Nuvasive (NUVA) 31 Jul 192019 Q2 Earnings call transcript

Greetings and welcome to the NuVasive, Inc.'s Second Quarter 2019 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.

to Vice conference External President like host, to Affairs. now Hatcher, Suzanne of would turn over the your I Internal and Thank you.

begin. You now may

accompany Thank IR on afternoon, We've financial is discussion. earnings on quarter Exchange our the release, you, Commission. has NuVasive also website with posted we The information been the and filed and which this company's supplemental earnings X-K on Sherry. XXXX early issued to website to Form the Welcome posted call. second Securities

Before will which you and results expressed statements. to such today's on correct, we do assumptions, to the that from they materialize or materially remind implied differ expectations by if uncertainties, not begin, I'd be include could like or and cause discussions during which, to forward-looking those other involve current are NuVasive's call risks and statements factors forward-looking based prove

the NuVasive's of NuVasive described and forward-looking Additional dates. periodic future results update as to information risks are statements with and respective that affect any or and which news releases may no obligation Securities speak in their Exchange uncertainties filings assumes Commission.

operating marketing with call administrative GAAP. Accepted These This include flow, and of accordance discussion financial non-GAAP Accounting and and that our cost per non-GAAP margin, include expenses, also EBITDA. measures earnings gross are to in sales, calculated expenses, Principles sold, a measures or these refer margin, We not measures. share, generally several free as will Generally financial development goods cash of research

accessible supplementary likely website. section news in financial most Relations which financial found are of today's the Investor to may and comparable measures GAAP from NuVasive's the the be information release Reconciliations

and today's Financial Chris Raj Asarpota, on Officer; Officer; Executive Barry, me Chief Link, are President. Chief call Matt Joining

I'd now to the that, over like With Chris. call turn to

we by solid anticipated results growth international prior US afternoon, primarily slower growth performance quarter currency spinal driven hardware $XXX.X the representing of million, X.X% clinical Earlier revenue second a services or are over in year. by X.X% you, Suzanne. These offset reported and XXXX NuVasive results this constant reported Thank growth business. from business,

delivered we half and strong the of we against objectives how I'm executing the set a Overall, this for the year. the at the out of business pleased on beginning – year performance is with first

Based believe raising on we will guidance performance, full-year about the operating will play commentary are more per for and the year-to-date share. the guidance of earnings as non-GAAP our rest year additional how out. well share we full-year on updated provide margin Raj

spinal revenue Now, system. driven year-over-year, franchises, let adoption plus me US hardware elaborate the XLIF X% strong in NuVasive's of increased continued by increase highlighted in results. the approximately quarter tangible on ALIF revenue with and volume, second quarter growth both XXXX case

trained world-class and professional half year. of more are to we'll surgeons program XXXX further continue see procedures have confident year-over-year develop NuVasive the We clinical through our surgical in on including ramp we the second

US was prior surgical year. support generally over flat

billings growth saw However, driven solid in primarily another NuVasive business, services collections strong clinical we momentum and volume. quarter strong of in the continued and by

six months last disciplined drive drivers profitability. with account of the the focus execution positive associated business These over are to

expectations performed decline X% at Biologics line with in about year-over-year. a

XXXX growth Revenue of and first basis currency. was reported constant X% Sequentially, grew from business reflects X% than lower international revenue this on the half international approximately approximately QX growth expected a XX%. as and

quarter, in the rates slower in region, EMEA offset the growth Asia over we QX, In saw first Pac and LatAm. by carrying from continued strength

across to continue take markets efforts share We I key in near in long-term. and confident globalization our our to and in ability the hone international remain

with the quarter We're for disciplined growth. XXXX, but key encouraged of organization, We're to higher the I'm areas for manufacturing Turning West margin future at in expectations. year-over-year profitability. Carrollton than the performing in strategically in well. came XX.X% Non-GAAP profitability. by second balancing operating investing execution flat throughout the

like I'd outcomes leading and by med-tech to spine core, its company, an predictable more delivering is industry a At that you are reproducible. update committed clinical innovation. enable the economic better NuVasive and on new to give technologies to

remains enhancing the procedure, technologies on entire offerings expanding that market and drive the segments. surgical key focus Our complete current experience in

on this further more and than surgery. to adoption technologies a invasive product in minimally lines of We're to core support fixation track spanning dozen launch solutions the enabling from products new year, implant to

to continues manufacturing the inherent we that and quarter, focus titanium. past methods on material material of AMS, science, properties portfolio. built of benefits porosity, further out or This pioneer and the PEEK advanced advantageous NuVasive combining design with

surgeons implant includes This most provide coarse best fit the engineered titanium TLIF, commonly for spine performed portfolio material their with in of procedure advanced implant Modulus TLIF-O, a needs. that the surgical options industry. This a patient's spine

We position of implant also use Cohere of XLIF, first XLIF PEEK lateral kind single surgery. the its Porous in case had first for lateral

to studies leads important that also more substantiate reproducible built investing to the clinical It's and to technology portfolio understand, also implant as outcomes. in AMS out, predictable better, further we're is

quarter, of allograft who cervical a Porous disease with underwent PEEK smooth PEEK with study interbody published Last in Journal disc and patients ACDF of an Neurosurgery the presenting degenerative structural XXX implants. was Cohere Spine using

