Company Announcements

Globus Medical Reports Second Quarter 2024 Results

Source: GlobeNewswire
Globus Medical Reports Second Quarter 2024 Results

AUDUBON, Pa., Aug. 06, 2024 (GLOBE NEWSWIRE) -- Globus Medical, Inc. (NYSE: GMED), a leading musculoskeletal solutions company, today announced its financial results for the quarter ended June 30, 2024.

  • Worldwide net sales were $629.7 million, an increase of 115.9% or 117.3% on a constant currency basis
  • GAAP net income for the quarter was $31.8 million
  • GAAP diluted earnings per share (“EPS”) was $0.23 and non-GAAP diluted EPS was $0.75
  • Non-GAAP adjusted EBITDA was $190.4 million, or 30.2% of net sales

“I’m pleased with the quarterly results, demonstrating our team’s strong performance as we continue to execute our long-term growth strategy, deliver on NuVasive integration plans, launch meaningful new products into the market and drive strong financial performance,” said Dan Scavilla, President and Chief Executive Officer. “I believe the potential for Globus has never been greater, as we redefine surgery with procedural solutions built around enabling technology.”

“Our second quarter results demonstrate our continued commitment to achieving excellence in commercial execution, while driving integration objectives to achieve synergy goals,” commented Keith Pfeil, COO-CFO. “I am pleased with our results thus far in 2024 and I believe we remain well positioned to deliver against our objectives for the remainder of this year, as well as into the future. Looking ahead, we will continue to focus on commercial initiatives to drive profitable growth and operational initiatives to drive enhanced efficiencies.”

Worldwide net sales for the second quarter of 2024 were $629.7 million, an as-reported increase of 115.9% over the second quarter of 2023. U.S. net sales for the second quarter of 2024 increased by 103.5% compared to the second quarter of 2023. International net sales increased by 182.3% over the second quarter of 2023 on an as-reported basis, and an increase of 191.3% on a constant currency basis. Net Sales increases were driven by the addition of NuVasive, as well as increased volume of spine product sales and enabling technology products and services.

GAAP net income for the second quarter of 2024 was $31.8 million, a decrease of 45.0% over the same period in the prior year. Diluted EPS for the second quarter was $0.23, compared to $0.57 for the second quarter of 2023. The GAAP net income was primarily driven by the amortization costs of purchase-accounting-related fair-value step ups and restructuring costs. Non-GAAP diluted EPS for the second quarter of 2024, which excludes, among other costs, both acquisitions related and restructuring costs, was $0.75, compared to $0.63 in the second quarter of 2023, an increase of 20.0%.

Net cash provided by operating activities was $54.3 million, and non-GAAP free cash flow was $26.5 million for the second quarter of 2024.

2025 Annual Guidance

The Company raised its guidance for full year 2024 revenue to be in the range of $2.47 to $2.49 billion, and non-GAAP fully diluted earnings per share in the range of $2.80 to $2.90.

Conference Call Information

Globus Medical will hold a teleconference to discuss its second quarter 2024 results with the investment community at 4:30 p.m. Eastern Time today. Participants may access the conference call live via webcast on the Investors page of Globus Medical’s website at http://www.investors.globusmedical.com/news-events/events-webcasts.

To participate via telephone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. The audio archive will be available after the call on the Investor page of the Globus Medical website.

About Globus Medical, Inc.

Based in Audubon, Pennsylvania, Globus Medical, Inc. was founded in 2003 by an experienced team of professionals with a shared vision to create products that enable surgeons to promote healing in patients with musculoskeletal disorders. Additional information can be accessed at www.globusmedical.com.

Non-GAAP Financial Measures

To supplement our financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), management uses certain non-GAAP financial measures. For example, non-GAAP Adjusted EBITDA, which represents net income before interest income, net and other non-operating expenses, provision for income taxes, depreciation and amortization, stock-based compensation expense, provision for litigation, acquisition of in-process research and development, merger and acquisition related costs/licensing, restructuring related costs, certain foreign currency acquisition-related impacts, and gains and losses from strategic investments, is useful as an additional measure of operating performance, and particularly as a measure of comparative operating performance from period to period, as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our capital structure, asset base, income taxes and interest income and expense. Our management also uses non-GAAP Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. Provision for litigation represents costs incurred for litigation settlements or unfavorable verdicts when the loss is known or considered probable and the amount can be reasonably estimated, or in the case of a favorable settlement, when income is realized. Merger and acquisition related costs/licensing represents the change in fair value of business-acquisition-related contingent consideration; costs related to integrating recently acquired businesses, including but not limited to costs to exit or convert contractual obligations, severance, retention bonus, duplicative costs and information system conversion; and specific costs related to the consummation of the acquisition process such as banker fees, legal fees, and other acquisition related professional fees, as well as one-time licensing fees. Restructuring related costs include severance, retention bonus, accelerated stock-based compensation expense, and costs associated with consolidating facilities. Acquisition of in-process research and development represents the expensing of acquired assets with no alternative future use and related fees. We also adjusted for certain foreign currency impacts related to the acquisition costs and gains/losses on strategic investments within other assets as we believe these impacts are not a measure of our operating performance.

