GMED - Earnings call transcript Q3 2021

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Operator

Welcome to the Globus Medical’s Third Quarter 2021 Earnings Call. [Operator Instructions] I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Brian Kearns

Thank you, Amanda, and thank you, everyone, for being with us today.

President Globus Scavilla, be Commercial Executive Keith Senior from and Demski, Officer; call Officer. Pfeil, Dan Financial CEO; Vice Vice today’s Medical Dave will President and Joining Chief and President, Chief This review webcast the website Relations Investor Medical available of Globus www.globusmedical.com. accessible the through section at being is made via

Before we during you statements. review or are remind this considered of forward-looking some begin, that let may me made the be statements

the Securities Form actual our with Our from for subsequent factors any certain today. fiscal the results in statements forward-looking materially our Exchange and year and that XX-K XXXX differ those cause identify projected made Commission filings could to

a or including filings, We undertake any SEC result do developments. Our information not as update of future or XX-K, our new are events available on to website. statements the forward-looking

to in most Demski, release schedules Medical pertinent GAAP directly Reconciliations available financial non-GAAP be measures. Our the with accordance We accompanying accepted calculated Dave today include read discussion measures and should directly and that, These I of With will the website. not the financial together that comparable considered Investor provide our believe are are over measures our the not turn replacements financial most press Relations or should the call and GAAP be Globus in on to section comparable measures information for non-GAAP financial the accounting to GAAP. these the CEO. business measures principles with performance. generally certain now additional will President

Dave Demski

revenue fueled of quarter leading Revenue share our product we several we in and Historically, the X continue Globus for important QX. above our accomplished results QX. do peers, sales X Non-GAAP only outstanding ‘XX. to share, million EPS and and $XX XQ Brian, was X% both in were would an over increase that and EBITDA well strategic the and X% up everyone. growth to revenue have and quarter revisions afternoon, new an good been million, you, non-GAAP adjusted perform Thank during quarter. a These competitive to Factoring take market indicators these per very objectives. correlated the in EBITDA. All million was $XXX also growth recruiting. EPS headwinds of resulted Not was had upward reflect adjusted XX%. strong factors: has estimated in $X.XX introductions, robotic strong in XX% in $XX U.S. by a

in $XX enabling in Our technology resulting continues XXX%. QX, build, to million revenue of increase of momentum an

our is capital performed they quarter extremely but typically of quarter missing all-time an well, for fourth challenging team sales, delivered growth. narrowly The robust as third a straight record

underlying the dampened Adoption factor quarter remained operating than technology the the a of on customers this the on clinical market. history. third ExcelsiusGPS enabling robot XX-month growing ExcelsiusGPS driving full in million, to and year best COVID $XX be and momentum. utilization the our basis continues strong any routinely fact, revenue XX% superiority fine reached is even surgeon that In trailing acknowledged in prospective The higher in room

is for be and cycle Hub in gained freehand robotics, The scalable This will XXX(k) virtuous of in surgeons. which and providing the the combination robot FDA driving ExcelsiusGPS seamless, Excelsius of joined clearance this our unmatched a both platform, quarter, will QX. imaging ecosystem, last navigation soon Excelsius navigation an imaging experience become discussed XD we As the and Excelsius acceleration system by growth. clinical

of the and on are finishing demand. in production products strong touches ramping We putting the anticipation

of application to the excited report in QX. launch also We the are cranial

efficiency XX% of Spine top U.S. exceeding the continues a of is approaches platforms. Excelsius as on robotic of take share business. results from robotics, to advancement and stack XX%, growth scalability of We peers. in adjusted The any number This growth. factors in growth a challenging advantage competitive in where The product factoring reported, This X-year driving our of impact all helps after Pull-through Spine U.S. significant introductions, were has from have to well in our savings of of recruiting excess shutdowns. contributions by by the highest our ExcelsiusGPS excited expectations. sites This team growth, multiple enthusiasm. market over of of last outstanding, robotic but future COVID-related in we’re take with performance. year. initial our reported a implications and traditional X% and drive with been comp technology reps full accuracy recruiting time have great indicators we latest competitive XX% QX growing the QX QX utilizing sales sites we historically of the strong along of results Competitive our in added and year, the from leading over to the was and been capabilities new

offset product and We several space The recruits. strong first planned work competitive the business in added we Frag reps ‘XX as year. our the of of was in in by implant QX by X% in X% in our the quarter. revenue upcoming On of launch growth this continues strong System XQ pipeline of is spinal off last impact front, of strategic in markets Japan, a moves XX% declined several international over exciting up The next our ANTHEM launches Japan sequentially. the declines and Trauma have most trend the year. in new Mini