The to post-op. Cohere outcomes exhibited XX-month improvements sustained through treatment and early other weeks alternative study relative as treatments concluded improvements the relative clinical patients better to receiving than coarse preoperative six PEEK significant that as scores,

this key signifying lives platform occurred NuVasive's change through enabling important and to advanced month the surgery, our of care earlier launch Pulse technology. milestone journey product transform an on

designed single the technologies less all first more to adopt is multiple efficient, Pulse disruptive help procedures. in include surgeons surgical approaches to platform spine

functions Pulse marketing market Pulse positions bring about excited how teams engineers, to and of to future. NuVasive I'm for the who proud of our and support product team tirelessly work developers,

neuromonitoring, and increased extensible the planning, many challenges OR. spine by surgical bending, reduction, surgical enable facing in with of the addresses surgery combining efficiencies Pulse functions, imaging capabilities to rod radiation navigation

we technology work to less as spine surgery to giving cases, shift a of of the surgery. immense in the used be in care of adoption accelerate can This spine NuVasive standard XXX% invasive potential

in Mark later US, now this trials with launch beta the We Europe, sites are system is underway CE launched gaining New Australia. alpha international to identified and and globally. year commercially already which the Zealand anticipate hospital a milestone markets in Pulse With in

Pulse make of spine is patient specific less and The will innovation reproducible, to with evolve by invasive to element more. insights. smart more add to applications the continue robotics, surgery the including and tools platform the foundational driven roadmap flexibility more our within OR, additional

the our as system of end we NASS more will application day plan robotic at be details further at out to And We the built how previously share at Pulse the early investor in August. Pulse unveil of will September. indicated,

the our XXXX system is force enthusiasm surgeon, the systems the our of and excitement tangible. sales to system. XXXX hospital The are surgeons NuVasive can care and they Finally, it's great benefits to see quite Spine the seeing deliver. surgeons surrounding clearly of access

spends times eliminating shorter which patient the to the increased during anesthesia the and means time By need and and reposition the surgery productivity. in XXXX efficiencies surgeons hospitals the OR, under patient drives less surgery, gain

not see may continue among converted of also surgeons, this but XLIF lateral NuVasive experience procedure, great We traditional only to procedures. with who have adoption with less surgeons

And is of the next to the phase examples innovations of future I share just front for growth. a hope this opportunities excitement Overall, market. bringing few my beginning the you in just in These us. of and we're NuVasive are

to priorities minute performance the more laid in turning three to to NuVasive. take over progress a out relative our Before our detail, to when I discuss shareholders the to discuss call financial Raj I want I joined to

to you. we're heard what what going actions ability our through Hopefully, on we financial driving do say our quarters you and are last two to seen the commitments execute do communicate to the over in we confidence and

innovation. I and at the to a continue attractive In to be an outlined renewed excellence and multiples leader all market enable operational world-class NuVasive Number aspects And January, profitable technology two, rigor and three investment. operating of to growth on continue and leverage. three, to spine in priorities business. discipline execution of focus disruptive be deliver through across one, number drive create our Number grow on

and categories. the clear these making in terms profitability, headway In for of innovation we're scorecard,

on predictable patient in spine truly with continue improving to others more lives. We outpace the reproducible that surgery, technology and focused aligns

the US, with underway, launch robotics well and portfolio future in our product in the With the current has stronger. been commercial Pulse combination application never

line the seen far leverage this in is execution year. be and top so results profitability, while financial of can growth, the driving team's progressing focused operational terms on balancing In revenue

mechanisms, and find Governance accountability ingrained within clear how along Operational we execution. driving with alignment organization on continues across is priorities, business do excellence be teams internal to on business. the our

improvement to making Improved supply in organization The these is logistics for amount a by drive and advantage competitive work process to three of efficiencies. further day-to-day there's priorities the key and a NuVasive. is chain execution fair progress a

accelerate operate the business for to a look continue to and will focused I manner our growth. opportunities in

QX our like I'd to to Raj? that, financial performance. over discuss to turn financial further Raj With

good Thanks, Chris. And afternoon, everyone.

many non-GAAP unless me in financial get financials, regarding otherwise. a that started non-GAAP the with well release today's supplemental information as covered we of measures reconciliations. the further let Before as you nuvasive.com today's on call at financial to the information are remind for earnings refer news Please noted

driven expectations. US reported growth case a year-over-year by These in growth as second support were volumes growth spinal with million, reported the on solid we and quarter in strong US above-market well international the results XXXX, X.X% and For $XXX.X surgical to largely of line revenue X.X% performing due hardware, quarterly constant reflecting basis. as currency

million these spinal Now, quarter, the for hardware growing over drivers let results. was supported prior-year. me the discuss specific some revenue of $XXX.X the that US X.X%

Performance robust continues growth. execution, be to procedure product introductions and driven case and commercial volume strong new by

to surgeon in procedures negative to pricing meaningful further lateral Offsetting and topline the of was The growth leading quarter. XXXX pressure system training and rates, a make growth X%. ramp up adoption double-digit of anterior continues impact this adoption on of

competitors, be mentioned As aggressive a hospital continues pressure when quarter, seeing we're NuVasive's than pricing I now environment. lower price our more consistently to last

proceduralization to offset the driving both spine from further continue believe and innovation We focus pricing trends. in new will industry in a market continued technology help

volume help market trade-offs expect further balance capture share. to pricing to We with

million, volumes that's collections. $XX.X Revenue and continued clinical from flat services was year. attributed and and steady strength support X% to up US NuVasive was in to compared generally performance surgical prior billing

primarily IOM a Biologics driven Partially offsetting pricing for over down revenue decline NPS prior products, the which X% second in with growth competitive the was landscape. line was the expectations. is by quarter year, in

new volumes to franchise of increase introductions this from deployment last track the modest the of to achieve year's growth flat in accounts. new on still production strategies the as to by We're year, benefit to and especially continue end

