Earnings call transcript Q2 2023

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Operator

Welcome to Globus Medical's Second Quarter 2023 Earnings Call. At this time, all lines will be on mute and a Q&A session will be held after the prepared remarks.

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 for and today. with Didi you, you being everyone us Thank

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

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

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

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

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

turn now I'll over Dan CEO. that, With and call our to Scavilla, the President

Dan Scavilla

or EBITDA of 'XX. $XX first versus Globus 'XX. of XX% to XX% strong versus or $XX for XX% fantastic record increase half XX%. delivered million was million, Adjusted of had Through -- $XXX a half and sales free increased good over has and 'XX, of of $XXX million flow an $X.XX, the second first had the afternoon QX million, 'XX. QX XX% quarter, increasing quarter up we QX Brian everyone. setting EPS up a a Thanks, Globus cash Non-GAAP million, new $XX

$XX of million 'XX. results sustainable members our Non-GAAP XX% EPS achievements further focus work was our his driving XX% growth. half and up are and these $X.XX, up outstanding the Keith profitable was cash flow will company section. due hard on to dedicated team in versus of the across first and cover free These

notable scoliosis US device Spine QX, XD-printed screws while grew In and and maintaining modulated three allowing REFLECT, is and correct our to productivity QX, progressive portfolio young pull-through. new robotic This growth designed a we X% products, in preserving MARVEL rep MIS patients above-market in in humanitarian for across with biologics, product launched REFLECT gains motion, growth. by implants. future Ossifuse. competitive is and and driven pedicle stability

delay of power rigid the tensioned side growth groundbreaking is the metal technology a rods that a the X,XXX for children patient system now durable cord available now US children avoid attractive convex parents Unlike spine uses harness curve fusion. on REFLECT over the for of to flexible becoming for quickly a and fusion, who for the This or very a has used is correction. worldwide procedures in and been option technology is can in

provides through access MARVEL through with reliable powerful expansion a XX obtain while large small of tactile to distraction under capability and for growing designed and The soft scoliosis continued disruption. allowing expansion mechanism maintain the rods for feedback geared are early-onset minimal patients growth correction invasive and age a tissue minimally incision distraction.

portfolio. the our MARVEL of market. surface presence HSA are increase or a XXX% is unique to surface biologic pediatric our a handling. area cortical in key architecture with attachment demineralized The cellular in carrier. innovation without Ossifuse allograft and and component synthetic and added part for strategy have high of composed high REFLECT area growing an deformity Ossifuse our fibers is multiple bone

move throughout I XXXX, product portfolio. anticipate we strong a second half cadence launches into of into As our and XXXX of the

of Technology new be sales. as Enabling worldwide. adoption million XX% penetration sales accounts driven continue by record and Robotic open robotic strong, had up and and we year, $XX to versus markets imaging system prior

We continue the increased surgeons EXD inroads ExcelsiusXD in both of in offering. imaging seamless combination positive advantage to and sales make we're the and ExcelsiusGPS also with and US system with seeing our integrated our as interest deals see

performed strong to placement, interbody XX% adoption accelerate versus of growing procedural pedicle XX,XXX and to-date, procedures year procedures placement cranial continued by exceeding prior and Robotic robotic screw driven applications.

and in We're development and offering to our Imaging, also portfolio. functionality bring in future and enhance ecosystem our Navigation, more current technology our product expanding about enabling investment Robotics

We're partner Market meaningful interest to state-of-the-art remains with And the innovation our a well pipeline. space. to we're our for bring entering into with strong high QX positioned technologies. surgeons

in business and most India Ireland, had basis, QX currency produced markets. growth for Australia, to constant XX% Spine UK, International of excluding more Our record momentum compared strong quarter Spain, Poland Japan and XX% year. quarter. in a a on We generated growth growing or all double-digit the prior

growth had addition, for constant In X% Japan QX. currency

gains to throughout year share. on as recapture see the focus in to expect We we Japan above-market gains

delivered XXth growth, quarter XX% consecutive Our of and its 'XX generating sequentially. sequential QX versus business XX% trauma growth

portfolio. uptake our product growth Trauma substantial in is driven sales throughout expansion performance lines by all force strong and with

and half We XXXX. I launches the in anticipate robust of pipeline second trauma product several have a in meaningful

To in status, voting the NuVasive XX% update of transaction. merger with merger support last mentioned and our Medical earnings call both overwhelmingly the for voted over as on in you shareholders Globus

remain merger date closure the a with planning. received and the our in to and remains XXXX providing been request We while We integration the continuing second expected FTC focused responses, committed on unchanged. QX May from fully have cross-functional necessary

