Globus Medical, Inc. (NYSE: GMED), a leading musculoskeletal
technology company, today announced its financial results for the
fourth quarter and year ended December 31, 2023.
Fourth Quarter 2023:
- Worldwide net sales were $616.5
million, an increase of 124.6%, or 123.8% on a constant currency
basis
- GAAP net income for the quarter was
$15.0 million
- GAAP diluted earnings per share
(“EPS”) was $0.11 and non-GAAP diluted EPS was $0.60
- Non-GAAP adjusted EBITDA was $170.0
million, or 27.6% of net sales
Full Year 2023:
- Worldwide net sales were $1,568.5
million, an increase of 53.3% on an actual and constant currency
basis
- GAAP net income for the year was
$122.9 million
- GAAP diluted EPS was $1.07 and
non-GAAP diluted EPS was $2.32
- Non-GAAP adjusted EBITDA was $464.1
million, or 29.6% of net sales
“I am pleased to report on the remarkable
progress we’ve made at Globus Medical. Our merger with NuVasive has
been a transformative milestone, where we pursue a vision of
providing the best innovative technology and most dedicated level
of customer service for our surgeons and their patients,” said Dan
Scavilla, president and CEO. “The integration is progressing
according to plan, underscoring our commitment to a seamless
transition and operational efficiency. Looking ahead to 2024, the
pipeline of product launches, especially in enabling technologies,
aligns with our philosophy of anticipating and meeting evolving
customer needs. We recognize the importance of staying ahead of the
curve, a principle that guides our approach to innovation and
client service. I believe the potential for Globus has never been
greater, as we continue to redefine spine surgery with procedural
solutions built around enabling technology.”
“Worldwide sales set a record for both fourth
quarter and full year 2023, as we completed the merger with
NuVasive on September 1, 2023,” said Keith Pfeil, COO-CFO.
“Excluding the impacts of the NuVasive merger, legacy Globus fourth
quarter revenue was $304.1 million, an increase of 10.8 percent
over the prior year fourth quarter, and full year revenue was
$1.154 billion, or 12.8 percent higher than the prior year. We
remain focused on merger integration activities as they continue to
proceed according to plan and we look forward to achieving
milestones as we work to get back to a steady state of running the
business. We remain well positioned to deliver on our commitments
for the coming year.”
Worldwide net sales for the fourth quarter
were $616.5 million, an
as-reported increase of 124.6% over the fourth
quarter of 2023, and an increase of 123.8% on a constant currency
basis. U.S. net sales for the fourth quarter of 2023 increased
by 111.1% compared to the fourth quarter of 2022.
International net sales increased by 200.9% over the
fourth quarter of 2023 on an as-reported basis, and an increase of
200.8% on a constant currency basis. Net Sales increases were
driven by the addition of NuVasive, as well as increased volume of
spine product sales and enabling technology volume.
Worldwide net sales for the full year of 2023
were $1,568.5 million, an increase of 53.3% as compared to the full
year of 2022 on an actual and constant currency basis. U.S. net
sales for the full year of 2023 increased by 46.8 % compared to the
full year of 2022. International net sales increased by 91.3% over
the full year of 2023 on an as-reported basis, and an increase of
92.3% on a constant currency basis.
GAAP net income for the fourth quarter
was $15.0 million, a decrease of 70.0% over the same
period in the prior year, driven primarily by the addition of
NuVasive results and acquisition related costs incurred in the
quarter since the closing date. Diluted EPS for the fourth quarter
was $0.11, compared to $0.49 for the fourth quarter
of 2022. Non-GAAP net income for the fourth quarter was $83.5
million, an increase of 38.9% over the same period in the prior
year, driven primarily by contributions from the NuVasive merger.
Non-GAAP diluted EPS for the fourth quarter of 2023 was $0.60,
compared to $0.59 in the fourth quarter of 2022, an
increase of 2.1% driven by higher Non-GAAP net income, partially
offset by a higher diluted share count as a result of the
stock-for-stock merger with NuVasive.
Net cash provided by operating activities
was $258.9 million, and non-GAAP free cash flow
was $178.9 million for the full year of 2023.
2024 Annual
Guidance
The Company reaffirms its full year 2024 revenue guidance range
of $2.450 billion to $2.475 billion and fully diluted non-GAAP
earnings per share range between $2.68 to $2.70.
