NuVasive, Inc.
Q4 2020 Earnings Call Transcript

Published: 26 Feb 2021

[Operator:]

Good day. And welcome to the NuVasive Inc. Fourth Quarter and Full Year 2020 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Matt Harbaugh, Executive Vice President and Chief Financial Officer. Thank you. You may begin.

[Matt Harbaugh:]

Thank you. Welcome to NuVasive's Fourth Quarter and Full Year 2020 Earnings Call. The company's earnings release, which we issued earlier this afternoon, has been filed on Form 8-K with the Securities and Exchange Commission. We have also posted supplemental financial information and an overview on the acquisition of Simplify Medical we announced yesterday on our website in the Investor Relations section to accompany our discussion today. Joining me on the call is NuVasive’s CEO, Chris Barry. Chris will provide opening remarks and then I will share additional details on our financial results, before we open it up for Q&A.

[Chris Barry:]

Thank you, Matt and good afternoon everyone. Before we get started, I want to take a moment to thank our employees for their continued resilience and commitment. This past year we build the true character of NuVasive. I'm proud of our people showed up and continue to serve our surgeons, providers and patients during a challenging year for everyone around the globe. Earlier today, we reported fourth quarter and full-year 2020 financial results, and yesterday announced the acquisition of Simplify Medical. On today's call, I'll provide an overview of full year 2020 results then turn to the investments NuVasive is making to deliver what I believe to be the strongest innovation pipeline in spine. Then Matt will share additional details on the fourth quarter, thoughts on how the first quarter is taking shape and how we're thinking about 2021.

[Matt Harbaugh:]

Thanks, Chris and good afternoon, everyone. Net sales for the fourth quarter 2020 or overall in line with our expectations at $291.8 million down 6% compared to prior year on a reported basis, 6.7% on a constant currency basis. As we entered the fourth quarter, pace volumes were relatively stable and market volatility had flattened. However, as we exited the fourth quarter we once again experienced market disruption from the resurgence of COVID-19. In particular, December experienced a significant decrease in procedural volumes as elective surgeries were delayed or canceled and patient sentiment declined, most notably in parts of the United States and Europe. U.S. Spinal Hardware net sales were $155.2 million in the quarter down year-over-year by 8.1%. Pricing was a 1.4% headwind in line with our annual, while having the same number of billing days as compared to the prior period. The business saw growth from portions of our thoracolumbar portfolio driven primarily from a continued adoption of our advanced material science implants with strong results from the clinical evaluation of Modulus ALIF and Reline 3D within our pediatric portfolio. This progress was offset by declining case volumes as a result of COVID-19.

[Operator:]

Our first question is from the line of Matt Miksic with Credit Suisse. Please go ahead. Your line is open.

[Matt Miksic:]

Hey well, thanks. Thanks so much for taking my question. So one on Pulse, and a follow-up on Simplify and cTDRs. So on the Pulse timeline, could you – because this has been a sort of conversation for awhile and leading up to sort of the launch here in mid-2021, maybe just expand a little on the timeline you expect. You mentioned, first cases in Europe likely in the first half, maybe how the cadence of Europe and U.S.? How you expect them to play out and maybe ramp into the second half to give some sense of how you see this year playing out? And then a one follow-up.

[Chris Barry:]

Sure. Thanks, Matt. Thanks for the question. Yes, we're excited. We've now submitted 510(k). So we're really under the regulatory timeline in the U.S., as far as Europe we're also on track to, to secure CE mark. So just the way that the regulatory approval process works, we expect to have cases in Europe first, that doesn't in any way shape or form preclude us from hitting the timeline we've talked about with cases in the summertime in the U.S., now clearly everything we can do to pull that ahead, we will, but once we kind of get into the regulatory timeline, we sort of follow it from there. But the fact is we believe will be in clinical setting in both U.S and Europe over the summer and launch later in the year. So that's the clarification. Like I said, I think we're very happy with the progress being made. We've actually expanded the applications in the system as we talked about in some prepared remarks, but very excited about the technology hitting the timelines that we committed to and are on track to deliver what we said we would this year.

