NuVasive, Inc.

Good day, ladies and gentlemen, and welcome to the NuVasive third quarter 2021 earnings conference call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to introduce your host for today's call, Ms. Julia Cunningham, Vice President of Investor Relations at NuVasive. Please go ahead, Ms. Cunningham.

Thank you. Good afternoon, everyone, and welcome to our third quarter 2021 financial results conference call. Joining me today are Chris Berry, Chief Executive Officer, and Matt Harbaugh, Chief Financial Officer. Chris will provide an overview of Nuvasiv's recent business results and trends, and Matt will review our detailed third quarter financial results and our updated financial guidance. Then we'll host a question and answer session. The earnings release which we issued earlier this afternoon is posted on the IR section of our website and has been filed on form 8K with the SEC. We have also posted supplemental financial information on our IR website. As a reminder, this call is being recorded and an archive will be available on our IR website later today. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements, which are based on current expectations and are subject to risk and uncertainty. Actual results may differ materially from those expressed or implied by such forward-looking statements. Please note we assume no obligation to update these forward-looking statements. Please refer to our SEC filings for a detailed discussion of risk. In addition, this call will include certain non-GAAP financial measures, Reconciliation of these measures to the most directly comparable GAAP financial measures is included in our third quarter earnings release. And with that, I'd like to introduce Chris Berry.

