Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 28, 2013 | |
Document Information [Line Items] | ' | ' |
Entity Registrant Name | 'GLOBUS MEDICAL INC | ' |
Entity Central Index Key | '0001237831 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 93,243,819 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $101,907 | $212,400 |
Short-term marketable securities | 111,239 | 0 |
Accounts receivable, net of allowances of $1,238 and $961, respectively | 55,274 | 53,496 |
Inventories | 71,199 | 62,310 |
Prepaid expenses and other current assets | 6,086 | 3,020 |
Income taxes receivable | 6,660 | 5,105 |
Deferred income taxes | 32,399 | 23,779 |
Total current assets | 384,764 | 360,110 |
Property and equipment, net | 63,614 | 61,089 |
Long-term marketable securities | 50,653 | 0 |
Intangible assets, net | 9,189 | 9,585 |
Goodwill | 15,372 | 15,372 |
Other assets | 1,080 | 977 |
Total assets | 524,672 | 447,133 |
LIABILITIES AND EQUITY | ' | ' |
Accounts payable | 8,876 | 9,991 |
Accounts payable to related party | 3,286 | 2,556 |
Accrued expenses | 44,411 | 25,003 |
Income taxes payable | 255 | 523 |
Business acquisition liabilities, current | 1,652 | 1,435 |
Total current liabilities | 58,480 | 39,508 |
Business acquisition liabilities, net of current portion | 9,055 | 9,909 |
Deferred income taxes | 5,191 | 7,714 |
Other liabilities | 3,570 | 3,500 |
Total liabilities | 76,296 | 60,631 |
Commitments and contingencies (Note 11) | ' | ' |
Equity: | ' | ' |
Common stock; $0.001 par value. Authorized 785,000 shares; issued and outstanding 93,225 and 91,270 shares at September 30, 2013 and December 31, 2012 | 93 | 91 |
Additional paid-in capital | 151,104 | 136,501 |
Accumulated other comprehensive loss | -1,125 | -767 |
Retained earnings | 298,304 | 250,677 |
Total equity | 448,376 | 386,502 |
Total liabilities and equity | $524,672 | $447,133 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parentheticals) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Current Assets: | ' | ' |
Allowance for doubtful accounts | $1,238 | $961 |
Equity: | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 785,000,000 | 785,000,000 |
Common stock, shares issued | 93,225,095 | 91,270,064 |
Common stock, shares outstanding | 93,225,095 | 91,270,064 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Income Statement [Abstract] | ' | ' | ' | ' |
Sales | $107,187 | $94,764 | $319,214 | $285,458 |
Cost of goods sold | 25,315 | 18,872 | 72,309 | 55,642 |
Provision for litigation loss | 0 | 0 | 1,260 | 0 |
Gross profit | 81,872 | 75,892 | 245,645 | 229,816 |
Operating expenses: | ' | ' | ' | ' |
Research and development | 6,568 | 7,022 | 20,452 | 20,698 |
Selling, general and administrative | 45,702 | 41,780 | 136,849 | 124,236 |
Provision for litigation loss/(income) | 99 | 30 | 18,418 | -801 |
Total operating expenses | 52,369 | 48,832 | 175,719 | 144,133 |
Operating Income | 29,503 | 27,060 | 69,926 | 85,683 |
Other income/(expense), net | 197 | -45 | 255 | -124 |
Income before income taxes | 29,700 | 27,015 | 70,181 | 85,559 |
Income tax provision | 9,390 | 10,528 | 22,554 | 32,495 |
Net Income | $20,310 | $16,487 | $47,627 | $53,064 |
Earnings per share: | ' | ' | ' | ' |
Basic | $0.22 | $0.18 | $0.52 | $0.60 |
Diluted | $0.22 | $0.18 | $0.51 | $0.58 |
Weighted average shares outstanding: | ' | ' | ' | ' |
Basic | 93,028 | 90,111 | 92,418 | 88,900 |
Dilutive stock options | 1,394 | 2,586 | 1,626 | 2,663 |
Diluted | 94,422 | 92,697 | 94,044 | 91,563 |
Anti-dilutive stock equivalents excluded from weighted average calculation | 1,622 | 2,705 | 2,084 | 2,331 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $20,310 | $16,487 | $47,627 | $53,064 |
Other comprehensive income/(loss): | ' | ' | ' | ' |
Unrealized gain on marketable securities, net of tax | 72 | 0 | 13 | 0 |
Foreign currency translation gain/(loss) | 175 | 313 | -371 | 387 |
Total other comprehensive income/(loss) | 247 | 313 | -358 | 387 |
Comprehensive Income | $20,557 | $16,800 | $47,269 | $53,451 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities: | ' | ' |
Net income | $47,627 | $53,064 |
Adjustments to reconcile net income to net cash provided by operating activities | ' | ' |
Depreciation and amortization | 14,211 | 13,500 |
Provision for excess and obsolete inventories | 6,405 | 5,386 |
Stock-based compensation | 3,865 | 3,682 |
Allowance for doubtful accounts | 234 | 336 |
Deferred income taxes | -11,138 | -5,057 |
(Increase)/decrease in: | ' | ' |
Accounts receivable | -2,143 | -5,277 |
Inventories | -15,715 | -14,587 |
Prepaid expenses and other assets | -2,111 | -326 |
Increase/(decrease) in: | ' | ' |
Accounts payable | 1,022 | 34 |
Accounts payable to related party | 730 | 3,659 |
Accrued expenses and other liabilities | 19,639 | -707 |
Income taxes payable/receivable | -1,813 | -1,926 |
Net cash provided by operating activities | 60,813 | 51,781 |
Cash flows from investing activities: | ' | ' |
Purchases of marketable securities | -186,748 | 0 |
Maturities of marketable securities | 19,000 | 0 |
Sales of marketable securities | 4,979 | 0 |
Purchases of property and equipment | -18,475 | -17,032 |
Acquisition of business | 0 | -6,031 |
Net cash used in investing activities | -181,244 | -23,063 |
Cash flows from financing activities: | ' | ' |
Payment of business acquisition liabilities | -1,000 | -800 |
Net proceeds from initial public offering | 0 | 20,963 |
Net proceeds from issuance of common stock | 6,221 | 1,046 |
Excess tax benefit related to nonqualified stock options | 4,519 | 2,644 |
Net cash provided by financing activities | 9,740 | 23,853 |
Effect of foreign exchange rate on cash | 198 | -83 |
Net increase/(decrease) in cash and cash equivalents | -110,493 | 52,488 |
Cash and cash equivalents, beginning of period | 212,400 | 142,668 |
Cash and cash equivalents, end of period | 101,907 | 195,156 |
Supplemental disclosures of cash flow information: | ' | ' |
Interest paid | 42 | 39 |
Income taxes paid | $30,956 | $36,317 |
BACKGROUND_AND_SUMMARY_OF_SIGN
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2013 | |
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' |
Background and Summary of Significant Accounting Policies | ' |
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
(a) The Company | |
Globus Medical, Inc., together with its subsidiaries, is an engineering-driven medical device company focused exclusively on the design, development and commercialization of products that promote healing in patients with spine disorders. Since our inception in 2003, we have launched over 120 products and offer a product portfolio addressing a broad array of spinal pathologies. | |
We are headquartered in Audubon, Pennsylvania and market and sell our products through our exclusive sales force in the United States, Europe, India, South Africa, Australia, Central & South America and the Middle East. The sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors. | |
The terms “the Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc. and, where applicable, our consolidated subsidiaries. | |
(b) Basis of Presentation | |
The accompanying interim unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2012. | |
In the opinion of management, the statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position and of the results for the three- and nine-month periods presented. The results of operations for any interim period are not indicative of results for the full year. Certain reclassifications have been made to prior period statements to conform to the current year presentation. | |
During the three months ended September 30, 2013, we identified a $5.3 million error in connection with reporting of cash flows for excess tax benefit related to nonqualified stock options and income taxes payable/receivable for the nine months ended September 30, 2012. The error resulted in the understatement of net cash provided by financing activities by $5.3 million and the offsetting overstatement of net cash provided by operating activities by $5.3 million. There was no impact to our results of operations, financial position, or overall cash flows for our previously filed quarterly financial statements. Accordingly, the Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 included herein has been revised to correct this error. | |
(c) Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of Globus and its wholly-owned subsidiaries. Our consolidation policy requires the consolidation of entities where a controlling financial interest is held as well as the consolidation of variable interest entities in which we are the primary beneficiary. All intercompany balances and transactions are eliminated in consolidation. | |
(d) Use of Estimates | |
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ materially from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. | |
Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, provision for excess and obsolete inventory, useful lives of assets, the outcome of litigation, and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results. | |
(e) Marketable Securities | |
Our marketable securities include municipal bonds, corporate debt securities, commercial paper and asset-backed securities, and are classified as available-for-sale as of September 30, 2013. Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive income on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets. | |
We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made. | |
(f) Inventories | |
Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a reserve for such excess inventories. | |
(g) Revenue Recognition | |
Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold. | |
(h) Reverse Stock Split and Initial Public Offering | |
In anticipation of our initial public offering (“IPO”), on March 13, 2012, our Board of Directors (“Board”) approved a reverse stock split of our common stock such that each two to five shares of issued common stock would be reclassified into one share of common stock, with the exact ratio within the two to five range to be subsequently determined by the Board. The stockholders approved the range of the reverse stock split on June 8, 2012. On July 9, 2012, our Board approved a ratio of one share for every 3.25 shares previously held. The reverse stock split became effective on July 31, 2012. All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split. See “Note 8. Equity” below for more details regarding the IPO. | |
(i) Medical Device Excise Tax | |
Effective as of January 1, 2013, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively “PPACA”) imposes a medical device excise tax (“MDET”) of 2.3% on any entity that manufactures or imports certain medical devices offered for sale in the United States. We account for the MDET as a component of our cost of goods sold. For the three and nine months ended September 30, 2013 we recognized $1.9 million and $5.3 million, respectively, of MDET in our consolidated statements of income. | |
(j) Recently Issued Accounting Pronouncements | |
In February 2013, we adopted Financial Accounting Standards Board (“FASB”) ASU 2013-2 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The new standard requires entities to prospectively disclose additional information about reclassification adjustments, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other comprehensive income. The adoption of the new standard did not have an impact on our financial position, results of operations or cash flows. |
ACQUISTIONS
ACQUISTIONS | 9 Months Ended |
Sep. 30, 2013 | |
Business Combinations [Abstract] | ' |
Acquisitions | ' |
ACQUISITIONS | |
On July 18, 2012, we entered into an asset purchase agreement with a global medical device company, pursuant to which we acquired substantially all of its assets for $6.0 million. In addition to the initial purchase price, we may be obligated to make revenue sharing payments based upon a percentage of net sales of products we acquired from it. We accounted for this purchase as a business combination and, as a result, recorded goodwill of $5.6 million. | |
This acquisition, which expanded our product pipeline, did not have a material effect on our consolidated net sales or operating income for the year ended December 31, 2012 or for the three and nine months ended September 30, 2013. The assets acquired and liabilities assumed as a result of the acquisition were included in our consolidated balance sheet as of the acquisition date. The purchase price for this acquisition was primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. The fair value assigned to identifiable intangible assets acquired was determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. Purchased identifiable intangible assets are amortized on a straight-line basis over their respective estimated useful lives. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | |||||||||||||
Intangible Assets Disclosure | ' | |||||||||||||
INTANGIBLE ASSETS | ||||||||||||||
A summary of intangible assets as of September 30, 2013 is presented below: | ||||||||||||||
(In thousands) | Weighted | Gross | Accumulated Amortization | Intangible | ||||||||||
Average Amortization | Carrying | Assets, net | ||||||||||||
Period | Amount | |||||||||||||
(in years) | ||||||||||||||
In-process research & development | — | $ | 4,100 | $ | — | $ | 4,100 | |||||||
Customer relationships & other intangibles | 9.7 | 3,603 | (768 | ) | 2,835 | |||||||||
Patents | 17 | 2,420 | (166 | ) | 2,254 | |||||||||
Total intangible assets | $ | 10,123 | $ | (934 | ) | $ | 9,189 | |||||||
A summary of intangible assets as of December 31, 2012 is presented below: | ||||||||||||||
(In thousands) | Weighted | Gross | Accumulated Amortization | Intangible | ||||||||||
Average Amortization | Carrying | Assets, net | ||||||||||||
Period | Amount | |||||||||||||
(in years) | ||||||||||||||
In-process research & development | — | $ | 4,100 | $ | — | $ | 4,100 | |||||||
Customer relationships & other intangibles | 9.7 | 3,603 | (479 | ) | 3,124 | |||||||||
Patents | 17 | 2,420 | (59 | ) | 2,361 | |||||||||
Total intangible assets | $ | 10,123 | $ | (538 | ) | $ | 9,585 | |||||||
MARKETABLE_SECURITIES
MARKETABLE SECURITIES | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
Marketable Securities [Abstract] | ' | |||||||||||||||||
Marketable Securities | ' | |||||||||||||||||
MARKETABLE SECURITIES | ||||||||||||||||||
The composition of our short-term and long-term marketable securities as of September 30, 2013 is as follows: | ||||||||||||||||||
(In thousands) | Contractual Maturity | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
(in years) | ||||||||||||||||||
Short-term: | ||||||||||||||||||
Municipal bonds | Less than 1 | $ | 71,854 | $ | 21 | $ | (20 | ) | $ | 71,855 | ||||||||
Corporate debt securities | Less than 1 | 16,440 | 7 | — | 16,447 | |||||||||||||
Commercial paper | Less than 1 | 22,932 | 5 | — | 22,937 | |||||||||||||
Total short-term marketable securities | $ | 111,226 | $ | 33 | $ | (20 | ) | $ | 111,239 | |||||||||
Long-term: | ||||||||||||||||||
Municipal bonds | 2-Jan | $ | 19,771 | $ | 11 | $ | (10 | ) | $ | 19,772 | ||||||||
Corporate debt securities | 2-Jan | 23,380 | 11 | (2 | ) | 23,389 | ||||||||||||
Asset backed securities | 2-Jan | 7,493 | — | (1 | ) | 7,492 | ||||||||||||
Total long-term marketable securities | $ | 50,644 | $ | 22 | $ | (13 | ) | $ | 50,653 | |||||||||
We had no short-term or long-term marketable securities as of December 31, 2012. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||
Fair Value Measurements | ' | |||||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||||
Under the accounting for fair value measurements and disclosures, fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. | ||||||||||||||
Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories: | ||||||||||||||
Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities; | ||||||||||||||
Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and | ||||||||||||||
Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques. | ||||||||||||||
The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows: | ||||||||||||||
Balance at | ||||||||||||||
(In thousands) | September 30, | Level 1 | Level 2 | Level 3 | ||||||||||
2013 | ||||||||||||||
Cash equivalents | $ | 23,825 | $ | 23,825 | — | — | ||||||||
Municipal bonds | 91,627 | 91,627 | — | — | ||||||||||
Corporate debt securities | 39,836 | 39,836 | — | — | ||||||||||
Commercial paper | 22,937 | 22,937 | — | — | ||||||||||
Asset-backed securities | 7,492 | 7,492 | — | — | ||||||||||
Contingent consideration | 7,368 | — | — | 7,368 | ||||||||||
Balance at | ||||||||||||||
(In thousands) | December 31, | Level 1 | Level 2 | Level 3 | ||||||||||
2012 | ||||||||||||||
Cash equivalents | $ | 96,585 | $ | 96,585 | — | — | ||||||||
Contingent consideration | 7,358 | — | — | 7,358 | ||||||||||
Contingent consideration represents our contingent milestone, performance and revenue-sharing payment obligations related to our acquisitions and is measured at fair value, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. We assess these estimates on an ongoing basis as additional data impacting the assumptions is obtained. Changes in the fair value of contingent consideration related to updated assumptions and estimates are recognized within research and development and selling, general and administrative expenses in the consolidated statements of income. |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Accrued Expenses | ' | |||||||
ACCRUED EXPENSES | ||||||||
(In thousands) | September 30, | December 31, | ||||||
2013 | 2012 | |||||||
Compensation and other employee-related costs | $ | 16,372 | $ | 16,733 | ||||
Royalties | 1,919 | 1,805 | ||||||
Legal and other settlements and expenses | 19,600 | 1,924 | ||||||
