Globus Medical Reports First Quarter 2025 Results

AUDUBON, Pa., May 08, 2025 (GLOBE NEWSWIRE) -- Globus Medical, Inc. (NYSE: GMED), a leading musculoskeletal solutions company, today announced its financial results for the quarter ended March 31, 2025. Worldwide net sales were $598.1 million, a decrease of 1.4%, or a decrease of 0.8% on a constant currency basisGAAP net income for the quarter was $75.5 millionGAAP diluted earnings per share (“EPS”) was $0.54 and non-GAAP diluted EPS was $0.68 “Our first quarter results were impacted by softer Enabling Technology deal closures, temporary integration related supply chain disruption, and timing of international distributor orders, partially offset by strength in our core US spine business,” commented Dan Scavilla, President and Chief Executive Officer. “We are encouraged by the continued strong performance in April across these businesses and remain confident in our ability to drive above-market revenue growth as we move forward. We will continue to invest and provide innovative and clinically advanced products and solutions that help our surgeons improve patient care. We remain steadfast in our vision for the future.” “We remain focused on our strategy and continue to execute against those objectives,” commented Keith Pfeil, COO-CFO. “During the quarter, we returned to a debt-free status, as we paid off the remaining $450 million of debt assumed from the NuVasive merger. We delivered record Q1 free cash flow, while continuing to drive significant investments in machinery, equipment and sets, as we further scale internal manufacturing. Our actions taken during the quarter are geared towards driving long-term, sustainable growth.” Worldwide net sales for the first quarter of 2025 were $598.1 million, an as-reported decrease of 1.4% over the first quarter of 2024. U.S. net sales for the first quarter of 2025 increased by 0.2% compared to the first quarter of 2024. International net sales decreased by 7.7% over the first quarter of 2024 on an as-reported basis and decreased by 4.6% on a constant currency basis. The decrease in Net Sales was due primarily to fewer enabling technology unit sales. GAAP net income for the first quarter of 2025 was $75.5 million, an increase over the same period in the prior year. Diluted EPS for the first quarter was $0.54, compared to a loss of $0.05 for the first quarter of 2024. The GAAP net income increase was primarily driven by a decrease in amortization costs of purchase accounting related fair-value step-ups and restructuring costs in the current period as compared to the prior period. Non-GAAP diluted EPS for the first quarter of 2025, which excludes, among other costs, acquisition and restructuring-related costs, was $0.68, compared to $0.63 in the first quarter of 2024, an increase of 8.5%. Net cash provided by operating activities was $177.3 million, and non-GAAP free cash flow was $141.2 million for the first quarter of 2025. Retrospectively, as of January 1, 2024, we no longer include acquisition of in-process research and development costs as an adjustment to non-GAAP Adjusted EBITDA or non-GAAP net income. 2025 Annual Guidance The Company reaffirms its guidance for full-year 2025 revenue to be in the range of $2.80 to $2.90 billion and updated its guidance for non-GAAP fully diluted earnings per share to be in the range of $3.00 to $3.30, which is a decrease from the prior non-GAAP fully diluted earnings per share guidance of $3.10 to $3.40. Conference Call Information Globus Medical will hold a teleconference to discuss its first quarter 2025 results with the investment community at 4:30 p.m. Eastern Time today. Participants may access the conference call live via webcast on the Investors page of Globus Medical’s website at http://www.investors.globusmedical.com/news-events/events-webcasts. To participate via telephone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. The audio archive will be available after the call on the Investor page of the Globus Medical website. About Globus Medical, Inc. Based in Audubon, Pennsylvania, Globus Medical, Inc. was founded in 2003 by an experienced team of professionals with a shared vision to create products that enable surgeons to promote healing in patients with musculoskeletal disorders. Additional information can be accessed at www.globusmedical.com. Non-GAAP Financial Measures To supplement our financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), management uses certain non-GAAP financial measures. For example, non-GAAP Adjusted EBITDA, which represents net income before interest income, net and other non-operating