NuVasive (NASDAQ:NUVA) may not have pulled a rabbit out of its hat for the earnings release today, but the surgical device manufacturer did have a trick up its sleeve that pleasantly surprised investors.

Drum roll, please...
NuVasive put a little dirt in the eyes of Wall Street analysts by posting net income ahead of expectations. While third-quarter revenue of $148 was largely in line with the previously announced range that was offered three weeks ago, adjusted earnings per share (not including one-time payments like litigation) of $0.23 soundly beat analysts' expectations of $0.10 a share. This came as a surprise because the company was able to hit these numbers despite a meaningfully weaker revenue picture. In a sales pre-announcement at the beginning of October, NuVasive lowered revenue expectations from $154 million to $147 million because of stagnant trends in some of its more critical sectors.  

The results from the earnings release and conference call may have eased some tensions for investors, and while some of the headwinds facing NuVasive still exist, the better-than-expected earnings numbers  provided a nice boost to shares today. However, despite the pop from the earnings news, keep in mind that NuVasive shares are still down 40% in the last six months.

NuVasive CEO Alex Lukianov noted on the earnings conference call that much of the slowdown in revenue was attributed to account churn. Worse yet, these problems could persist in the upcoming quarter, but the company is looking to recapture revenue by bringing on more sales reps and focusing on geographic areas where churn was most prevalent. Management gave revenue guidance for the rest of the year, and expects total sales for the year to land somewhere between $601 million and $605 million.

What a Fool believes
While the issues facing NuVasive are concerning today, they are not doomsday problems in the long term. Sales people who migrated to competitors are replaceable. More importantly, NuVasive will need to keep innovating to keep afloat in this extremely competitive market for spinal treatment and procedures. Big guns like Stryker (NYSE:SYK) and Medtronic (NYSE:MDT) can throw their weight around to squeeze out smaller players like NuVasive. If it can continue to innovate in minimally invasive procedures, though, NuVasive should be fine on that front.

One of the big hurdles for NuVasive is that some of its tools and procedures are considered experimental by some insurers. This is a key area to watch, and any increased pushback from large insurers is a negative.

However, in a sign of good news for the spinal implant market, Globus Medical (NYSE:GMED) just received approval from the Food and Drug Administration for one of its motion-preserving treatments for spinal disc abnormalities. This could start to open the door for more innovative spinal procedures, especially those pioneered by NuVasive.

There are still some mixed signals coming out of this company, but the recent lows in share price could prove to be a good time to pick up shares if some of these headwinds can be addressed.