Conference Call Information
Globus Medical will hold a teleconference to
discuss its 2023 fourth quarter and full year 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
https://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,
acquisition related costs/licensing and acquisition of in-process
research and development, merger and acquisition related
costs/licensing, 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. Our management also uses
non-GAAP Adjusted EBITDA for planning purposes, including the
preparation of our annual operating budget and financial
projections. Provision for litigation represents costs incurred for
litigation settlements or unfavorable verdicts when the loss is
known or considered probable and the amount can be reasonably
estimated, or in the case of a favorable settlement, when income is
realized. Acquisition related costs/licensing represents the change
in fair value of business-acquisition-related contingent
consideration; costs related to integrating recently acquired
businesses, including but not limited to costs to exit or convert
contractual obligations, severance, 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, as
well as one-time licensing fees. Acquisition of in-process research
and development represents the expensing of acquired assets with no
alternative future use and related fees. 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 December 31,
2023 and for other comparative periods, we are presenting non-GAAP
net income and non-GAAP Diluted Earnings Per Share, which represent
net income and diluted earnings per share excluding the provision
for litigation, amortization of intangibles, acquisition related
costs/licensing, acquisition of in-process research and
development, merger and acquisition related costs/licensing,
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
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 December 31,
2023 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 integration of the NuVasive business and Globus
Medical, Inc.’s ability to successfully integrate and achieve
anticipated synergies with the NuVasive business, 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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(unaudited) |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
(In thousands, except
per share amounts) |
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
Net sales |
$ |
616,534 |
|
|
$ |
274,498 |
|
$ |
250,021 |
|
|
$ |
1,568,476 |
|
|
$ |
1,022,843 |
|
|
$ |
958,102 |
|
Cost of sales |
|
265,486 |
|
|
|
70,591 |
|
|
61,796 |
|
|
|
548,174 |
|
|
|
263,725 |
|
|
|
239,223 |
|
Gross profit |
|
351,048 |
|
|
|
203,907 |
|
|
188,225 |
|
|
|
1,020,302 |
|
|
|
759,118 |
|
|
|
718,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
52,253 |
|
|
|
19,507 |
|
|
51,022 |
|
|
|
124,010 |
|
|
|
73,015 |
|
|
|
97,346 |
|
Selling, general and administrative |
|
244,718 |
|
|
|
118,075 |
|
|
106,560 |
|
|
|
643,410 |
|
|
|
432,117 |
|
|
|
408,149 |
|
Provision for litigation, net |
|
250 |
|
|
|
— |
|
|
5,410 |
|
|
|
434 |
|
|
|
2,341 |
|
|
|
5,921 |
|
Amortization of intangibles |
|
28,122 |
|
|
|
4,506 |
|
|
4,556 |
|
|
|
51,032 |
|
|
|
17,735 |
|
|
|
18,526 |
|
Acquisition-related costs |
|
15,581 |
|
|
|
7,791 |
|
|
2,477 |
|
|
|
68,274 |
|
|
|
5,959 |
|
|
|
16,984 |
|
Total operating expenses |
|
340,924 |
|
|
|
149,879 |
|
|
170,025 |
|
|
|
887,160 |
|
|
|
531,167 |
|
|
|
546,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income/(loss) |
|
10,124 |
|
|
|
54,028 |
|
|
18,200 |
|
|
|
133,142 |
|
|
|
227,951 |
|
|
|
171,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income/(expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income/(expense), net |
|
(2,581 |
) |
|
|
5,315 |
|
|
1,939 |
|
|
|
20,130 |
|
|
|
14,233 |
|
|
|
9,297 |
|
Foreign currency transaction gain/(loss) |
|
19,908 |
|
|
|
2,688 |
|
|
(454 |
) |
|
|
14,259 |
|
|
|
(1,020 |
) |
|
|
(1,423 |
) |
Other income/(expense) |
|
(2,456 |
) |
|
