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NuVasive Inc. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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NuVasive Inc. (NUVA) filed Quarterly Report for the period ended 2010-09-30.

Nuvasive Inc. has a market cap of $942.6 million; its shares were traded at around $24.29 with a P/E ratio of 40.5 and P/S ratio of 2.6. NUVA is in the portfolios of Jim Simons of Renaissance Technologies LLC, RS Investment Management, PRIMECAP Management, Mario Gabelli of GAMCO Investors, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Costs that tend to vary based on revenue, such as sales force compensation and other direct costs related to the sales force, shipping costs and depreciation expense related to our surgical instrument sets increased $9.4 million and $32.6 million for the three and nine months ended September 30, 2010, respectively, compared to the same periods in 2009. The increases are reasonably consistent with our increased revenue growth for the three and nine months ended September 30, 2010 as compared to the same periods in 2009. Total costs related to our sales force, as a percent of revenue, decreased slightly to 28.7% from 28.8% for the three months ended September 30, 2010 compared to the same period in 2009.

Compensation and other shareowner related expenses for our marketing and administrative support functions decreased $1.8 million for the three months ended September 30, 2010 compared to the same period in 2009 as increased compensation and other shareowner related expenses resulting from additions to the Companys headcount were more than offset by a decrease in performance based compensation estimates. Compensation and other shareowner related expenses for our marketing and administrative support functions increased $3.7 million for the nine months ended September 30, 2010 compared to the same period in 2009 as a result of overall Company growth and headcount additions in our marketing and administrative support functions, partially offset by a decrease in performance based compensation estimates. Stock-

based compensation increased $2.2 million and $4.1 million in the three and nine months ended September 30, 2010, respectively, compared to the same periods in 2009 primarily related to an increase in stock-based awards granted to shareowners (employees) associated with the continued increase in headcount. These increases in expenses are partially offset by decreases of approximately $0.3 million and $2.6 million in acquisition-related costs during the three and nine months ended September 30, 2010, respectively, compared to the same periods in 2009, attributable to expenses incurred in connection with our investment in Progentix and acquisition of Cervitech in the three and nine months ended September 30, 2009 with no comparable expense during the same periods in 2010.

In addition to the items discussed above, legal expenses increased $2.2 million and $4.0 million for the three and nine months ended September 30, 2010, respectively, compared to the same periods in 2009, resulting primarily from increased non-Medtronic related litigation and legal activity including recently announced offensive actions to protect our intellectual property. These increased expenses were partially offset by the recovery of an international receivable in the amount of $1.5 million in the nine months ended September 30, 2010 which had previously been reserved for in the first half of 2009.

In connection with the relocation of our corporate headquarters in August 2008, we recorded a charge of approximately $4.8 million to sales, marketing, and administrative expenses for lease termination costs and other related items. During the third quarter of 2009, due to continued growth, we decided to reoccupy the former corporate headquarters facility. Accordingly, in 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.

Compensation and other shareowner related expenses decreased $0.3 million for the three months ended September 30, 2010 as increased compensation and other shareowner related expenses resulting from additions to the Companys headcount were more than offset by a decrease in performance based compensation estimates for the three months ended September 30, 2010 as compared to the same period in 2009. Compensation and other shareowner related expenses increased $1.7 million for the nine months ended September 30, 2010 primarily due to increased headcount to support our product development and enhancement efforts, as compared to the same period in 2009. In addition, expenses related to ongoing clinical trial and study related activities designed to demonstrate the value of our emerging and existing technologies increased $0.5 million and $1.8 million for the three and nine months ended September 30, 2010, respectively, compared to the same periods in 2009. In addition, expenses increased $0.3 million and $1.0 million in the three and nine months ended September 30, 2010 as compared to 2009 as a result of expenses incurred in connection with a supply agreement related to the bone graft product being developed by Progentix. We expect research and development costs to increase in absolute dollars for the foreseeable future in support of our ongoing development and planned clinical trial and study related activities.

Read the The complete Report

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