X.X% currency basis. International X.X% as was constant growing $XX.X a reported revenue million, and on

in As the approximately anticipated, the slowed growth a for currency in of the resulting rate of half first year. rates growth the blended business constant quarter, international XX%

For Italy, tenders of execution DACH secured by solid in continued EMEA revenue quarter, the with year. Spain accounts was last particularly and region, and new the wins execution, growth driven in

newly in entered This was offset Latin and Asia by limited set as markets. in growth Pac as availability well America slower-than-expected

the XX profitability, for to XX.X%, basis an compared to of quarter points non-GAAP XX.X% Moving increase gross second margin of quarter second XXXX. the was in

efficiencies, savings variance The to for manufacturing offset was Manufacturing erosion. prior-year progressing as by price realized the ahead expected being by slight while partially efforts to year. driven are the from

SKUs, additional additional Further further prototyping quarter, practices. including processes integration Six new past started of of product the Lean Sigma introduction of in-source this implementation and

Our to focus factory deliver investment of benefits the beyond. supply-chain on and the continues the remain will ensuring balance that in the year for

for expenses prior-year million the to the $XXX.X $XXX.X SM&A representing million XX.X% quarter both of period, Non-GAAP compared revenue. for were

to to rigorous the be in drive order strategic to continue We investments. disciplined efficiencies organization spend in and across fund

models. supply-chain and sterile as initiatives, for MDR Within the were made boundary as investments well as packaging quarter, the planned

expectations, total primarily impact in internal by was our stock-based spend of favorable SM&A driven to compensation. the

million with Non-GAAP a focus robotics the second increase hardware or of expense development, of expectations, to the research of revenue, basis quarter intelligence, or XXXX. $XX.X X.X% an investing surgical line expenses quarter core in R&D of compared in points with remains in business. totaled R&D, and and XX

was Second quarter This compared efficiencies, and to was by planned SM&A and operating investment. prior-year XX.X%, expectations. performance manufacturing margin above driven profit offset XXXX by flat the non-GAAP year-over-year R&D

managing mentioned make and favorability equated We progress between in gross benefit within the previously into SM&A expenses margin quarter. basis about continue and unexpected of XXX reinvesting to as steady operating points to The the business.

updated solid of operating full shortly. quarters will two execution, margin guidance I on Based year discuss non-GAAP

QX P&L, currency other in on The down in and higher primarily the million interest net XXXX. unrealized $X.X quarter, prior-year. due the of further from million in to non-GAAP foreign is the Moving a basis losses expense reduction second was down $X.X

XXX to million, to a of Now prior-year. effective due basis of tax. $X.X non-GAAP windfall tax of over was global an the quarter expense This the intangible XX%, year. turning in tax resulting increase rate benefits reduced current in Non-GAAP and tax tax low within was income inclusion points

the of $X.XX year, $XX.X or in of per X.X% earnings $X.XX share was increase per non-GAAP period of income of to last non-GAAP net share an million diluted compared income $X.XX million non-GAAP $XX.X or quarter diluted Second same prior-year. or non-GAAP earnings over net

quarter diluted results, GAAP income compared same $XX.X XXXX period GAAP $X.XX of to earnings million year. the $XX Turning to last per the share per $X.XX second or was net for of million share or in

Adjusted the stock-based unrealized the non-GAAP EBITDA This was non-cash primarily same of compensation higher margin, year. in which and of impact includes quarter increase XX.X% losses period. due the for recognized the period prior-year adjustments, profit the in impact was XX.X% compared Difficulty] last to to the in period operating and currency [Technical foreign other

last settlement increase in this of driven investments in to part by cash was million by quarter. The free $XX.X for flow was and instrumentation one-time in second year. income litigation the the The same $XX.X million compared year. quarter net past offset Finally, last quarter improved surgical additional increase in was payment the period a

based year, billion, approximately into of $X prior $X guidance maintained XXXX. updating results now outlook full-year expectations compared incorporates guidance, full-year which headwind $X.XX half remainder and We currency million million. of for Moving first the of guidance on for to to revenue $X.XX of we're guidance the

reflected to growth Full X.X%. of in in full guidance adjusted the to constant revenue year remains revenue compared range X.X%. currency prior X.X% growth to of reported is of This range the to X.X% X.X% year X.X%

guidance non-GAAP of non-GAAP XX.X%. to our per XX.X% updating $X.XX to share guidance previous guidance compared to raising $X.XX. compared to prior a to to to to range We're XX.X% range $X.XX year earnings also of $X.XX full margin operating We're range XX%

at me give and the additional increased beginning puts the and Let the financials year. around some you the discussed of you that of context few remind we takes

to business hardware first the prior harder X% lower year, driven the compared grow spinal back expected X% to increase is year growth by X%. in still rates in guidance for is half of to the the half of This US now to the between year, expected while due performance X% the reflecting of primarily comparisons. to

in prudent and IOM line. of half along billings the continue, with performance NCS collections guidance pressure in from strength support the We the remains but the X% second anticipate half pricing business in with surgical the first slow our in the full-year of X% the down continued year, to US range expectations growth. to year in will remain product of the

grew as at of to regards in the currency first In approximately half the year international XX% business, constant it a expected on the basis.