Other | 6,520 | 4,541 | ||||||
Total accrued expenses | $ | 44,411 | $ | 25,003 | ||||
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2013 | |
Debt Disclosure [Abstract] | ' |
Debt | ' |
DEBT | |
Line of Credit | |
In May 2011, and as amended in March 2012 and May 2013, we entered into a credit agreement with Wells Fargo Bank related to a revolving credit facility that provides for borrowings up to $50.0 million. At our request, and with the approval of the bank, the amount of borrowings available under the revolving credit facility can be increased to $75.0 million. The revolving credit facility includes up to a $25.0 million sub-limit for letters of credit. The revolving credit facility expires in May 2015. Cash advances bear interest at our option either at a fluctuating rate per annum equal to the daily LIBOR in effect for a one-month period plus 0.75%, or a fixed rate for a one- or three-month period equal to LIBOR plus 0.75%. The credit agreement governing the revolving credit facility also subjects us to various restrictive covenants, including the requirement to maintain maximum consolidated leverage. The covenants also include limitations on our ability to repurchase shares, to pay cash dividends or to enter into a sale transaction. As of September 30, 2013, we were in compliance with all covenants under the credit agreement, there were no outstanding borrowings under the revolving credit facility and available borrowings were $50.0 million. The revolving credit facility is subject to an unused commitment fee of 0.10% of the unused portion. We may terminate the credit agreement at any time on ten days’ notice without premium or penalty. |
EQUITY
EQUITY | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Equity [Abstract] | ' | |||||||||||
Equity | ' | |||||||||||
EQUITY | ||||||||||||
Prior to June 21, 2012, of the authorized number of shares of common stock, we had 360,000,000 shares designated as Class A common stock (“Class A Common”), 309,178,636 shares designated as Class B common stock (“Class B Common”) and 10,000,000 shares designated as Class C common stock (“Class C Common”). On June 21, 2012, we amended and restated our Certificate of Incorporation, and as a result, amended the number of authorized shares. As of the amendment date, of the authorized number of shares of common stock, we had 500,000,000 shares designated as Class A Common, 275,000,000 shares designated as Class B Common and 10,000,000 shares designated as Class C Common. | ||||||||||||
The holders of Class A Common are entitled to one vote for each share of Class A Common held. The holders of Class B Common are entitled to 10 votes for each share of Class B Common held. The holders of Class A Common and Class B Common vote together as one class of common stock. The Class C Common is nonvoting. Except for voting rights, the Class A Common, Class B Common and Class C Common have the same rights and privileges. | ||||||||||||
In August 2012, we completed our IPO. We sold 2,083,333 shares of our Class A Common at an offering price of $12.00 per share. For the period ended September 30, 2012, we recognized gross proceeds of $25.0 million and our net proceeds received after underwriting fees and offering expenses were $21.0 million. | ||||||||||||
All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split that became effective July 31, 2012. | ||||||||||||
Immediately prior to the closing of our IPO, we effectuated the following conversion: | ||||||||||||
• | the automatic conversion of all shares of our Series E preferred stock to 15,597,300 shares of our Class B Common; | |||||||||||
• | the subsequent automatic conversion of 49,655,411 shares of our Class B Common (which reflects all such shares of Class B Common held by those who beneficially owned less than 10% of the aggregate number of all outstanding shares of our common stock) to 49,655,411 shares of our Class A Common; | |||||||||||
• | the automatic conversion of all shares of our Class C Common to 73,554 shares of our Class A Common; and | |||||||||||
• | the automatic conversion of 3,039,385 shares of Class B Common to 3,039,385 shares of Class A Common upon their sale by the selling stockholders. | |||||||||||
Although the number of outstanding shares of our Series E preferred stock did not change due to the reverse stock split, the rate at which shares of our Series E preferred stock converted into shares of Class B Common decreased proportionally to the reverse stock split ratio. The reverse stock split did not affect the number of shares of capital stock we are authorized to issue. As a result of the reverse stock split, the number of unreserved and issuable shares of authorized common stock increased. | ||||||||||||
Our issued and outstanding common shares by Class were as follows: | ||||||||||||
(Shares) | Class A Common | Class B | Total | |||||||||
Common | ||||||||||||
31-Dec-12 | 63,892,508 | 27,377,556 | 91,270,064 | |||||||||
September 30, 2013 | 65,847,539 | 27,377,556 | 93,225,095 | |||||||||
The following table summarizes changes in total stockholders’ equity: | ||||||||||||
Nine Months Ended | ||||||||||||
(In thousands) | September 30, | |||||||||||
2013 | ||||||||||||
Total stockholders’ equity, beginning of period | $ | 386,502 | ||||||||||
Net income | 47,627 | |||||||||||
Stock-based compensation | 3,865 | |||||||||||
Exercise of stock options | 6,221 | |||||||||||
Excess tax benefit of nonqualified stock options | 4,519 | |||||||||||
Other comprehensive loss | (358 | ) | ||||||||||
Total stockholders’ equity, end of period | $ | 448,376 | ||||||||||
The table below presents the changes in each component of accumulated other comprehensive loss, including current period other comprehensive loss and reclassifications out of accumulated other comprehensive loss: | ||||||||||||
(In thousands) | Unrealized gain/(loss) on marketable securities, net of tax | Foreign currency translation adjustment | Accumulated Other Comprehensive Loss | |||||||||
Accumulated other comprehensive loss, net of tax, at December 31, 2012 | $ | — | $ | (767 | ) | $ | (767 | ) | ||||
Other comprehensive income/(loss) before reclassifications | 17 | (371 | ) | (354 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax | (4 | ) | — | (4 | ) | |||||||
Other comprehensive income/(loss), net of tax | 13 | (371 | ) | (358 | ) | |||||||
Accumulated other comprehensive income/(loss), net of tax, at September 30, 2013 | $ | 13 | $ | (1,138 | ) | $ | (1,125 | ) | ||||
For the year ended December 31, 2012, our accumulated other comprehensive loss consisted solely of foreign currency translation and no amounts were reclassified out of accumulated other comprehensive loss during the year ended December 31, 2012. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||||
We have three Stock Plans (the “Plans”), the purpose of which is to provide incentive to employees, directors, and consultants of Globus. We have reserved an aggregate of 5,459,510 shares of Class A Common and 4,153,846 shares of Class B Common pursuant to our Amended and Restated 2003 Stock Plan (the “2003 Plan”) and our 2008 Stock Plan (the “2008 Plan”) as of September 30, 2013. The Plans are administered by the Board or its delegates. The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans. The options granted expire on a date specified by the Board, but generally not more than ten years from the grant date. Option grants to employees generally vest monthly over a four-year period. | ||||||||||||||||
The Board approved the 2012 Equity Incentive Plan (the “2012 Plan”) in March 2012, and our stockholders subsequently approved the 2012 Plan in June 2012. Under the terms of the 2012 Plan, the aggregate number of shares of Class A Common that may be issued subject to options and other awards is equal to the sum of (1) 3,076,923 shares, (2) any shares available for issuance under the 2008 Plan as of March 13, 2012, (3) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (4) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3% of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by the Board. We have reserved 6,201,667 shares of Class A Common pursuant to the 2012 Plan as of September 30, 2013. The number of shares that may be issued or transferred pursuant to incentive stock options under the 2012 Plan is limited to 10,769,230 shares. The shares of Class A Common covered by the 2012 Plan are authorized but unissued shares, treasury shares or shares of common stock purchased on the open market. | ||||||||||||||||
As of September 30, 2013, there were 5,214,829 shares of common stock available for future grants under the Plans. | ||||||||||||||||
The weighted average grant date per share fair values of the options awarded to employees were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Weighted average grant date per share fair value | $ | 7.17 | $ | 6.57 | $ | 6.05 | $ | 6.19 | ||||||||