expenses, provision for income taxes, depreciation and amortization, stock-based compensation expense, provision for litigation, merger and acquisition related costs, restructuring related costs, certain foreign currency acquisition-related impacts, and gains and losses from strategic investments, is useful as an additional measure of operating performance, and particularly as a measure of comparative operating performance from period to period, as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our capital structure, asset base, income taxes and interest income and expense. We no longer include acquisition of in-process research and development as an adjustment to non-GAAP Adjusted EBITDA. Our management also uses non-GAAP Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. Provision for litigation represents costs incurred for litigation settlements or unfavorable verdicts when the loss is known or considered probable and the amount can be reasonably estimated, or in the case of a favorable settlement, when income is realized. Merger and acquisition related costs represents the change in fair value of business-acquisition-related contingent consideration; costs related to integrating recently acquired businesses, including but not limited to costs to exit or convert contractual obligations, severance, retention bonus, duplicative costs and information system conversion; and specific costs related to the consummation of the acquisition process such as banker fees, legal fees, and other acquisition related professional fees. Restructuring related costs include severance, retention bonus, accelerated stock-based compensation expense, legal and tax fees for legal entity reorganization and costs associated with consolidating facilities. We also adjusted for certain foreign currency impacts related to the acquisition costs and gains/losses on strategic investments within other assets as we believe these impacts are not a measure of our operating performance. In addition, for the period ended March 31, 2025 and for other comparative periods, we are presenting non-GAAP net income and non-GAAP Diluted Earnings Per Share, which represent net income and diluted earnings per share excluding the provision for litigation, amortization of intangibles, merger and acquisition related costs, restructuring related costs, certain foreign currency impacts, gains and losses from strategic investments, the impact of dilution attributable to the Convertible Notes, and the tax effects of all of the foregoing adjustments. We no longer include acquisition of in-process research and development as an adjustment to non-GAAP net income. We also present Non-GAAP gross profit, which excludes the impacts of any inventory acquisition-related costs within cost of goods sold. The tax effect adjustment represents the tax effect of the pre-tax non-GAAP adjustments excluded from non-GAAP net income. The tax impact of the non-GAAP adjustments is calculated based on the consolidated effective tax rate on a GAAP basis, applied to the non-GAAP adjustments, unless the underlying item has a materially different tax treatment, in which case the estimated tax rate applicable to the adjustment is used. We believe these non-GAAP measures are also useful indicators of our operating performance, and particularly as additional measures of comparative operating performance from period to period as they remove the effects of the foregoing items, which we believe are not reflective of underlying business trends. Additionally, for the period ended March 31, 2025 and for other comparative periods, we also define the non-GAAP measure of free cash flow as the net cash provided by operating activities, adjusted for the impact of restricted cash, less the cash impact of purchases of property and equipment. We believe that this financial measure provides meaningful information for evaluating our overall financial performance for comparative periods as it facilitates an assessment of funds available to satisfy current and future obligations and fund acquisitions. Furthermore, the non-GAAP measure of constant currency net sales growth is calculated by translating current year net sales at the same average exchange rates in effect during the applicable prior year period. We believe constant currency net sales growth provides insight to the comparative increase or decrease in period net sales, in dollar and percentage terms, excluding the effects of fluctuations in foreign currency exchange rates. Non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit, free cash flow and constant currency net sales growth are not calculated