of half to revenue As a full we year look the lowering to second to growth range currency of the year, to XX% guidance of on constant XX%. we're to prior compared XX% XX% a guidance basis

we year. Latin reflects and This America beginning the seen, to the market compared particularly have based updated outlook the dynamics of on in Asia-Pac revised the guidance

and EU investments of execution integration increased On operating quarter saw investments, spend intelligence we priority sterile expenses, business second in surgical expected, into Pulse. well including planning as and towards the capabilities MDR as in as key on packaging and robotic

year of efficiencies. Spend further will gains investments will operational accelerate half back offset partially on and in by the be the in these

expect be quarter We half seasonality cadence half to margin in year improving of third fourth based with second the with volumes. results of in back in operating of the similar to the incremental the first typical the on the quarter the we and quarter our below saw cadence year the

full-year the for our raising guidance on we in confidence optimistic year, on XXXX. remain delivering and us behind quarters commitments solid two With midway through financial

for I'd the open like up that, With to call Q&A.

Instructions]. [Operator you. Thank

Our from Miksic Matt with Please first question Suisse. proceed. Credit is

the taking question. Thanks for Hi.

how, of the out to in if about a solid too impact of the business talk or any, that's really contracting there front? you you some competitors on seem or all? of color wanted the side at I some to Doesn't you surgery on pricing terms robotic US ask congrats in quarter. volume seeing the dynamics So, bit little and the from much affecting but you're any moment, how affecting that maybe at on a more just to be

platform, And know of be where little that's maybe lot Pulse? traction, of about. more of but which hear the into kind an to it's two that affecting is awful Those elements, hear now I then, how about the on uptake marketplace, in we a it'd it's the built the finding component LessRay. Pulse super

Appreciate the general, market Matt. to spine Thanks, comments. in the we talk good US about market. have in you continue When the success clearly, a

I think focus that recently our a direct continued reflection XXXX, about. the rolling on science we've talked on advanced most materials proceduralization, that that's out portfolio

driving believe grow, to key tactics US were very the robotics competitive that competitors, know I a our over on I renewed their the other that some of don't they're is competitive have do is ability market. through our believe of competitors last robotics, do itf direct some challenging. but several commercial having I as with years key it's not market a maybe it with impact and some technologies. the focus

we're competing well off dividends. on focus our proceduralization So, I think has and in think paid I

I ability what gives of clearly, pursuit and think very represented the the share. we to have continue couple quarters, don't parts And, today. clearly, to other we've last have of better the the take of portfolio us our we competitors posted see over as ultimately by Pulse robotics footing competitive that But, simply of against entrance

So, in come XXXX of and invasive to in surgery, minimally the to adoption are short-term, excited focused but continuing some market midterm. the we're drive competitive those laser to lateral with surgery the alternatives of on systems very to

last Link I'll direct say here that and comment has So, business competitiveness can also me. today, our over sitting impact market increased would the he beside the comment I XX him Matt LessRay the is have no the on of but question. on months.

to characterized market. it general the accurately, we're consolidation Chris movement as of think So, I a seeing

and build then, full-line really to And of include comprehensive we when a done the work about we've factors offering in solutions and provider critical. critical out the role having obviously, a participate procedural think important portfolio is enabling as spine has as well. technologies, been think really the the comprehensively, play to so I market consolidation, technologies

with but around reference technologies that the is But it's critical come ultimately the respect value enabling a of and of platform, integrated component which critical LessRay of of Pulse LessRay, would Pulse back to one. platform an a really proposition to is

obviously LessRay and about key to radiation invasive an advanced respect think integration procedures, technologies area like is imaging and where exposure minimally we to a significant When adoption with that's barriers procedures, and shines. component,

When we improve, platform make technologies that critical interoperative support actually a to LessRay workflow in is technologies again think about patient efficiency is of then integration the to those integration enabling great technology outcomes, that. that

So, the the valuable a includes over obviously spine same technologies a benefit standalone time at comprehensive technology a some integrated LessRay of we've addition advanced had last of but solution that suite a really in see OR experience having it months, several to the as with as surgery. to the we imaging

Matt, or [technical events. you timing Latin international confidence growth you Maybe sort in those Chris Asia-Pac America expect the difficulty] some if kind visibility some of and into talk to improve of of could your business. and of and of about that your factors

me of back kind Let up.

efforts diversification has has globalization where for to our we've NuVasive that been US on growth the the have revenue been taken of concentrated, in geographical think been I which of market. last drive over diversify impactful also the primarily really and years couple

we NuVasive got strategy, So, and that echoes X, support. last is education Zealand; markets, we some markets, our have don't that ensure for sustainable also everything built over I how how of in we robust overcommit/underdeliver; clinical so looking the globalization we ensure but how assets we've we we've from XX do do ensure at fully what do started the support; have European that New and longer-term growth to the the really move what was months, Western larger think X, we Australia, technology, do Japan, thoughtfully into markets, how the we

thoughtful more on enter how getting just markets. we So,

recently So, Asia-Pac. that offsetting all weakness those EMEA in things of honestly is diversification we The within working are some see saw well. we

as were I first to very product as much that just of not going in is referencing half. we double-digit we yet growing up in grow some new listen, – We're for through markets, still new Japan and are growth, and market. say us, the you going the thought Japan innovation were well Japan product key ramping we introduction

in we'll feel half. results see So, good the back I

but we got compared dealing Zealand. But results in speak. relatively versus competitive in We've good those Australia/New pressures very softness generally working through as We're market. to we're some speaking, with expectation Japan,

we're and seeing facing Australia/New we're Zealand good Some this really challenges in strength EMEA. in

do So, markets. kind we we're specific of And clear sure do ensure make there. to in I that with to making we a focused we're understanding like we a continue pathway how win how feel of how going we're these that to to diversify, good progress continue

[Operator Instructions].

