AUDUBON, Pa., May 04, 2023 (GLOBE NEWSWIRE) -- Globus Medical, Inc. (NYSE:GMED), a leading musculoskeletal solutions company, today announced its financial results for the quarter ended March 31, 2023.

Worldwide net sales were $276.7 million, an increase of 20.0%, or 21.0% on a constant currency basis
GAAP net income for the quarter was $49.1 million
GAAP diluted earnings per share ("EPS") was $0.48 and non-GAAP diluted EPS was $0.53
Non-GAAP adjusted EBITDA was $85.1 million, or 30.8% of net sales

"Globus achieved a record quarter, delivering our highest quarterly revenue yet of $277 million, an increase of 21% over the first quarter of 2022 on a constant currency basis. Non-GAAP EPS was $0.53, an increase of 25% as earnings grew faster than sales due to operational efficiencies and disciplined spending," said Dan Scavilla, President and CEO. "Our U.S. Spine business grew an impressive 14%, with notable gains across our product portfolio in expandables, biologics, MIS screws, and 3D printed implants. International Spine sales increased 21% on an as-reported basis, and 28% on a constant currency basis as we continue to increase our brand recognition on the global healthcare stage. Enabling Technologies grew 91% to $25 million, driven by continued robotic system demand and new interest in our Excelsius3D™ imaging system."

"We are also excited about our pending merger with NuVasive," said Mr. Scavilla. "Last week, shareholders of both companies provided overwhelming support for this combination of leading innovators in spine care. Globus Medical remains well positioned to continue providing innovative procedural solutions to help patients with musculoskeletal disorders."

Worldwide net sales for the first quarter of 2023 were $276.7 million, an as-reported increase of 20.0% over the first quarter of 2022, and an increase of 21.0% on a constant currency basis. U.S. net sales for the first quarter of 2023 increased by 19.2% compared to the first quarter of 2022. International net sales increased by 24.7% over the first quarter of 2022 on an as-reported basis, and an increase of 31.5% on a constant currency basis.

GAAP net income for the first quarter of 2023 was $49.1 million, an increase of 29.0% over the same period in the prior year. Diluted EPS for the first quarter was $0.48, compared to $0.37 for the first quarter of 2022. Non-GAAP diluted EPS for the first quarter of 2023 was $0.53, compared to $0.42 in the first quarter of 2022 an increase of 24.7% driven primarily by higher net sales.

Net cash provided by operating activities was $53.3 million, and non-GAAP free cash flow was $37.3 million for the first quarter of 2023. The Company remains debt free.

2023 Annual Guidance

The Company today reaffirmed its full year 2023 guidance of $1.1 billion in net sales and non-GAAP diluted earnings per share of $2.30.

Conference Call Information

Globus Medical will hold a teleconference to discuss its first quarter 2023 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 https://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 related costs/licensing, and acquisition of in-process research and development, 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. 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, 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. Acquisition of in-process research and development represents the expensing of acquired assets with no alternative future use and related fees.

In addition, for the period ended March 31, 2023 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 related costs/licensing, acquisition of in-process research and development, and the tax effects of all of the foregoing adjustments. 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 litigation, amortization of intangibles, acquisition related costs/licensing, acquisition of in-process research and development, and the tax effects of all of the foregoing adjustments, which we believe are not reflective of underlying business trends. Additionally, for the period ended March 31, 2023 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, 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, 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 occurrence of any change, event, series of events or circumstances that could give rise to the termination of the Merger Agreement, including a termination of the Merger Agreement under circumstances that could require Globus to pay a termination fee to NuVasive or require NuVasive to pay a termination fee to Globus; the inability to complete the Merger due to the failure to satisfy any of the conditions to the completion of the Merger, including receipt of the necessary approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), in a timely manner or otherwise; any unexpected costs, liabilities or delays related to the NuVasive transaction; the respective businesses of Globus and NuVasive may suffer as a result of uncertainty surrounding the transaction; the effect of the announcement of the transaction on the ability of Globus or NuVasive to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom Globus or NuVasive does business, or on Globus' or NuVasive's operating results and business generally; health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic, 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
	March 31,
*(In thousands, except per share amounts)*	2023		2022
Net sales	$	276,688	$	230,549
Cost of goods sold		70,825		59,167
Gross profit		205,863		171,382