[Matt Miksic:]

Excellent. That's exciting. So and then the follow-up on Simplify, maybe just you mentioned minimal sales, net sales in 2021. A couple of things, maybe if you could frame out what you think this segment is currently in terms of dollars and then maybe where it can go? I know that's been a topic of debate for some time. How big can cervical disc replacement actually get with coverage improving? I suspect that, that's also kind of improving? And then Matt, I think you had mentioned something about the launch of C360, positive offset by some offsets in legacy cervical products, and maybe give us a sense of what that dynamic looks like when you're net positive or are you net positive and how we should think about growth if there's going to be sort of an offset of legacy ACDF products as well? Thanks.

[Chris Barry:]

Thanks, Matt. Listen, we're super excited about the Simplify opportunity. And again, let me just kind of back up in the context of the broader strategy we laid out going all the way back into August, in 2019 we kind of did our Investor Day, us moving from sort of the excellent company to taking continue our leadership on anterior, but also complementing our organization through innovation in cervical. C360 was just launched and it was sort of launched in the teeth of the pandemic really in the December timeframe. So we're still ramping up that opportunity. Simplify is a great compliment. And again, if you look at the entirety of the cervical market, it's a $2.6 billion segment, huge segment, where as NuVasive we enjoy low-single digit share position and it has just not had – has not been an area of focus. So today's market size, I think is somewhat a moving target. Clearly you're seeing a transition of ACDF procedures to this replacement. The indication today is more narrow, but increasing over time. So I think it's still a question of what the size of this market could become, but clearly within Simplify it's somewhat pre-commercial. So we've been looking at the today’s market of, say its $250 million, $300 million huge upside for us, what I consider to be a differentiated technology and in many ways. So I think what Matt was saying earlier, the initial launch of C360 compared with our legacy products the growth we saw with C360 still being somewhat drugged down by the predicates. We expect that to shift over the course of the next couple of quarters and see substantial growth in the back half.

[Operator:]

Our next question is from the line of Joanne Wuensch with Citi Bank. Please go ahead. Your line is open.

[Joanne Wuensch:]

Good afternoon. Thanks for taking the questions. I want to circle back to your commentary that you would expect the first half of 2021 revenue to be lower than the first half of 2019. I want to make sure that I heard that right? And just for setting up models and expectations anyway to put a parameter of how much lower?

[Matt Harbaugh:]

Sure. Thank you, Joanne. So on a full-year basis, we actually think that current consensus is a reasonable range to be in plus or minus right now. So on a full year the numbers look pretty good. What we are concerned about is the first quarter because of the continuing impact from COVID to a lesser extent, some of the weather challenges we've had in the U.S. So as we're thinking about the first quarter, we think we'll be roughly plus or minus flat with what we did in the first quarter last year, that number was 260 million. So we do think in the second quarter, things will get better, there'll be less impact from COVID. And then the back half of the year, we'll have very strong results that kind of get us to that $1.2 billion mark that I mentioned earlier. And a lot of that has to do with Pulse being launched success with C360, the Simplify Medical addition. A lot of net sales is going to manifest itself in the back half of the year.

[Joanne Wuensch:]

Excellent. And then as a follow-up question, how do we think about Pulse contributing financially, dollars and cents in the second half of the year and then into 2022?

[Matt Harbaugh:]

Yes, it's going to be similar to Simplify. It's going to be in a $5 million net sales range plus or minus. So it's not going to be hugely impactful on this year, but obviously that gets us well set up for future years.

[Operator:]

Our next question from the line of Josh Jennings with Cowen, please go ahead. Your line is open.

[Josh Jennings:]

Hi, good evening. Thanks for taking the questions. I had a follow-up on Pulse Robotics and understand that first-in-human is still on track for early 2022. Are you willing to share any development kind of timelines after first-in-human? And when we could potentially see assuming all things go well up to first-in-human, when we could potentially see a submission? I believe that. Can you just to help us understand again the submission pathway?

