NuVasive Climbs on Strong Earnings, Sales Growth

Image: NuVasive.

Healthcare is one of the biggest growth industries in the 21st century, with an aging population worldwide needing more medical procedures to stay healthy. Advances in surgical technology have allowed doctors to use innovative tools to perform procedures without having the same detrimental side effects that older surgical methods involve. NuVasive is one of the company's at the forefront of medical technology, with its minimally invasive spinal surgery solutions aiming at what it sees as a growing market. Coming into its first-quarter financial report, NuVasive shareholders wanted to get confirmation of the company's growth opportunity, and the company largely delivered good news in the form of solid results. Let's take a closer look at NuVasive's latest quarter and what's likely to happen in the near future for the company.

NuVasive pushes forwardNuVasive's first-quarter results showed just how strongly the company has done lately. Revenue rose more than 8% to $192.4 million, with the company overcoming currency-related headwinds that would have added another 1.5 to 2 percentage points to its sales growth rate. After accounting for gains from litigation resolution and other one-time items, NuVasive's adjusted net income climbed 70% to $15.1 million, equating to $0.30 per share. That easily topped the consensus figure of $0.22 per share among those following the stock.

Taking a closer look at NuVasive's numbers, the company took steps to rein in costs despite the sales expansion, helping to boost profits further. General overhead dropped almost 2% from year-ago levels, and reductions in research and development costs also added to profits. One of the biggest items, though, came from the company's agreement in principle with the Justice Department. Under the agreement, NuVasive will pay $13.8 million to the U.S. Treasury in order to resolve allegations, with the result of avoiding a lengthy dispute and potentially incurring even greater costs. When combined with a court order in March calling for a reassessment of damages in its patent litigation with Medtronic , NuVasive was able to reduce its accrued pre-tax litigation-related liabilities by $56.4 million.

Interim CEO and Chairman Greg Lucier celebrated the results, noting that they "speak to the ongoing strength of our innovative edge in the marketplace and commitment to leveraging our scale as NuVasive evolves into a global spine player." In addition, Lucier believes that NuVasive should keep "driving innovation in our products and business and making our culture and people a competitive advantage."

Image: NuVasive.

What's ahead for NuVasive?NuVasive's updated 2015 guidance shows expectations for continued increases in the company's overall business. Revenue of $810 million would represent roughly 6% growth from 2014 levels, while adjusted earnings of $1.10 per share would give NuVasive a much faster growth rate. Margin growth projections were unchanged from previous guidance, and the company still has the same expectations on tax rates.

Yet with NuVasive, products are the company's future, so it's important to take a look at what's coming in the company's pipeline. At a conference earlier this week, NuVasive announced the launch of its Integrated Global Alignment platform, which is hopes to use to integrate procedural technology and tools related to spinal surgery into a single unit to ensure proper alignment. The company believes that by ensuring that medical professionals can align the spine in the optimal position, it can improve the chance of successful long-term surgical outcomes, with academic studies backing up NuVasive's position. Given the proprietary nature of NuVasive's platform, the medical-device maker has plenty of potential to profit from future uses of the device if it can convince medical professionals of its value.

Investors in NuVasive celebrated the news, with shares climbing more than 2% the day following the announcement. With so much potential, NuVasive has many health care investors looking to see how much higher the spinal-surgery specialist can climb. As long as it continues to be a cutting-edge innovator, NuVasive will continue to have opportunities for future growth in a key industry for the global population.

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