NuVasive, Inc. NUVA announced preliminary revenue results for first-quarter 2020 on Apr 14. The company is slated to release its full financial results for the period on May 6. However, the preliminary results failed to impress the investors as its shares dipped 6.3% to close at $52.90 yesterday, following the announcement.
For first-quarter 2020, NuVasive expects revenues of $259-$261 million, suggesting a decline of 5-5.7% as compared with $274.8 million reported in the first quarter of 2019. The top line is expected to be primarily dented by the global decline in elective surgical procedures since mid-March due to the coronavirus pandemic and government stay-at-home orders. The Zacks Consensus Estimate for the metric is currently pegged at $280.6 million.
As of Mar 31, 2020, NuVasive estimates to have more than $500 million cash on hand and a revolving credit facility of $550 million, which was undrawn as of Mar 31, 2020. However, the company is not in a position to provide more precise estimates for first-quarter 2020 as it is currently conducting its financial close procedure for the quarter.
NuVasive witnessed a fall in elective procedure volumes in the first quarter, which it expects to continue to significantly impact its performance in second-quarter 2020. As of now, the company expects the spine surgery volumes for the remainder of the year to be limited. It is also unable to predict the time and rate of recovery of the elective surgery volumes. Hence, NuVasive has withdrawn its 2020 guidance, which was initially provided on Feb 20, 2020.
Cost Control Measures
Given the adverse impact of the coronavirus pandemic on the demand for elective surgical procedures, NuVasive is adopting measures to control its expenses and overcome the situation. However, given that technological innovation is the key growth driver, NuVasive intends to maintain its levels of R&D investment. The company, from an operation continuity perspective, is managing its distribution and commercial teams to support surgeon partners at present as well as when surgeries start to be on track globally in the future.
Share Price Movement
NuVasive has underperformed its industry over the past three months. The stock has fallen 32.3% compared with a 13.5% decline of the industry.
Zacks Rank & Key Picks
NuVasive currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are ResMed Inc. RMD, National Vision Holdings, Inc. EYE and Phibro Animal Health Corporation PAHC.
ResMed has a projected long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
National Vision’s long-term earnings growth rate is estimated at 10.7%. The company presently has a Zacks Rank #2.
Phibro’s long-term earnings growth rate is estimated at 2.1%. It currently carries a Zacks Rank #2.
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