Innovative competitive core Merger in New pre-eminent world. on all about to execution growth. are for long-term the is In Robotic becoming and System growth and the company achieve focus Product XXXX remain of deliver value know musculoskeletal we to summary, sustained and on elements well customers drive planning. mission I our Integration to we recruiting focused sales, introductions, Imaging rep positioned our the

the turn to, Keith. now will call over I

Keith Pfeil

good quarter second Momentum first record continued Dan concluded report strong am resulting earnings. afternoon the in I Thanks and pleased the exceptionally second Globus revenue from into an that everyone. to on and quarter. quarter,

the second $XX.X reported growing resulting year. XXXX the quarter was was per versus the in XX.X% Net second income $X.XX. quarter $XXX.X fully prior diluted as Revenue in of million, of of million share earnings

$XXX.X our business Non-GAAP prior globally delivering $XX.X prior per revenue XX.X% growing $X.XX earnings growth QX million as resulting musculoskeletal net year by led the as well as over fully year income was reported, in Spine diluted non-GAAP compared was of to X.X%, primarily the share million quarter. trauma. quarter

$XX.X of reported, as robotic quarter the compared penetration growth by XXXX, growing in quarter. million was the well Sales imaging Enabling continued system mainly prior Technologies EXD the system second revenue as XX.X% as US. our to was year primarily in led

quarter revenue revenue US million, Enabling second in expanding growing largely the constant US growing and reported basis was $XX.X implant X% Spine a XX.X% led by Technologies. sales. currency QX versus on to as and International due $XXX.X million, prior the year was and quarter XX%

well led growth in was our the Sales primarily focus and APAC. UK, Regionally, region by EMEA Poland was key driven Australia, as as Japan. countries the Spain, India, growth including

gross dollars in P&L, quarter strong the gross line mainly growing rate, implant growth. compared the driven of the second sales. profit quarter in mix the by XX.X% further profit The profit decline rate as XX% in the growth decline Moving prior to was XX.X% well as of sales products capital our year XX.X% quarter. into international gross profit gross was mix Despite revenue in with grew a in in namely

continued or are a that long-term we compared of however, is development continued or largely on of is prior Spine X.X% and reflective the Research growth in XXXX and spend resulting business. to mid-XXs head for growth. $XX.X in platforms develop million future was expectation million as new our year we second sales focused of to and the were Enabling in The $XX.X to the sales technologies of Over work rate count profit gross X.X% increase quarter quarter. Technologies drive expenses

were second The driven reflective to expenses higher by of or in prior is by increased XX.X% bad compared higher $XXX.X or well costs of in volume, increased sales the year. conversions legal $XXX.X debt of second costs as quarter expenses driven of rep as compensation and SG&A spending quarter the competitive expense. million million sales XX.X% G&A sales the

income year. and Adjusted on prior second with increased quarter line the XX.X% noted in changes, XX.X% of XX% for of mix sales quarter year earlier for quarter as the quarter comments rate the G&A my as effective essentially the the was second EBITDA increased investments was in tax spending. noted is well reflective the The prior in R&D XX.X% than the lower

track will long-term history heavier will during As steadfast. has over continue remains long-term, the investment mid-XXs. we the about think to The Consistent of adjusted to the leadership EBITDA. the of periods with adjusted and our lower range strive EBITDA for mid-XXs goal Globus

for will shareholders. to on sales drive our investment profitability future focus We continued delivering while above-market

XXXX the in to higher second $X.XX as compared XX.X% EPS the year quarter. Non-GAAP prior of quarter or was

Our normalized quarter would our of non-GAAP for been approximate EPS income. by tailwind XXXX an second items mainly Adjusting this non-operating $X.XX includes higher interest have driven $X.XX.

expenditures activities operating inventory primarily timing $XX lower as million investments and is well in spending. working and higher by cash $XX.X was provided driven flow the flow capital million. increase was cash Net by cash of namely free payable free The additional as capital

now time be net company $X.XXX the is year We year expect revising billion. to XXXX full this guidance. its At standalone sales full

unchanged at fully fully $X.XX standalone non-GAAP Our remains diluted per EPS guidance diluted share.