Stock option activity during the nine months ended September 30, 2013, is summarized as follows: | ||||||||||||||||
Option Shares(thousands) | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value (thousands) | |||||||||||||
Outstanding at December 31, 2012 | 6,253 | $ | 6.99 | |||||||||||||
Granted | 1,052 | 14.11 | ||||||||||||||
Exercised | (1,955 | ) | 3.18 | |||||||||||||
Forfeited | (314 | ) | 10.25 | |||||||||||||
Outstanding at September 30, 2013 | 5,036 | $ | 9.64 | 7 | $ | 39,380 | ||||||||||
Exercisable at September 30, 2013 | 2,853 | $ | 6.98 | 5.5 | $ | 29,916 | ||||||||||
Compensation expense related to stock options granted to employees and non-employees under the Plans and the intrinsic value of stock options exercised was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Compensation expense related to stock options | $ | 1,387 | $ | 1,545 | $ | 3,865 | $ | 3,682 | ||||||||
Intrinsic value of stock options exercised | 5,027 | 8,684 | 22,326 | 11,070 | ||||||||||||
As of September 30, 2013, there was $10.6 million of unrecognized compensation expense related to unvested employee stock options that are expected to vest over a weighted average period of three years. |
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
INCOME TAXES | |
In computing our income tax provision we make certain estimates and management judgments, such as estimated annual taxable income or loss, annual effective tax rate, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets. Our estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. Should facts and circumstances change during a quarter causing a material change to the estimated effective income tax rate, a cumulative adjustment is recorded. | |
For the nine-month periods ended September 30, 2013 and 2012, our effective income tax rates were 32.1% and 38.0%, respectively. The effective rate for the nine months ended September 30, 2013 was favorably affected by the domestic production activities deduction, an increase in disqualifying dispositions from incentive stock option exercises, an adjustment to the provisional rate due to the prior quarter litigation loss, the timing of the American Taxpayer Relief Act of 2012 (“ATRA,” which unfavorably impacted the prior year period due to the inability to recognize the effect of the reinstated credit in the period of qualifying activity and favorably affected the current year) and other changes to the components of the annual effective tax rate calculation. On January 2, 2013, the ATRA was signed into law and reinstated the research and experimentation credit from January 1, 2012 through December 31, 2013. However, as the passage of the ATRA occurred in 2013, the entire reinstated credit for the year ended December 31, 2012 of $0.9 million was recognized in 2013 accordance with accounting guidance. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
COMMITMENTS AND CONTINGENCIES | |
We are involved in a number of proceedings, legal actions, and claims. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows. | |
N-Spine and Synthes Litigation | |
In April 2010, N-Spine, Inc. and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. N-Spine, the patent owner, and Synthes USA, a licensee of the subject patent, allege that we infringe one or more claims of the patent by making, using, offering for sale or selling our TRANSITION® stabilization system product. N-Spine and Synthes USA seek injunctive relief and an unspecified amount in damages. We intend to defend our rights vigorously. This matter was stayed on July 14, 2011 pending the resolution of an inter partes reexamination on the asserted patent granted by the U.S. Patent and Trademark Office (“USPTO”) in February 2011. In December 2011, the examiner withdrew the original grounds of rejection of the asserted patent and we have appealed the examiner’s decision. As of October 2013, the appeal is still pending at the USPTO. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. | |
Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC Litigation | |
In July 2011, Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Synthes USA, LLC, the patent owner, Synthes USA Products, LLC, a licensee to manufacture products of the subject patents, and Synthes USA Sales LLC, a licensee to sell products of the subject patents, alleged that we infringed one or more claims of three patents by making, using, offering for sale or selling our COALITION®, INDEPENDENCE® and INTERCONTINENTAL® products. As a result of the acquisition of Synthes, Inc. by Johnson & Johnson, a motion was filed to change the plaintiff in this matter to DePuy Synthes Products, LLC (“DePuy Synthes”) in February 2013. On June 14, 2013, the jury in this case returned a verdict, finding that prior versions of the three products we previously sold did infringe on DePuy Synthes’ patents and awarding monetary damages in the amount of $16.0 million. The jury also upheld the validity of DePuy Synthes’ patents. There was no finding of willful infringement by Globus. | |
We do not expect the verdict to impact our ability to conduct our business or to have any material impact on our future revenues. As this lawsuit involved only three products that are no longer part of our product portfolio, this verdict is not expected to impair our ability to sell any of our future products. | |
We believe the facts and the law do not support the jury’s findings of infringement and patent validity and will seek to overturn the verdict in post-trial motions with the District Court and, if necessary, through the appeals process. | |
For the nine months ending September 30, 2013, we accrued $19.5 million in damages and other litigation-related costs, of which $1.3 million was included in provision for litigation loss (cost of goods sold, due to a write off of certain inventory which will not be sold due to the verdict) and $18.2 million was included in provision for litigation loss (operating expense). | |
L5 Litigation | |
In December 2009, we filed suit in the Court of Common Pleas of Montgomery County, Pennsylvania against our former exclusive independent distributor L5 Surgical, LLC and its principals, seeking an injunction and declaratory judgment concerning certain restrictive covenants made to L5 by its sales representatives. L5 brought counterclaims against us alleging tortious interference, unfair competition and conspiracy. The injunction phase was resolved in September 2010, and this matter is now in the discovery phase of litigation on the underlying damages claims. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. | |
NuVasive Infringement Litigation | |
In October 2010, NuVasive, Inc. filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. NuVasive, the patent owner, alleges that we infringe one or more claims of three patents by making, using, offering for sale or selling our MARS 3V™ retractor for use in certain lateral fusion procedures. NuVasive seeks injunctive relief and an unspecified amount in damages. The litigation is currently in the discovery phase. We intend to defend our rights vigorously. Additionally, we sought inter partes reexaminations of the three patents asserted by NuVasive in the U.S. Patent and Trademark Office, which were granted in April 2012. In August 2012, the examiner withdrew the original grounds of rejection of the patents asserted by NuVasive, and we are in the process of appealing the examiner’s decision. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. | |
NuVasive Employee Litigation | |
We have hired several employees who were formerly employed by NuVasive, Inc. In July 2011, NuVasive filed suit against us in the District Court of Travis County, Texas alleging that our hiring of one named former employee and other unnamed former employees constitutes tortious interference with their contract with employees, and with prospective business relationships, as well as aiding and abetting the breach of fiduciary duty. NuVasive is seeking compensatory damages, permanent injunction, punitive damages and attorneys’ fees. Trial is currently scheduled for January 2014. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. | |
Bianco Litigation | |
On March 21, 2012, Sabatino Bianco filed suit against us in the Federal District Court for the Eastern District of Texas claiming that we misappropriated his trade secret and confidential information and improperly utilized it in developing our CALIBER® product. Bianco alleges that we engaged in misappropriation of trade secrets, breach of contract, unfair competition, fraud and theft and seeks correction of inventorship, injunctive relief and exemplary damages. On April 20, 2012, Bianco filed a motion for a preliminary injunction, seeking to enjoin us from making, using, selling, importing or offering for sale our CALIBER® product. On November 15, 2012, the court denied Bianco’s motion for preliminary injunction. On October 1, 2013, Bianco amended his complaint to claim that his trade secrets and confidential information were also used improperly in developing our RISE® product. This matter is now in the discovery phase of litigation on the underlying damages claims and trial is currently scheduled for January 2014. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. | |
