the potential impact of a secondary rebound is critically important. That is, without question, going to impact volumes at the service line level. They’ll be inherently less efficient.” – Matt Link, NuVasive President
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Spine | $226.4 | $239.6 | ($13.2) | (5.5%) |
| Trauma | $10.0 | $10.3 | ($0.3) | (3.2%) |
| Orthobiologics | $23.5 | $24.8 | ($1.4) | (5.6%) |
| Total | $259.9 | $274.8 | ($14.9) | (5.4%) |
Geographic Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $204.0 | $222.8 | ($18.8) | (8.4%) |
| OUS | $55.8 | $52.0 | $3.9 | 7.5% |
| EMEA | $34.6 | $33.8 | $0.9 | 2.5% |
| Asia Pacific | $16.2 | $13.0 | $3.2 | 24.7% |
| Rest of World | $5.0 | $5.2 | ($0.2) | (3.3%) |
| Total | $259.9 | $274.8 | ($14.9) | (5.4%) |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $259.9 | |
| Cost of Sales | $71.9 | 27.7% |
| R & D | $18.3 | 7% |
| Selling and Admin | $130.2 | 50.1% |
| Other | $34.2 | 13.2% |
| Net Earnings | $5.3 | 2% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
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ME
Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
