Embed Size (px)
Citation preview
Jefferies 2015 Healthcare Conference
June 1, 2015
Forward-Looking Statements
NuVasive, Inc. (“NuVasive,” “NUVA” or the “Company”) cautions you
that statements included in this presentation that are not a description
of historical facts are forward-looking statements that involve risks,
uncertainties, assumptions and other factors which, if they do not
materialize or prove correct, could cause the Company's results to
differ materially from historical results or those expressed or implied
by such forward-looking statements.
Further information on NuVasive’s disclaimer and forward-looking
statements and the potential risks and uncertainties that could cause
actual growth and results to differ materially are more fully described
in the Company’s news releases and periodic filings with the
Securities and Exchange Commission.
2
2
Reconciliation of Non-GAAP Information
Management uses certain non-GAAP financial measures in this presentation such as non-GAAP
earnings per share, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP
operating margin, which exclude amortization of intangible assets, leasehold related charges, one-
time and acquisition related items, CEO related transition costs, net gain from changes in litigation
liabilities and non-cash interest expense on convertible notes. The Company also uses measures
such as free cash flow, which represents cash flow from operations less cash used in the acquisition
and disposition of capital. Additionally, the Company uses an adjusted EBITDA measure which
represents earnings before interest, taxes, depreciation and amortization and excludes the impact of
stock-based compensation, a leasehold related charge, acquisition related items, an intangible asset
impairment charge, and other significant one-time items. Management calculates the non-GAAP
financial measures provided in this earnings release excluding these costs and uses these non-GAAP
financial measures to enable it to further and more consistently analyze the period-to-period financial
performance of its core business operations. Management believes that providing investors with
these non-GAAP measures gives them additional information to enable them to assess, in the same
way management assesses, the Company’s current and future continuing operations. These non-
GAAP measures are not in accordance with, or an alternative for, GAAP, and may be different from
non-GAAP measures used by other companies. Reconciliations of the non-GAAP financial measures
to the comparable GAAP financial measures can be found on the Investor Relations section of the
Company’s website.
3
NuVasive Today
• 3rd largest global spine company
• Focused on less disruptive surgical
procedures
• Pioneered lateral approach to spine
fusion
• Transforming both minimally
disruptive and traditional spine surgery
VISION
Change Spine
Surgery and
Improve Patient
Outcomes
Leading Pure-Play Global Spine Company
4
$9 Billion Global Spine Market with
Strengthening U.S. Performance Outlook
Key Market Influencers
• Demographics
supporting expansion
• Increased access to
healthcare internationally
• Surgeons and hospitals
focused on improved
outcomes and attractive
economics
• Consistent, manageable
pricing dynamics
NUVA Strategy Delivering Despite Slower Market Growth and Industry Challenges
5*NuVasive estimates and Spinemarket Worldwide spinal market estimates
2015 – US growing low single digit*2015 – OUS growing mid single digit*
Delivering Best-in-Class, Differentiated Solutions
Game-changing innovation designed to improve surgical outcomes
• Differentiated, less disruptive treatments
• Unique delivery of procedurally integrated solutions
• 10 to 12 new launches and extensions per year
Innovation and differentiation drive premium pricing / mix benefits
6
7
iGA Game-Changing Innovation
The launch of Integrated Global Alignment platform positioned to reshape the market through game-changing innovation
Addressing the Next Frontier in Spine Surgery – ALIGNMENT
Differentiated Culture Delivering Industry
Leading Results
Culture of Innovation and Absolute Responsiveness
– Fuels growth
– Distinct competitive advantage
– Singular vision permeates every department at every level
NUVA 2.0 Transforming Culture
– Driving innovation throughout organization
– Innovative process improvements and increased efficiencies
to better scale and improve profit structure
– Re-investing strategically to drive future growth
8
Evolving into a Global Spine Powerhouse
90+ Solutions Capable of Addressing the Entire
Spine Market
Improving Surgery in
Over 30 Countries OUS
The Only Company with Over a Decade of Experience
in Lateral
9
Strong Foundation for Shareholder Value Creation*
• Focused on delivering mid to high single-digit revenue growth – and
driving to achieve higher aspirations – through targeted market share-
taking strategies
• Committed to capturing well-identified operating efficiencies to drive