Altus Partners, LLC Litigation | |
On February 20, 2013, Altus Partners, LLC filed suit against us in the U.S. District Court for the Eastern District of Pennsylvania for patent infringement. Altus Partners, LLC alleges that we infringe one or more claims of U.S. Patent No. 8,162,989, which issued on April 24, 2012, by making, using, offering for sale or selling our pedicle screws associated with the REVERE®, TRANSITION® and REVOLVE® products. Altus Partners seeks injunctive relief and an unspecified amount in damages. The litigation is currently in the discovery phase and trial has been set for June 2014. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. | |
In addition, we are subject to legal proceedings arising in the ordinary course of business. |
RELATEDPARTY_TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Related Party Transactions [Abstract] | ' | |||||||||||||||
Related Party Transactions | ' | |||||||||||||||
RELATED-PARTY TRANSACTIONS | ||||||||||||||||
We have contracted with a third-party manufacturer in which certain of our senior management and significant stockholders have or had ownership interests and leadership positions. This supplier had been consolidated through December 29, 2009, and the effect of this entity in our consolidated statements of income was not material for the three and nine months ended September 30, 2013 and 2012, respectively, due to the sale or write-off of inventory purchased when the entity was consolidated and our inventory cost reflected the entity’s cost to produce rather than invoice price. | ||||||||||||||||
We have purchased the following amounts of products and services from the supplier: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Purchases from related-party supplier | $ | 4,478 | $ | 6,894 | $ | 15,987 | $ | 15,418 | ||||||||
As of September 30, 2013 and December 31, 2012, we had $3.3 million and $2.6 million of accounts payable due to the supplier. |
SEGMENT_AND_GEOGRAPHIC_INFORMA
SEGMENT AND GEOGRAPHIC INFORMATION | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment And Geographic Information | ' | |||||||||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | ||||||||||||||||
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We globally manage the business within one reportable segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. Products are sold principally in the United States. Segmentation of operating income and identifiable assets is not applicable since our sales outside the United States are export sales, and we do not have significant operating assets outside the United States. | ||||||||||||||||
The following table represents total sales by geographic area, based on the location of the customer: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
United States | $ | 98,109 | $ | 87,140 | $ | 292,487 | $ | 263,710 | ||||||||
International | 9,078 | 7,624 | 26,727 | 21,748 | ||||||||||||
Total sales | $ | 107,187 | $ | 94,764 | $ | 319,214 | $ | 285,458 | ||||||||
We classify our products into two categories: innovative fusion products and disruptive technology products. The following table represents total sales by product category: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Innovative Fusion | $ | 62,620 | $ | 57,828 | $ | 186,929 | $ | 180,549 | ||||||||
Disruptive Technology | 44,567 | 36,936 | 132,285 | 104,909 | ||||||||||||
Total sales | $ | 107,187 | $ | 94,764 | $ | 319,214 | $ | 285,458 | ||||||||
BACKGROUND_AND_SUMMARY_OF_SIGN1
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' |
Principles of Consolidation | ' |
Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of Globus and its wholly-owned subsidiaries. Our consolidation policy requires the consolidation of entities where a controlling financial interest is held as well as the consolidation of variable interest entities in which we are the primary beneficiary. All intercompany balances and transactions are eliminated in consolidation. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ materially from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. | |
Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, provision for excess and obsolete inventory, useful lives of assets, the outcome of litigation, and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results. | |
Marketable Securities | ' |
Marketable Securities | |
Our marketable securities include municipal bonds, corporate debt securities, commercial paper and asset-backed securities, and are classified as available-for-sale as of September 30, 2013. Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive income on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets. | |
We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made. | |
Inventories | ' |
Inventories | |
Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a reserve for such excess inventories. | |
Revenue Recognition | ' |
Revenue Recognition | |
Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold. | |
Medical Device Excise Tax | ' |
Medical Device Excise Tax | |
Effective as of January 1, 2013, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively “PPACA”) imposes a medical device excise tax (“MDET”) of 2.3% on any entity that manufactures or imports certain medical devices offered for sale in the United States. We account for the MDET as a component of our cost of goods sold. For the three and nine months ended September 30, 2013 we recognized $1.9 million and $5.3 million, respectively, of MDET in our consolidated statements of income. | |
Recently Issued Accounting Pronouncements | ' |
Recently Issued Accounting Pronouncements | |
In February 2013, we adopted Financial Accounting Standards Board (“FASB”) ASU 2013-2 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The new standard requires entities to prospectively disclose additional information about reclassification adjustments, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other comprehensive income. The adoption of the new standard did not have an impact on our financial position, results of operations or cash flows. |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Intangible Assets [Abstract] | ' | |||||||||||||
Intangible Assets Acquired as Part of Business Combination | ' | |||||||||||||
A summary of intangible assets as of September 30, 2013 is presented below: | ||||||||||||||
(In thousands) | Weighted | Gross | Accumulated Amortization | Intangible | ||||||||||
Average Amortization | Carrying | Assets, net | ||||||||||||
Period | Amount | |||||||||||||
(in years) | ||||||||||||||
In-process research & development | — | $ | 4,100 | $ | — | $ | 4,100 | |||||||
Customer relationships & other intangibles | 9.7 | 3,603 | (768 | ) | 2,835 | |||||||||
Patents | 17 | 2,420 | (166 | ) | 2,254 | |||||||||
Total intangible assets | $ | 10,123 | $ | (934 | ) | $ | 9,189 | |||||||
A summary of intangible assets as of December 31, 2012 is presented below: | ||||||||||||||
(In thousands) | Weighted | Gross | Accumulated Amortization | Intangible | ||||||||||
Average Amortization | Carrying | Assets, net | ||||||||||||
Period | Amount | |||||||||||||
(in years) | ||||||||||||||
In-process research & development | — | $ | 4,100 | $ | — | $ | 4,100 | |||||||
Customer relationships & other intangibles | 9.7 | 3,603 | (479 | ) | 3,124 | |||||||||
Patents | 17 | 2,420 | (59 | ) | 2,361 | |||||||||
Total intangible assets | $ | 10,123 | $ | (538 | ) | $ | 9,585 | |||||||
MARKETABLE_SECURITIES_Tables
MARKETABLE SECURITIES (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
Marketable Securities [Abstract] | ' | |||||||||||||||||
Marketable Securities | ' | |||||||||||||||||
The composition of our short-term and long-term marketable securities as of September 30, 2013 is as follows: | ||||||||||||||||||
(In thousands) | Contractual Maturity | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
(in years) | ||||||||||||||||||
Short-term: | ||||||||||||||||||
Municipal bonds | Less than 1 | $ | 71,854 | $ | 21 | $ | (20 | ) | $ | 71,855 | ||||||||
Corporate debt securities | Less than 1 | 16,440 | 7 | — | 16,447 | |||||||||||||
Commercial paper | Less than 1 | 22,932 | 5 | — | 22,937 | |||||||||||||
Total short-term marketable securities | $ | 111,226 | $ | 33 | $ | (20 | ) | $ | 111,239 | |||||||||
Long-term: | ||||||||||||||||||
Municipal bonds | 2-Jan | $ | 19,771 | $ | 11 | $ | (10 | ) | $ | 19,772 | ||||||||
Corporate debt securities | 2-Jan | 23,380 | 11 | (2 | ) | 23,389 | ||||||||||||
Asset backed securities | 2-Jan | 7,493 | — | (1 | ) | 7,492 | ||||||||||||