|
85 |
|
|
143 |
|
|
|
(2,138 |
) |
|
|
1,855 |
|
|
|
580 |
|
Total other income/(expense), net |
|
14,871 |
|
|
|
8,088 |
|
|
1,628 |
|
|
|
32,251 |
|
|
|
15,068 |
|
|
|
8,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) before income taxes |
|
24,995 |
|
|
|
62,116 |
|
|
19,828 |
|
|
|
165,393 |
|
|
|
243,019 |
|
|
|
180,407 |
|
Income tax provision |
|
9,960 |
|
|
|
12,051 |
|
|
4,722 |
|
|
|
42,520 |
|
|
|
52,850 |
|
|
|
31,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income/(loss) |
$ |
15,035 |
|
|
$ |
50,065 |
|
$ |
15,106 |
|
|
$ |
122,873 |
|
|
$ |
190,169 |
|
|
$ |
149,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income/(loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain/(loss) on marketable securities |
|
8,893 |
|
|
|
4,199 |
|
|
(2,623 |
) |
|
|
13,231 |
|
|
|
(14,040 |
) |
|
|
(6,054 |
) |
Foreign currency translation gain/(loss) |
|
(18 |
) |
|
|
3,397 |
|
|
(1,095 |
) |
|
|
1,207 |
|
|
|
(3,818 |
) |
|
|
(4,673 |
) |
Total other comprehensive
income/(loss), net of tax |
|
8,875 |
|
|
|
7,596 |
|
|
(3,718 |
) |
|
|
14,438 |
|
|
|
(17,858 |
) |
|
|
(10,727 |
) |
Comprehensive
income/(loss) |
$ |
23,910 |
|
|
$ |
57,661 |
|
$ |
11,388 |
|
|
$ |
137,311 |
|
|
$ |
172,311 |
|
|
$ |
138,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.11 |
|
|
$ |
0.50 |
|
$ |
0.15 |
|
|
$ |
1.09 |
|
|
$ |
1.89 |
|
|
$ |
1.48 |
|
Diluted |
$ |
0.11 |
|
|
$ |
0.49 |
|
$ |
0.14 |
|
|
$ |
1.07 |
|
|
$ |
1.85 |
|
|
$ |
1.44 |
|
Weighted average
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
137,883 |
|
|
|
99,967 |
|
|
101,495 |
|
|
|
113,087 |
|
|
|
100,469 |
|
|
|
100,734 |
|
Diluted |
|
139,021 |
|
|
|
102,209 |
|
|
104,192 |
|
|
|
114,630 |
|
|
|
102,643 |
|
|
|
103,623 |
|
|
GLOBUS MEDICAL, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(unaudited) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
(In thousands, except
share and per share values) |
|
2023 |
|
2022 |
ASSETS |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
467,292 |
|
|
$ |
150,466 |
|
Short-term marketable
securities |
|
|
50,497 |
|
|
|
295,592 |
|
Accounts receivable, net of
allowances of $8,934 and $4,724, respectively |
|
|
503,235 |
|
|
|
213,247 |
|
Inventories |
|
|
848,135 |
|
|
|
298,981 |
|
Prepaid expenses and other
current assets |
|
|
44,580 |
|
|
|
20,997 |
|
Income taxes receivable |
|
|
1,635 |
|
|
|
4,061 |
|
Total current assets |
|
|
1,915,374 |
|
|
|
983,344 |
|
Property and equipment, net of
accumulated depreciation of $425,695 and $343,036,
respectively |
|
|
586,932 |
|
|
|
243,729 |
|
Operating lease right of use
assets |
|
|
59,931 |
|
|
|
5,988 |
|
Long-term marketable
securities |
|
|
75,428 |
|
|
|
495,852 |
|
Intangible assets, net |
|
|
924,603 |
|
|
|
63,574 |
|
Goodwill |
|
|
1,434,540 |
|
|
|
197,471 |
|
Other assets |
|
|
78,590 |
|
|
|
37,323 |
|
Deferred income taxes |
|
|
10,685 |
|
|
|
48,845 |
|
Total assets |
|
$ |
5,086,083 |
|
|
$ |
2,076,126 |
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
56,671 |
|
|
$ |
36,101 |
|
Accrued expenses |
|
|
240,460 |
|
|
|
92,169 |
|
Operating lease
liabilities |
|
|
11,967 |
|
|
|
2,536 |
|
Income taxes payable |
|
|
3,845 |
|
|
|
990 |
|
Business acquisition
liabilities |
|
|
61,035 |
|
|
|
13,308 |
|
Deferred revenue |
|
|
18,369 |
|
|
|
14,100 |
|
Total current liabilities |
|
|
392,347 |
|
|
|
159,204 |
|
Business acquisition
liabilities, net of current portion |
|
|
78,323 |
|
|
|
54,950 |
|
Operating lease
liabilities |
|
|
91,037 |
|
|
|
3,475 |
|
Senior convertible notes |
|
|
417,400 |
|
|
|
— |
|
Deferred income taxes and
other tax liabilities |
|
|
84,421 |
|
|
|
1,779 |
|
Other liabilities |
|
|
24,596 |
|
|
|
10,345 |
|
Total liabilities |
|
|
1,088,124 |
|
|
|
229,753 |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Class A common stock; $0.001
par value. Authorized 500,000,000 shares; issued and outstanding
113,905,565 and 77,762,282 shares at December 31, 2023 and
December 31, 2022, respectively |
|
|
114 |
|
|
|