to removal the developed removal, minimally into Peter plan technology. removal safety Southeastern Finally, of is it element orthopedic important drill high-speed of is Capstone significantly in an compared in accomplish that board-certified profile the Technologies. traditional to invasive my in in and Furthermore, instruments leverages surgeon pleasure the unique powered Bono, patented has technology Founded drill insertion efficient screw safe, Dr. platforms our technology Capstone a Surgical surgical to our oscillating Michigan, improves a tissue bone this robotic by future. acquisition disk announce surgery. incorporate Oscillation spine capability to

to been finish has what a an outstanding strong forward to We are year. looking

late still than lower and remained to While their they impacting QX in restrictions peak. are COVID certain abate began markets,

strong, and in late over quarter INR to our pipeline We robotics of will Our trauma I deals pipelines and several remains already closed the launch Keith. turn call Excelsius QX. remain now the in recruiting the in we’ve and anticipate strong. XD spine,

Keith Pfeil

Thanks, continued quarter profitability execution driving investment market cash free good were continued robust its focus Globus afternoon, and all quarter, all our objectives business. across impressive growth, the Dave, and Revenue, another our and while the continued on completed headwinds. everyone. of strategic around reflective share has our despite COVID flow for

count net quarter million, QX growing $XX.X over quarter. fully X.X% of and million, $XXX.X delivered of was includes X.X% earnings was reported income as share, EBITDA was was XX.X%, $X.XX Third flow. QX when million and the X.X% income non-GAAP by XXXX diluted $XX.X net $XX.X which growing versus revenue growing primarily year of compared per $X.XX million, to third XXXX, Non-GAAP a a of QX generated the prior repurchase. result XXXX. higher QX of we headwind versus share free as of driven year prior Adjusted a share cash

attention to sales. our Turning

earlier Our as of in million, INR versus Dave growing third was $XXX.X revenue Spine, quarter U.S. quarter his mentioned X.X% XXXX, U.S. by the comments. and led third

quarter. the by difficult the our are We the conditions performance despite during encountered market encouraged U.S. business of

declining The countries, X.X% robotic growth quarter COVID compared was by business mainly for XXXX, expenses compared by compared QX well strong to in lingering as and over impressive million lower quarter or in XXXX. to offset by our $XX.X by of of X growing profit for XX.X% the in the continues compared quarter impacts $XX.X year-over-year million third Gross by back of profit our positioning to international the million, gains, as The QX third X.X% trailing $X.X over which the primarily our XX.X% growth. of longer-term of and increase International This the XX.X% Spine show when previously quarter past approximately lower Research to mentioned Looking U.S. sales, driven is for Japan sustained XXXX. U.K., third partially was X XX% gross was the revenue sales. by region, was inventory higher development varied us Spain spine the to third in demonstrating quarters were driven business or as transition, reserves. performance growth years, including Belgium. XXXX.

accelerate year, continue and As joints. growth mentioned earlier we opportunities in in trauma total our spine, to INR, to tremendous see the

X-quarter free profitability the quarter, system contribute free long of was to was continue such as an was in to $XX.X and tax by and XX.X% both of We XXXX sales the setting expanding share. of experiencing compensation $XXX.X The non-GAAP continued areas impacts, million, flow million fourth to we with to trainings. on further the Despite cash of growth. our position term. result was sales while rate Though a third reflective marketable a that, the activities The effective year levels the in gained drive R&D us We portfolio investments year $XXX remain quarter to execution was SG&A the the during sales flow meetings $XXX cash exercises. in return costs $XX.X has tax XXXX the to sales we fully delivered rolling focused increase XXXX. sales pre-pandemic cash in million, lingering forward, ourselves our our dollars beyond. we customers. COVID quarter Capstone provided and earnings still XX.X% going are reaffirms spending QX sales all and focused million of growth travel, for equivalents record quarter quarter while benefits we The on approval net seek Globus. for spending guidance a as were securities. cash, for We option the the or basis, engage spending, we generated flow. for $XXX.X of in of but and for in company as seeking rate in and percentage with of and has to also expenses EXD of encountered results is or the quarter Surgical third our headwinds and higher during our $XX.X impressive closed product XX% Given for million what diluted These close income strong Net on associated cash operating continued million $X free increased remain compared of in Year-to-date its continuing company differentiate concluded per stock and to million. up been further tax quarter to third of lower COVID with $XX.X growth. compared The XXXX. cash million third XX.X% areas and

excellence. for to to like I’d markets. drive to to drive continued their products while their We the for team customer exciting will our the across continued thank invest expanding drive in for in all and gains pursuit new continue future outreach order share Globus

open will call We the for now questions.