Total long-term marketable securities | $ | 50,644 | $ | 22 | $ | (13 | ) | $ | 50,653 | |||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||
Fair Value, Assets Measured on Recurring Basis | ' | |||||||||||||
The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows: | ||||||||||||||
Balance at | ||||||||||||||
(In thousands) | September 30, | Level 1 | Level 2 | Level 3 | ||||||||||
2013 | ||||||||||||||
Cash equivalents | $ | 23,825 | $ | 23,825 | — | — | ||||||||
Municipal bonds | 91,627 | 91,627 | — | — | ||||||||||
Corporate debt securities | 39,836 | 39,836 | — | — | ||||||||||
Commercial paper | 22,937 | 22,937 | — | — | ||||||||||
Asset-backed securities | 7,492 | 7,492 | — | — | ||||||||||
Contingent consideration | 7,368 | — | — | 7,368 | ||||||||||
Balance at | ||||||||||||||
(In thousands) | December 31, | Level 1 | Level 2 | Level 3 | ||||||||||
2012 | ||||||||||||||
Cash equivalents | $ | 96,585 | $ | 96,585 | — | — | ||||||||
Contingent consideration | 7,358 | — | — | 7,358 | ||||||||||
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Accrued Expenses | ' | |||||||
(In thousands) | September 30, | December 31, | ||||||
2013 | 2012 | |||||||
Compensation and other employee-related costs | $ | 16,372 | $ | 16,733 | ||||
Royalties | 1,919 | 1,805 | ||||||
Legal and other settlements and expenses | 19,600 | 1,924 | ||||||
Other | 6,520 | 4,541 | ||||||
Total accrued expenses | $ | 44,411 | $ | 25,003 | ||||
EQUITY_Tables
EQUITY (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Equity [Abstract] | ' | ||||||||
Schedule of Issued and Outstanding Shares by Class | ' | ||||||||
Our issued and outstanding common shares by Class were as follows: | |||||||||
(Shares) | Class A Common | Class B | Total | ||||||
Common | |||||||||
31-Dec-12 | 63,892,508 | 27,377,556 | 91,270,064 | ||||||
September 30, 2013 | 65,847,539 | 27,377,556 | 93,225,095 | ||||||
Schedule of Stockholders Equity | ' | ||||||||
The following table summarizes changes in total stockholders’ equity: | |||||||||
Nine Months Ended | |||||||||
(In thousands) | September 30, | ||||||||
2013 | |||||||||
Total stockholders’ equity, beginning of period | $ | 386,502 | |||||||
Net income | 47,627 | ||||||||
Stock-based compensation | 3,865 | ||||||||
Exercise of stock options | 6,221 | ||||||||
Excess tax benefit of nonqualified stock options | 4,519 | ||||||||
Other comprehensive loss | (358 | ) | |||||||
Total stockholders’ equity, end of period | $ | 448,376 | |||||||
EQUITY_Accumulated_Other_Compr
EQUITY Accumulated Other Comprehensive Income (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Accumulated Other Comprehensive Income [Abstract] | ' | |||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ' | |||||||||||
The table below presents the changes in each component of accumulated other comprehensive loss, including current period other comprehensive loss and reclassifications out of accumulated other comprehensive loss: | ||||||||||||
(In thousands) | Unrealized gain/(loss) on marketable securities, net of tax | Foreign currency translation adjustment | Accumulated Other Comprehensive Loss | |||||||||
Accumulated other comprehensive loss, net of tax, at December 31, 2012 | $ | — | $ | (767 | ) | $ | (767 | ) | ||||
Other comprehensive income/(loss) before reclassifications | 17 | (371 | ) | (354 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax | (4 | ) | — | (4 | ) | |||||||
Other comprehensive income/(loss), net of tax | 13 | (371 | ) | (358 | ) | |||||||
Accumulated other comprehensive income/(loss), net of tax, at September 30, 2013 | $ | 13 | $ | (1,138 | ) | $ | (1,125 | ) | ||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Grants in Period, Weighted Average Grant Date Fair Value | ' | |||||||||||||||
The weighted average grant date per share fair values of the options awarded to employees were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Weighted average grant date per share fair value | $ | 7.17 | $ | 6.57 | $ | 6.05 | $ | 6.19 | ||||||||
Summary of Stock Option Activity | ' | |||||||||||||||
Stock option activity during the nine months ended September 30, 2013, is summarized as follows: | ||||||||||||||||
Option Shares(thousands) | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value (thousands) | |||||||||||||
Outstanding at December 31, 2012 | 6,253 | $ | 6.99 | |||||||||||||
Granted | 1,052 | 14.11 | ||||||||||||||
Exercised | (1,955 | ) | 3.18 | |||||||||||||
Forfeited | (314 | ) | 10.25 | |||||||||||||
Outstanding at September 30, 2013 | 5,036 | $ | 9.64 | 7 | $ | 39,380 | ||||||||||
Exercisable at September 30, 2013 | 2,853 | $ | 6.98 | 5.5 | $ | 29,916 | ||||||||||
Stock Option Compensation Expense and Intrinsic Value Schedule | ' | |||||||||||||||
Compensation expense related to stock options granted to employees and non-employees under the Plans and the intrinsic value of stock options exercised was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Compensation expense related to stock options | $ | 1,387 | $ | 1,545 | $ | 3,865 | $ | 3,682 | ||||||||
Intrinsic value of stock options exercised | 5,027 | 8,684 | 22,326 | 11,070 | ||||||||||||
RELATEDPARTY_TRANSACTIONS_Tabl
RELATED-PARTY TRANSACTIONS (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Related Party Transactions [Abstract] | ' | |||||||||||||||
Schedule of Related Party Transactions | ' | |||||||||||||||
We have purchased the following amounts of products and services from the supplier: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Purchases from related-party supplier | $ | 4,478 | $ | 6,894 | $ | 15,987 | $ | 15,418 | ||||||||
SEGMENT_AND_GEOGRAPHIC_INFORMA1
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Schedule of Revenue from External Customers by Geographical Area | ' | |||||||||||||||
The following table represents total sales by geographic area, based on the location of the customer: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
United States | $ | 98,109 | $ | 87,140 | $ | 292,487 | $ | 263,710 | ||||||||
International | 9,078 | 7,624 | 26,727 | 21,748 | ||||||||||||
Total sales | $ | 107,187 | $ | 94,764 | $ | 319,214 | $ | 285,458 | ||||||||
Revenue from External Customers by Products and Services | ' | |||||||||||||||
The following table represents total sales by product category: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | September 30, | September 30, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Innovative Fusion | $ | 62,620 | $ | 57,828 | $ | 186,929 | $ | 180,549 | ||||||||
Disruptive Technology | 44,567 | 36,936 | 132,285 | 104,909 | ||||||||||||
Total sales | $ | 107,187 | $ | 94,764 | $ | 319,214 | $ | 285,458 | ||||||||
BACKGROUND_AND_SUMMARY_OF_SIGN2
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2013 | Sep. 30, 2012 | Jul. 09, 2012 | Sep. 30, 2013 | Mar. 13, 2012 | Mar. 13, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | |
Minimum | Minimum | Maximum | Cost of Goods, Total | Cost of Goods, Total | Adjustment for Immaterial Error Correction | ||||
products | |||||||||
Summary of Significant Accounting Policies | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase/(decrease) in income taxes payable | ($1,813,000) | ($1,926,000) | ' | ' | ' | ' | ' | ' | ($5,288,000) |
Excess tax benefit related to nonqualified stock options | 4,519,000 | 2,644,000 | ' | ' | ' | ' | ' | ' | 5,288,000 |
Net cash provided by operating activities | 60,813,000 | 51,781,000 | ' | ' | ' | ' | ' | ' | -5,288,000 |
Net cash provided by financing activities | 9,740,000 | 23,853,000 | ' | ' | ' | ' | ' | ' | 5,288,000 |
Number of Products Launched Since Inception | ' | ' | ' | 120 | ' | ' | ' | ' | ' |
Reverse Stock Split Proposed Conversion Ratio | ' | ' | ' | ' | 2 | 5 | ' | ' | ' |
Board approved reverse stock split ratio | ' | ' | 3.25 | ' | ' | ' | ' | ' | ' |
Medical Device Excise Tax Percentage | 2.30% | ' | ' | ' | ' | ' | ' | ' | ' |
Medical Device Excise Tax | ' | ' | ' | ' | ' | ' | $1,900,000 | $5,300,000 | ' |
ACQUISTIONS_Details
ACQUISTIONS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jul. 18, 2012 |
Acquisitions 2012 | Acquisitions 2012 | |||
Acquisition | ' | ' | ' | ' |
Aggregate purchase price paid for acquisitions at closing | ' | ' | $6,000,000 | ' |
Goodwill | $15,372,000 | $15,372,000 | ' | $5,600,000 |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Acquired Intangible Assets | ' | ' |
Intangible assets, gross | $10,123 | $10,123 |
Accumulated amortization | -934 | -538 |
Intangible assets, net | 9,189 | 9,585 |
Customer Relationships & Other Intangibles | ' | ' |
Acquired Intangible Assets | ' | ' |
Weighted average amortization period | '9 years 8 months | '9 years 8 months |
Gross carrying amount | 3,603 | 3,603 |
Accumulated amortization | -768 | -479 |
Finite-lived intangible assets, net | 2,835 | 3,124 |
Patents | ' | ' |
Acquired Intangible Assets | ' | ' |
Weighted average amortization period | '17 years | '17 years |
