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NuVasive (NUVA) Q2 Earnings Miss Estimates, Revenues Beat

·5 min read

NuVasive, Inc. NUVA delivered adjusted earnings per share (EPS) of 47 cents in second-quarter 2022, down 21.7% from the year-ago quarter’s adjusted EPS of 60 cents. The figure also missed the Zacks Consensus Estimate by 14.6%.

The one-time adjustments include expenses associated with certain business transition costs and amortization expenses, among others.

GAAP loss per share of 2 cents compares with the year-ago EPS of 3 cents.

Total Revenues

Revenues in the second quarter totaled $310.5 million, up 5.3% year over year on a reported basis and up 7.8% at the constant exchange rate or CER. The top line beat the Zacks Consensus Estimate by 1.5%.

Second-quarter revenue growth was driven by continued positive momentum from new products, including the Simplify Cervical Disc and the Pulse platform, higher procedure volume in the United States and robust international performance.

Geographical & Segmental Details

In the reported quarter, U.S. Spinal Hardware business revenues rose 3.1% year over year to $165.1 million on continued growth in the X360 and C360 portfolios.

Revenues from the U.S. Surgical Support business were $71.8 million in the second quarter, up 6.2% year over year, led by strong sales of the Pulse platform. However, this growth was offset by a decline in biologics driven by a shift in case mix and lower attachment rates.

NuVasive, Inc. Price, Consensus and EPS Surprise

 

NuVasive, Inc. Price, Consensus and EPS Surprise
NuVasive, Inc. Price, Consensus and EPS Surprise

NuVasive, Inc. price-consensus-eps-surprise-chart | NuVasive, Inc. Quote

 

In the quarter, the company’s international business delivered a strong performance, exhibiting double-digit growth on a constant currency basis across Europe and Latin America. Within the Asia Pacific region, growth was led by Japan amid acute COVID-19 challenges.

Margin Details

In the reported quarter, gross profit rose 3.8% year over year to $224.7 million. The gross margin contracted 107 basis points (bps) to 72.4%.

Selling, general and administrative expenses rose 2.1% year over year to $160.7 million, whereas research and development (R&D) expenses climbed 19.1% year over year to $25.9 million.

Overall adjusted operating profit was $38.1 million, up 1.9% from the year-ago figure. Adjusted operating margin saw a 41-bp contraction year over year to 12.3%.

Financial Details

The company exited the second quarter of 2022 with cash and cash equivalents of $225.9 million compared with $205.3 million at the end of the first quarter of 2022.

Cumulative net cash provided by operating activities at the end of the quarter was $68.1 million compared with the prior-year period’s $79.4 million.

2022 Guidance

NuVasive has updated its financial outlook for full-year 2022.

The company continues to expect revenue growth in the range of 6-8% on a reported basis and 8.7-10.7% at CER (up from the prior projection of 7.5-9.5%). The Zacks Consensus Estimate for revenues is pegged at $1.22 billion.

The company reaffirmed its adjusted EPS guidance in the band of $2.15-$2.45. The Zacks Consensus Estimate for the same is pegged at $2.23.

The company has also maintained its adjusted operating margin guidance in the range of 13.0-14.5%.

Our Take

NuVasive exited the second quarter of 2022 with revenues beating the Zacks Consensus Estimate. Strong sales performance across the U.S. Spinal Hardware and U.S. Surgical Support businesses instill optimism. Robust international performance is encouraging. The continued demand for the Simplified Cervical Disc and the Pulse platform also seem promising. The Pulse platform attained several key milestones in the second quarter, including the first cases in Italy, the first Pulse case for pediatric scoliosis and over 100 cases recorded in early sites across the United States and Europe. Further, the improvement in procedure volumes is an added advantage.

However, adjusted EPS for the quarter under review missed the consensus mark and fell year over year. Contraction in both margins on escalating operating expenses is building pressure on the bottom line. The company’s performance continues to be challenged by inflationary costs, supply chain disruptions, volatility in foreign exchange rates and the persistent COVID-led impact.

Zacks Rank and Key Picks

NuVasive currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, Molina Healthcare, Inc. MOH and Merck & Co. MRK.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.8%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Molina Healthcare, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $ 4.55, which beat the Zacks Consensus Estimate by 4.8%. Revenues of $8.1 billion outpaced the consensus mark by 6.2%.

Molina Healthcare has a long-term estimated growth rate of 16.4%. MOH’s earnings surpassed estimates in the trailing four quarters, the average being 3.2%.

Merck reported second-quarter 2022 adjusted earnings of $1.87 per share, beating the Zacks Consensus Estimate of $1.67. Revenues of $14.6 billion surpassed the Zacks Consensus Estimate by 5.4%. It currently has a Zacks Rank #2.

Merck has a long-term estimated growth rate of 10.1%. MRK’s earnings surpassed estimates in the trailing four quarters, the average surprise being 16.8%.


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