Operating expenses:
Research and development		21,082		17,412
Selling, general and administrative		122,416		100,748
Provision for litigation		—		2,341
Amortization of intangibles		4,601		4,512
Acquisition related costs		1,361		(76)
Total operating expenses		149,460		124,937

Operating income/(loss)		56,403		46,445

Other income/(expense), net
Interest income/(expense), net		6,497		2,543
Foreign currency transaction gain/(loss)		212		(391)
Other income/(expense)		77		301
Total other income/(expense), net		6,786		2,453

Income/(loss) before income taxes		63,189		48,898
Income tax provision		14,060		10,814

Net income/(loss)	$	49,129	$	38,084

Other comprehensive income/(loss), net of tax:
Unrealized gain/(loss) on marketable securities		4,298		(8,828)
Foreign currency translation gain/(loss)		910		(1,567)
Total other comprehensive income/(loss), net of tax		5,208		(10,395)
Comprehensive income/(loss)	$	54,337	$	27,689

Earnings per share:
Basic	$	0.49	$	0.37
Diluted	$	0.48	$	0.37
Weighted average shares outstanding:
Basic		100,279		101,600
Diluted		102,196		104,077

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)



	March 31,		December 31,
*(In thousands, except share and per share values)*	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	217,685	$	150,466
Short-term marketable securities		286,685		295,592
Accounts receivable, net of allowances of $5,514 and $4,724, respectively		222,783		213,247
Inventories		321,033		298,981
Prepaid expenses and other current assets		19,201		20,997
Income taxes receivable		3,042		4,061
Total current assets		1,070,429		983,344
Property and equipment, net of accumulated depreciation of $353,868 and $343,036, respectively		245,098		243,729
Long-term marketable securities		480,025		495,852
Intangible assets, net		59,194		63,574
Goodwill		198,710		197,471
Other assets		44,985		43,311
Deferred income taxes		51,179		48,845
Total assets	$	2,149,620	$	2,076,126

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	39,835	$	36,101
Accrued expenses		83,998		94,705
Income taxes payable		16,389		990
Business acquisition liabilities		13,784		13,308
Deferred revenue		13,541		14,100
Total current liabilities		167,547		159,204
Business acquisition liabilities, net of current portion		52,486		54,950
Deferred income taxes		1,369		1,779
Other liabilities		13,398		13,820
Total liabilities		234,800		229,753
Equity:
Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 77,904,573 and 77,762,282 shares at March 31, 2023 and December 31, 2022, respectively		78		78
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 March 31, 2023 and December 31, 2022, respectively		22		22
Additional paid-in capital		645,062		630,952
Accumulated other comprehensive income/(loss)		(19,422)		(24,630)
Retained earnings		1,289,080		1,239,951
Total equity		1,914,820		1,846,373
Total liabilities and equity	$	2,149,620	$	2,076,126

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



	Three Months Ended
	March 31,
*(In thousands)*	2023		2022
Cash flows from operating activities:
Net income	$	49,129	$	38,084
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		18,108		16,837
Amortization of premium (discount) on marketable securities		482		1,690
Write-down for excess and obsolete inventories, net		2,055		1,834
Stock-based compensation expense		8,953		8,152
Allowance for doubtful accounts		810		(728)
Change in fair value of business acquisition liabilities		(446)		(263)
Change in deferred income taxes		(3,979)		(2,994)
(Gain)/loss on disposal of assets, net		81		115
Payment of business acquisition related liabilities		(772)		(743)
(Increase)/decrease in:
Accounts receivable		(9,861)		(1,614)
Inventories		(22,470)		(17,939)
Prepaid expenses and other assets		836		547
Increase/(decrease) in:
Accounts payable		3,916		4,160
Accrued expenses and other liabilities		(9,969)		(15,428)
Income taxes payable/receivable		16,440		12,980
Net cash provided by/(used in) operating activities		53,313		44,690
Cash flows from investing activities:
Purchases of marketable securities		(69,141)		(142,145)
Maturities of marketable securities		85,546		106,549
Sales of marketable securities		13,240		42,673
Purchases of property and equipment		(15,991)		(19,971)
Acquisition of businesses, net of cash acquired and purchases of intangible and other assets		(2,662)		(1,000)
Net cash provided by/(used in) investing activities		10,992		(13,894)
Cash flows from financing activities:
Payment of business acquisition liabilities		(1,919)		(1,699)
Proceeds from exercise of stock options		4,859		7,746
Net cash provided by/(used in) financing activities		2,940		6,047
Effect of foreign exchange rates on cash		(26)		(123)
Net increase/(decrease) in cash and cash equivalents		67,219		36,720
Cash and cash equivalents at beginning of period		150,466		193,069
Cash and cash equivalents at end of period	$	217,685	$	229,789
Supplemental disclosures of cash flow information:
Income taxes paid	$	1,724	$	572
Purchases of property and equipment included in accounts payable and accrued expenses	$	6,493	$	4,105