[Chris Barry:]

It's still – Josh, thanks for the question on robotics. Clearly getting Pulse out, we've taken a parallel pathway to continue to develop along the pathway for robotics. We feel confident that the timeline we've put out on first-in-human man in 2022 will – is within the timeline that we're pursuing today and feel comfortable. As far as some of the broader milestones, it’s still a little early for us at this point to lay those out. I think as we go through this year we want to make sure that we're seeing the things we want, we've got to make sure we have a firm understanding of all the regulatory pathway – the regulatory pathway in general, that we need to pursue. So it's a little early to comment on some of those milestones today, but over the course of this year, I’ll plan letting you guys know kind of where things are going with that project.

[Josh Jennings:]

Excellent. And then just a second question on Pulse. Since it – our check suggested about 30% to 35% of surgical cases in the United States surgeons use navigation one form or the other, NuVasive hasn't had a navigation system, most nav systems aren't exclusive for the manufacturers implant technology, but can you just help us understand the headwind NuVasive faced in that kind of 30%-ish or one-third the market, one-third of the surgeries that use navigation and understand Pulse. Matt said about 5 million plus or minus in 2022, but just on the, the procedure pull through potential for Pulse and getting into that then navigation segment? Sorry, multiple questions in one there, but if you get the shift, would love some help just thinking about without that dynamic.

[Chris Barry:]

Yes. I think you're kind of hitting on an area that I think is important for us to talk about, which is sort of this idea that of what's the remaining opportunity in the market for enabling technologies, whether you're talking about navigation or you're talking about something like robotics. We still believe its early days. You kind of mentioned that 30%, 35% of surgical cases are using navigation that, that's in line with generally the ballpark of what we see. It's inconsistent, I think and where it could or should become standard of care. We still think there's an opportunity to drive. That's why we think the integrated nature of the Pulse technology provides a great entrance into an operating room where you utilize that platform in 100% of spine cases. And I think the key for us is thinking in terms of utilization. Same thing on the robotic side, if we look at the number of robots in play today, maybe 10% to 20% of the available operating rooms have access to a robot. But when you look at that the utilization is still less than one a week, if you really do the macro level math. So our ability to drive an integrated system to drive a superior performance in our system, we think gives us an opportunity. So the navigation, as far as the inclusivity for us, we're being used in a lot of those cases that use navigation today. So there's no necessarily proprietary nature for using anybody's navigation with their own products. I think performance wise it'll be advantage with our products, but we very much look at the opportunities, both in navigation and robotics as in early days where there's still a significant upside opportunity for us as a company.

[Operator:]

Thank you. . We have a question from Robbie Marcus with JP Morgan, please go ahead. Your line is open.

[Lilia-Celine Breton Lozada:]

Hi, this is actually Lilia on for Robbie. Thanks for taking the question. So something we've heard from some of your peers is that new product launches really just aren't seeing the same sort of traction that they normally would, because of COVID. So could you give a little bit of color on how receptive doctors and hospitals have been to new products like C360 or are people putting off on adopting these sort of things until trends materially improve? Thanks.

[Chris Barry:]

Thanks Lilia. And thanks for the question. It's really hard to say, honestly in the eyes of COVID, because there's been such volatility, both U.S.-based but also globally. I can tell you that the demand and the excitement from our surgeons is still remains unchanged, there's significant excitement on C360 we're ramping up our assets to fill that demand over time. There's still a significant excitement on our Pulse technology. A lot of the technologies we're launching this year, including our Modulus expandables, there's significant excitement there. It's hard to say what 2020 represents to us because of just the differentiating between a lack of an ability to bring in a new product versus just volatility as a result of COVID. It's really hard to discern that, but I would just say that in this space, innovation still carries significant interest that hasn't gone away. It won't go away getting past, the situation we find ourselves in with still some impact from COVID. I think will give us a clear picture, but I don't think anything fundamentally changed at 2020. I think surgeons are still looking for better ways to treat their patients. They're looking for innovation, that's meaningful. And as I said, in my prepared remarks, we are dedicated to driving clinical, financial and operational results that meet their demands. So to that end, kind of hard to look back, but looking forward, I still believe the demand is very high and we've got a strong pipeline.

