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Product / Company Performance

NuVasive Reports 3Q18 Revenue of $271.3MM, +9.8% vs. 3Q17 -



NuVasive leveraged favorable market conditions and new product launches to post 3Q18 revenue of $271.3MM, +9.8% vs. 3Q17. The company believes that its transformation from a mechanical and implant-based portfolio to a systems-based player will enable them to take market share.


Favorable Market Conditions Spur Accelerated Case Volumes

NuVasive saw U.S. case volume increase in 3Q18. Between discussions with their surgeon partners and data showing an increase in elective surgeries, company leadership believes that the spine market is healthier and headed toward growth. Outgoing CEO Gregory T. Lucier said, “I do believe a strong U.S. economy is leading people to have insurance and people feeling confident to spend whatever out-of-pocket they have to spend to take elective surgery.” Against this backdrop, NuVasive had success with continued adoption of newer products in the U.S. like Modulus for TLIF and XLIF, Porous PEEK offerings, RELINE small stature and TLX launches.

The company’s biologics segment experienced a faster than expected rebound, performing flat against 3Q17. Leadership expects 4Q18 to be their first growth period in two years. Product line extensions, including bone allograft, Amniotic Membrane DS and Propel DBM, and continued investments are driving the return to growth in this segment.

The company continued to make progress in increased throughput at their West Carrollton manufacturing facility under the guidance of newly-hired Dale Wolf, a former GE executive with 20 years of medical device manufacturing experience. By the end of the year, the company anticipates producing about 70% of the SKUs planned for self-manufacture.

ORTHOWORLD estimates 3Q18 and YTD segment sales and growth on an as-reported basis, as follows.

  3Q18 3Q17 $ Change % Change
Spine $232.3 $209.2 $23.2 11.1%
Trauma $10.0 $8.9 $1.1 12.1%
Orthobiologics $29.0 $29.0 $0.0 0.0%
Total  $271.3 $247.1 $24.3 9.8%


  YTD18 YTD17 $ Change % Change
Spine $701.8 $647.3 $54.5 8.4%
Trauma $28.7 $25.3 $3.4 13.3%
Orthobiologics $83.0 $83.4 -$0.4 -0.5%
Total  $813.5 $756.0 $57.5 7.6%


3Q18 Revenue by Geographic Region

International revenue was below company expectations, in part because of continued friction with the U.K. healthcare system. Puerto Rico has not returned to average growth rates since the 2017 hurricane. Double-digit growth in the EMEA and Asia Pacific regions were driven primarily by Germany and Japan, where MIS adoption rates are accelerating.

ORTHOWORLD estimates NuVasive’s orthopaedic revenue by geographic region as follows.

Geographic Region 3Q18 3Q17 $ Change % Change
US $218.7 $198.5 $20.1 10.1%
Ex-US $52.7 $48.5 $4.1 8.5%
   EMEA $42.91 $38.83 $4.1 10.5%
   Asia Pacific $5.40 $4.85 $0.5 11.2%
   Rest of World $4.34 $4.85 -$0.5 -10.5%
Total  $271.3 $247.1 $24.3 9.8%


Surgical Intelligence Systems and Technology the Future at NuVasive

As health systems consolidate and reduce their number of vendors, NuVasive’s strategic approach is to offer complete systems of products and technology to “make an operating room [into] a NuVasive room.” The company remains on track for 2Q19 delivery of the Pulse surgical automation platform. Per leadership, their Spine Precision Partnership with Siemens Healthineers has resulted in excitement from their surgeons and salesforce. NuVasive does not plan to place Pulse units for free in exchange for increased procedural volume share. The company is confident that the capital sales team it is assembling and training will be able to sell units.

NuVasive has continued to work behind the scenes on a “new approach” to robotics. Leadership said little on the topic other than the company is taking a build vs. buy strategy for the technology. In 3Q18, NuVasive launched its Surgical Intelligence offering, as well as a strategic partnership with Biedermann Technologies, whose proprietary screw innovations will be integrated into RELINE products, yielding the capacity to offer customized screw placement and corrections based on individual patient need. Finally, the company has had success converting trials of their LessRay software to sales. NuVasive has not seen diminished interest in LessRay ahead of the Pulse launch, as the former represents an important part of their tiered product offering strategy.

To further company expertise in robotics, NuVasive named J. Christopher Barry as CEO, effective November 5. Barry served as Senior Vice President and President, Surgical Innovations at Medtronic, where he led development of the general surgical robotics initiative. Additionally, Scott Huennekens was named the newest member of the NuVasive board. Mr. Huennekens is the President and CEO of Verb Surgical, a company building a digital surgery platform combining robotics, advanced visualization, advanced instrumentation, data analytics, and connectivity.

Based on market conditions and earnings guidance, ORTHOWORLD projects 2018 NuVasive revenue of $1,105.8, +7.6% vs 2017.


Net Earnings

NuVasive leadership stated the investment costs and start-up issues of the West Carrollton plant are now behind them. The reduced cost-per-unit should start having margin benefits in 2019. While the company has previously hinted at belt-tightening, the rebound of the spine market represented an opportunity to capitalize. Per Lucier, “As a CEO, I have to make the tough calls that are in the long-term interest of NuVasive. During the quarter, it became clear the U.S. spine market was turning for the better and our commercial teams were building momentum. As a result, we decided not to make further operational cuts or slow R&D project funding.”

3Q18 Amount ($MM) % of Sales
Sales $271.3  
   Administrative -$141.2 52.0%
   Cost of Goods -$74.2 27.3%
   R&D -$24.2 8.9%
   Other -$15.8 5.8%
Net Earnings $15.9 5.9%


Sources: NuVasive; ORTHOWORLD estimates. All revenue figures presented in USD $MM.

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.

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