Supplemental Financial Information

Net Sales by Product Category:




	Three Months Ended
	March 31,
*(In thousands)*	2023		2022
Musculoskeletal Solutions	$	251,607	$	217,402
Enabling Technologies		25,081		13,147
Total net sales	$	276,688	$	230,549

Liquidity and Capital Resources:



	March 31,		December 31,
*(In thousands)*	2023		2022
Cash and cash equivalents	$	217,685	$	150,466
Short-term marketable securities		286,685		295,592
Long-term marketable securities		480,025		495,852
Total cash, cash equivalents and marketable securities	$	984,395	$	941,910

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

Non-GAAP Adjusted EBITDA Reconciliation Table:


	Three Months Ended
	March 31,
*(In thousands, except percentages)*	2023		2022
Net income/(loss)	$	49,129	$	38,084
Interest (income)/expense, net		(6,497)		(2,543)
Provision for income taxes		14,060		10,814
Depreciation and amortization		18,109		16,837
EBITDA		74,801		63,192
Stock-based compensation expense		8,953		8,152
Provision for litigation		—		2,341
Acquisition related costs/licensing		1,375		657
Adjusted EBITDA	$	85,129	$	74,342

Net income/(loss) as a percentage of net sales		17.8%		16.5%
Adjusted EBITDA as a percentage of net sales		30.8%		32.2%

Non-GAAP Net Income Reconciliation Table:


	Three Months Ended
	March 31,
*(In thousands)*	2023		2022
Net income/(loss)	$	49,129	$	38,084
Provision for litigation		—		2,341
Amortization of intangibles		4,601		4,512
Acquisition related costs/licensing		1,375		657
Tax effect of adjusting items		(1,329)		(1,661)
Non-GAAP net income/(loss)	$	53,776	$	43,933

Non-GAAP Diluted Earnings Per Share Reconciliation Table:


	Three Months Ended
	March 31,
*(In thousands)*	2023		2022
Diluted earnings per share, as reported	$	0.48	$	0.37
Provision for litigation		—		0.02
Amortization of intangibles		0.05		0.04
Acquisition related costs/licensing		0.01		0.01
Tax effect of adjusting items		(0.01)		(0.02)
Non-GAAP diluted earnings per share	$	0.53	$	0.42

*amounts might not add due to rounding

Non-GAAP Free Cash Flow Reconciliation Table:


	Three Months Ended
	March 31,
*(In thousands)*	2023		2022
Net cash provided by operating activities	$	53,313	$	44,690
Purchases of property and equipment		(15,991)		(19,971)
Free cash flow	$	37,322	$	24,719

Non-GAAP Net Sales on a Constant Currency Basis Comparative Table:


	Three Months Ended				Reported	Currency Impact on		Constant Currency
	March 31,				Net Sales	Current		Net Sales
*(In thousands, except percentages)*	2023		2022		Growth	Period Net Sales		Growth
United States	$	234,120	$	196,403	19.2%	$	—	19.2%
International		42,568		34,146	24.7%		(2,347)	31.5%
Total net sales	$	276,688	$	230,549	20.0%	$	(2,347)	21.0%

Contact:

Brian Kearns

Senior Vice President, Business Development and Investor Relations

Phone: (610) 930-1800

Email: investors@globusmedical.com

www.globusmedical.com

Globus Medical Reports First Quarter 2023 Results