Gross carrying amount | 2,420 | 2,420 |
Accumulated amortization | -166 | -59 |
Finite-lived intangible assets, net | 2,254 | 2,361 |
In-Process Research & Development | ' | ' |
Acquired Intangible Assets | ' | ' |
Indefinite-lived intangible assets | $4,100 | $4,100 |
MARKETABLE_SECURITIES_Details
MARKETABLE SECURITIES (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Short-term Marketable Securities | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | $111,226 |
Marketable Securities, Gross Unrealized Gains | 33 |
Marketable Securities, Gross Unrealized Losses | -20 |
Marketable Securities, Fair Value | 111,239 |
Short-term Marketable Securities | Municipal Bonds | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | 71,854 |
Marketable Securities, Gross Unrealized Gains | 21 |
Marketable Securities, Gross Unrealized Losses | -20 |
Marketable Securities, Fair Value | 71,855 |
Short-term Marketable Securities | Municipal Bonds | Maximum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '1 year |
Short-term Marketable Securities | Corporate Debt Securities | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | 16,440 |
Marketable Securities, Gross Unrealized Gains | 7 |
Marketable Securities, Gross Unrealized Losses | 0 |
Marketable Securities, Fair Value | 16,447 |
Short-term Marketable Securities | Corporate Debt Securities | Maximum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '1 year |
Short-term Marketable Securities | Commercial Paper | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | 22,932 |
Marketable Securities, Gross Unrealized Gains | 5 |
Marketable Securities, Gross Unrealized Losses | 0 |
Marketable Securities, Fair Value | 22,937 |
Short-term Marketable Securities | Commercial Paper | Maximum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '1 year |
Long-term Marketable Securities | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | 50,644 |
Marketable Securities, Gross Unrealized Gains | 22 |
Marketable Securities, Gross Unrealized Losses | -13 |
Marketable Securities, Fair Value | 50,653 |
Long-term Marketable Securities | Municipal Bonds | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | 19,771 |
Marketable Securities, Gross Unrealized Gains | 11 |
Marketable Securities, Gross Unrealized Losses | -10 |
Marketable Securities, Fair Value | 19,772 |
Long-term Marketable Securities | Municipal Bonds | Minimum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '1 year |
Long-term Marketable Securities | Municipal Bonds | Maximum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '2 years |
Long-term Marketable Securities | Corporate Debt Securities | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | 23,380 |
Marketable Securities, Gross Unrealized Gains | 11 |
Marketable Securities, Gross Unrealized Losses | -2 |
Marketable Securities, Fair Value | 23,389 |
Long-term Marketable Securities | Corporate Debt Securities | Minimum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '1 year |
Long-term Marketable Securities | Corporate Debt Securities | Maximum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '2 years |
Long-term Marketable Securities | Asset-backed Securities | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Amortized Cost Basis | 7,493 |
Marketable Securities, Gross Unrealized Gains | 0 |
Marketable Securities, Gross Unrealized Losses | -1 |
Marketable Securities, Fair Value | $7,492 |
Long-term Marketable Securities | Asset-backed Securities | Minimum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '1 year |
Long-term Marketable Securities | Asset-backed Securities | Maximum | ' |
Schedule of Marketable Securities | ' |
Marketable Securities, Contractual Maturity | '2 years |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (Fair Value, Measurements, Recurring, USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Estimate of Fair Value, Fair Value Disclosure | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Cash equivalents | $23,825 | $96,585 |
Contingent consideration | 7,368 | 7,358 |
Level 1 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Cash equivalents | 23,825 | 96,585 |
Contingent consideration | 0 | 0 |
Level 2 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Cash equivalents | 0 | 0 |
Contingent consideration | 0 | 0 |
Level 3 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Cash equivalents | 0 | 0 |
Contingent consideration | 7,368 | 7,358 |
Municipal Bonds | Estimate of Fair Value, Fair Value Disclosure | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 91,627 | ' |
Municipal Bonds | Level 1 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 91,627 | ' |
Municipal Bonds | Level 2 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 0 | ' |
Municipal Bonds | Level 3 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 0 | ' |
Corporate Debt Securities | Estimate of Fair Value, Fair Value Disclosure | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 39,836 | ' |
Corporate Debt Securities | Level 1 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 39,836 | ' |
Corporate Debt Securities | Level 2 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 0 | ' |
Corporate Debt Securities | Level 3 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 0 | ' |
Commercial Paper | Estimate of Fair Value, Fair Value Disclosure | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 22,937 | ' |
Commercial Paper | Level 1 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 22,937 | ' |
Commercial Paper | Level 2 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 0 | ' |
Commercial Paper | Level 3 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 0 | ' |
Asset-backed Securities | Estimate of Fair Value, Fair Value Disclosure | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 7,492 | ' |
Asset-backed Securities | Level 1 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 7,492 | ' |
Asset-backed Securities | Level 2 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | 0 | ' |
Asset-backed Securities | Level 3 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' |
Marketable Securities | $0 | ' |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Payables and Accruals [Abstract] | ' | ' |
Compensation and other employee-related costs | $16,372 | $16,733 |
Royalties | 1,919 | 1,805 |
Legal and other settlements and expenses | 19,600 | 1,924 |
Other | 6,520 | 4,541 |
Total accrued expenses | $44,411 | $25,003 |
DEBT_Details
DEBT (Details) (Revolving Credit Facility [Member], USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Debt Instrument | ' |
Revolving credit facility, current borrowing capacity | $50 |
Revolving credit facility, maximum borrowing capacity | 75 |
Revolving credit facility, unused commitment fee percentage | 0.10% |
Revolving credit facility, minimum termination notice period | '10 days |
Fluctuating Rate Per Annum | ' |
Debt Instrument | ' |
Revolving credit facility, variable rate | 'LIBOR |
Revolving credit facility, period of variable rate | '1 month |
Revolving credit facility, basis spread on variable rate | 0.75% |
Fixed Rate | ' |
Debt Instrument | ' |
Revolving credit facility, variable rate | 'LIBOR |
Revolving credit facility, basis spread on variable rate | 0.75% |
Fixed Rate | Minimum | ' |
Debt Instrument | ' |
Revolving credit facility, period of variable rate | '1 month |
Fixed Rate | Maximum | ' |
Debt Instrument | ' |
Revolving credit facility, period of variable rate | '3 months |
Letter of Credit | ' |
Debt Instrument | ' |
Revolving credit facility, maximum borrowing capacity | $25 |
EQUITY_Textuals_Details
EQUITY (Textuals) (Details) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Jun. 20, 2012 | Sep. 30, 2013 | Jun. 20, 2012 | Sep. 30, 2013 | Jun. 20, 2012 |
Common Class A | Common Class A | Common Class B | Common Class B | Common Class C | Common Class C | |||
votes | votes | |||||||
Class of Stock | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized | 785,000,000 | 785,000,000 | 500,000,000 | 360,000,000 | 275,000,000 | 309,178,636 | 10,000,000 | 10,000,000 |
Common stock, votes per share | ' | ' | 1 | ' | 10 | ' | ' | ' |
EQUITY_IPO_Details
EQUITY IPO (Details) (USD $) | 9 Months Ended | 1 Months Ended | |||||||
Sep. 30, 2013 | Sep. 30, 2012 | Aug. 03, 2012 | Aug. 31, 2012 | Aug. 31, 2012 | Aug. 31, 2012 | Aug. 31, 2012 | Aug. 31, 2012 | Aug. 31, 2012 | |
Common Class A | Conversion of Class B to Class A | Conversion of Class C to Class A | Conversion of Class B to Class A, Selling Stockholders | Conversion of Class E to Class B | Issued by Company | Equity Ownership of Less Than Ten Percent | |||
Common Class A | Conversion of Class B to Class A | ||||||||
Shares sold for initial public offering | ' | ' | ' | ' | ' | ' | ' | 2,083,333 | ' |
Offering price per share (USD) | ' | ' | $12 | ' | ' | ' | ' | ' | ' |
Gross proceeds from issuance initial public offering | ' | $25,000,000 | ' | ' | ' | ' | ' | ' | ' |