[Operator:]

Our next question is from Richard Newitter with Silicon Valley Bank. Please go ahead. Your line is open.

[Richard Newitter:]

Hi, thanks for taking the questions. One clarification question and a follow-up. You had mentioned that plus or minus 5 million around Pulse and Simplify. I just want to make sure, was that a second half 2021 comment kind of plus of 5 million or is that 2022 comment?

[Chris Barry:]

2021.

[Richard Newitter:]

2021.

[Chris Barry:]

Yes.

[Richard Newitter:]

Okay. Thanks for that. And then, Chris, maybe just on two things as it related to the fourth quarter, International's trending strong, obviously U.S. is so weak, I mean. Is that really more or less the way we should be modeling the first half, U.S. significantly pressure to keep some of the strengths in international. And then secondly appreciate the –you have some product holds in cervical, but last quarter you call that geographic mix relative to the rest of the industry, might've been impacting you guys a little bit more harshly, I guess. I'd love some updates there on how that trend is into the fourth quarter. And if you could also just talk to what your actual X360 growth rate was? And what your growth rate was perhaps by regions? Thank you.

[Chris Barry:]

Thanks Rich. I'll give a shot at some of those. On our Q4, obviously you said it that we saw continued strength even in the face of certain markets internationally that were down, but offset by those markets again, some of the diversification that we'd look at geographically starting to pay dividends or so we're happy with that. U.S. continue to see some headwinds and we look at the volatility of COVID it did impact us. You are kind of mixing this up with a second part geographically. So we saw intense pressure in certain parts of the U.S. versus others. Now, towards the end of December and into early January, we saw pretty uniform reduction almost across the board. As far as Q1 and kind of the first half of 2021, I expect to continue to see increasing levels of strength internationally, but I expect to see also see recovery in the U.S. and again, you also got to think about the U.S. business. We are coming off back half of 2020 that reflected some pretty strong comps for 2019. We had some of our strongest U.S. growth quarters that we had in recent history. So I still believe that we'll see strength in international markets. I think you'll continue to see ongoing recovery of the U.S. business and hopefully less geographic impact. As far as X360 and some of those specific growth, we don't really go into that, but I can just say that the runway for X360, we didn't make a lot of progress in 2020 because of the volatility and some of the challenges we faced with bringing new people in and training, but the demand is still there. And as we talked about in some of our prepared remarks, we're increasing our capacity to train and educate through our East Coast Experience Center. We've got a healthy number of folks that want to come in and be trained. We're obviously offering now C360 and then ultimately Simplify and then launching Pulse later this year. So we've got a strong pipeline of innovation coming out of Q4 and coming into this year, we're looking to get out from under the volatility of the market, but feel very, very good about the direction we're taking.

[Matt Harbaugh:]

Rich, the only other thing I'd add to Chris’s comments is that, I mentioned in the prepared remarks around stocking orders. And we did not see typical stocking orders largely driven because of COVID at the latter part of December that would have impacted our U.S results by a little below $10 million in net sales. So that also was kind of a one-time impact, which I think you were kind of alluding to. We didn't see anywhere near to sort of one-timer in our international results.

[Operator:]

Our next question is from Ryan Zimmerman with BTIG. Please go ahead. Your line is open.

[Ryan Zimmerman:]

Thank you. Yes, I have just two brief questions. I just want to follow up on Rich's comment there that you were referring to. So that $10 million was specifically related, I think the biologics, but can you just quantify the impact of COVID on your U.S. Hardware business a little bit more? If I think about one of your closest competitors who grew north of 10% and called out a 5% impact, I'm just trying to understand kind of the full impact of COVID for you guys kind of late in December?