Thank you, Juliette, and good afternoon, everyone. Earlier today, we reported third quarter 2021 financial results. While progress during the quarter shows that our technology is advancing NuVase's competitive position in our key markets, Our financial performance reflects continued pressure on our elective surgical procedures due to COVID-19, healthcare staffing shortages, and global impact from newvasive specialized orthopedics product availability. Matt and I will provide more color on third quarter results and our view of the current environment and its impact on elective surgical volumes. But first, let me update you on progress we're making with our vectors of growth and the commercialization of the PULSE platform and simplified cervical disc. Despite a challenging quarter, I'm proud of our team's progress on our strategic growth drivers. As the leader in spine innovation, we're dedicated to advancing the standard of care in anterior, posterior, and cervical spine surgery through the introduction of novel technology. This starts with driving growth in subsegments where we historically had underrepresented market share, such as cervical and posterior. We are committed to expanding our presence in the $2.6 billion cervical subsegment and see continued runway in the coming years. In fact, not only do we expect to take share in this important segment, but we believe the differentiated technologies in C360, our comprehensive portfolio for anterior and posterior cervical spine surgery, will help expand our market opportunities and allow more patients to benefit from these technologies. Third quarter gains show we are heading in the right direction. In the US, cervical delivered double digit growth as we continue to see momentum from C360 led by the simplified disc. We are encouraged by surgeon adoption and demand for C360 and are now on track to deliver higher net sales for Simplify than our original 2021 expectations. During the third quarter, the simplified disc one-level investigational device exemption study data was published in the International Journal of Spine Surgery. This study further validates the strong clinical data behind the simplified disc and why it is the most clinically effective technology in the CTDR procedure segments. We've made great progress integrating this device into our supply chain ahead of schedule to meet current and expected customer demand. We're working to ramp our manufacturing capacity into 2022 to continue driving growth in cervical and bringing this superior technology to more patients. Moving to posterior spine, which represents a $1.6 billion opportunity, we continue to expand our portfolio to meet surgeon and patient needs. We recently announced the commercial launch of Cohere TLIF-O and Cohere TLIF-A, both of which are porous peak implants for the TLIF procedure. As part of our advanced material science portfolio, this brings Nuvasiv's extensive expertise in material engineering and proprietary porous peak technology to the most widely utilized posterior spine procedure. Nuvasiv is the only company to offer both porous peak and porous titanium implants for posterior spine surgery. As the global market leader in lateral spine surgery, we are well positioned to continue leading in this $900 million anterior spine subsegment. Modulus ALIF, our latest 3D printed porous titanium implant, launched earlier this year, and we expect this new product introduction to continue driving positive momentum in our anterior portfolio. Overall, our Thoracolumbar business experienced pressure in the third quarter due to increased competitive environment as well as lower than anticipated elective surgical volumes and healthcare staffing shortages. In response to this, we have ramped up and made improvements in surgeon and commercial training year over year, and we have continued evolving our anterior spine innovation roadmap to support all procedural types, from lateral to prone to A-lift, with new implants and enabling technologies to bring our procedural value to more surgeons, providers, and patients. Turning to our PULSE platform, the integration of enabling technology into our procedural offering has been foundational to the success of Nuvasiv, first with neuromonitoring and XLIFT, and now with PULSE. We commercially launched PULSE in the third quarter, a culmination of years of research and development from our internal teams with input from surgeon experts to build a first-of-its-kind solution that integrates all these essential tools to perform a spine surgery in one condensed footprint. Pulse is a software ecosystem that integrates multiple hardware technologies into a single platform in the operating room. Unlike other navigation or robotic systems on the market, Pulse provides surgeons the freedom of faster decision-making through integrated technologies that inform one another, producing a seamless and efficient workflow. As an example, a surgeon can take a full spinal film intraoperatively and perform sagittal alignment measurements, use advanced neuromonitoring integrated into navigation to improve screw placement, and utilize infrared tracking for navigation, take low-dose radiation images with Lestray, and shape rods using computer-assisted technology with Bandini, all through one camera. So this single unit of capital technology with two fixed screens and wireless device connectivity makes all of this possible. which minimizes the number of technologies and space needed in the operating room. Pulse's extensible nature maximizes the value for the hospital, with one initial capital investment and the possibility to add future surgical applications. While it's still in early days, the first commercial cases with the Pulse platform have taken place successfully at multiple hospitals across the U.S. It's incredible to hear the impact Pulse is having in the operating room. especially from surgeons, as several have recently presented at UroSpine, SMS, and other societies on their experience with the differentiated capabilities of the platform. We're still on track to deliver net sales consistent with our original expectations for Pulse this year and have a strong commercial pipeline of future orders in the US, Europe, and Asia Pacific leading us into 2022. We believe Pulse, coupled with our comprehensive procedures will help transform the future of spine care. As a market leader in surgeon education, we know our continued investments in training will further our ability to change more patients' lives. In Q3, there was an increase in surgeon trainings when compared to the prior year and to 2019. These trends are encouraging and a reflection of surgeon interest and adoption in our differentiated surgical procedures. With the recent opening of our East Coast Experience Center, we have even more opportunities to expand our training capacity. I commend our team's commitment to deliver disruptive innovation and educate our surgeon partners, which fuels our ability to scale around the world. Our globalization efforts remain a substantial opportunity for both growth and value creation. Now let me speak to our third quarter performance. Net sales were $270.8 million, down 8.3% year-over-year on both reported and constant currency basis. Our expectation coming into the quarter was for continued COVID-19 recovery and normal third quarter seasonality. However, as previously stated in our September investor update, there were substantial unexpected challenges for elective surgical procedures in July and August. and we did not see the volume levels return as we would normally expect in September. Instead, we saw a decline in September, which we typically expect to be our largest volume month in the quarter. This was primarily due to the resurgence of the COVID-19 Delta variant, healthcare staffing shortages, and higher seasonality in the summer months after a long period of travel restrictions. All of this created for a difficult operating environment for our surgeons and had a significant impact on the company's third quarter performance. Throughout the pandemic, we've kept in close contact with our key surgeon partners across the U.S. to understand what they are experiencing in their hospitals and respective regions. They've shared two key themes. One, the COVID-19 Delta variant resurgence was a factor in Q3's elective surgical procedure slowdown. And two, staffing shortages had a substantial impact on the healthcare system, including elective surgical volumes. While this slowdown was felt across the globe, some of our strongest U.S. markets experienced this more acutely, which in turn put pressure on our results. However, our international core spine business grew double digits year over year in the third quarter, led by Asia Pacific and Europe, which both delivered double-digit growth. The Japan team continues to execute and gain market share while we see ongoing market recovery across Europe. This growth was largely offset due to NSO product availability in the third quarter. We recently started returning precise titanium products to market and expect to be in a majority of our key markets by end of year. Matt will share additional commentary on NSO in his remarks. While we saw sequential improvement from September to October in the U.S., stability of elective surgical volumes is still uncertain. We anticipate this to linger in the fourth quarter. Although these factors are outside of our control, we are diligently working with our teams, surgeons, and providers to manage what is in our control to build a strong foundation for 2022 and beyond. We remain focused on our long-term strategy. and progressing on the multiple vectors of growth within our business. This is led by advancing our leadership position in interior and less invasive surgery, expanding our market presence in opportunistic growth segments, and integrating enabling technology, as well as scaling our business globally. Given the successful commercialization of the Pulse platform, continued adoption of our C360 portfolio featuring the simplified cervical disc, and recent product expansion within our advanced material science portfolio, we are confident in our organization's ability to deliver the strongest innovation cycle in years. Now, I'll turn the call over to Matt to discuss the company's third quarter financial results in more detail.