Pandemic Pain: NuVasive’s 2020 Sales Fall 10 Percent

COVID-19 has not been kind to medtech finances.

NuVasive Inc. is reporting both fourth-quarter and full-year sales losses, though the company delivered strong international growth.

“NuVasive continues to see significant impact from COVID-19 on elective surgical procedures and patient sentiment, particularly within the U.S. market, which increased late in the fourth quarter,” said J. Christopher Barry, CEO of NuVasive. “Against a challenging 2020, we made key investments in infrastructure, talent, and innovation to unlock our ability to fulfill our long-term strategy. We are excited about the acquisition of Simplify Medical to advance our C360 portfolio and the 510(k) submission for the Pulse platform. We remain committed to delivering enhanced value to shareholders, surgeons, and employees, while helping change the lives of patients around the globe.”

Fourth-quarter gross profit dropped 8.7 percent to $207.2 million. For the three-month period ending Dec. 31, 2020, GAAP and non-GAAP gross margin was 71 percent and 71.6 percent, respectively compared to GAAP and non-GAAP gross margin of 73.2 percent, for the fourth quarter 2019. The decline in GAAP and non-GAAP gross margin was primarily due to the decrease in net sales and incremental reserves for inventory.
 
GAAP net income was $1.7 million, or diluted earnings per share of $0.03, for the fourth quarter 2020 plummeting from GAAP net income of $29.9 million, or diluted earnings per share of $0.55, for the fourth quarter 2019. On a non-GAAP basis, the company reported net income of $30.4 million, or diluted earnings per share of $0.59, for the fourth quarter 2020 compared to non-GAAP net income of $38.5 million, or diluted earnings per share of $0.73, for the fourth quarter 2019.

Free cash flow for the quarter was $44.8 million compared to $46.3 million in the prior year period.
 
Full-year net sales decreased 10.1 percent to $1.051 billion, or 10.2 percent on a constant currency basis; and gross profit nosedived 14.8 percent to $729 million. 

For the full year 2020, GAAP and non-GAAP gross margin was 69.4 percent and 69.5 percent, respectively compared to GAAP and non-GAAP gross margin of 73.3 percent for the full year 2019. The decrease in GAAP and non-GAAP gross margin was primarily a result of incremental reserves for inventory attributed to projected demand for certain spinal hardware products impacted by COVID-19.
 
The company reported GAAP net loss of $37.2 million, or diluted loss per share of $0.72, for the full year 2020 compared to GAAP net income of $65.2 million, or diluted earnings per share of $1.23, for the full year 2019. On a non-GAAP basis, net income was $63.8 million, or diluted earnings per share of $1.23, for the full year 2020 compared to non-GAAP net income of $129.8 million, or diluted earnings per share of $2.47, for the full year 2019. 
 
Cash, cash equivalents, and investments were $1.030 billion as of Dec. 31, 2020, compared to $213 million reported as of Dec. 31, 2019.