[Chris Barry:]

Yes. So we were doing pretty well, and so we got to mid-December. And December is always our strongest month historically for the company, it's where we booked the most net sales. And so what we saw here was COVID really started to impact us in the last week, either ramp right around biologics as far as the orders that didn't manifest themselves in the quarter. We in turn saw that trend from mid-December continue into kind of that mid-June, but we still have volatility out there. It is getting better, part of the reason why we aren't giving guidance today, other than my remarks earlier around the first quarter and the full year, is that we just want to play this out a bit further and make sure that we're in a place where we feel really comfortable with where things were at.

[Matt Harbaugh:]

And may be just kind of I just hop on the Q4, if you just look at the year and we try and relate it again, across all competitors, we estimated that the overall impact of COVID was around – anywhere from 9% and that's the impact we experienced, we grew out of the 10% mark. So volatility is when the quarters volatility, geographically volatility globally. But overall, if you just – if you sort of spread it out, we believe we were in line with how the market was impacted and obviously ready to move forward into 2020.

[Ryan Zimmerman:]

Okay. I think a cut out there, but I think you said between 9% and 11% there, Chris?

[Chris Barry:]

Correct.

[Ryan Zimmerman:]

Okay. And then just lastly for me, you guys, back in 2019, Chris, when you stepped in you put a target about 1.6 billion out there in 2024, by my math that's about a 10% CAGR from here to the end and so is that still on the table in your mind or is that we shouldn't be thinking that especially with 2020s impact?

[Chris Barry:]

No, I mean, 2020 is a bit of a lost year, but the innovation pipeline and what we're pushing, it's still in the ballpark. It takes us another year to get to that number, but clearly the growth rates and the strategic plan we put in place we believe gives us a healthy runway, not only in anterior, but also in cervical and taking advantage of our low-position in posterior. And also obviously we're doing it with enabling tech and our globalization. So still in the ballpark, clearly 2020 and the impact of 2020 how quickly can recover in 2021 and get back on track is still a bit of a question, but I believe it's on the ballpark of where we think we're going.

[Operator:]

We have a question from Matthew O'Brien with Piper Sandler. Please go ahead.

[Matthew O'Brien:]

Good afternoon. Thanks for taking the question. I look back at LDR and when they launched Mobi-C in the U.S., in the first full year that they were on the market, they did just under $30 million in revenue that year. So as we look into 2022, Chris or Matt, is that a fair kind of expectation that investors should have, you'll have a one and two level indication or if you're not willing to go kind of to that extent, I mean, isn't it fair to think that that Simplify should add 150 to even 200 basis points in growth over the next couple of years at a minimum?

[Chris Barry:]

Listen, we're getting this technology sort of pre-commercial, so we're ramping up our capabilities across the board. Clearly the manufacturing and the R&D will be an internal integration. We're getting our salesforce up and train getting curriculum built to support our product with also our professional education. All things we'll do in 2021, in 2022 I mean, you're saying something that that's generally in the ballpark, again it's a little early for us to comment, but we're very, very optimistic about the opportunity that we have here. And it's an opportunity in a market that's somewhat been set. You mentioned LDR, they created the market. We have an opportunity with a very differentiated product, both from how that shows up under visualization, specifically postoperatively on the MRI the proprietary 4 millimeter size of this technology and we think that's a broadening of the potential patient population that could present or this type of technology. And then lastly striking the balance between what's on the market today with a technology that sort of strikes the right balance between mobility and stability. And we're getting overwhelmingly positive comments from our key surgeons that we've spoken with. So, listen, I'm optimistic about 2022, very optimistic. I'll be hesitant to put a number out there yet, because we've got to walk before we can run, but I can tell you that it's going to be a key focus for us as we move forward.

