• Globus Medical Reports Second Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 04 Aug 2021 15:15:01   America/Chicago

    AUDUBON, Pa., Aug. 04, 2021 (GLOBE NEWSWIRE) -- Globus Medical, Inc. (NYSE: GMED), a leading musculoskeletal solutions company, today announced its financial results for the quarter ended June 30, 2021.

    • Worldwide net sales were $251.0 million, an increase of 68.6% as compared to the second quarter of 2020
    • GAAP net income for the quarter was $41.5 million, or 16.6% of net sales, which is an increase of 299.4% as compared to the second quarter of 2020
    • GAAP diluted earnings per share (“EPS”) was $0.40 and non-GAAP diluted EPS was $0.56
    • Non-GAAP adjusted EBITDA was $87.8M, or 35.0% of net sales

    “Revenue in the second quarter was a record $251 million, an increase of 69% over the second quarter of 2020, as we continue to capture market share,” said Dave Demski, President and CEO. “Our U.S. Spine business grew by almost 64% over the second quarter of 2020, and by 30% over the second quarter of 2019. Pull through from robotics; contributions from new product introductions; a resurgence in our biologics business; and competitive recruiting were all factors driving growth. Enabling Technologies revenue was $21 million, nearly 4x the second quarter of 2020, marking our third consecutive quarter of strong year-over-year growth.”

    Worldwide net sales for the second quarter of 2021 was $251.0 million, an as-reported increase of 68.6% over the second quarter of 2020, or an increase of 67.9% on a constant currency basis. U.S. net sales for the second quarter of 2021, including robotics, increased by 71.9% compared to the second quarter of 2020. International net sales for the second quarter of 2021 increased by 51.0% over the second quarter of 2020 as-reported and increased 47.1% on a constant currency basis.

    GAAP net income for the second quarter of 2021 was $41.5 million, an increase of 299.4% over the same period last year. GAAP diluted EPS for the second quarter of 2021 was $0.40, compared to ($0.21) for the second quarter 2020. Non-GAAP diluted EPS for the second quarter of 2021 was $0.56, compared to $0.07 in the second quarter of 2020, an increase of 691.2%.

    The Company generated net cash from operating activities of $59.2 million and non-GAAP free cash flow of $50.8 million during the second quarter of 2021. Cash, cash equivalents and marketable securities were $914.2 million as of June 30, 2021. The Company remains debt free.

    2021 Annual Guidance

    The Company today increased guidance for full year 2021 net sales from $925 million to $950 million and non-GAAP diluted earnings per share of $1.89 to $2.00.

    Conference Call Information

    Globus Medical will hold a teleconference to discuss its second quarter 2021 results with the investment community at 4:30 p.m. Eastern Time today. Globus invites all interested parties to join the call by dialing:

    1-877-313-2501 United States Participants
    1-929-517-0907 International Participants

    There is no pass code for the teleconference.

    For interested parties who do not wish to ask questions, the teleconference will be webcast live and may be accessed through a link on the Globus Medical website at www.globusmedical.com/investors.

    The call will be archived until Wednesday, August 11, 2021. The audio archive can be accessed by calling 1-855-859-2056 in the U.S. or 1-404-537-3406 from outside the U.S. The passcode for the audio replay is 136-3916.

    About Globus Medical, Inc.

    Globus Medical, Inc. is a leading musculoskeletal solutions company based in Audubon, PA. The company 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 June 30, 2021 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 June 30, 2021 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, 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 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 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) 2021   2020   2021   2020 
    Net sales$ 251,016  $148,922  $ 478,360  $339,499 
    Cost of goods sold  63,846   50,643    118,873   99,507 
    Gross profit  187,170   98,279    359,487   239,992 
                
    Operating expenses:           
    Research and development  15,547   39,455    30,471   54,857 
    Selling, general and administrative  107,254   80,019    205,145   173,558 
    Provision for litigation    197    (94)  197 
    Amortization of intangibles  4,623   4,115    9,397   7,891 
    Acquisition related costs  13,870   56    14,144   604 
    Total operating expenses  141,294   123,842    259,063   237,107 
                
    Operating income/(loss)  45,876   (25,563)   100,424   2,885 
                
    Other income/(expense), net           
    Interest income/(expense), net  2,541   3,590    5,253   7,914 
    Foreign currency transaction gain/(loss)  209   (168)   (71)  (636)
    Other income/(expense)  307   199    521   393 
    Total other income/(expense), net  3,057   3,621    5,703   7,671 
                
    Income/(loss) before income taxes  48,933   (21,942)   106,127   10,556 
    Income tax provision  7,388   (1,105)   19,253   5,444 
                
