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NuVasive (NUVA) Q4 Earnings Miss Estimates, Gross Margin Up

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NuVasive, Inc. NUVA delivered fourth-quarter 2021 adjusted earnings per share (EPS) of 40 cents, registering a 30.5% decline from the year-ago adjusted EPS of 59 cents. The figure also lagged the Zacks Consensus Estimate by 14.9%.

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

GAAP loss per share of 71 cents shows a huge decline from the year-ago EPS of 3 cents.

For the full year, adjusted earnings were $1.68, reflecting an increase of 36.6% from the year-ago period. However, it lagged the Zacks Consensus Estimate by 4.5%.

Total Revenues

Revenues in the fourth quarter totaled $302.1 million, up 3.5% year over year on a reported basis and up 4.5% at constant exchange rate or CER. The top line beat the Zacks Consensus Estimate by 1.5%.

Fourth-quarter revenues growth was driven by product introductions, particularly the Pulse platform and the C360 portfolio featuring the NuVasive Simplify Cervical Disc in the United States, and continued strong international performance.

Full-year revenues were $1.14 billion, reflecting an 8.4% increase from the year-ago period (up 8.1% at CER). Revenues beat the Zacks Consensus Estimate by 0.9%.

Geographical & Segmental Details

In the reported quarter, U.S. Spinal Hardware business revenues rose 3.4% year over year to $160.5 million.

Revenues from the U.S. Surgical Support business were $69.7 million in the fourth quarter, up 3.4% year over year led by strong sales of the Pulse platform.

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. Also, NuVasive’s core Spine business grew double digits year over year, led by the Asia Pacific, Europe and Latin America regions.

Margin Details

In the reported quarter, gross profit rose 5.5% year over year to $218.5 million. Gross margin expanded 135 basis points (bps) to 72.4%.

Selling, general and administrative expenses rose 11.4% year over year to $160.7 million, whereas research and development (R&D) expenses climbed 15.9% year over year to $25.2 million.

Overall adjusted operating profit was $32.6 million, down 20.7% from the year-ago figure. Adjusted operating margin saw a 330-bp contraction year over year to 10.8%.

Financial Details

The company exited 2021 with cash and cash equivalents of $246.1 million compared with $856.9 million at the end of 2020.

Cumulative net cash provided by operating activities at the end of 2021 was $182.2 million compared with the prior-year period’s $185.9 million.

2022 Guidance

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

The company currently expects to report revenue growth in the range of 5-8% (6-9% at CER). The Zacks Consensus Estimate for the revenue is pegged at $1.22 billion.

Adjusted earnings per share are projected in the range of $2.05−$2.35. The Zacks Consensus Estimate for the same is pegged at $2.15. Adjusted operating margin is estimated in the range of 13% to 14.5%.

Our Take

NuVasive exited the fourth quarter of 2021 on a mixed note ith an earnings miss and revenue beat. The year-over-year decline in earnings due to the increase in the contingent consideration liabilities for the Simplify Medical acquisition is disappointing. Escalating costs and decline in operating profit is discouraging too. On a positive note, the year-over-year growth in revenues was driven by product introductions, particularly the Pulse platform and the C360 portfolio featuring the NuVasive Simplify Cervical Disc in the United States. The continued strong international performance and double-digit growth in NuVasive’s core Spine business across the Asia Pacific, Europe, and Latin America regions raise investor confidence.

Zacks Rank and Key Picks

NuVasive currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are McKesson Corporation MCK, Henry Schein, Inc. HSIC and Bio-Rad Laboratories, Inc. BIO.

McKesson, carrying a Zacks Rank #2 (Buy), reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. Revenues of $68.61 billion surpassed the Zacks Consensus Estimate by 3.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 48% compared with the industry’s 5.8% growth in the past year.

Henry Schein, carrying a Zacks Rank #1, reported fourth-quarter 2021 adjusted earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 18.9%. Revenues of $3.33 billion outpaced the consensus mark by 4.7%.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.5%.

Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. Revenues of $732.8 million outpaced the Zacks Consensus Estimate by 0.5%. It currently has a Zacks Rank #2.

Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in each of the trailing four quarters, the average surprise being 66.9%.


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