[Matt Harbaugh:]

And then from margin profile the Simplify Medical deal is very, very attractive. It does improve our gross margin over time and it gets better throughout the life of our ownership, because there's some things we're doing to from a manufacturing perspective to lean-it up further. And the operating margin is also significantly accretive well above kind of our corporate rate.

[Operator:]

We have a question from Kyle Rose with Canaccord, please go ahead. Your line is open.

[Kyle Rose:]

Great. Thank you for taking the questions. Chris, just wondering if you could talk just about the overall mentality and stability within the sales organization, I mean 2020 has been a tough year I think for everybody. You've talked about some of the big product launches over the past several years, maybe being more training focused. So being impacted from an execution standpoint in 2020. Just where's the stability of the salesforce fall right now. And have you lost anybody, any key distributors, anything along that perspective?

[Chris Barry:]

Yes. Thanks Kyle, appreciate the question. Listen, I've spent a lot of time and I actually I mentioned this in some of the prepared remarks. We brought in some fresh faces that compliment just a tremendous amount of knowledge and know-how in the spine industry. And I think that those things coupled together starting to match what I consider to be a very healthy mentality, very healthy culture. 2020 was hard for everybody. I think it was specifically hard for our commercial teams, but I was proud of the company we stepped up and bridge the gap in compensation. I think that there's an acknowledgement of that within our sales channel. And then you said it, our innovation and what we've got coming down the pike, I think people see it clearly Simplify was well-received. I was with a lot of our RVPs this morning, actually. And some of the newer leadership I brought in more recently, and I can tell you that there's a growing excitement, a growing level of bullishness on where we're taking things and clearly coming up year like 2020 it's as welcomed to get together and actually get to sit down and talk to one another. As far as turnover in the salesforce, I mean, we have turnover and we have competitive gains every year. I've kind of said this before. It's a part of the industry. We will continue to try to lead our advancement to attract talent through our innovation. And I think if you're a competitive rep out today and you see what we're doing with Simplify, what we're doing at cervical, the opportunities we see with enabling technologies, hopefully you'll see this is the place to want to come to. And we continue to see interest and pick off key talent from our competitors and from time-to-time, we lose talent. So the churn is not meaningfully different. I think the innovation pipeline and some of the cultural changes that we're feeling now are better than they have been. So I'm actually bullish – more bullish now than I was when I started the company two years ago, about where we are in our commercial organization.

[Operator:]

We have a question from Shagun Singh with Wells Fargo. Please go ahead. Your line is open.

[Shagun Singh:]

Thank you so much for taking the question. So I guess the first one is on margins. Matt, I think previously you had indicated that we should think about 2019 operating margins of about 15.8% as the floor and you would expect a modest step up from there. And I think today you've indicated that we should assume an additional 10 million from Simplify. So what does that net out to should be spilled – should be expected to be flattish year-over-year? So that's question number one. And then secondly, just on M&A, it looks like you do have additional firepower to do deals. How were you thinking about other areas of interest as well as deal size? Thank you for taking the questions.

[Matt Harbaugh:]

Thank you. So, yes, margins we've said all along that the operating margin improvement that we talked about in 2019 was backend weighted from a strategic plan perspective. And so this year with COVID impact, it's a bit unclear as to how this all is going to shake out. Our operating margins should be lower in the first half of this year and then we'll pick back up in the back half. And yes, the $10 million is clear headwind from the Simplify add. But as we said in the prepared remarks, we're really excited about it. And we're excited about the fact that it becomes profitable next year. So we don't have to wait that long to start driving the bottom line. And as I said earlier, the margins are very attractive on this transaction. And then finally from an M&A perspective, we do have additional firepower, we envision generating positive cash this year, much like we did last year and years before. We have not touched our $550 million revolver the debt capital markets are incredibly attractive right now. So we don't feel any constraint. We just want to find really good deals like the one we announced yesterday.