Please Josh with Our next proceed. and Cowen question Jennings Company. is from

you we out a should next update. for just of Hi. help Thanks you with with targets start might just you that us And questions. the also, hoping on And the – update solid just able we was maybe XXXX have day. that on maybe could the congrats side, NASS, guys three for be five Thanks clear at week's with will I with guidance to taking expectations of investor that. most but we happen what guidance quarter. expecting years. be received been be Primarily, that that. kind years, should Pulse for then And expecting

just could for US Thanks in that's taking of the international the spinal side then, for guidance understand the biggest been if we driver revision. hardware, target just operating questions. of margin lower dynamic higher And the guidance whether secondarily, and the

of much the we're to to give the one, be. yeah, and I'll on and over you we to looking second we're take we're And a at I'll pipeline innovation perspective one. and of where focus range both excited. the of as we will then The years. looking on the in-depth, hands-on to to take future innovation five reestablish the execute and first We give the really we we want expect things some of let a do. week, launching that We'll few currently reframe five-year key that Ross more the we some next the Really, forward. drivers key next want about that talked and priorities things a that Josh, expectation, look we're

clearly, to XXXX, we bottom won't that Now, got perspective line you line a from we'll clear be where company the take hopefully, a that of give But, and, specific range give or topline XXXX we and XXXX. want we've some guidance confidence for both order delivering and do priorities sure in internal in make that, that our competent external company sight that a we said important. the commitments as that our are so of commitments and of we very way, meet both before, ensuring

So, myself, we're Matt or have some demo we'll a hands-on going will have have a to to workshop. talk, surgeons there

you'll walk So, strategy. a financial with going, a better a sense and get to how of we're understanding hopefully, much of longer-term away better where we're there going

answers the So, I'll question on guidance. to hopefully, hit to the it Raj over that question, turn Josh. on your

Yeah, Josh.

think I the which is So, what's course, terms you of asked there question in the going guidance. international, on on of lowering

driven results line America. the So, Asia-Pac was and performing expectations, strong like QX, in that in about a in and Latin growth was first with said, you of the that was and the little offset bit with our first foremost, half think year, in by Chris if EMEA

really So, that played outlook the in QX first out the then growth in and by the our half was update particular. driven factors of current in guidance

one continue to geography there's America in QX relocation other, that surgeon in so saw deceleration big the So, second a will deal that the some we bit the Latin moving had half. from We expect there. there, no little but that's into just we

very the that into about sustainable sake – the like, markets. being newly of than we've for are talked of turning rather We're that thoughtful making entered growth. markets sure markets growth on enter markets the providing the expectation we also Chris that

we mentioned competitive again, account Asia-Pac guidance think which are into rest thing last taken that range was the as been the that's pressure for the the in which about we to international some there. is and also then, the of why year, – And updated seeing look, Chris the we

Lewis Our Stanley. next Please from Morgan question proceed. is David with

Good afternoon.

for Just Raj. real quickly me,

margin basis first half. over did You XXX expansion points

there's know the improvement it some about way in more think looks you internal for initiatives. talked right implies several it? to now flattish I reinvestment. guidance half durable is of quarters like Second about But margins. It the some

all much. you the to increased year? by offset is about the So, the so into of it, think right improvement investments that back expect half to be Thanks way fully

yeah. So,

facility I think slightly and manufacturing foremost, we deliver takes and is continuing guidance, that if had think of operating Carrollton into margin can ahead the puts of even about expectations plan. and and sort of West to maybe the first our

So, with we're pleased what's happening there.

just and the margin in and to packaging then, MDR we side, And on on expect gross models. line, R&D up boundary robotics, SM&A, investments our sterile ramping the continue

improvements and kind the investments will year. from So, last we of these workforce offset Ohio started margin of some other through work that efficiencies

the West But, the sort are and those certainly of by year. helped playing Carrollton margin takes. some we So, of we've the puts through gross and rest really, being got investments that need finish to

conscious you're within performance a I There just growing controls Carrollton, say inside before, execution is and our and the focus around company. would business, initiatives – on. some of what of disciplined expense the this West David, said durability dead spending is both more on but also I the much

the that initiatives sterile headwinds very I had including on, se, clearly per don't platform they and to some of work games in MDR Obviously, are are underlying some pack. some out we are investing initiative ultimately and that think feeling. that Pulse the offset deliver clear durable There in we're those but robotics. standing one-timers

margins, to to ensure that quarters. that we several acute are to expanding on some of have next still So, the the deliver we committed things but

think that. should you way the that's about So,

with is question Kyle Canaccord Rose proceed. next Genuity. from Please Our

Great. Can for question. the Thank you you taking hear me right? all

and Loud clear.