Proceeds from issuance initial public offering, net of fees and expenses | $0 | $20,963,000 | ' | ' | ' | ' | ' | ' | ' |
Conversion of stock, shares converted | ' | ' | ' | ' | 73,554 | 3,039,385 | 15,597,300 | ' | 49,655,411 |
Conversion of stock, requirements, maximum ownership percentage | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' |
EQUITY_Schedule_of_Issued_and_
EQUITY (Schedule of Issued and Outstanding Shares) (Details) | Sep. 30, 2013 | Dec. 31, 2012 |
Class of Stock | ' | ' |
Common stock, shares outstanding | 93,225,095 | 91,270,064 |
Common stock, shares issued | 93,225,095 | 91,270,064 |
Class A Common | ' | ' |
Class of Stock | ' | ' |
Common stock, shares outstanding | 65,847,539 | 63,892,508 |
Common stock, shares issued | 65,847,539 | 63,892,508 |
Class B Common | ' | ' |
Class of Stock | ' | ' |
Common stock, shares outstanding | 27,377,556 | 27,377,556 |
Common stock, shares issued | 27,377,556 | 27,377,556 |
EQUITY_Stockholders_Equity_Rol
EQUITY Stockholders' Equity Rollforward (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' |
Total stockholders' equity, beginning of period | ' | ' | $386,502 | ' |
Net income | 20,310 | 16,487 | 47,627 | 53,064 |
Stock-based compensation | ' | ' | 3,865 | ' |
Exercise of stock options | ' | ' | 6,221 | ' |
Excess tax benefit of nonqualified stock options | ' | ' | 4,519 | ' |
Other comprehensive income/(loss) | 247 | 313 | -358 | 387 |
Total stockholders' equity, end of period | $448,376 | ' | $448,376 | ' |
EQUITY_Accumulated_Other_Compr1
EQUITY Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Accumulated other comprehensive loss, net of tax | ($1,125) | ' | ($1,125) | ' | ($767) |
Other comprehensive income/(loss) before reclassifications | ' | ' | -354 | ' | ' |
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax | ' | ' | -4 | ' | ' |
Other comprehensive income/(loss), net of tax | 247 | 313 | -358 | 387 | ' |
Foreign Currency Translation Adjustment | ' | ' | ' | ' | ' |
Accumulated other comprehensive loss, net of tax | -1,138 | ' | -1,138 | ' | -767 |
Other comprehensive income/(loss) before reclassifications | ' | ' | -371 | ' | ' |
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax | ' | ' | 0 | ' | ' |
Other comprehensive income/(loss), net of tax | ' | ' | -371 | ' | ' |
Unrealized Gain/(Loss) on Marketable Securities, Net of Tax | ' | ' | ' | ' | ' |
Accumulated other comprehensive loss, net of tax | 13 | ' | 13 | ' | 0 |
Other comprehensive income/(loss) before reclassifications | ' | ' | 17 | ' | ' |
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax | ' | ' | -4 | ' | ' |
Other comprehensive income/(loss), net of tax | ' | ' | $13 | ' | ' |
STOCKBASED_COMPENSATION_Textua
STOCK-BASED COMPENSATION (Textuals) (Details) (USD $) | 9 Months Ended |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Number of stock plans | 3 |
Number of shares available for grant | 5,214,829 |
Stock Options | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Maximum contractual term | '10 years |
Award vesting period (in years) | '4 years |
Unrecognized compensation expense, unvested stock options | $10.60 |
Weighted average period of recognition, unvested stock options | '3 years |
2003 Stock Plan | Common Class B | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Shares reserved under the Amended and Restated 2003 Stock Plan and the 2008 Stock Plan | 4,153,846 |
2003 and 2008 Stock Plans | Common Class A | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Shares reserved under the Amended and Restated 2003 Stock Plan and the 2008 Stock Plan | 5,459,510 |
2012 Equity Incentive Plan | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Base number of shares that may be issuable under stock plan | 3,076,923 |
2012 Equity Incentive Plan | Maximum | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Number of shares available for grant | 10,769,230 |
Annual percentage limit for incremental shares that may be issued | 3.00% |
2012 Equity Incentive Plan | Common Class A | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Shares reserved under the Amended and Restated 2003 Stock Plan and the 2008 Stock Plan | 6,201,667 |
STOCKBASED_COMPENSATION_Grant_
STOCK-BASED COMPENSATION (Grant Date Fair Values of Options Awarded to Employees) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' | ' | ' |
Weighted average grant date per share fair value | $7.17 | $6.57 | $6.05 | $6.19 |
STOCKBASED_COMPENSATION_Stock_
STOCK-BASED COMPENSATION (Stock Option Activity) (Details) (USD $) | 9 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding | ' |
Number of shares outstanding beginning balance | 6,253 |
Number of shares granted | 1,052 |
Number of shares exercised | -1,955 |
Number of shares forfeited | -314 |
Number of shares outstanding ending balance | 5,036 |
Number of shares exercisable | 2,853 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | ' |
Weighted average exercise price per share outstanding beginning balance | $6.99 |
Weighted average exercise price per share granted | $14.11 |
Weighted average exercise price per share exercised | $3.18 |
Weighted average exercise price per share forfeited | $10.25 |
Weighted average exercise price per share outstanding ending balance | $9.64 |
Weighted average exercise price per share exercisable | $6.98 |
Weighted average remaining contractual life outstanding | '7 years 0 months 0 days |
Weighted average remaining contractual life exercisable | '5 years 6 months 0 days |
Aggregate intrinsic value outstanding | $39,380 |
Aggregate intrinsic value exercisable | $29,916 |
STOCKBASED_COMPENSATION_Compen
STOCK-BASED COMPENSATION (Compensation Expense Related to Stock Options and Their Intrinsic Values) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' | ' | ' |
Compensation expense related to stock options | $1,387 | $1,545 | $3,865 | $3,682 |
Intrinsic value of stock options exercised | $5,027 | $8,684 | $22,326 | $11,070 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
Effective income tax rate | 32.10% | 38.00% |
Tax credit applicable to 2012 recognized in 2013 due to retroactive change in tax law | $0.90 | ' |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | ||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Jul. 31, 2011 | Jul. 31, 2011 | Oct. 31, 2010 | Oct. 31, 2010 | Feb. 20, 2013 | Dec. 31, 2011 | |
Synthes USA, LLC, Synthes USA Products, LLC, and Synthes USA Sales, LLC Litigation | Synthes USA, LLC, Synthes USA Products, LLC, and Synthes USA Sales, LLC Litigation | Synthes USA, LLC, Synthes USA Products, LLC, and Synthes USA Sales, LLC Litigation | NuVasive, Inc. Litigation | NuVasive, Inc. Litigation | Altus Partners, LLC Litigation | N-Spine and Synthes Litigation | |||||
claim | Minimum | claim | Minimum | Minimum | Minimum | ||||||
claim | claim | claim | claim | ||||||||
Loss Contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss Contingency, Pending Claims, Number | ' | ' | ' | ' | ' | 3 | 1 | 3 | 1 | 1 | 1 |
Monetary damanges (from jury verdict) | ' | ' | ' | ' | $16,000,000 | ' | ' | ' | ' | ' | ' |
Total damages and other litigation-related costs | ' | ' | ' | ' | 19,500,000 | ' | ' | ' | ' | ' | ' |
Provision for litigation loss (cost of goods sold) | 0 | 0 | 1,260,000 | 0 | 1,260,000 | ' | ' | ' | ' | ' | ' |
Provision for litigation loss (operating expense) | $99,000 | $30,000 | $18,418,000 | ($801,000) | $18,200,000 | ' | ' | ' | ' | ' | ' |
RELATEDPARTY_TRANSACTIONS_Deta
RELATED-PARTY TRANSACTIONS (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Related Party Transactions [Abstract] | ' | ' | ' | ' | ' |
Accounts payable to related party | $3,286 | ' | $3,286 | ' | $2,556 |
Purchases from related-party supplier | $4,478 | $6,894 | $15,987 | $15,418 | ' |
SEGMENT_AND_GEOGRAPHIC_INFORMA2
SEGMENT AND GEOGRAPHIC INFORMATION (Geographic Location) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues from External Customers | ' | ' | ' | ' |
Total sales | $107,187 | $94,764 | $319,214 | $285,458 |
United States | ' | ' | ' | ' |
Revenues from External Customers | ' | ' | ' | ' |
Total sales | 98,109 | 87,140 | 292,487 | 263,710 |
International | ' | ' | ' | ' |
Revenues from External Customers | ' | ' | ' | ' |
Total sales | $9,078 | $7,624 | $26,727 | $21,748 |
SEGMENT_AND_GEOGRAPHIC_INFORMA3
SEGMENT AND GEOGRAPHIC INFORMATION (Products) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
categories | ||||
segments | ||||
Revenue from External Customer | ' | ' | ' | ' |
Total sales | $107,187 | $94,764 | $319,214 | $285,458 |
Textuals [Abstract] | ' | ' | ' | ' |
Number of reportable segments | ' | ' | 1 | ' |
Number of product categories | ' | ' | 2 | ' |
Innovative Fusion | ' | ' | ' | ' |
Revenue from External Customer | ' | ' | ' | ' |
Total sales | 62,620 | 57,828 | 186,929 | 180,549 |
Disruptive Technology | ' | ' | ' | ' |
Revenue from External Customer | ' | ' | ' | ' |
Total sales | $44,567 | $36,936 | $132,285 | $104,909 |