NuVasive, Inc. Is Taking Market Share and the CEO Isn't Afraid to Tout It

By Markets Fool.com

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Image source: NuVasive.

NuVasive(NASDAQ: NUVA) reported second-quarter earnings last week with sales outperforming the overall spine market. Given the competitive nature of the business, investors can't really ask for more.

NuVasiveresults: The raw numbers

Metric

Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)

Revenue

$236 million

$203 million

16%

Adjusted income

$20.6 million

$15.7 million

31%

Adjusted earnings per share

$0.40

$0.31

29%

Data source: Company press release.

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What happened with NuVasivethis quarter?

  • Some of the revenue growth came from the acquisition of Ellipse Technologies, which became NuVasive's specialized orthopedic business. On an organic basis, revenue increased 9% year over year.
  • The strong launch of integrated global alignment systems continues with surgical planning technology driving sales of spinal hardware.
  • Growth in international sales is back on track, with sales up 33% year over year on a constant currency basis.
  • The bottom line grew faster than the top line as NuVasive continues to improve operating margins, but the earnings-per-share number is losing a little ground due to an increasing share count.

What management had to say

Greg Lucier, NuVasive's chairman and CEO, wasn't afraid to gloat a little about the company's growth: "We continue to take market share from the bigger spine players who remain complacent and the small spine players who are getting squeezed out."

He highlighted future growth from the acquisition of Biotronic NeuroNetwork, which closed on July 1. "We have combined the service offering of Biotronic with our impulse monitoring business to create NuVasive Clinical Services, which will support more than 75,000 cases annually in the US, making it the nation's largest intraoperative neural monitoring service provider," Lucier said.

Looking forward

Management raised 2016 guidance to approximately $962 million, from previous guidance of approximately $928 million. The new guidance is almost a 19% increase over 2015 revenue. Much of the increase comes from the inclusion of the Biotronic acquisition -- which is expected to add $13 million in the third quarter -- but the strong first-half momentum appears to be adding a little to the increase as well.

The guidance for the bottom line was also increased, with adjusted earnings expected to be approximately $1.64 per share, compared to previous guidance of $1.48. Expanding operating margins are helping drive the expected 25% growth compared to 2015.

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Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends NuVasive. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.