in conformity with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP. These measures do not include certain expenses that may be necessary to evaluate our liquidity or operating results. Our definitions of non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit, free cash flow and constant currency net sales growth may differ from that of other companies and therefore may not be comparable. Safe Harbor Statements All statements included in this press release other than statements of historical fact are forward-looking statements and may be identified by their use of words such as “believe,” “may,” “might,” “could,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and other similar terms. These forward-looking statements are based on our current assumptions, expectations and estimates of future events and trends. Forward-looking statements are only predictions and are subject to many risks, uncertainties and other factors that may affect our businesses and operations and could cause actual results to differ materially from those predicted. These risks and uncertainties include, but are not limited to, the risks and costs associated with the health epidemics, pandemics and similar outbreaks, factors affecting our quarterly results, our ability to manage our growth, our ability to sustain our profitability, demand for our products, our ability to compete successfully (including without limitation our ability to convince surgeons to use our products and our ability to attract and retain sales and other personnel), our ability to rapidly develop and introduce new products, our ability to develop and execute on successful business strategies, our ability to comply with laws and regulations that are or may become applicable to our businesses, our ability to safeguard our intellectual property, our success in defending legal proceedings brought against us, trends in the medical device industry, general economic conditions, and other risks. For a discussion of these and other risks, uncertainties and other factors that could affect our results, you should refer to the disclosure contained in our most recent annual report on Form 10-K filed with the U.S. Securities and Exchange Commission, including the sections labeled “Risk Factors” and “Cautionary Note Concerning Forward-Looking Statements,” and in our Forms 10-Q, Forms 8-K and other filings with the U.S. Securities and Exchange Commission. These documents are available at www.sec.gov. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements contained in this press release speak only as of the date of this press release. We undertake no obligation to update any forward-looking statements as a result of new information, events or circumstances or other factors arising or coming to our attention after the date hereof. GLOBUS MEDICAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(unaudited) Three Months Ended March 31,(In thousands, except per share amounts) 2025 2024Net sales $ 598,121 $606,666 Cost of Sales and Operating expenses: Cost of sales (exclusive of amortization of intangibles) 195,397 241,487 Research and development 33,062 57,268 Selling, general and administrative 242,799 248,679 Amortization of intangibles 28,802 29,676 Acquisition-related costs 1,057 2,418 Restructuring costs — 19,141 Operating income/(loss) 97,004 7,997 Other income/(expense), net Interest income/(expense), net 1,681 (1,894)Foreign currency transaction gain/(loss) 4,270 (15,371)Other income/(expense) 713 710 Total other income/(expense), net 6,664 (16,555)Income/(loss) before income taxes 103,668 (8,558)Income tax provision/(benefit) 28,206 (1,441)Net income/(loss) $ 75,462 $(7,117) Other comprehensive income/(loss), net of tax: Unrealized gain/(loss) on marketable securities 315 379 Foreign currency translation gain/(loss) 4,379 (1,232)Total other comprehensive income/(loss), net of tax 4,694 (853)Comprehensive income/(loss) $ 80,156 $(7,970) Earnings per share: Basic $ 0.55 $(0.05)Diluted $ 0.54 $(0.05)Weighted average shares outstanding: Basic 136,757 135,358 Diluted 139,774 135,358 GLOBUS MEDICAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(unaudited) March 31, December 31,(In thousands, except share and per share values) 2025 2024ASSETS Current assets: Cash and cash equivalents $ 461,266 $784,438 Short-term marketable securities — 105,619 Accounts receivable, net of allowances of $8,488 and $15,505, respectively 535,090 557,697 Inventories 663,603 659,233 Prepaid expenses and other current assets 47,131 49,640 Income taxes receivable 3,024 20,633 Total current assets 1,710,114 2,177,260 Property and equipment, net