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Q3 2008 Earnings Call
October 22, 2008 5:30 pm
Nick Laudico - The Ruth Group
Alex Lukianov - Chairman and Chief Executive Officer
Keith Valentine - President and Chief Operating Officer
Kevin O’Boyle - Executive Vice President and Chief Financial Officer
Matt Miksic - Piper Jaffray
Taylor Harris - JPMorgan
Raj Denhoy - Thomas Weisel Partners
Benjamin Andrew - William Blair & Company
Bob Hopkins - Banc of America
David Roman - Morgan Stanley
Joanne Wuensch - BMO Capital Markets.
Vincent Ricci - Wachovia
Vivian Cervantes - Rodman & Renshaw LLC
Ed Shenkan - Needham & Company
John Putnam - Dawson James Securities
Bill Plevenic - Kenicourt
Greetings and welcome to NuVasive Incorporated third quarter 2008 earnings conference call. (Operator Instructions)
It’s now my pleasure to introduce your host, Nick Laudico of The Ruth Group. Thank you, Mr. Laudico. You may begin.
Previous Statements by NUVA
» NuVasive Inc. Q3 2009 Earnings Call Transcript
» NuVasive, Inc., Q1 2009 Earnings Call Transcript
» NuVasive Inc. Q4 2008 Earnings Call Transcript
During our management comments and in our responses to your questions, certain items may be discussed which are not based entirely on historical facts. Any such items should be considered forward looking statements that involve risks, uncertainties, assumptions and other factors which if they do not materialize or proved correct could cause NuVasive results to differ materially from those expressed or implied by such forward-looking statements.
These and other risks and uncertainties are more completely described in today’s press release and NuVasive’s most recent 10-Q and 10-K forms filed with the Securities and Exchange Commission.
With that I’d like to turn the call over to Alex Lukianov.
Thank you Nick and thank you everyone for joining us this afternoon on our third quarter 2008 call. Our results in the third quarter provide continued evidence of strong market adoption of XLIF and the proficiency of our exclusive sales force in penetrating existing accounts with our full mixed innovative products.
And following our continued philosophy to stay ahead of the competitive curve, we are preparing to launch our newly-acquired biologic product Osteocel as the core of a $100 million biologics platform. The combination of these strategic initiatives provides what we believe to be a clear path to the robust revenue growth and sustained profitability we expect over the next several years.
Before outlining some of the details that drove our operational success this quarter, let me take a moment to briefly review our strong financial performance. Revenue in the quarter increased 73.7% year-over-year to $67 million.
On a sequential basis, this represents a 16.5% quarterly increase over the second quarter of 2008. Accordingly, we are increasing our revenue guidance for the full year 2008 to $245 million to $247 million.
Our exclusive sales force, which now stands at 300-strong, continue to gain momentum in the third quarter. Our most seasoned representatives who have been with the company for at least 18 to 24 months have been successful in achieving penetration of our full product offering into existing accounts while also developing new business.
On average, our commissioned representatives are currently producing $1.2 million in annual sales. In regions such as the west and the southeast, our most experienced representatives are producing annual sales well above the current corporate average in an excess of $2 million.
This demonstrates the potential we envision for our entire organization as our exclusive sales force becomes more expert in selling our full mix of products and expands their relationships with both current and new spine surgeon customers.
Our growing product offering has strengthened our ability to address the majority of procedures in the lumbar, thoracic and cervical spine allowing our sales force to compete for the majority of the spine surgeon’s business and expanding our established competitive advantage in XLIF. Our most important new product introduction was at NASS was NeuroVision M5, our next generation nerve avoidance system.
M5 builds on the innovation behind our original NeuroVision products and represents a significant step forward in nerve monitoring technology, strengthening XLIF in the MAS platform as the only safe and reproducible lateral approach to spine surgery.
M5 brings the total number of NeuroVision monitoring modalities from three to five, extending monitoring coverage to the entire spine. The addition of SSEP mode or somatosensory evoked potential broadens NeuroVision coverage for thoracic surgical procedures and offers a faster set-up with intuitive plug and play connections. Navigated guidance mode offers surgeons a user-friendly approach to pedicle screw placement using precision trajectory feedback to help align the proper approach angle, while dramatically reducing fluoroscopy exposure.
These two new modes are in addition to our pre-existing modalities of stimulated EMG or electromyography, free run EMG and MEP or motor-evoked potentials. The next generation NeuroVision leverages NuVasive’s five years of experience in nearly 100,000 cases of surgeon-directed neuro-monitoring and will create even greater distance between us and our competitors.
In addition to these enhancements to the NeuroVision platform, we have introduced CoRoent interbody device extensions to address the specific demand for unique sizes and shapes in the lumbar spine from the surgeon community. We also believe there is considerable opportunity for XLIF to address failed TDRs or failed traditional fusions. At NAS, we introduced instrumentations specifically designed to facilitate removal and reversion of these failed implant.
We have complemented the growing applications of our innovative lateral approach by devoting appropriate focus on the development of our traditional product lines. In addition to expanding options with XLIF, a surgeon can now use NuVasive products to perform anterior fusion procedures and address L5-S1 through our Halo system.