In addition, for the period ended June 30, 2024 and for other comparative periods, we are presenting non-GAAP net income and non-GAAP Diluted Earnings Per Share, which represent net income and diluted earnings per share excluding the provision for litigation, amortization of intangibles, acquisition of in-process research and development, merger and acquisition related costs/licensing, restructuring related costs, certain foreign currency impacts, gains and losses from strategic investments, the impact of dilution attributable to the Convertible Notes, and the tax effects of all of the foregoing adjustments. We also present Non-GAAP gross profit, which excludes the impacts of any inventory acquisition-related costs within cost of goods sold. The tax effect adjustment represents the tax effect of the pre-tax non-GAAP adjustments excluded from non-GAAP net income. The tax impact of the non-GAAP adjustments is calculated based on the consolidated effective tax rate on a GAAP basis, applied to the non-GAAP adjustments, unless the underlying item has a materially different tax treatment, in which case the estimated tax rate applicable to the adjustment is used. We believe these non-GAAP measures are also useful indicators of our operating performance, and particularly as additional measures of comparative operating performance from period to period as they remove the effects of the foregoing items, which we believe are not reflective of underlying business trends. Additionally, for the period ended June 30, 2024 and for other comparative periods, we also define the non-GAAP measure of free cash flow as the net cash provided by operating activities, adjusted for the impact of restricted cash, less the cash impact of purchases of property and equipment. We believe that this financial measure provides meaningful information for evaluating our overall financial performance for comparative periods as it facilitates an assessment of funds available to satisfy current and future obligations and fund acquisitions. Furthermore, the non-GAAP measure of constant currency net sales growth is calculated by translating current year net sales at the same average exchange rates in effect during the applicable prior year period. We believe constant currency net sales growth provides insight to the comparative increase or decrease in period net sales, in dollar and percentage terms, excluding the effects of fluctuations in foreign currency exchange rates.

Non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit, free cash flow and constant currency net sales growth are not calculated in conformity with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP. These measures do not include certain expenses that may be necessary to evaluate our liquidity or operating results. Our definitions of non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit, free cash flow and constant currency net sales growth may differ from that of other companies and therefore may not be comparable.

Safe Harbor Statements

All statements included in this press release other than statements of historical fact are forward-looking statements and may be identified by their use of words such as “believe,” “may,” “might,” “could,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and other similar terms. These forward-looking statements are based on our current assumptions, expectations and estimates of future events and trends. Forward-looking statements are only predictions and are subject to many risks, uncertainties and other factors that may affect our businesses and operations and could cause actual results to differ materially from those predicted. These risks and uncertainties include, but are not limited to, the risks and costs associated with the integration of the NuVasive business and our ability to successfully integrate and achieve anticipated synergies with the integration, health epidemics, pandemics and similar outbreaks, factors affecting our quarterly results, our ability to manage our growth, our ability to sustain our profitability, demand for our products, our ability to compete successfully (including without limitation our ability to convince surgeons to use our products and our ability to attract and retain sales and other personnel), our ability to rapidly develop and introduce new products, our ability to develop and execute on successful business strategies, our ability to comply with laws and regulations that are or may become applicable to our businesses, our ability to safeguard our intellectual property, our success in defending legal proceedings brought against us, trends in the medical device industry, general economic conditions, and other risks. For a discussion of these and other risks, uncertainties and other factors that could affect our results, you should refer to the disclosure contained in our most recent annual report on Form 10-K filed with the U.S. Securities and Exchange Commission, including the sections labeled “Risk Factors” and “Cautionary Note Concerning Forward-Looking Statements,” and in our Forms 10-Q, Forms 8-K and other filings with the U.S. Securities and Exchange Commission. These documents are available at www.sec.gov. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements contained in this press release speak only as of the date of this press release. We undertake no obligation to update any forward-looking statements as a result of new information, events or circumstances or other factors arising or coming to our attention after the date hereof.

