IB Net Payout Yields Model

Fantastic Earnings From NuVasive

After the close today, NuVasive (NUVA) reported solid results that easily beat estimates. NUVA is a medical device company focused on developing minimally disruptive surgical products and procedures for the spine.

Clearly an attractive product concept but the company was hit very hard last year when the new healthcare bill caused insurance providers to push back on lumbar reimbursements. The stock plunged from nearly $38 in October last year to a low of $22 in December. Since this was a broken stock and not a broken company, Stone Fox Capital recently added NUVA to most of the Opportunistic portfolios.

The company reported earnings of $.24 and revenue of $124.5M including a doubling of international revenue to 8% with an office opened up in Puerto Rico and one to open up in Tokoyo later this year. Revenue increased by 14.1% over 2010 showing that growth is back on track.

NUVA management continues to expect to eventually move towards a $1B revenue company with several exciting products in the pipeline. The company currently expects roughly $535M in 2011 so the goal amounts to a doubling of revenue.

From Briefing.com:

4:33PM NuVasive beats by $0.05, beats on revs; raises FY11 guidance (NUVA) 30.60 +0.58 : Reports Q1 (Mar) earnings of $0.24 per share,$0.05 better than the Thomson Reuters consensus of $0.19; revenues rose 14.1% year/year to $124.5 mln vs the $123.2 mln consensus. Co issues upside guidance for FY11, sees EPS of $1.20-1.23 vs. $1.09 Thomson Reuters consensus, up from previous guidance of $1.07 to $1.10; sees FY11 revs of $530-540 mln vs. $530.61 mln Thomson Reuters consensus, up from previous guidance of $525 million to $535 million.


-- Alex Lukianov, Chairman and Chief Executive Officer, said, "Our financial performance in the first quarter of 2011 was excellent across all our key sectors. We generated revenue growth of over 14% and better than expected operating margin improvement in view of challenging spine market growth dynamics. Our performance internationally was a highlight, and is well on track to double this year to approximately 8% of revenue. We are pleased to be able to raise revenue guidance today in light of a marginally improved outlook for our U.S. lumbar business this year. As our focus shifts toward the achievement of our next milestone, the evolution of NuVasive into a $1 billion revenue company, we are laser focused on maintaining the startup mentality that is the very source of NuVasive's success as a prolific new product innovator. With speed as our competitive edge, we expect to continue to sustain industry leading growth."

2011 Full Year Financial Guidance 
-- Revenue of $530 million to $540 million; up from previous guidanceof $525 million to $535 million
-- GAAP EPS of $0.52 to $0.55; up from previous guidance of $0.39 to $0.42

-- Non-GAAP EPS of $1.20 to $1.23; up from previous guidance of $1.07
   to $1.10

-- Non-GAAP Operating Margin of ~17.5%, up from previous guidance
   of ~16.5%

-- GAAP effective tax rate of ~45%, down from previous guidance
   of ~49%
Disclosure: Long NUVA in client and personal accounts. Please review the disclaimer page.


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