of accumulated depreciation of $571,728 and $545,786, respectively 556,496 561,909 Operating lease right of use assets 48,367 49,647 Long-term marketable securities — 66,134 Intangible assets, net 771,688 795,117 Goodwill 1,432,964 1,432,387 Other assets 74,856 75,096 Deferred income taxes 116,663 94,200 Total assets $ 4,711,148 $5,251,750 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 73,144 $75,118 Accrued expenses 237,566 260,591 Operating lease liabilities 10,622 10,249 Income taxes payable 12,739 10,725 Senior convertible notes — 443,351 Business acquisition liabilities 33,458 33,739 Deferred revenue 17,172 22,140 Total current liabilities 384,701 855,913 Business acquisition liabilities, net of current portion 84,597 89,496 Operating lease liabilities 81,691 83,588 Deferred income taxes and other tax liabilities 46,605 23,889 Other liabilities 25,486 21,531 Total liabilities 623,080 1,074,417 Equity: Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 112,926,345 and 114,990,219 shares at March 31, 2025 and December 31, 2024, respectively 113 115 Class B common stock; $0.001 par value. Authorized 275,000,000 shares; issued and outstanding 22,430,097 and 22,430,097 shares at March 31, 2025 and December 31, 2024, respectively 22 22 Additional paid-in capital 3,053,927 3,031,244 Accumulated other comprehensive income/(loss) (2,167) (6,861)Retained earnings 1,036,173 1,152,813 Total equity 4,088,068 4,177,333 Total liabilities and equity $ 4,711,148 $5,251,750 GLOBUS MEDICAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited) Three Months Ended March 31,(In thousands) 2025 2024Cash flows from operating activities: Net income $75,462 $(7,117)Adjustments to reconcile net income to net cash provided by operating activities: Acquired in-process research and development — 12,613 Depreciation and amortization 66,074 55,261 Amortization of premiums on marketable securities (421) 24 Provision for excess and obsolete inventory 5,960 3,914 Amortization of inventory fair value step-up 49 53,670 Amortization of 2025 Notes fair value step-up 6,658 6,658 Stock-based compensation expense 13,206 17,260 Allowance for expected credit losses 3,206 2,968 Change in fair value of business acquisition liabilities 167 (165)Change in deferred income taxes 509 (45,091)(Gain)/loss on disposal of assets, net 2,613 34 Payment of business acquisition-related liabilities (2,012) (16,115)Net (gain)/loss from foreign currency adjustment (3,772) 11,191 (Increase) decrease in: Accounts receivable 22,603 (36,393)Inventories (7,587) (8,986)Prepaid expenses and other assets 4,534 1,778 Increase (decrease) in: Accounts payable (899) (5,753)Accrued expenses and other liabilities (28,658) (33,881)Income taxes payable/receivable 19,608 40,517 Net cash provided by/(used in) operating activities 177,300 52,387 Cash flows from investing activities: Purchases of marketable securities (1,750) (8,017)Maturities of marketable securities 58,630 85 Sales of marketable securities 115,608 2,565 Purchases of property and equipment (36,103) (28,568)Acquisition of businesses, net of cash acquired and purchases of intangible and other assets — (12,649)Acquisition of intangible assets (5,000) — Net cash provided by/(used in) investing activities 131,385 (46,584)Cash flows from financing activities: Payment of business acquisition-related liabilities (3,890) (30,475)Net proceeds from exercise of stock options 11,223 3,413 Payments related to tax withholdings for share-based compensation (2,293) (5,343)Repurchase of common stock (190,451) (83,316)Repayment of senior convertible notes (449,985) — Net cash provided by/(used in) financing activities (635,396) (115,721)Effect of foreign exchange rates on cash 3,539 (3,312)Net increase/(decrease) in cash and cash equivalents (323,172) (113,230)Cash and cash equivalents at beginning of period 784,438 467,292 Cash and cash equivalents at end of period $ 461,266 $354,062 Supplemental disclosures of cash flow information: Income taxes paid, net $ 7,199 $1,967 Non-cash investing and financing activities: Accrued purchases of property and equipment $ 10,014 $5,426 Supplemental Financial Information Net Sales by Product Category: Three Months Ended March 31,(In thousands) 2025 2024Musculoskeletal Solutions $575,932 $574,697 Enabling Technologies 22,189 31,969 Total net sales $598,121 $606,666 Liquidity and Capital Resources: March 31, December 31,(In thousands) 2025 2024Cash and cash equivalents $461,266 $784,438 Short-term marketable securities — 105,619 Long-term marketable securities — 66,134 Total cash, cash equivalents and marketable securities $461,266 $956,191 