 
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
            
 Three Months Ended Six Months Ended
 June 30, June 30,
(In thousands, except per share amounts)2024  2023  2024  2023 
Net sales$ 629,691  $291,615  $ 1,236,357  $568,303 
Cost of sales  260,040   76,473    501,527   147,298 
Gross profit  369,651   215,142    734,830   421,005 
            
Operating expenses:           
Research and development  37,698   21,347    94,966   42,429 
Selling, general and administrative  238,119   120,069    486,829   242,485 
Provision for litigation, net  1,335   (2,740)   1,304   (2,740)
Amortization of intangibles  29,709   4,547    59,385   9,148 
Acquisition-related costs  13,734   5,707    16,152   7,068 
Restructuring Costs  (566)      18,575    
Total operating expenses  320,029   148,930    677,211   298,390 
            
Operating income/(loss)  49,622   66,212    57,619   122,615 
            
Other income/(expense), net           
Interest income/(expense), net  (2,335)  8,294    (4,229)  14,791 
Foreign currency transaction gain/(loss)  (703)  (548)   (16,074)  (336)
Other income/(expense)  997   716    1,707   793 
Total other income/(expense), net  (2,041)  8,462    (18,596)  15,248 
            
Income/(loss) before income taxes  47,581   74,674    39,023   137,863 
Income tax provision/(benefit)  15,821   16,962    14,380   31,022 
            
Net income/(loss)$ 31,760  $57,712  $ 24,643  $106,841 
            
Other comprehensive income/(loss), net of tax:           
Unrealized gain/(loss) on marketable securities  492   40    871   4,338 
Foreign currency translation gain/(loss)  (1,298)  315    (2,530)  1,225 
Total other comprehensive income/(loss), net of tax  (806)  355    (1,659)  5,563 
Comprehensive income/(loss)$ 30,954  $58,067  $ 22,984  $112,404 
            
Earnings per share:           
Basic$ 0.23  $0.57  $ 0.18  $1.06 
Diluted$ 0.23  $0.57  $ 0.18  $1.05 
Weighted average shares outstanding:           
Basic  135,195   100,373    135,276   100,326 
Diluted  136,979   101,782    136,836   101,989 


 
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
      
 June 30, December 31,
(In thousands, except share and per share values)2024  2023 
ASSETS     
Current assets:     
Cash and cash equivalents$ 410,424  $467,292 
Short-term marketable securities  82,509   50,497 
Accounts receivable, net of allowances of $19,256 and $8,934, respectively  611,784   503,235 
Inventories  770,463   848,135 
Prepaid expenses and other current assets  46,213   44,580 
Income taxes receivable  2,498   1,635 
Total current assets  1,923,891   1,915,374 
Property and equipment, net of accumulated depreciation of $480,290 and $425,695, respectively  571,776   586,932 
Operating lease right of use assets  53,881   59,931 
Long-term marketable securities  27,795   75,428 
Intangible assets, net  866,565   924,603 
Goodwill  1,454,117   1,434,540 
Other assets  77,569   78,590 
Deferred income taxes  18,199   10,685 
Total assets$ 4,993,793  $5,086,083 
      
LIABILITIES AND EQUITY     
Current liabilities:     
Accounts payable$ 67,163  $56,671 
Accrued expenses  215,885   240,460 
Operating lease liabilities  11,118   11,967 
Income taxes payable  11,429   3,845 
Senior convertible notes  430,485    
Business acquisition liabilities  38,221   61,035 
Deferred revenue  19,845   18,369 
Total current liabilities  794,146   392,347 
Business acquisition liabilities, net of current portion  83,111   78,323 
Operating lease liabilities  87,702   91,037 
Senior convertible notes    417,400 
Deferred income taxes and other tax liabilities  27,264   84,421 
Other liabilities  25,205   24,596 
Total liabilities  1,017,428   1,088,124 
      
      
      
Equity:     
Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 112,928,331 and 113,905,565 shares at June 30, 2024 and December 31, 2023, respectively  113   114 
Class B common stock; $0.001 par value. Authorized 275,000,000 shares; issued and outstanding 22,430,097 and 22,430,097 shares at June 30, 2024 and December 31, 2023, respectively  22   22 
Additional paid-in capital  2,913,609   2,870,749 
Accumulated other comprehensive income/(loss)  (11,851)  (10,192)
Retained earnings  1,074,472   1,137,266 
Total equity  3,976,365   3,997,959 
Total liabilities and equity$ 4,993,793  $5,086,083 