Operator

first Our question of the Instructions] [Operator Credit Miksic line Suisse. from Matt comes from

Matt Miksic

And congrats environment. impressive quarter on really the given

Just you one question, if trends I mentioned. could, international the on

though or internationally? about maybe just You that and then the your estimates sales. than you’re even the any called have on Can that seeing out talk expectations maybe one your dynamics follow-up. shortfall better our was it international you side to around robot out other expectations, I flesh And

Keith Pfeil

As relates as a it specifically. quarter me to nothing Dave concern call U.S. We internationally. typically said, have is robotics. that for robots, to just as QX, out gives to for it There’s relates pause I quarter. wouldn’t anything really strong robots slower happen a

is I in think but internationally commented trying Japan separate musculoskeletal lumpy to seeing with As country, the growth called expect the what would internationally, callout for about couple we there we’re is that on. musculoskeletal, we I musculoskeletal. that of was overall, countries both by country out make Point growth a of you

Matt Miksic

to questions you a then helpful. going things few Great. a get environment staffing. the I’m current I follow-up. of and on about And maybe to ask, just But Capstone. lot sure That’s wanted the mentioned you’re

could or for -- your getting what’s how learned you’re you does go-to-market little you about with out kind current of special -- your not what’s you it portfolio bit, fits flesh into understand how If strategy? but that do maybe the now maybe portfolio? it technologies a that that what enabling Or

Dave Demski

not we’re part as our musculoskeletal now. -- is adjacency It’s that for Power market Matt. right a nice thanks, strategy. in -- we Well, tools overall of

that that opportunity This tissue So big technology a us the with into that future. robotic combine platforms that one with of then solve removal. segment important the gives that robotics that product. to incorporate unsolved us the challenges highly our enter in unmet an gives some can fact with is really we differentiated to And problem

So of the this. we’re potential excited about

Operator

next comes Matt with Our UBS. from question Taylor

Matt Taylor

the So quarter. what as to did Matt want in the predicted, and about ask I current not you seeing kind you’re environment of

challenges lingering and bit If a things could about love how any you you are staffing, provide. the color little and on can talk impact the changing would

Dave Demski

ortho It bad, than It August, too Yes, heard getting what September, worse. bit I’ve a much was different calls. better. started Matt, on little not other got

QX. coming we’re are back, some still seeing markets but Some overhang into

So it’s better bed as well considerations. that’s not a of but really mix just was, as have staffing is, but capacity how gone. into insight We than combination don’t that it

Matt Taylor

And there. give an just ask And on will we Great. color launch enabling should tech. us any and a the could Could that imaging the you ramp about be think I follow-up you I assume on expect? how

Keith Pfeil

be Imaging, a -- within from we’re the will QX enabling launch technologies. expecting QX classification late that

Matt Taylor

Okay. ramp, could that and the on Any go? quickly color how

Keith Pfeil

We’re everyone busy about and building excited is imaging systems it. now,

followed launched into it late XXXX get up and with to looking We’re QX, sales. and quarter the really more more in in

of I out as year, our part it As it be year… material don’t the of expect relates this a close number to we to QX

Dave Demski

I’ll to early add just The to is predict. Matt, Yes, that. hard ramp

the and strong. final the surgeon is in launch product demand the We’ve it production, stages the up huge. orders interest terms finishing for already. The is but of of We’re really got

the be a will But go. the once hard first we important it’s product to half to year So probably the see in really that is stride, for how going exactly ramp get us. of

Operator

from comes the next Our with question & Needham Saxon of line David Company.

David Saxon

just My environment in guidance. wondering what’s was guidance, better. is you assumed the on noted one is first just getting I

any that COVID in does the then bad of $XX those So does assume the And same. procedures? million continues are returns guidance assume kind fourth And or $XX stays million guidance deferred quarter? to in headwinds that

Keith Pfeil

question. for guidance quarter. growth to here the in mean, X% the X% Thanks the really I fourth assumes

you compounded -- we annually. year. stepping We’ve at $XX compare with and it we impressive total back look When the we’re since guidance, think growing million look We XXXX, out this As current our back, million we really as at in year, XX% year then. had we’ve came increased to $XXX a look in guidance. at

result specific quarter, As and And the in like had to that having look a things quarter the occurred last kids back I going with you about we COVID school the things of we called out, headwinds fourth that now to to quarter. as some that. talked slowdowns

may close guidance, focused those We back. Some a I come our good as number, is what we’re of on million But number. as that’s at $XXX like feel it’s a we good look and of of out of impacts. out about do feel calling good business we we them also the COVID our but year. performing, all still that are We see areas the lingering in terms some

David Saxon

second Okay. just on question And then is my enabling technologies.

this and year, the launching have later module hub cranial You launch well. you called the imaging is out as

be $XX million it, -- that trailing I million mean something $XX XXXX? this at You’re a months XX is call could $XXX million revenue. in

