NUVA

NuVasive, Inc. (NUVA)

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NuVasive Inc. (NUVA)

Q3 2009 Earnings Call

October 20, 2009; 5:30 am ET

Executives

Alex Lukianov - Chairman & Chief Executive Officer

Keith Valentine - President & Chief Operating Officer

Kevin O’Boyle - Executive Vice President & Chief Financial Officer.

Patrick Williams - Vice President of Finance and Investor Relations

Analysts

Taylor Harris - JP Morgan

Ben Andrew -William Blair

Bill Plovanic - Cannacord Adams

David Roman - Goldman Sachs

Matt Miksic - Piper Jaffrey

Rick Wise - Leerink Swann

Michael Matson - Wells Fargo Securities

Joanne Wuensch - BMO Capital Markets

Glenn Novarro - RBC Capital Markets

John Putnam - Capstone Investments

Samir Harish - Needham & Co

Steve Lichman - JMP Securities

Douglas Tsao - Barclays Capital

Doug Schenkel - Cowen & Co.

Taylor Harris - JP Morgan

Presentation

Operator

Greetings and welcome to the NuVasive Inc. third quarter 2009 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded.

It is now my pleasure to introduce your host Patrick Williams, Vice President of Finance and Investor Relations. Thank you, you may begin.

Patrick Williams

Thanks, operator. Welcome to NuVasive third quarter 2009 earnings conference call. NuVasive Senior Management on the call today would be Alex Lukianov, Chairman and Chief Executive Officer; Keith Valentine, President and Chief Operating Officer; and Kevin O’Boyle, Executive Vice President and Chief Financial Officer.

During our management comments and our responses to your questions, certain items maybe 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 prove correct, could cause NuVasive’s 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.

Finally, we would be limiting each person a two question during the Q-and-A session, so that we can accommodate the large number of request and as a courtesy to all in order to keep the conference call up to one hour.

With that, I’d like to turn the call over to Alex.

Alex Lukianov

Our third quarter results confirm that NuVasive’s exclude approach to spine fusion has gaining market share by improving the safety and reproducibility of spine surgery. Our sales force continues to educate the spine surgeon community on the benefits of excellent in all of our unique products, which cover the lumbar and thoracic, and cervical spine, as well as biologics and motion preservation.

This complete and innovative product offering give us an unparalleled advantage and drives our strategy to become the number of four global spine company. As we advance adoption of the XLIF procedure and improve the utilization of our entire product offerings, we continue to anticipate generating increasing levels of profitability.

Revenue in the second quarter increased 42% to $95 million. We achieved earnings per share on a GAAP basis of $0.13. To reflect third quarter results in our 2009 outlook, we are raising annual revenue guidance to $365 million to $367 million, EPS guidance to $0.11 to $0.14. Additionally, cash should be over $200 million at year-end.

We continue to receive positive feedback on the spine market in both new and existing spine surgeon customers we are weekly MVP training program. The surgeons had healthy queues for surgeries with visibility to three to six months out in the vast majorities, our experience in surgical volumes better than or equal to surgical volumes last year.

The underlying strength of the market and positive surgeon feedback give us confidence that overall spine market growth will continue to exceed 10% creating the foundation for our share taking strategies to generate revenue growth in the 30% to 35% range in 2010.

Our gross strategy continues to be driven by the comparative advantages of the XLIF procedures and our MaXcess platform, which was developed internally several years ago. The driving technology of that platform is our NeuroVision application, which provides surgeons the ability to avoid nerves as they navigate through the soleus muscle to approach the spine laterally.

NeuroVision uses a patented hunting algorithm, unique to invasive, which monitor nerves on the real time basis and enable surgeons to make adjustments to their surgical path in order to avoid neural damage and complications. This real time feedback is absolutely essential to the safety and reproducibility of the XLIF procedure.

As competing lateral approaches raise the awareness of and further validate the lateral technique, we believe the shift towards the adoption of XLIF will accelerate and we welcome the competitive comparison. We are well positioned with our patented real time monitoring capabilities in the years of know-how afforded by our pioneering results and we encourage you to join us at the upcoming North American Spine Society Annual Meeting in San Francisco for a better understanding of the debt of our market making technology.

Investments into research and development continue to be the source of our technological competitive advantage. These investments led to the development of the XLIF approach, provided the foundation for expanded XLIF indications and feel the establishment of our comprehensive suite of creative spine surgery products. This commitment to research and development and the speed, at which our projects come to market, has positioned us as the premier innovator in spine.

Our development efforts will be on full display at Nash, where we plan to launch several new products to expand the reach of XLIF to new areas of the spine and to treat more pathology. These launches include a host of new products that represents comprehensive solutions for the thoracic spine and are designed to be performed through our minimally disruptive lateral approach.

Read the rest of this transcript for free on seekingalpha.com