 
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
       
  Six Months Ended
  June 30,
(In thousands) 2024  2023 
Cash flows from operating activities:      
Net income $24,643  $106,841 
Adjustments to reconcile net income to net cash provided by operating activities:      
Acquired in-process research and development   12,613    
Depreciation and amortization   118,849   36,183 
Amortization of premiums on marketable securities   (14)  786 
Provision for excess and obsolete inventory   10,498   3,972 
Amortization of inventory fair value step up   107,341    
Amortization of 2025 Note fair value step up   13,315    
Stock-based compensation expense   30,073   17,542 
Allowance for doubtful accounts   11,481   1,863 
Change in fair value of business acquisition liabilities   12,739   3,280 
Change in deferred income taxes   (65,275)  (11,160)
(Gain)/loss on disposal of assets, net   464   129 
Payment of business acquisition-related liabilities   (16,965)  (1,490)
Net (gain)/loss from foreign currency adjustment   6,558    
(Increase) decrease in:      
Accounts receivable   (124,206)  (28,237)
Inventories   (22,855)  (38,658)
Prepaid expenses and other assets   (2,001)  (2,100)
Increase (decrease) in:      
Accounts payable   11,561   (2,769)
Accrued expenses and other liabilities   (28,951)  (888)
Income taxes payable/receivable   6,777   3,047 
Net cash provided by/(used in) operating activities   106,645   88,341 
Cash flows from investing activities:      
Purchases of marketable securities   (12,174)  (81,381)
Maturities of marketable securities   21,709   159,328 
Sales of marketable securities   7,404   21,788 
Purchases of property and equipment   (56,366)  (33,859)
Acquisition of businesses, net of cash acquired and purchases of intangible and other assets   (17,535)  (2,662)
Net cash provided by/(used in) investing activities   (56,962)  63,214 
Cash flows from financing activities:      
Payment of business acquisition-related liabilities   (33,921)  (4,034)
Net proceeds from exercise of stock options   17,651   8,058 
Payments related to tax withholdings for share-based compensation   (5,955)   
Repurchase of common stock   (84,787)   
Net cash provided by/(used in) financing activities   (107,012)  4,024 
Effect of foreign exchange rates on cash   461   407 
Net increase/(decrease) in cash and cash equivalents   (56,868)  155,986 
Cash and cash equivalents at beginning of period   467,292   150,466 
Cash and cash equivalents at end of period $ 410,424  $306,452 
       
Supplemental disclosures of cash flow information:      
Income taxes paid, net $ 71,586  $38,979 
Non-cash investing and financing activities:      
Accrued purchases of property and equipment $ 9,508  $5,366 


             
Supplemental Financial Information

Net Sales by Product Category:
          
  Three Months Ended Six Months Ended
  June 30, June 30,
(In thousands) 2024 2023 2024 2023
Musculoskeletal Solutions $592,913 $256,855 $1,167,610 $508,462
Enabling Technologies  36,778  34,760  68,747  59,841
Total net sales $629,691 $291,615 $1,236,357 $568,303


 
Liquidity and Capital Resources:
       
  June 30, December 31,
(In thousands) 2024 2023
Cash and cash equivalents $410,424 $467,292
Short-term marketable securities  82,509  50,497
Long-term marketable securities  27,795  75,428
Total cash, cash equivalents and marketable securities $520,728 $593,217

The following tables reconcile GAAP to Non-GAAP financial measures.

 
Non-GAAP Adjusted EBITDA Reconciliation Table:
 
 Three Months Ended Six Months Ended
 June 30, June 30,
(In thousands, except percentages)2024  2023  2024  2023 
Net income/(loss)$31,760  $57,712  $24,643  $106,841 
Interest (income)/expense, net 2,335   (8,294)  4,229   (14,791)
Provision for income taxes 15,821   16,962   14,380   31,022 
Depreciation and amortization 63,588   18,075   118,849   36,183 
EBITDA 113,504   84,455   162,101   159,255 
Stock-based compensation expense 12,735   8,589   25,174   17,542 
Provision for litigation, net 1,335   (2,740)  1,304   (2,740)
Merger and acquisition-related costs/licensing 67,613   5,809   124,000   7,184 
Acquisition of in-process research and development       12,613    
Net (gain) loss from strategic investments (490)     (267)   
Non-cash acquisition-related foreign currency impacts (4,633)     6,558    
Restructuring costs 371      25,533    
Adjusted EBITDA$190,435  $96,113  $357,016  $181,241 
            
