NuVasive, Inc. (NASDAQ:NUVA) Q4 2018 Earnings Conference Call - Final Transcript

Feb 20, 2019 • 04:30 pm ET

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NuVasive, Inc. (NASDAQ:NUVA) Q4 2018 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

(Operator Instructions)

Our first question here is from Jonathan Demchick from Morgan Stanley. Please go ahead.

Analyst
Jonathan Lee Demchick

Hi, thanks for taking the questions. Raj and Chris, thanks for all the commentary around the moving pieces on operating margins this year. And I guess understanding this is a bit of a movement from prior conversations around leverage commitments, what's the philosophy on margin improvement going forward? Does the additional investments, I guess for growth this year, make the 100 basis points are so margin improvement targets in out years less likely or is this more of a one-time reset?

Executive
Rajesh Asarpota

So, the way I think about it, this is Raj, we -- I think we've been saying over the last six months in terms of our margin expansion, the levers for growth are still intact and we did discuss that the linearity of the 100 basis points will be impacted or in other words, there won't be linearity of 100 basis points. With the current reset, like I said, those levers are still intact and the way we're thinking about this is maybe it's about -- like, it is what it is in our guidance right now, but going forward, you could expect 100 points on an average. So if this year's down, let's say, like we're expanding about 30 basis points or 40 basis points of operating margin as an example, next year could be 120 basis points based on the investments we're making. To make a long story short, I think you're right, this is going to be more of a reset as we put into invest -- as we look at short term investment but that we will continue to grow operating leverage and margin in the future. Chris, anything on your side?

Executive
Chris Barry

I think you said, I mean we're still committed to it. I think as we make the investments, we're ensuring that we maintain good focus on the top line growth, balancing that top line growth with profitability is going to be something we're going to focus on. We've got some unique situations this year with the need to continue to lead in the hardware side of our business, including launching the Pulse and with some of the key issues that we need to address with the MDR or the European Medical Device Regulation, ensuring that we have those investments to continue to fuel that top line growth is something that is required.

Having said that, as we as we continue to move throughout this year and into future years, committed to operational margin expansion, to Raj's point, don't see it as a linear event, but every year we're looking for improvement. We still think that 20% to 25%, as I stated earlier is within reach. But again, we'll continue to look at that and talk more about that at the upcoming Investor Day that we're planning later this year.

Analyst
Jonathan Lee Demchick

Thank you very much.

Executive
Chris Barry

Thanks.

Operator
Operator

Our next question is from Larry Biegelsen from Wells Fargo. Please go ahead.

Analyst
Shagun Singh

Thank