Is some It questions. talked a accelerate. little to in bit pricing of from help pressures But Raj, bit Chris, a across sounds One, I really from areas you of specific touch if some Just seen two about I a just some it more. coming you talk consolidation blanket that's wanted of standpoint? board? the Is that just vendors. on it technology that. like about could wondered –you've the little understand maybe

that you do off where rollout are the you and that period we you boundary then boundary as long model? Thank you make off costs until to the long And some what should the upfront you. fixed hop how in of over time of back take? start leverage expect And model? the expect come in then, kind I'll then, see queue. as of far that And secondly, in see an the rollout to investments leverage the how And roll of to

I'll on that. Matt He's to both that closest those take let one. conversations

Yes.

or obviously for the pricing years we've So, number compression headwind first of now. a on on in think the seen market a consistent side, that I based pricing

As products, that largest and like in is pressure you there screws, would pedicle open things probably commoditization, areas plates is like. about cervical so think expect, fixation conventional the where greater

One is the other product under relates prices as disposables results it we and surgical referenced areas the that an in on earlier tend increased and IOM some comments of his intelligence. that's say Raj for reflected of in to pressure to the

What – continue that new see described. of in product our we I've cadence areas product benefit the do new the of each our to is of introduction

may spine new brings of benefit the related screw ASP additions We investment areas pricing. fixation, about we our existing some compression project portfolio. and complex per though fixation conventional Also, have our to component technology larger constructs, even line as case or think with segments, pipeline it in the to higher deformity you on pedicle a like see

So, flow the across in the manner. that of takes puts portfolio kind and

rollout early I'd in in of somewhat the to days model, still we're say the As boundary. it the boundary relates the

along but past, being and being certain asset. Chicago heard the the are judicious in the we're in and of measurement you've one, further the our just markets, financially, performance not in performance As reference us we

completely, to from deployment sales We utilization, we can So, turn geographic into the we but anticipate the rates model other away with force. of as learner associated moving where our and forward model as really gain asset as efficiencies, well our can to the set continue central serve a mix we sales force don't so better customers want move understand we with certainly efficiencies understand to regionalization areas.

results been So, still that, through working good. the far but so have

Thanks for the question.

Our proceed. with next BMO Markets. Joanne Wuensch Please is from question Capital

a and an as When of [technical nice very And year. we year I of restructuring afternoon. XXXX this was Good year, difficulty]. thinking sort entered investment

you're example. of of state that, year? benefits of the us sort thinking But the could the the already see margin, how to Some on on give of operating for union you a starting you're of

Yeah.

delivering in, assessment and elements where You an of the understand better really really of wanted better what I how early get lot key real know understand good areas the we are what's get challenges in get we sense about. talked I some commitments. ultimately, on wanted I the region, a those CEO, of or regions, to a this I three the of to come were to consistently of honestly the to I structural that. a we and, get wanted happening of facing sense of I our needs. company a new wanted what sense operated we're the on kind year innovation and changed how our were to

things The actually expectations good news my is those the all key of innovation. of element exceeded that was

some actually day. of me what established And helping We've so, than of get the investor strategic the unveil that new expected. that areas to we'll a faster innovation lot the other pipeline a growth framework probably I at is driving is

things in we've I forecasting better and strategic made get think governance around installing establishing discipline priorities, mechanisms much think areas starting that were potentially of tremendous rigor strides financial to and opportunity. I and at

actually ahead to we're had where of So, hoped I be.

The that we're externally. diligently is communication work innovate and outcomes. those think working to And operational to be growth. is on. driving challenged I with seems accountable and really think on deliver both want something the and for I But on company in think, to we're internally I like just comes resources better discipline do, with, And to but prioritization lead together, things We're sustainable really on is the start be. coordination getting to ensuring we allows that both of clinical the for our and where hardest which company and I commitments started, said, driving the the well, near organization continue ourselves planning, things responding Nowhere the does well. us our us to transition all I commitments hold of delivering we thing longer-term our

we organization happy look deliver this working I thrilled that's I'm I'm but year. at and where building solid the with muscle we through So, – and way quarters, are are to two the

the for Thanks question.

Larry with from Biegelson is question next Wells Fargo. Please Our proceed.

about quick comments just Good seem for that pressure? and made with pricing Maybe making question. two volume incremental ones you capture tradeoffs to you for taking Raj, elaborate on afternoon. if the Thanks you. pricing share. the to could Does be

we second just Raj And secondly, questions, is just comps And – QX, half? have X.X% comp growth the cadence half. is – the the about first tougher. the about the and Thanks taking how for I the QX [indiscernible] in X% in second noise day clearly the at think, background given I are tougher versus that, you for apologize extra one Is should half but of was about it QX, in think guys. [indiscernible] in

Matt. is So, trade-offs. try background difficult this distill to first apologize, part, with think to I'm and going I to was hear. around the price volume the noise, price I which Larry, to

in guidance. segments portfolio we're with like currently, perform our impact in other segments. and through to line So, to growth pricing to environment offset volume pricing pressure where the and the certain in But, comfortable I said, of earlier I with highlighted with ability as pricing expectations, line perhaps reflected the some greater have continue comments seeing expectations current we're that than

understanding was respect question… second With of it the challenge the to a little part, more a

international on alluding if I through both think, comparables Larry, you bit maybe a was can to the I And in you little side. sort of on were the second US half. the what and talk

of the US last the some had So, which made year, get a we as like on second side we half really bit growth year. strong said, comps into the hotter little

the where have side, get other around lot On we as second half. the a into international more way tailwind we the it's

a over really of it's tale two cities here. So,

and of further given of but with the still your Hope factor those in if guidance the So, us clarify. just question, we answers that the usual that and kind good enables pretty in terms both the And it seasonality think in expectation and hit opportunities, that mind, geographies. balanced. we've well to got we've given and can risks not I

Our next Richard Leerink. SVB is Please Newitter from proceed. question with

Hi.