EBITDA margin towards ~30% and operating margin expansion to ~20%
over time
• Implementing future EPS levers to deliver bottom-line growth
approaching 2x revenue growth over next several years
• Increasing shareholder value with continued free cash flow generation and
thoughtful capital deployment
Driving Toward $1 Billion in Revenue and Beyond
10*NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
First Quarter 2015 Performance Highlights
11
• Double-digit revenue growth of 10.0% on constant currency basis
to $192.4 million
– Lead by strength in Biologics and US Implants & Services, with meaningful
International constant currency growth
• Delivered 450 basis point operating margin improvement to 12.6%
– Reflective of 320 basis points of underlying operational improvements
– Benefited from expiration of Medtronic royalty and one-time legal settlement
• Adjusted EBITDA margin of 23.0%, or 380 basis point improvement
• Non-GAAP EPS of $0.30
2015 Annual Financial Guidance Reiterated
12
• Revenue increasing to ~$810 million
• 6% growth including ~$12 million of currency headwinds
• 7.8% growth on constant currency basis
• Greatest currency impact expected in 2Q15
• Non-GAAP Operating Margin of ~14.4%, increasing ~300 basis points
from prior year
• Seasonality to be similar to prior years
• 1Q15 to be low point of the year
• MDT royalty expiration begins to benefit margin meaningfully in 2Q15
• Adjusted EBITDA margin of ~24.6%, increasing ~270 basis points
from prior year
• ~64% increase in non-GAAP EPS from prior year to ~$1.10
*NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
Mid to high single digit
revenue growth in 2015
and toward $1 billion*
Taking share of expanding market for less disruptive
treatment
Taking share of and converting traditional
market
Taking share internationally
Multi-Pronged Market Share-Taking Strategy
13*NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
Driving Market Shift to Less Disruptive Spine
Treatments
• MIS becoming standard of care with better patient outcomes and overall
reduction in costs
• Increasingly penetrating and converting traditional spine market with ability to
apply MAS® procedural “know-how” to conventional procedures14
1. International scale
2. In-sourcing manufacturing
3. Improved asset efficiency
4. Sales force efficiency
5. Impact of MDT patent expiration
Targeting ~100 bps*
of Operating Margin
Improvements
Annually
Driving EBTIDA Margin Towards ~30% Beyond $1 Billion* in Revenue
with Well-Identified Long-Term Levers
Pursuing Operating Efficiencies to Drive EBTIDA
and Operating Margin Expansion
15*NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
Increasing Scale and Profitability
16*NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
11.4%
2014 Operating
Margin
Operating Margin at
$1B in Revenue*
Operating Margin at
Beyond $1B in Revenue*
>15%
~20%
21.9%
2014 EBITDA Margin
EBITDA Margin at
$1B in Revenue*
EBITDA Margin at
Beyond $1B in Revenue*
>25%
~30%
Operating Margin Performance Goals
EBITDA Margin Performance Goals
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
32.0%
21.9%
~150
~150
~100~50
~100~200
~200
~100
~100~200
~25%
#’s represent approximation of basis point impact
Profitability Levers Remain Unchanged
17* Non-GAAP EBITDA Margin excludes the impact of stock-based compensation expense^NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
~30%
Driving EBTIDA Margin Towards ~30% Beyond $1 Billion* in Revenue
with Well-Identified Long-Term Levers
• Utilizing OUS infrastructure to
drive long-term operational
efficiencies
• ETR expected to gradually
work from 2014 high point
toward mid 30’s as Company
approaches $1 billion in
revenue*
• Managing for the long term
Committed to Driving EPS Growth at ~ 2x the Rate
of Revenue Growth
• Stockholders approved new
equity incentive plan in 2014
• Reducing “burn rate” to
< 2% in future years
Globalization Initiative Designed to Drive ETR Lower
Additional EPS Lever Through Reduced Share Dilution
18*NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
Creating Financial Flexibility to Maximize
Shareholder Value
• Increasing free cash flow through earnings growth and working
capital management
• Exited 1Q15 with ~$317 million cash on hand with necessary
access to capital, if required
• Analyzing strategic means to accelerate in-sourcing efforts and
OUS expansion
• Re-investing to cultivate future growth drivers:
– Innovation
– OUS infrastructure
19
Evolving into a Global Business
With Increasing Scale and Profitability
By Driving Mid to High Single-Digit
Revenue Growth
Adjusted EBITDA Margin Expansion
to ~30%
Operating Margin Expansion
To ~20%
And EPS Growth at ~2x the
Rate of Revenue Growth
A Look at NuVasive Beyond $1 Billion in Revenue*
20*NuVasive Guidance as of 5/4/15 as Posted on the Company’s Investor Relations Website Under “IR Overview”
Jefferies 2015 Healthcare Conference
June 1, 2015
