NuVasive, Inc. (NASDAQ:NUVA) Q2 2017 Earnings Conference Call - Preliminary Transcript

Jul 27, 2017 • 04:30 pm ET

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NuVasive, Inc. (NASDAQ:NUVA) Q2 2017 Earnings Conference Call - Preliminary Transcript

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Q & A
Analyst
Matthew O'Brien

(Operator Instructions) Our first question today is coming from Matthew O'Brien from Piper Jaffray. Please proceed with your question.(inaudible) Good afternoon. Thanks for taking the question. Just to be clear, I guess kind of two questions bundled here into one. But just to be clear, as far as the shortfall in Q2, you're saying that was entirely because of a weakness that you saw in your Biologics business. And if that's true, my math is about $1 million in lost revenue. So on an annual basis, $4 million of lost revenue for $100 million business, is that right? And then why would that turn around quickly, just given your portfolio of products? And then if I could sneak another one on top of that. The pricing that you're seeing -- the pressure that you're seeing on the pricing side continues to get a little bit worse. Is that a function of a lack of new products or is this kind of the new level we should be expecting going forward?

Executive
Quentin Blackford

Hi, Matt. This is Quentin here. On the Biologics side of things, we were down roughly 7% in the quarter, which compares to roughly 6% in Q1. And our expectation was we would begin to see that turn around and be closer to flat, coming out of the quarter and into the back half of the year. I think what you heard Greg touch on is our ability to capture that entire procedure. There's a bit of leakage there, which happens around the biologic portfolio, and it's probably more like $2 million, $2.5 million of potential impact in Q2.

And what you saw in the updated guidance, by taking the US to roughly 8% is that you reflected that in the back half of the year as well as some of the incremental softness on the procedural or hardware side of the business as well that we reflected also. Now offsetting that was the strength of the International business. We brought that up and then we also reflect the currency rates. So Biologics is part of that driver. And then part of it was the hardware side of the business.

On the pricing side, I would say in the US, we haven't seen much change, but what you do see is with the strength of international, we've historically seen a little bit more pricing pressure in that International business which, a lot of times, will be more commoditized product lines. We'll generally launch with the new products, new innovation in the US, and then international will come behind that. And so as international is a bit higher in terms of its overall contribution to our total company's revenue result, you get a bit higher mix -- or sorry, price as a result of mix.

Analyst
Matthew O'Brien

Got it. Thank you.

Operator
Operator

Our next question today is coming from Richard Newitter from Leerink Partners. Please proceed with your questions.

Analyst
Richard Newitter

Hi, thanks for taking the questions. I wanted to just start with -- I might have