Millions of patients suffer from spinal conditions around the world, and NuVasive (NASDAQ:NUVA) is aiming at making it easier to treat them. With its minimally disruptive surgical equipment, the company has worked hard to help medical professionals give their patients a better experience with more favorable results than treatment options that have been available in the past.
Coming into Tuesday's second-quarter financial report, NuVasive investors were hoping that the company would be able to see at least some modest growth. The spinal specialist managed to do better than most had expected, and an increase in guidance for the rest of the year points to the optimism that NuVasive has about its prospects.
NuVasive keeps finding growth
NuVasive's second-quarter results were solid and particularly impressive in light of recent industry headwinds. Revenue rose 3.7% to $292.1 million, which was roughly what most of those following the stock had expected to see from the spinal surgical equipment specialist. Adjusted net income climbed 8% to $32.8 million, and that produced adjusted earnings of $0.63 per share, topping the consensus forecast among investors for $0.56 per share on the bottom line.
Most of NuVasive's growth during the quarter came from the spinal hardware side of the business, where revenue was higher by more than 6% compared to the year-earlier period. That was faster than the company saw in the first quarter, and it also helped to make up for a 0.1% decline in revenue from surgical support services that NuVasive provides. Internationally, NuVasive didn't manage to repeat the extremely strong gains that it saw three months ago, but it did still eke out a 2.1% revenue gain for the period.
Margin expansion also continued to be an important contributor to NuVasive's results. Gross margin in particular was up more than half a percentage point to 73.4% during the period, and adjusted operating margin stayed at relatively high levels of 16.3%, achieving the same high-water mark that it did last year at this time. Efforts to keep overall costs in check seemed to pay off for the company.
CEO Chris Barry gave some color on what brought about the solid results from NuVasive. "We saw meaningful case volume growth," Barry said, "driven by increased surgeon adoption of lateral single-position surgery and NuVasive's innovative X360 system." The CEO also noted that stronger execution in the business helped the company make the most of its sales opportunities and enabled more revenue to fall through to the bottom line as profit.
What's ahead for NuVasive?
One key move that NuVasive has made is to make the Pulse platform commercially available to medical professionals and institutions. Pulse is an integrated technology platform that takes multiple technologies and brings them together into a single product. That improves workflow and makes it easier for surgeons to deliver consistent results for patients time after time.
Because of the demand that the company has seen for its products, NuVasive made some upward revisions to its guidance for the year. The spinal specialist expects that sales for 2019 will still come in between $1.14 billion and $1.16 billion, but adjusted earnings got a $0.05 boost to their guidance range. With NuVasive now expecting $2.25 to $2.35 per share on the bottom line, shareholders are looking for at least modest year-over-year gains even in a worst-case scenario for the company.
NuVasive shareholders were extremely happy with the news, and the stock climbed more than 7% in after-hours trading following the announcement. With so many opportunities to help patients suffering from spinal conditions, NuVasive has put itself in position to keep up healthy growth rates for the foreseeable future.