questions here. two Just

you growth First is, I a lateral think, for portfolio. your rate Raj, provided

I you it mid-teens. was said think

the just be extent last I'd which its If over to to few what has accelerating? curious trend quarters, provide you can the been see that

the I'm sure then, to maybe want straight. make I second And question, Chris, just keeping

where we ecosystem. an I year going revenue commercial to it? think, Pulse, when? I mid-XXXX. and said and You've And expect to remember start and start last booking got until launched What Pulse is then, when can is booked launching you exactly being you you for late which weren't and seeing revenues

on you're I Is of that Mark. for that? go-to-launch guess, looking So, where we are And, CE the Pulse? official the

when we that then, actually you do you're Pulse of think NASS, you booking you and do the And revenue-wise? just though let's start mid-to-late you. think of robot, Should robotic XXXX? Thank portion the at think even when showing – say about commercializing

to Right. I'm shot questions a this. a in was lot of going take at that question. There

We you've which Let XLIF me Obviously, XXXX just those. as lateral hit lateral the we be because is combination on It's ALIF, the a got look what at part of side. surgery. lateral you the sometimes side. tough of little really have to consider have lateral a minimally-invasive you a

to basically our last the look we've X% necessarily months MIS to teens, XX%, we we not reflects XX%. So, that that X% And at think over that's what several seen side growing portfolio around the quarters. but and and of entire

Compared for is that. in to to, surgery X X% open to range. spine we instance, which think that's X more the So, X%,

very story side of what to doing we're the is winning So, the in important and really MIS clearly, to our growth innovate. portfolio

Pulse goes, Pulse as launched. far is As

the We're through launch. of in today, we going two process will final to in very of recognize initial are quarters. launch phases through final we but next short expect We're order. We revenue the revenue and over recognizing process not the the going

the continuing process through What's a of to available technology. are system the the roadmap elements enhance that we've of talked about. We're in

I'm We not relation Pulse revenue about to for as robotics NASS. that dates will continue talk yet we'll articulate and going move than of application to really Pulse be launch in vision But to we more Pulse. or forward. robotics at to show recognition happy our

may other there there. be questions So, in

got Day. I but talk can or you gist to additional questions, at you have us us it, think of with follow-up Investor if that the

the for Thanks question.

proceed. Our is Please from question next Denhoy with Raj Jefferies.

position a ask little want afternoon. Hi. XXXX the I about single lateral the to talked system, about. Good you've

about terms some I'm the of that's you you're and it surgeon users I comments wins system how competitive or with if training that think the current offer that driving your of pace you're with you seeing and really more curious seeing really that's in is system. made with could your And surgeon just anything like traction results?

Matt up hit I been to is that, I one one. approaches, has on just clinical innovative things I'm NuVasive key and that really for Matt for tell think going a of procedural will the and Thanks example the great do kind notes. high backing it, and of of look just hit we question. let I'll XXX, economic Yeah. that at is day very He's benefit. clear involved this but you from the here But let

Yeah.

think of I segments of is all across XXXX one of customers. exciting sort elements more wins the we're So, of seeing

think of of of within of as competitive expansion lateral as new customers; conversion existing so customers, the user; existing lateral an lateral new So, it application that be procedures lateral NuVasive customers users. may well

I seeing enthusiasm that what of We're we driving, think, that outcomes. of the we're innovation more the our seeing supports operating goal be the the a clinical really procedure internally validation one is driving that's efficient a just well-received. in better not So, of room, believe lot but patient

training so we'll So, well scale across resources surgeon to continue with globally. apply that, the to this we inventory, as continue as the functions

the of that follow-up to lot about speak Maybe you This that, just bit a a is, obviously, property, intellectual the lateral Can protection relative to of different. competitors? there's system a systems. very

has around been of elements NuVasive portfolio key the for the lateral of the procedure. the property one the integration of intellectual So,

there of the around procedure, certainly, is procedure. the of protections but across really elements technologies So, specific integration the

as as portfolio of have as system well scale integration portfolio, intellectual interbody the as looked entire neurophysiology, Cohere the across we've retractor of to just interbody our in includes but not which the designs well. property components platform technology MS modules unique So, the the and some XXXX,

again, So, to complete the a relatively it's approach comprehensive solution. procedural

Morgan. Robbie Our JP Marcus Please proceed. next question is from with

point X% guidance, are easier. the a tougher. international. I US got the range, to are focus appreciate comps getting the looks here two-year the the in year. Chris basis wanted at little first hardware something on said just Raj, the to halfway I to do to the desire the growth But the where the half Thanks And have you be get growth on midpoint of or the like for wanted that getting Still year. And you versus like comps it of US to specifically conservative But X% to focus and in I looks like this question. a on go. to lot taking actually a the it

think are about that all that, and should as how holistically are puts here? what and we guidance be you focusing thinking the takes about you So,

things. It comes down to a couple of

You hit couple. a

some have We We tough talk comps. that. about

we One have fact of like renewed in things are with of competitors seeing that the do – that through this other referenced competitors. the market some questions we're our investing key

existing but Pulse a our – We're We also capital itself a using is are isolated not launching team. in it's to specialists, That Pulse. – organization. using some

QX things pause don't get those some in aggressive to a gives future. taking if I me headwind. in But in know tailwind QX up. will that just Now, should guidance be overly a all and revenue the coinciding be us for That

within what's That, going lot some driving evolutionary a day of process that's said, and I competitive like product our around can coupled you that. happens a tell with, lot – thinking. learning my And comps that every an We're that a learning I a is lot. We're it of on. So, There's there's organization. ultimately the in tougher market. launching

strengthening, it's feel necessarily like on like but don't things those of the I seeing those, see need – I seeing markets. puts to we're I'm just I'm and From key turnaround. international an that the perspective, in I other some really takes yay.