Our while collective highlight EBITDA and compared our the improvement QX all serve strength flow record free year. record when record seeing earnings adjusted continued dollars prior results cash to revenue, in to

seen revenue and across portfolios. well record was US technologies Our both our and distributed as the was as business strength enabling in the across international musculoskeletal as

in with expand to as our investments to continue We disruptive the position seek development technology. market product a in and leader lead

thank I Operator, to want NuVasive. excellence and now with focus operational continuing plan open for team our members for questions. pending for to driving while the our we'll call merger and prepare Globus

Operator

for question. Singh first our go you. our Instructions] ahead. And question Shagun [Operator of from One Capital first Thank RBC Please Markets. comes moment

Unidentified Analyst

on given This Hi. forward can hurdles ask nice the second if the quick half might room about for was Congrats in I for of any about you Kendall second have in also other to going other quarter? about I I the the any any other deal upside and there's the one give implied wanted so the the in commentary deal Thank was quarter. question you momentum Shagun. if much. FTC business wondering guidance deal closed closing. the I And had on a guidance. wondering is and you QX. have

Dan Scavilla

I'll This Kendall. and hand Dan. is Thanks, start Keith. it I'll over to that with

step last are move SEC, with working to for now we us that having reason related and gone like We've be hurdles we cadence feel to through that's there planned we stated the FTC, amount So we what shareholders quarter reasonable a think to activity what date no of responding other upcoming third that obtained for still we forward. us seen would on from to forth. and that the no needed based the the needed no look back our to. the with merger with to forward the deviate But and the and

Keith Pfeil

the comments I'll second part. for take the the for question, on your and quarter. thanks Thanks

$X.XXX puts grower, step to I given we're of always that half single-digits that the the second there I we put back new As But the the guidance full high-end would about to out of range we at look up company. guidance think us the good X.X% us that year seek mid- and about where at. that said implies full we're putting billion a conservative at think we when think about X.XX%. that be as I year that you high Globus appropriate feel the would We've that a is the remains say year, and that. the growth in

Operator

you. Thank

Miksic Our ahead. of comes next Please from question Matt Barclays. go

Matt Miksic

for question Hi. quarter. on the impressive congrats a Thanks really taking and

this in an this cadence get So bigger was we out a -- are seasonal line you or did a in to I Are of seem your you the like it out seeing Was to to quarter played it with are color surprising wanted seeing trying idea this give vacation a to more commentary any quarter the more the way in year. quarter. this summer QX. we And figure people think I as dip can expectations? lot

so to I your us shape Just July could. quick I to quantify up from to give what what sense be you one strong should And to relative trying a follow-up maybe very as QX? anything was can comment without get on QX you far is if have

Dan Scavilla

Thanks, Matt.

process We're in you we're the going current give So you of always comment answer, we're because to on know to quarter, this just not right? it. the going

I would that. So disclose you consider we'll there's tell wouldn't surprise. that there a nothing with QX, I

of therein There had lot activity we the think quarter. the I a throughout a businesses. throughout months great solid was

solid technology all spine month. of our traction. well single well. the you with international this look were It's The put I those in or enabling we at things doing So think investments or whether every just is trauma really

of we So I those stay QX. said, talk throughout about each would to those like get pleased say three We'll I months. one hurdles before we were have through tuned And one. that for

Operator

you. Thank

comes Please ahead. next of Matt Stifel. from Blackman question Our go

Unidentified Analyst

on Hi. This is for Emily [ph] Matt.

Just Thanks. was Tech NuVa spine hoping side a surgeon any on could on specific whether the docs? training inbound talk side. interest maybe from bit about And uptick little Enabling core color or in you the volumes

Dan Scavilla

Well, Emily. thanks for the question

heavy But unusually I occurs or usually We than throughout tell the towards which traffic the we end week, that flow week. of normal lighter you the have do. a in nothing the would in lot heavier of that surge

the we be between. it's do, a or entity. NuVasive training robot on I'd we're cadaveric throughput that say that of whether think good or I with that there's separate everything still pleased way. hands with With itself, the pretty amount in

them do so nor a surgeons lot with along And ways. can done haven't with or a planning we those their lot we

when uptick staying heavier go on is we're lane surgeons an and we'll expect But now a the at right focusing have. our in just will and approved it We we that within that pace.

Unidentified Analyst

you. Thank

Operator

you. Thank

ahead. Genuity. Our next from question Cronin comes Please of Caitlin Canaccord go

Caitlin Cronin

Hi. quarter. for Rose. This Kyle Congrats is awesome on Caitlin an on

challenges? any out Just supply others this called experiencing to been touch what you chain topic recent on given have have

Dan Scavilla

I our Thanks. Dan. of no, post-surgery. be This here. strongest in internal, would world throughout our our and we're the replenish Caitlin. to is with whether chain team hard We're I We're set one to arguably pleased both that particular thanks of just the the work supply the, you very opposite. say strength periods, building. tell operations external ability the Hey would of it’d but

entering I strength. a would went say So QX of we at and through we're point QX

Keith Pfeil

Yes. And challenges of chain that ties back this positioned the Dan add count we the market I to in are called is some to there just with last feel that about you year only year to really if better supply back where thing last we year the and think, statements I versus were made. would the out it