Net income/(loss) as a percentage of net sales 5.0%   19.8%   2.0%   18.8% 
Adjusted EBITDA as a percentage of net sales 30.2%   33.0%   28.9%   31.9% 


 
Non-GAAP Net Income Reconciliation Table:
 
 Three Months Ended Six Months Ended
 June 30, June 30,
(In thousands)2024  2023  2024  2023 
Net income/(loss)$31,760  $57,712  $24,643  $106,841 
Provision for litigation, net 1,335   (2,740)  1,304   (2,740)
Amortization of intangibles 29,709   4,547   59,385   9,148 
Merger and acquisition-related costs/licensing 67,613   5,809   124,000   7,184 
Acquisition of in-process research and development       12,613    
Non-cash acquisition-related foreign currency impacts (4,633)     6,558    
Restructuring Costs 371      25,534    
Net gain/(loss) on strategic investments (490)     (267)   
Tax effect of adjusting items (22,941)  (1,730)  (52,947)  (3,059)
Non-GAAP net income/(loss)$102,724  $63,598  $200,823  $117,374 


 
Non-GAAP Gross Profit Reconciliation Table:
 
 Three Months EndedSix Months Ended
 June 30,June 30,
(In thousands)2024  2023  2024  2023 
Cost of sales$260,040  $76,473  $501,527  $147,298 
Merger and acquisition related costs/licensing (53,670)     (107,341)   
Adjusted cost of sales$206,370  $76,473  $394,186  $147,298 
            
Adjusted gross profit$423,321  $215,142  $842,171  $421,005 
Adjusted gross profit as a percentage 67.2%   73.8%   68.1%   74.1% 


 
Non-GAAP Diluted Earnings Per Share Reconciliation Table:
 
 Three Months Ended Six Months Ended
 June 30, June 30,
(In thousands)2024  2023   2024  2023 
Diluted earnings per share, as reported$0.23  $0.57   $0.18  $1.05 
Provision for litigation, net 0.01   (0.03)      (0.03)
Amortization of intangibles 0.22   0.04    0.43   0.09 
Merger and acquisition-related costs/licensing 0.49   0.06    0.91   0.07 
Acquisition of in-process research and development        0.09    
Net (gain) loss from strategic investments (0.00)      (0.00)   
Non-cash acquisition-related foreign currency impacts (0.03)      0.05    
Tax effect of adjusting items (0.17)  (0.02)   (0.39)  (0.03)
Restructuring costs 0.00       0.20    
Non-GAAP diluted earnings per share$0.75  $0.63   $1.47  $1.15 

*amounts might not add due to rounding

 
Non-GAAP Free Cash Flow Reconciliation Table:
 
 Three Months EndedSix Months Ended
 June 30,June 30,
(In thousands)2024  2023  2024  2023 
Net cash provided by operating activities$54,258  $35,028  $106,645  $88,341 
Purchases of property and equipment (27,798)  (17,868)  (56,366)  (33,859)
Free cash flow$26,460  $17,160  $50,279  $54,482 


 
Non-GAAP Net Sales on a Constant Currency Basis Comparative Table:
 
  Three Months Ended Reported Currency
Impact on 
 Constant
Currency
  June 30, Net Sales Current Net Sales
(In thousands, except percentages) 2024 2023 Growth Period Net Sales   Growth
United States $499,460 $245,490 103.5%  $  103.5% 
International  130,231  46,125 182.3%   (4,109) 191.3% 
Total net sales $629,691 $291,615 115.9%  $(4,109) 117.3% 


              
  Six Months Ended Reported Currency
Impact on 
 Constant
Currency
  June 30, Net Sales Current Net Sales
(In thousands, except percentages) 2024 2023 Growth Period Net Sales   Growth
United States $982,386 $479,609 104.8%  $  104.8% 
International  253,971  88,694 186.3%   (5,569) 192.6% 
Total net sales $1,236,357 $568,303 117.6%  $(5,569) 118.5% 


Contact:
Brian Kearns
Senior Vice President, Business Development and Investor Relations
Phone: (610) 930-1800
Email: investors@globusmedical.com
www.globusmedical.com