    Net income/(loss)$ 41,545  $(20,837) $ 86,874  $5,112 
                
    Other comprehensive income/(loss):           
    Unrealized gain/(loss) on marketable securities, net of tax  (774)  6,897    (2,440)  3,055 
    Foreign currency translation gain/(loss)  1,026   667    (3,087)  1,141 
    Total other comprehensive income/(loss)  252   7,564    (5,527)  4,196 
    Comprehensive income/(loss)$ 41,797  $(13,273) $ 81,347  $9,308 
                
    Earnings per share:           
    Basic$ 0.41  $(0.21) $ 0.87  $0.05 
    Diluted$ 0.40  $(0.21) $ 0.84  $0.05 
    Weighted average shares outstanding:           
    Basic  100,449   97,509    100,159   98,572 
    Diluted  103,475   97,509    102,931   100,992 



    GLOBUS MEDICAL, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (unaudited)

           
           
     June 30, December 31,
    (In thousands, except share and per share values) 2021   2020 
    ASSETS      
    Current assets:      
    Cash, cash equivalents, and restricted cash$ 268,783  $239,397 
    Short-term marketable securities  191,644   187,344 
    Accounts receivable, net of allowances of $4,687 and $4,408, respectively  165,852   141,676 
    Inventories  231,208   229,153 
    Prepaid expenses and other current assets  15,200   17,771 
    Income taxes receivable  19,311   6,424 
    Total current assets  891,998   821,765 
    Property and equipment, net of accumulated depreciation of $293,534 and $276,451, respectively  210,749   216,879 
    Long-term marketable securities  453,726   358,522 
    Intangible assets, net  76,153   86,949 
    Goodwill  155,777   156,716 
    Other assets  33,147   32,039 
    Deferred income taxes  8,663   6,615 
    Total assets$ 1,830,213  $1,679,485 
           
    LIABILITIES AND EQUITY      
    Current liabilities:      
    Accounts payable$ 21,270  $18,205 
    Accrued expenses  78,453   78,334 
    Income taxes payable  3,427   1,101 
    Business acquisition liabilities  8,182   5,777 
    Deferred revenue  9,005   8,125 
    Payable to broker  9,705   9,250 
    Total current liabilities  130,042   120,792 
    Business acquisition liabilities, net of current portion  39,813   31,493 
    Deferred income taxes  5,474   6,202 
    Other liabilities  15,611   14,701 
    Total liabilities  190,940   173,188 
           
    Equity:      
    Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 78,303,475 and 77,284,007 shares at June 30, 2021 and December 31, 2020, respectively  79   77 
    Class B common stock; $0.001 par value. Authorized 275,000,000 shares; issued and outstanding 22,430,097 shares at June 30, 2021 and December 31, 2020  22   22 
    Additional paid-in capital  508,788   457,161 
    Accumulated other comprehensive income (loss)  (1,572)  3,955 
    Retained earnings  1,131,956   1,045,082 
    Total equity  1,639,273   1,506,297 
    Total liabilities and equity$ 1,830,213  $1,679,485 



    GLOBUS MEDICAL, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (unaudited)

          
          
     Six Months Ended
     June 30,
    (In thousands)2021  2020 
    Cash flows from operating activities:     
    Net income$ 86,874  $5,112 
    Adjustments to reconcile net income to net cash provided by operating activities:     
    Acquired in-process research and development    24,418 
    Depreciation and amortization  36,287   29,669 
    Amortization of premium (discount) on marketable securities  1,131   104 
    Write-down of excess and obsolete inventories  5,000   7,216 
    Stock-based compensation expense  15,330   14,118 
    Allowance for doubtful accounts  590   2,455 
    Change in fair value of business acquisition liabilities  14,128   463 
    Change in deferred income taxes  (1,783)  (1,127)
    (Gain)/loss on disposal of assets, net  191   625 
    (Increase)/decrease in:     
    Accounts receivable  (25,587)  19,306 
    Inventories  (6,024)  (34,371)
    Prepaid expenses and other assets  845   (2,875)
    Increase/(decrease) in:     
    Accounts payable  2,737   2,974 
    Accrued expenses and other liabilities  3,559   (7,756)
    Income taxes payable/receivable  (10,519)  5,030 
    Net cash provided by operating activities  122,759   65,361 
    Cash flows from investing activities:     
    Purchases of marketable securities  (293,092)  (57,418)
    Maturities of marketable securities  131,739   88,383 
    Sales of marketable securities  58,154   17,405 
    Purchases of property and equipment  (22,058)  (32,270)
    Acquisition of businesses, net of cash acquired, and purchases of intangible and other assets    (21,991)
    Net cash used in investing activities  (125,257)  (5,891)
    Cash flows from financing activities:     
    Payment of business acquisition related liabilities  (3,105)  (853)
    Proceeds from exercise of stock options  35,597   15,964 
    Repurchase of common stock    (104,669)
    Net cash provided by/used in financing activities  32,492   (89,558)
    Effect of foreign exchange rates on cash  (608)  (82)
    Net increase in cash, cash equivalents, and restricted cash  29,386   (30,170)
    Cash, cash equivalents, and restricted cash at beginning of period  239,397   195,724 
    Cash, cash equivalents, and restricted cash at end of period$ 268,783  $165,554 
    Supplemental disclosures of cash flow information:     
    Income taxes paid$ 31,597  $2,147 
    Purchases of property and equipment included in accounts payable and accrued expenses$ 3,537  $6,155 