Caitlin Cronin

to attractiveness you've you really then Awesome. And a Any other recently. quick launch you. How pediatric Thank any products just launched one market? products? the on this do plans the of deformity view

Dan Scavilla

you excited correctly, are lot that and that, a and or way incisions in like young heard to controlled the first, products that I those hopefully if you in patients a referred how reduce give I to of that think further I about it's two fashion. to REFLECT which MARVEL, should surgeries items a options very going different we're treat because

FTC two when portfolio We're is a There's pushed this These definitely the and for we're that really leaning comes needs will key the into REFLECT look, time innovation. excited into this us innovation. a the doubt surgeons So and of stronger to an no and with that market in ever the that NuVa US. approves and offering. get come together products are right the hands bring this, out MARVEL,

Operator

you. And Thank Newitter ahead. comes question Truist [Operator next from Please Securities. of our Instructions] Richard go

Lin Zhang

Hi. It's actually for on Rich. Lin

So first great on quarter. congrats the of all,

capital we So the on comments market. slowdown heard in some

if are there? wondering what you seeing -- you Just could like

Keith Pfeil

Thanks for This the question. is Keith.

you prior at versus a last on in slowdowns if where was I -- uptake said, year especially Dan system to basis, at I our where happy as asked of But time that start in add. this our ahead well that where we're you look I we I sell with say robot. when would year-to-date what at try year. we're -- happy repeat with at wouldn't to to as a and to comp slowdown that seen to we're we've just extremely I'll were we're continuing feel we this we're the and say think we're mean seeing today think I We're today EXD more. If free capital at. market I if market. there the the

Dan Scavilla

And I'll just that. on build Yes.

Keith any stronger, that's they're just like QX be change market or to hospitals out difference it would That there significant quarter and struggling out but and some as this we're not nothing said, year it It's in all noticeable disruption I the years, quite when created a and think in into said. through us this with. comes I we'd seeing the solidified there's and we difference. that as for COVID the equalized call not what think carried with

Lin Zhang

you. That's helpful. Thank follow-up. A

some like could Japan, color Thanks. on that So there? provide really strength what drove us you

Dan Scavilla

taking -- really to because of that strength think of reps as time starting the saw we is in period the starting hold go-to-market strategy growth, our in sales done territories really to say is Japan we're we we way and couple think hold. business going really the about is that really a that the not with our what where controlling And and the we've have, plan the hold. consecutive I'd take years of to see is other starting We're declines. we we take saw last

Operator

Thank you. question. our One moment for next

Our go & Please Steven Lichtman comes Oppenheimer of next question ahead. from Company.

Unidentified Analyst

Congrats pandemic for force Ron putting on any of Hi, if for guys. signs deal to quarter. see because in is you the concern were force retention? guys are sales This losses, any or Wanted ask, great there sales of place the initiatives on [ph] Steve. you

Dan Scavilla

stronger in best to with thanks we with products, launch doing and a and anything support, right like No, places in way. the in hands, that get is pay level not chain be. to the feel to the that In them concerns that. and of force our one we and them have creating best look now their question. do innovation we're that, sales supply as and Globus supply seen of them approach develop Ron, for we having we have Really that

in to that. have is there concern mindful with we think be future. I what can happen Certainly, of the

so, going we're of our our main commitment and with of we aware one our going field rate we're so, remain to communicating where on engines. interact, vital what's us, how And we're growth a at sure in just them will to making they're higher that and they and

And what hands while so that making with we need this them to we as reminding through them so of certainly on waiting how we're get post they forward really driving, sure great are, just we approval. approval can the their provide and can need, get and of we're they drive the that kind

Keith Pfeil

that the to it I'd you're that's And companies going When that you are I ahead, something we development two forward, product, product only excitement bringing add together surgeon education should to thing, is drive to continue see bringing forces. think sales as well both as as and together you're innovators. look and that committed two across to comes

Unidentified Analyst

Great.

some us short the trends a you recent Just give in guys quarter. Maybe about pricing the commentary follow-up. in can US,

Keith Pfeil

that really really, I Pricing decline. really trends it's any single-digit different. low wouldn't that's say,

we've As of some those of that We've offset this erosion as done is products, launched done for the product with to bring really market. price the planned that we we about things well earlier, what remainder the about as to think Dan year. new have Globus, talked launches

Dan Scavilla

in no with for us. as just add, would we pressures I change quarters. or over past It's we've significant fairly multiple consistent that been shifts the look seen pricing

Unidentified Analyst

guys. Thanks,

Operator

Earnings Globus participating you for further no you disconnect. Call. With the you. that now concludes and Medical Thank questions Thank may

Globus Medical (GMED) 3 Aug 232023 Q2 Earnings call transcript