The following tables reconcile GAAP to Non-GAAP financial measures. As of September 30, 2024, we no longer include Acquisition of in-process research and development as an adjustment to the non-GAAP financial measures. As previously disclosed, the Company incurred $12.6 million in the three months ended March 31, 2024 for the Acquisition of in-process research and development, which, when it was previously included, resulted in a 2.1% impact on Adjusted EBITDA as a percentage of net sales and $0.09 on Non-GAAP diluted earnings per share. Non-GAAP Adjusted EBITDA Reconciliation Table: Three Months Ended March 31,(In thousands, except percentages) 2025 2024Net income/(loss) $75,462 $(7,117)Interest (income)/expense, net (1,681) 1,894 Provision for income taxes 28,206 (1,441)Depreciation and amortization 66,074 55,261 EBITDA 168,061 48,597 Stock-based compensation expense 13,052 12,439 Provision for litigation, net (1,287) (31)Merger and acquisition-related costs (1) 1,106 56,387 Net (gain) loss from strategic investments (61) 223 Non-cash acquisition-related foreign currency impacts (3,772) 11,191 Restructuring costs 734 25,162 Adjusted EBITDA $177,833 $153,968 Net income/(loss) as a percentage of net sales 12.6% (1.2%)Adjusted EBITDA as a percentage of net sales 29.7% 25.4%(1) Merger and acquisition-related costs represent certain costs associated with acquisitions. These costs, presented on a before-tax effect basis, are included in Non-GAAP Merger and Acquisition-related Costs table. Non-GAAP Merger and Acquisition-related Costs Table: Three Months Ended March 31, 2025 2024(In thousands) Amortization of inventory fair value step up $49 $53,670 Change in fair value of business acquisition liabilities 167 (158)Employee-related costs — 1,457 Other acquisition-related costs (a) 890 1,418 Merger and acquisition-related costs $1,106 $56,387 (a) Primarily comprised of legal fees, investment banking and consulting fees. Non-GAAP Net Income Reconciliation Table: Three Months Ended March 31,(In thousands) 2025 2024Net income/(loss) $75,462 $(7,117)Provision for litigation, net (1,287) (31)Amortization of intangibles 28,802 29,676 Merger and acquisition -related costs (1) 1,106 56,387 Non-cash acquisition-related foreign currency impacts (3,772) 11,191 Restructuring Costs 734 25,162 Net gain/(loss) on strategic investments (61) 223 Tax effect of adjusting items (6,156) (30,006)Non-GAAP net income/(loss) $94,828 $85,485 (1) see footnote 1 to the Non-GAAP Adjusted EBITDA Reconciliation Table above for the detail of these costs. Non-GAAP Gross Profit Reconciliation Table: Three Months Ended March 31,(In thousands) 2025 2024Net Sales $598,121 $606,666 Cost of Sales (exclusive of amortization of intangibles) 195,397 241,487 Amortization of Intangibles 22,208 29,676 Gross Profit $380,516 $335,503 Amortization of inventory fair value step up 49 53,670 Amortization of Intangibles 22,208 29,676 Adjusted Gross Profit $402,773 $418,849 Gross Profit % of Net Sales 63.6% 55.3%Adjusted Gross Profit % of Net Sales 67.3% 69.0% Non-GAAP Diluted Earnings Per Share Reconciliation Table: Three Months Ended March 31,(In thousands) 2025 2024Diluted earnings per share, as reported $ 0.54 $ (0.05)Provision for litigation, net (0.01) — Amortization of intangibles 0.21 0.22 Merger and acquisition -related costs (1) 0.01 0.41 Non-cash acquisition-related foreign currency impacts (0.03) 0.08 Restructuring costs 0.01 0.18 Tax effect of adjusting items (0.04) (0.22)Non-GAAP diluted earnings per share $ 0.68 $ 0.63 (1) see footnote 1 to the Non-GAAP Adjusted EBITDA Reconciliation Table above for the detail of these costs.* amounts may not add due to rounding. Non-GAAP Free Cash Flow Reconciliation Table: Three Months Ended March 31,(In thousands) 2025 2024Net cash provided by operating activities $177,300 $52,387 Purchases of property and equipment (36,103) (28,568)Free cash flow $141,197 $23,819 Non-GAAP Net Sales on a Constant Currency Basis Comparative Table: Three Months Ended Reported Currency Impact on Constant Currency March 31, Net Sales Current Net Sales(In thousands, except percentages) 2025 2024 Growth Period Net Sales GrowthUnited States $483,857 $482,927 0.2% $— 0.2%International 114,264 123,739 (7.7%) (3,799) (4.6%)Total net sales $598,121 $606,666 (1.4%) $(3,799) (0.8%) Investor contact:Brian KearnsSenior Vice President, Business Development and Investor RelationsPhone: (610) 930-1800Email: investors@globusmedical.comwww.globusmedical.com Media contact:Moran Chavezmedia@globusmedical.com

Globus Medical Reports First Quarter 2025 Results

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