Dave Demski

be. could Certainly

the given than the where really But in technology, terms trends a in a this business, to of to we not of of position our we just of the our -- expect both participant, segment are curve it favorable. give are those nor down. significantly guidance business grow faster are We’re in do adoption market we rest break where of the we

grows over the we this segment significantly think long for term. So us

Operator

Our Truist. from Brodovsky question next the Sam is from of line

Sam Brodovsky

of further in Just seen adding hiring terms there first the of one, get thoughts in And seeing kind as rep environment a of spend that. more COVID, and change want how with environment? to people. just what question clearly the appreciate follow has competitive impact there any of macro kind through you’ve you’re away we initial can of been that rep and hiring being in terms successful from But in

Dave Demski

reps go We’ve change surgical value rep Thanks, the say COVID technology for would hiring. any we place accomplished not an Sam. to the procedures. always been have because in adding I that’s attractive sales in to been due there’s

the and accordingly. always it’s sales, always best them -- our we nice So value a salespeople if to would been traditionally recruiter. strong have we’ve competitive. products you’re it’s I compensate in not been And and

you if of will. So same, the it’s kind

Sam Brodovsky

I’ll just then helpful. here. one That’s Capstone on Great. And ask

spine I think whether augmenting it and spine, joint. trauma initial larger applications to potentially portfolio be to even expanding hear application be about you going or think but into a curious would is probably that the beyond be the how intended

Dave Demski

technology ortho definitely the opportunity segment. to expand Yes, there’s that across

start So developed with was spine. it’s -- by we’re going spine It to surgeons.

really technology But it’s across procedures. So into those is do those in all the they applicable what dialed segments. itself of

Operator

from Matt the question of line is Next Sandler. with O’Brien Piper

Korinne Wolfmeyer

This is for on Korinne Matt.

So launches, kind new those? trauma could forward believe front? your the to build in of portfolio. trauma color to anything update is turning provide we there that your is some be product that, on I you business? or mentioned you what the mentioned on the product the past, historical there focus can launches on specific efforts to you status but Is coming any out And up looking like further

Dan Scavilla

Thanks what think largest within market, given rolling the forward. the it, to to is basic personally that we to continue be is approval see question. mentioned some of market in significant for bag, in your just in that Dave the that as us itself quarter. a for one players. What is potential I with of about able brands received appropriate spoken become we’ve FDA the We’ll our system, a the will the actual growth a compete out build product we that time. the fourth out past, adding be it our the be short significant Yes, add very be market established fragmentation to into mini for innovation our in I to step And that as

With of year. where we’re in getting we We for close to the start FDA the I’m have to we’ll a to all of first be to ability today. in the doing market the gain what from actually what several with submission then maybe the want planned to that, up seeing to meaningful the innovation XX% we’ll to off to in to launch And probably be portfolio procedures. transform other products scheduled half addition very cover in the bringing

Korinne Wolfmeyer

That’s great. been But I know XD, but you in what just were far. We what what the pretty talked have saw hear early impressed And so on it at you’ve field just the who we feedback curious some has speak that. to to a hearing about among lot. can then Excelsius you’ve been it with surgeons around of tried NAS,

Dave Demski

It’s really impressive and exciting.

how technology of becomes size, terms in this what’s who then think functionality, aspects it get there. to what’s I the sees obvious it out the everyone them benefits -- it, to I are just compared maneuverability it one wants smart can the the the of versus of

we’re really So excited the here. about opportunity

Operator

Our Company. next question Lichtman the Steven line of Oppenheimer & comes from with

Steven Lichtman

I was, on particular, bit I but headwinds question guess, are of guys staff on my the on guys it, And assuming terms you a COVID touched impact, on what guess, volumes, you little hospital guess, procedure I insurances. in earlier, in

Keith Pfeil

I thanks the question. mean, for

think this Last about one. we’ve a we think in number where strong strong to our at done, two, as is super I looking saw ongoing headwinds we’re did we’ve out are guidance we is call But out I we’re overall had that COVID the focused $XXX as we stated $XXX the quarters. total and we’re in not the environment. in parts still earlier, million. We pieces. third finish view But Our I and we and quarter. what really fourth number million mean breaking at year, the growth at seen on statement,

comp. again, this a fourth the have We into of of some quarter we coming all third still lingering strong we in in sort knew we strong comp a So quarter headwind. environment COVID year, being had

of again, aggregate all you like million, today, here feels sitting for the in the a us businesses. number good when our So at look $XXX

Operator

This Medical’s and Third And you joining call, XXXX now Quarter for thank Earnings today’s Call. you disconnect. Globus concludes may the

Globus Medical (GMED) 5 Nov 212021 Q3 Earnings call transcript