    Supplemental Financial Information

    Net Sales by Product Category:

                    
               
     Three Months Ended Six Months Ended
     June 30, June 30,
    (In thousands)2021 2020 2021 2020
    Musculoskeletal Solutions$230,263  $143,480  $442,679  $326,022 
    Enabling Technologies 20,753   5,442   35,681   13,477 
    Total net sales$251,016  $148,922  $478,360  $339,499 



    Liquidity and Capital Resources:

            
            
     June 30, December 31,
    (In thousands)2021 2020
    Cash, cash equivalents, and restricted cash$268,783  $239,397 
    Short-term marketable securities 191,644   187,344 
    Long-term marketable securities 453,726   358,522 
    Total cash, cash equivalents, restricted cash and marketable securities$914,153  $785,263 



    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) 2021   2020   2021   2020 
    Net income/(loss)$41,545  $(20,837) $86,874  $5,112 
    Interest income/(expense), net (2,541)  (3,590)  (5,253)  (7,914)
    Provision for income taxes 7,388   (1,105)  19,253   5,444 
    Depreciation and amortization 19,130   15,101   36,287   29,669 
    EBITDA 65,522   (10,431)  137,161   32,311 
    Stock-based compensation expense 7,632   7,311   15,330   14,118 
    Provision for litigation    197   (94)  197 
    Acquisition related costs/licensing 14,624   469   15,507   1,426 
    Acquisition of in-process research and development    24,418      24,418 
    Adjusted EBITDA$87,778  $21,964  $167,904  $72,470 
                
    Net income as a percentage of net sales 16.6%  -14.0%  18.2%  1.5%
    Adjusted EBITDA as a percentage of net sales 35.0%  14.7%  35.1%  21.3%



    Non-GAAP Net Income Reconciliation Table:

                 
                 
      Three Months Ended Six Months Ended
      June 30, June 30,
    (In thousands)  2021   2020   2021  2020 
    Net income/(loss) $41,545  $(20,837) $86,874  $5,112 
    Provision for litigation     197   (94)  197 
    Amortization of intangibles  4,623   4,115   9,397   7,891 
    Acquisition related costs/licensing  14,624   469   15,507   1,426 
    Acquisition of in-process research and development     24,418      24,418 
    Tax effect of adjusting items  (2,906)  (1,470)  (4,060)  (2,426)
    Non-GAAP net income $57,886  $6,892  $107,624  $36,618 



    Non-GAAP Diluted Earnings Per Share Reconciliation Table:

                
                
     Three Months Ended Six Months Ended
     June 30, June 30,
    (Per share amounts) 2021   2020   2021   2020 
    Diluted earnings per share, as reported$0.40  $(0.21) $0.84  $0.05 
    Provision for litigation           
    Amortization of intangibles 0.04   0.04   0.09   0.08 
    Acquisition related costs/licensing 0.14      0.15   0.01 
    Acquisition of in-process research and development    0.25      0.24 
    Tax effect of adjusting items (0.03)  (0.02)  (0.04)  (0.02)
    Non-GAAP diluted earnings per share$0.56  $0.07  $1.05  $0.36 

    * 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) 2021   2020   2021   2020 
    Net cash provided by operating activities$59,189  $23,068  $122,759  $65,361 
    Purchases of property and equipment (8,386)  (9,956)  (22,058)  (3,270)
    Free cash flow$50,803  $13,112  $100,701  $33,091 



    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)2021 2020 Growth Period Net Sales Growth
    United States$215,119 $125,154 71.9% $ 71.9%
    International 35,897  23,768 51.0%  938 47.1%
    Total net sales$251,016 $148,922 68.6% $938 67.9%



                 
                 
     Six Months Ended Reported Currency
    Impact on 
     Constant
    Currency
     June 30, Net Sales Current Net Sales
    (In thousands, except percentages)2021 2020 Growth Period Net Sales Growth
    United States$408,436 $283,601 44.0% $ 44.0%
    International 69,924  55,898 25.1%  2,146 21.3%
    Total net sales$478,360 $339,499 40.9% $2,146 40.3%


    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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