NuVasive Inc. (NUVA) filed Quarterly Report for the period ended 2009-09-30.
NUVASIVE is a medical device company focused on the design development and marketing of products for the surgical treatment of spine disorders. The Company's product portfolio is focused on applications in the over $4.2 billion U.S. spine fusion market. The Company's current principal product offering includes a minimally disruptive surgical platform called Maximum Access Surgery or MAS as well as a growing offering of cervical and motion preservation products. Nuvasive Inc. has a market cap of $1.41 billion; its shares were traded at around $37.39 with a P/E ratio of 103.9 and P/S ratio of 5.6.
Highlight of Business Operations:
The increase in cost of goods sold in total dollars in the three and nine months ended September 30, 2009 compared to the same periods in 2008, resulted primarily from (i) increased direct costs of $6.2 million and $15.6 million, respectively, primarily to support revenue growth; and (ii) increased depreciation expense of $1.0 million and $3.5 million, respectively, incurred on the increased amount of surgical instrument sets we hold for use in surgeries. We expect cost of goods sold, as a percentage of revenue, to remain at these levels for the remainder of 2009.
The increases in costs discussed above were offset by decreases in costs for the three and nine months ended September 30, 2009 compared to the same periods in 2008, related to charges totaling $7.4 million for vacating the Company’s previous corporate headquarters and incremental transition costs related to our ERP system which were recorded in the three and nine months ended September 30, 2008. In August 2008, we relocated our corporate headquarters to a two-building campus style complex in San Diego. In connection with vacating our former corporate headquarters, we recorded a charge of approximately $4.8 million to sales, marketing, and administrative expenses for lease termination costs and other related items. In addition, during the three and nine months ended September 30, 2008, we incurred non-capitalizable expenses totaling $2.6 million related to the implementation of our new ERP system which was completed in the third quarter of 2008. During the third quarter of 2009, due to continued growth, we decided to reoccupy the former corporate headquarters facility. Accordingly, at August 31, 2009, the remaining liability related to lease termination costs of $2.0 million was reversed and is recorded as a reduction of sales, marketing, and administrative expenses for the three and nine months ended September 30, 2009.
The increase in research and development costs in the periods presented are primarily due to expenses related to litigation support costs of $0.8 million and $3.4 million incurred during the three and nine months ended September 30, 2009, respectively, with no comparable expenses during the same periods in 2008. Compensation and other shareowner related expenses increased $1.4 million and $4.0 million, for the three and nine months ended September 30, 2009, respectively, including an increase in stock-based compensation of $1.2 million for the nine months ended September 30, 2009, compared to the same periods in 2008, primarily due to increased headcount to support our product development and enhancement efforts. We expect research and development costs to continue to increase in absolute dollars for the foreseeable future in support of our ongoing development activities and planned clinical trial activities.
Cash, cash equivalents and short-term and long-term marketable securities, was $200.2 million at September 30, 2009 and $223.4 million at December 31, 2008. The decrease was due primarily to the payments of $10.0 million related to our investment in Progentix, $10.0 million related to Osteocel milestones and $24.1 million related to our acquisition of Cervitech, offset by cash flow provided from achieving profitability in 2009.
Net cash used in investing activities was $40.6 million in the first nine months of 2009 compared to $164.7 million in the same period in 2008. The decrease in net cash used in investing activities of $124.1 million is primarily due to the net change of $114.5 million in the cash provided by the activity in our investment portfolio and to a $12.9 million decrease in capital asset purchases, offset by an increase of $2.8 million used in cash payments for our acquisitions.
Net cash provided by financing activities was $9.6 million in the first nine months of 2009 compared to $216.6 million in the same period in 2008. The change in net cash provided by financing activities of $207.0 million is primarily due to the receipt of net proceeds of $208.4 million from the issuance of convertible debt in March 2008.
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