NuVasive, Inc.

Second quarter 2023 worldwide net sales were $317.8 million, up 2.4% reported and 3.1% constant currency year over year. International net sales were $78.6 million, up 6.8% reported and 9.8% constant currency. U.S. Spinal Hardware net sales were $174.1 million, up 5.5%; U.S. surgical support net sales were $65.1 million, down 9.3%. Non-GAAP gross profit was $228.3 million versus $224.7 million, and non-GAAP gross margin was 71.8%, down 60 basis points from 72.4%. Non-GAAP operating expenses were $186.1 million, up 1%, and non-GAAP operating margin was 13.3%, up 30 bps from 13.0%. GAAP net income was $7.4 million, or $0.14 diluted EPS, versus a GAAP net loss of slightly less than $1 million, or $(0.02) per share, in the prior year period. Non-GAAP net income was $29.8 million, or $0.56 diluted EPS, versus $24.8 million, or $0.47, a year ago. Cash and cash equivalents were $80.7 million at June 30, 2023, and the company repaid the $450 million convertible notes using $350 million of credit facility borrowings plus cash on hand. Free cash flow was $3 million versus $26 million last year. Full-year 2023 guidance remains unchanged: worldwide net sales growth of 6% to 8% reported and constant currency, with foreign exchange assumed neutral based on July 31 rates. The annual effective tax rate is expected to be in the mid-20% range.

Chris Barry framed the quarter as solid execution in a challenging environment, emphasizing that the company was tracking in line with internal plans and was not seeing a material talent or commercial breakdown ahead of the merger. He highlighted continued momentum in Cervical, early progress in P360, and strength in international markets, while acknowledging some slowdown in Pulse sales tied partly to merger-related anxiety and broader capital spending caution. On the Globus transaction, he said NuVasive remains optimistic about a Q3 close and believes the combination will accelerate its strategy rather than replace it.

Matt Harbaugh emphasized that the first half came in close to plan and that full-year revenue guidance was unchanged at 6% to 8%. He said gross margin was 71.8%, down 60 bps, mainly because of lower NCS sales, while operating margin improved to 13.3% due to higher sales and expense control. He also noted $80.7 million in cash, the full repayment of the $450 million convertible notes with $350 million of credit facility borrowings plus cash, and $3 million of free cash flow in Q2, down from $26 million a year ago. He said pricing remained in the low-single digits and expected the tax rate to stay in the mid-20% range.

Analysts pressed management on whether merger uncertainty was causing reps or customers to pull away, and Chris Barry said the business was holding up well, with the main softness coming from Pulse timing and some capital-market caution rather than broad competitive loss. On FTC process questions, Barry said the company had submitted its second-request response and remained optimistic about a Q3 close, while acknowledging a dynamic range of possible regulatory outcomes. Questions on surgical support and NCS weakness were answered with comments that the decline was pronounced in Q2 but should normalize somewhat, and questions on pricing were met with guidance that low-single-digit pressure should continue in a similar range through the back half of the year.