[Operator:]

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

[Unidentified Analyst:]

Hi guys. This is Drew Renery on for David tonight. Just a question on international to start, but just you broadly sound confident on reaching your 2024 LRP and international seems like there's a bigger component of that for revenue, but just with the resurgence littering globally, I know you have ongoing vaccination. Is there anything that changes in your thinking about international? Do you need to make any more investments to drive potential incremental revenue there? Are there even more attractive regions or countries that look more attractive today than they did a year ago or two years ago?

[Chris Barry:]

Thanks. The simple answer is we're still very excited about international opportunities and nothing material has changed. And I still think that the opportunity to grow in those markets, I do think there's ongoing investment that is taking place as we speak today and we'll continue going forward. But I believe we continue to add strength in our key markets, the performance of our Asia-Pac team this year inclusive of Japan, even through the COVID crisis, we saw pockets of strength in Europe and just resiliency across the globe, really to deliver during this time to the extent that they could based on their situation. So generally speaking, I still think there's significant runway in our existing markets. And as I said before, they're still very attractive markets that we're not participating in today. And some of those are within our short-term regions and may be within the mid and long-term rates based on portfolio things like simplify may accelerate our opportunities in certain markets. And we're also looking at M&A opportunities like Simplify or maybe other things that, that would accelerate our opportunities in some of these key markets. But we're still committed to the globalization opportunity we saw, I think strength amongst our competitors, significant strength within our business over the course of this year, which is a disruptive year, which gives me even more confidence of our ability to deliver our commitments over the next several years.

[Operator:]

Our next question is from Kaila Krum with Truist. Please go ahead. Your line is open.

[Samuel Brodovsky:]

Hi, this is Sam on for Kaila. Thanks for taking the question. Just one last one on reimbursement and the updates around pre-authorization for cervical fusion. We start to see if you – have you seen any impact on that in your fusion business, and is that playing in at all into the Simplify transaction? And if you think that this could benefit or that this market more broadly could benefit from those reimbursement changes.

[Chris Barry:]

Thanks, Sam for the question. Generally speaking, no, we don't see any impact to our cervical fusion business, because of pre-reimbursement, pre-authorization I should say. We do believe and do believe that changes in reimbursement over time could benefit the Simplify acquisition. I think we've seen those change over the last few years. A lot of these – this is a procedure that we mentioned earlier, many of these are done in the ASC. There was some deficit there early on. I think that's being neutralized now with some of the reimbursement decisions made. There's still work to be done there. And it will be an active participant to ensure that we're supporting that those changes from a reimbursement as we move forward.

[Operator:]

Our next question is from Craig Bijou with Bank of America. Please go ahead.

[Craig Bijou:]

Hey guys, thanks for taking the questions. Just a couple quick follow-ups on Pulse. So you mentioned the $5 million in 2021. So just wanted to see if you guys can provide a little bit of color, is that capital sales revenue disposables just how to think about that. And then in 2021, can we see that $5 million from Pulse double, or is it a multiple higher than that? How – sorry, in 2022, how should we think about Pulse revenue in 2022?

[Chris Barry:]

Yes. So the way we're thinking about Pulse is a plus or minus $5 million, we think is reasonable, because obviously the launches later this year, so we start to see the benefit. We'll get a full year sales cycle next year. So yes, we're going to be as flexible as we possibly can as whether it's capital sale or a cash sale at least to buy whatever model it is. We have kind of a mix in our numbers and our assumptions as to how that's going to play out. I would also add that we see units sold this year both here in the United States and in Europe in that number.

[Craig Bijou:]

Got it. Thanks.

[Chris Barry:]

You bet.

[Operator:]

Our next question is from Jason Wittes with Northland. Please go ahead. Your line is open.

[Jason Wittes:]

Hi, thanks for taking the questions. First off on, I appreciate your conservatives on the simplicity to. That said it does seem particularly well-positioned potentially to take quite a bit of market share. Is that a fair assumption? Is there the gatekeeper just training the field out there to be able to capture that share?

