NuVasive Earnings Cheat Sheet: Higher Expenses Shrinks Margins, Profit Declines

Rising costs hurt NuVasive, Inc. (NASDAQ:NUVA) in the second quarter as profit dropped from a year earlier. NuVasive, Inc. is a medical device company focused on the design, development and marketing of products for the surgical treatment of spine disorders.

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NuVasive Earnings Cheat Sheet for the Second Quarter

Results: Net income for the medical instruments and supplies company fell to $5.4 million (13 cents per share) vs. $6.7 million (17 cents per share) a year earlier. This is a decline of 19.7% from the year earlier quarter.

Revenue: Rose 11.2% to $133 million from the year earlier quarter.

Actual vs. Wall St. Expectations: NUVA reported adjusted net income of 30 cents per share. By this measure, it beat the mean analyst estimate of 17 cents per share. Analysts were expecting revenue of $132 million.

Quoting Management: Alex Lukianov, Chairman and Chief Executive Officer, said, “Our financial performance in the second quarter of 2011 was excellent and suggests that we are executing well against our strategy to take market share. We generated industry leading revenue growth of over 11% and made progress against our profitability goals in spite of challenging spine market growth dynamics. We are exceptionally pleased with the outcome of our recent convertible notes offering, which bolsters our balance sheet and significantly enhances our financial flexibility. As our focus shifts toward the achievement of our next milestone, the evolution of NuVasive into a $1 billion revenue company, we are laser focused on maintaining the startup mentality that is the source of NuVasive’s success as a prolific new product innovator. With Speed of Innovation as our competitive edge, we expect to continue to sustain industry leading growth.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 21.6%, with the biggest boost coming in the second quarter of the last fiscal year when revenue rose 35.2% from the year earlier quarter.

Gross margin shrank 1.6 percentage points to 80.8%. The contraction appeared to be driven by increased costs, which rose 21.4% from the year earlier quarter while revenue rose 11.2%.

Competitors to Watch: Alphatec Holdings, Inc. (NASDAQ:ATEC), Stryker Corporation (NYSE:SYK), Zimmer Holdings, Inc. (NYSE:ZMH), TranS1 Inc. (NASDAQ:TSON), Orthofix International NV (NASDAQ:OFIX), Medtronic, Inc. (NYSE:MDT), Exactech, Inc. (NASDAQ:EXAC), Wright Medical Group, Inc. (NASDAQ:WMGI), Orthovita, Inc. (NASDAQ:VITA), and RTI Biologics Inc. (NASDAQ:RTIX).

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(Source: Xignite Financials)