NuVasive, Inc.

Good day, ladies and gentlemen, and welcome to the NAVASA fourth quarter and full year 2022 earnings conference call. I would now like to introduce your host for today's call, Ms. Juliette Cunningham, Vice President of Investor Relations at NAVASA. Please go ahead, Ms. Cunningham.

Thank you. Good afternoon, everyone. Joining me today are Chris Berry, Chief Executive Officer, and Matt Harbaugh, Chief Financial Officer. Chris will provide an overview of NuVasive's fourth quarter and full year 2022 business results and trends, as well as innovation highlights. Matt will review our detailed financial results and full year 2023 outlook. And 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. As a reminder, this call is being recorded and an archive will be available on the IR website later today. Before we get started, I'd like to remind you there are comments during this call will include forward-looking statements, which are based on current expectations and involve risks and uncertainties, assumptions and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The factors that could cause actual results to differ materially are described in new basis news releases and periodic filings with the SEC. Except as required by law, we assume no obligation to update any forward-looking statements or information which speak as of their respective date. In addition, this call will include certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP financial measures are included in today's earnings release and the supplemental financial information. both of which are accessible on Nuvesa's website. And now I'd like to introduce Chris Berry.

Thank you, Juliette, and good afternoon, everyone. Earlier today, we reported fourth quarter and full year 2022 financial results. On today's call, I will provide highlights of 2022 and review our outlook for 2023, which is supported by our fundamentals of growth strategy and our definitive agreement to combine with Globus Medical. Matt will share additional financial details on the fourth quarter and four-year 2022 performance, as well as 2023 net sales guidance. I couldn't be more excited about our combination with Globus Medical, as it brings together two well-regarded technology companies in the musculoskeletal industry. The combined company will have an incredible commercial scale, an exceptional portfolio of clinically proven solutions supported by strong commercial and clinical professional development teams. and excellent capabilities to serve our customers effectively. Being able to change the future of spine and orthopedic care while unlocking our vision to change a patient's life every minute is now even more achievable, together with Globus. More on our announcement later in my remarks. Our progress over the full year 2022 reflects how our market-leading 360 portfolios and globalization efforts are advancing the company's core growth strategy. And I'm excited to see how our investments over the past three years have further positioned us to accelerate growth in 2023. Nuvasa delivered fourth quarter 2022 net sales of $305.4 million, an increase of approximately 1% on a reported basis and approximately 5% on a constant currency basis compared to the prior year period. Foreign currency negatively impacted our net sales performance by approximately 11 million, primarily driven by the Japanese yen and the euro. As expected, case mix favored lower acuity cases, both relative to the market and our procedural mix. However, we remain optimistic that higher acuity cases will ramp up throughout the year. In our international business, we achieved double-digit growth of approximately 11% on a constant currency basis compared to the prior year period. led by corresponding growth and the continued return of magic and precise titanium products. For the full year, our 2022 net sales came in at $1,202,000,000, an increase of 5.5% on a reported basis and 8.5% on a constant currency basis compared to the prior year. In a challenging environment, we grew our U.S. spinal hardware and U.S. surgical support business, as well as our international business. We achieved greater than 20% growth in cervical in the U.S. and delivered a strong global performance from NSO. Completing its first full year of commercial launch, Pulse platform net sales showed solid growth in the U.S. and international markets. Despite ongoing macro environmental headwinds, we continue to make progress on our growth strategy. During 2022, we delivered core growth to the proliferation of our 360 strategy, globalization, new product introductions, and introduced intelligent surgery built on the foundation of the Pulse platform with new partnerships, commercial distribution agreements, and asset acquisitions related to our innovation pipeline. Starting with our core business, we have significant runway in key procedural segments that our 360 portfolios, X360, C360, P360, and Complex continue to target. Our innovation gives us a strong competitive position to extend our leadership in the interior segment and take share where we've historically been underrepresented. This year marks 20 years of our flagship procedure, XLIFT. Today, with approximately 300,000 procedures performed, more than 450 peer-reviewed publications, and 50 XLIFT products launched, our success in introducing procedurally integrated solutions have made us a leader in the $900 million anterior segment. In addition, this year also marks five years of the X360 procedure, our lateral approach to single position surgery. Last month, another study published in the Spine Journal demonstrated the benefits of lateral single position surgery versus patients that needed to be flipped mid-procedure. Operative time significantly decreases from approximately five hours to one and a half hours. There's less fluoroscopic dosage, a shortened length of hospital stay, and a 36% reduction in post-op complications. We remain committed to delivering innovation that will improve clinical, operational, and financial outcomes for surgeons, hospitals, and patients. This year, our next-generation expandable technology, MODX XLIF, will begin clinical evaluations, and the introduction of modulus A-LIF blades will support the continued interest and Modulus ALIF as an interbody implant of choice. Within the $1.7 billion posterior segment, we plan to tackle the tremendous opportunity with our P360 portfolio, providing comprehensive pathology-driven solutions from the posterior position. ModXPL continues clinical evaluations in the U.S. market, and the recent commercial launch of the NuVasive tube system is providing our surgeon customers less invasive surgical access for both T-lift and decompression application. Turning to the $2.6 billion cervical segment, our C360 portfolio continues to deliver greater than 20% growth. We have a highly differentiated portfolio that continues to take share and maintain high surgeon interest. The Simplify Cervical Disc exceeded our expectations, furthering our ability to capture more of the $450 million CTDR market and creating pull-through for the rest of the C360 portfolio. The team is committed to additional enhancements for the Simplify Disc with plans to launch advanced instrumentation in the second half of this year. Our ACDF Interbody Implant Modulus Cervical received expanded indications for Atrax Putty, allowing surgeons to utilize the cost-effective biologic across our modulus thoracolumbar and cervical solutions. And our most recent addition, Realign Cervical, continues to receive positive feedback with plans to launch an additional occipital system enhancement in Q4 2023. Central to our core growth strategy is enabling technology. While other enabling technologies today deliver limited clinical utility, Pulse differentiates itself in that it can be used in 100% of spine procedures. Pulse is demonstrating definitive pull-through in hospitals that have adopted the technology. Our surging customers are experiencing the benefits of the platform. We have continued our global momentum by reaching 2,000-plus commercial cases. Our R&D and global operations teams are completing the next system-level software release for Pulse, launching this summer. The upcoming release will enhance the line of sight for navigation. at new instrument compatibility, improve remote support and services, and further streamline the overall surgeon and OR staff experience. As I conclude my remarks, our planned combination with Globus Medical to create an innovative global musculoskeletal company helps accelerate our near and long-term strategy. With presence in more than 50 countries and supported by over 5,000 employees, the new organization will be well positioned to deliver on our vision of intelligent surgery. Our combined spine and orthopedic portfolio is needed throughout the continuum of care to help deliver better clinical outcomes. As a reminder, the complementary combination expands our reach to surgeons and patients around the world with limited commercial overlap in key markets, creates a comprehensive portfolio of innovative spine and orthopedic technologies, continues our commitment to meaningful innovation, expands our operational capabilities, and creates compelling upside net sales potential, as well as a strong financial profile and value creation opportunity for shareholders. I remain confident in our standalone strategy, but together with Globus Medical, we can do so much more. We're combining two of the most well-regarded companies in the musculoskeletal industry to accelerate our vision to change a patient's life every minute. and further our purpose to transform surgery, advance care, and change lives. Now, I'll turn the call over to Matt.