[Chris Barry:]

Yes, thanks for the question, Jason. Generally, I would say that it's really just – it's pretty commercial. We've got to commercialize the product. So we've got to train up our existing sales organization. We've got to make sure we integrate the company effectively from a manufacturing from an R&D perspective. That'll be ongoing. We got to make sure that we train on how to use the product properly. We're going to make sure that we do what's right and build our curriculum to train our surgeons and educate along the way. So it's really just standing the product up. It's an implantable technology and we want to make sure that we are approaching it the right way. It's within a warehouse of what we always do and these things do take time. We're also looking for the level two approval this year. I think that will further accelerate the growth of the product. So that comes early. There's potential to outperform, but the fact is we run a timeline. I think it's the right timeline. And as we move forward, we do believe, as you said, it's a significant opportunity to take share.

[Operator:]

We have a question from Anthony Petrone with Jefferies. Please go ahead. Your line is open.

[Anthony Petrone:]

Thanks. Hope everyone's doing well. We're hopping between calls, so apologies if a couple of these were asked, but the first one would be maybe to just level set where you see the underlying spine market in terms of volume growth at the moment, even considering that COVID the headwind and maybe the latest trends on price. And if you can give an update on where NuVasive share is exiting 2020. And then the follow-up on Pulse would be the system is modular and it's coming out ahead of robotics. And so how do we think about adoption when you factor in the six modules that are available. Will it be offered as a complete suite, or do you think a lot of accounts will accumulate piecemeal? Thanks.

[Chris Barry:]

All right. Let me try to hit on some of these, so the underlying spine market, we thought the market pre-COVID was growing in the 0 to 2% range. I don't think that's necessarily changed. I think the COVID dynamic obviously slows the market down and had an impact in 2020 moving through this year. We think we'll get back to previous volumes, which reflect those numbers that you've probably seen in the past pricing. I think has remained relatively unchanged versus what you may have seen in the past. Our share position remains relatively unchanged. We consider ourselves a number three share position player in the market, slightly behind the few with our sites squirrely set on changing that over the next year or so. Pulse will it be for all the applications. Listen, on Pulse just so just again, we believe that the runway is still substantial that the relevance and the utilization of things like navigation and robotics in the market, they are still early, but we think the integrated nature of this technology provides an opportunity to be used in a 100% of spine cases. I think that is a gating item that gives us a competitive opportunity and by installing Pulse and with post represents with neuromonitoring, imaging, Bendini, Lessray, iGA then adding a robotic application creates a truly unique platform in the market. And we're dedicated to bring that to market over the next 24 months.

[Operator:]

We have a question from Matt Taylor with UBS. Please go ahead.

[Matt Taylor:]

Yes. Hi, thank you for taking the question. So I wanted to ask one just about your decision to not give formal guidance this year. You gave us some color, but why not just give conservative guidance that you think you can hit, what's your philosophy behind guidance going forward? And when do you think you might be able to start to reinstate it?

[Matt Harbaugh:]

Yes, this is Matt. We decided not to give formal guidance, because as we track our net sales there is some volatility that I mentioned earlier both from COVID and also weather. And we wanted to give it a little more time. This being said, I would just echo what I said earlier, which is we do think our first quarter will be plus or minus in line with what we posted last year. Last year, we came in at $260 million, so COVID impact there. And then on a full year consensus is makes sense to us plus or minus we're in the zone of where consensus is right now. So just wanted to give ourselves more time before putting something out there that's formal, but I think we've given you enough to have a good understanding of how we're thinking about the company this year.

[Operator:]

And Mr. Barry, there are no further questions at this time. I would like to turn the call back to you for your closing comments.

[Chris Barry:]

Thanks, Scott, and thanks, everyone for your questions. Thank you all for participating in the earnings call today. I'm confident that the investments we've made in 2020 and how this position NuVasive, to continue my progress against our long-term strategy will continue to unlock value for our stakeholders. So with that, we look forward to speaking to you all next quarter. Thank you.

[Operator:]

That concludes the call for today. We thank you for your participation. I ask you to please disconnect your line.