deliver what before, we've that actually seen it sure to we just see the ago. in make extent put hoping thought to than And going said so, I the two initiatives quarters half, I'm I and still not improvements in see first Japan place better the that to Japan as I'm nicely, the although, would in growing we

there, say I overly was being So, the I thinking conservative. wouldn't

on I But see to the being I'm that I control. why I that factors well continue feel give taking I those side, do progress I feel feel but good we're that confident up. think we'll revenue in realistic. what the I the optimistic, commitments. be continue want are are optimistic contributing within to deliver we're guidance But that our pause making the doing those and very success. comfortable to to margin ensure to our me am our That's we about and cautiously anything. need fact is

add also Robbie. could Hey, to just what If I said. Chris

Just case primarily XXXX, on growth. volume an third the US increased like hardware primarily saw in the side we quarter, again, in

et I part the hurricanes, prior the think from impact year cetera. that of was pent up from

little So, we're that's on given at being just bit being, the this point, everything prudent terms a plate, what seeing. in of we're

front. strong. cautiously So, is but tracking that nicely, optimistic hardware growth the business we're The very I on is think

Zimmerman Our next Ryan question proceed. BTIG. Please with is from

taking questions. for the Thanks

biologics to to for turn a minute want here. just So,

then When You've And have lapped seeing line what think, price follow-up. gains now, volume does maybe biologics? versus you this you're that a seeing your the pricing losses quarter, on line. positive? out in you. we're if or and I biologics I the turn relative volume in could parse to comps And easiest Thank the what

this you quarter. little Matt, Ryan, can was then, jump quarter over start, biologics saw prior we X% But, if or I'll down X% want you a in too. in the

positive in second turn positive, it answering terms in half. the does of So, when your questions, it turns

slight like total at – expecting to said, modest for of growth. So, to be we year, kind be to the guidance our we're

of to the your year. positive half expect second uplift in straight Ryan, So, the question, we on,

the about side Those for still as volume-price traction over talked and some the the on more taking synthetics. DBM are we've introduced months. nine trade-offs we going out biologics is of kind all expensive that lines product new last on product several there which trade Osteocel, a of is We've and

to So, we're price-volume trade-offs. those make Matt, anything… continuing

of we we're solution been. a to of with creating continue where it complete see is a other offering complete and to that the bit rates, products the Yeah. a To measure complete consistent there we company to manage, that as also monitor that we're has just to a shift in procedural like but integrate a continuing we're mix biologics line solutions into echo ensure portfolio, attachment Raj's portfolio, comments, Much what in our philosophy solution. and little

business for So, in been year. team, in good sort of of we're expectations with the the the line and of under the balance it's a the leadership correction biologics

Our question is from next Jaffray. Matt Piper Please O'Brien with proceed.

putting asked question it's the point Farshchi me Kevin for It's is for been international. on a I finer Matt on everyone. O'Brien squeezing results. know in on Thanks congrats Hi, and there. today. My

number. you can going things dig know with than in the of second mentioned comps more the prepared need little full to issues half there, we You've mentioned going it these, bit favorable in even they acceleration the year. the you some got against the But more year EMEA I into APAC, in was but on if remarks. resolve? a think in sets on I you strength are

Has like it for And then, or be your time in Am would year sounded more something in growing the last nature? there QX in Lat rest was nicely anything quarter, you. one or the with or at changed Thank color least helpful? line there Any thinking. of

Feel Yeah. what good very growth as I'll market about in we're overview. talked there. EMEA quick we about. seeing Strong a hit

Japan forecasted that of to a higher tale would. in double-digit assets to that. the we growth. Asia-Pac, We Japan really We Zealand. thought some we something it's didn't have we two get did you that some If slowdown. major and than markets, turn Japan, we Australia/New Caused timeframe saw

the We sort ramp. of missed back, but most we've expect of resolve to in of our some that

challenge So, the some of original stress there'll I'll still in market our I that's Again, well ahead Japan. today. think fact as do to expectation hit be that grow they

what some pressure. And exactly do back opportunity Brazil the I those risk will some be fact some just past leave issues in continued of Asia it we we the remediation grow in But we that that, for outside customers of we've of with Pac. market. competitive had of to From what key – Zealand, our elements, into half some have and related months. couple think now. we're like is recovery there? Am over We create pressure. some continue challenged is of need into I'll that But and feel Australia/New competitive to into hit getting digging We've several what Brazil. level get primarily set continue a our resolved plans to are Lat the there sets We're asset the and perspective, more to a

these So, difficult. the But, quarters. improve – some be two getting are over challenges can we again, think that continue to things the will through next of customers'

and think together, like I US we'll to. some Brazil. with So, in good all what things in to guided and those of line I continue with to expect things see in challenges see we've strength considered, recovery in But A/NZ EMEA. see we'll in level decent some Japan feel recovery

We Chris question-and-answer call the our I over have back reached closing end for the like remarks. would session. of to to Barry turn

Thank you.

next is New for which financial on in seeing City our call our everyone thank and of week, today. you forward just being of Day, as X, closing, August you many at all in can I or outlook. look Just the York to I sharing and you long-term as Investor growth with

end that, the you. Thank So, with I'll call.

today's concludes This conference.

time. You great this may at a disconnect your day. lines And have