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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.

“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 InformationNet 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 Ended Six 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 Ended Six 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


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