78 |
|
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 December 31, 2023 and
December 31, 2022, respectively |
|
|
22 |
|
|
|
22 |
|
Additional paid-in
capital |
|
|
2,870,749 |
|
|
|
630,952 |
|
Accumulated other
comprehensive income/(loss) |
|
|
(10,192 |
) |
|
|
(24,630 |
) |
Retained earnings |
|
|
1,137,266 |
|
|
|
1,239,951 |
|
Total equity |
|
|
3,997,959 |
|
|
|
1,846,373 |
|
Total liabilities and equity |
|
$ |
5,086,083 |
|
|
$ |
2,076,126 |
|
|
GLOBUS MEDICAL, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
December 31, |
(In
thousands) |
|
2023 |
|
2022 |
|
2021 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
122,873 |
|
|
$ |
190,169 |
|
|
$ |
149,191 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Acquired in-process research and development |
|
|
— |
|
|
|
150 |
|
|
|
34,312 |
|
Depreciation and amortization |
|
|
144,733 |
|
|
|
68,252 |
|
|
|
69,867 |
|
Amortization of premiums on marketable securities |
|
|
793 |
|
|
|
5,389 |
|
|
|
2,781 |
|
Provision for excess and obsolete inventory |
|
|
10,959 |
|
|
|
6,400 |
|
|
|
6,143 |
|
Amortization of inventory fair value step up |
|
|
71,656 |
|
|
|
— |
|
|
|
— |
|
Amortization of 2025 Note fair value step up |
|
|
8,176 |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation expense |
|
|
52,742 |
|
|
|
32,810 |
|
|
|
30,586 |
|
Allowance for doubtful accounts |
|
|
3,658 |
|
|
|
(1 |
) |
|
|
1,200 |
|
Change in fair value of business acquisition liabilities |
|
|
17,434 |
|
|
|
5,132 |
|
|
|
16,807 |
|
Change in deferred income taxes |
|
|
(57,789 |
) |
|
|
(22,223 |
) |
|
|
(17,615 |
) |
(Gain)/loss on disposal of assets, net |
|
|
1,541 |
|
|
|
299 |
|
|
|
464 |
|
Payment of business acquisition related liabilities |
|
|
(3,005 |
) |
|
|
(2,647 |
) |
|
|
(210 |
) |
Net (gain)/loss from foreign currency adjustment |
|
|
(13,674 |
) |
|
|
— |
|
|
|
— |
|
(Increase) decrease in: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(49,914 |
) |
|
|
(50,843 |
) |
|
|
(25,895 |
) |
Inventories |
|
|
(70,328 |
) |
|
|
(61,745 |
) |
|
|
(11,971 |
) |
Prepaid expenses and other assets |
|
|
1,148 |
|
|
|
(10,292 |
) |
|
|
(6,178 |
) |
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
(14,223 |
) |
|
|
14,418 |
|
|
|
3,684 |
|
Accrued expenses and other liabilities |
|
|
17,127 |
|
|
|
6,087 |
|
|
|
17,896 |
|
Income taxes payable/receivable |
|
|
(408 |
) |
|
|
(2,887 |
) |
|
|
5,212 |
|
Net cash provided
by/(used in) operating activities |
|
|
243,499 |
|
|
|
178,468 |
|
|
|
276,274 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
Purchases of marketable securities |
|
|
(100,643 |
) |
|
|
(419,534 |
) |
|
|
(622,359 |
) |
Maturities of marketable securities |
|
|
240,190 |
|
|
|
312,221 |
|
|
|
227,908 |
|
Sales of marketable securities |
|
|
537,723 |
|
|
|
102,433 |
|
|
|
109,898 |
|
Purchases of property and equipment |
|
|
(78,274 |
) |
|
|
(74,047 |
) |
|
|
(56,898 |
) |
Acquisition of businesses, net of cash acquired and purchases of
intangible and other assets |
|
|
(296,028 |
) |
|
|
(31,435 |
) |
|
|
(34,488 |
) |
Net cash provided
by/(used in) investing activities |
|
|
302,968 |
|
|
|
(110,362 |
) |
|
|
(375,939 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
Payment of business acquisition-related liabilities |
|
|
(8,039 |
) |
|
|
(7,185 |
) |
|
|
(9,349 |
) |
Net proceeds from exercise of stock options |
|
|
12,397 |
|
|
|
41,716 |
|
|
|
63,496 |
|
Payments related to tax withholdings for share-based
compensation |
|
|
(10,617 |
) |
|
|
— |
|
|
|
— |
|
Repurchase of common stock |
|
|
(225,562 |
) |
|
|
(144,493 |
) |
|
|
— |
|
Net cash provided
by/(used in) financing activities |
|
|
(231,821 |
) |
|
|
(109,962 |
) |
|
|
54,147 |
|
Effect of foreign exchange
rates on cash |
|
|
2,180 |
|
|
|
(747 |
) |
|
|
(810 |
) |
Net
increase/(decrease) in cash and cash equivalents |
|
|
316,826 |
|
|
|
(42,603 |
) |
|
|
(46,328 |
) |
Cash and cash equivalents at
beginning of period |
|
|
150,466 |
|
|
|
193,069 |
|
|
|
239,397 |
|
Cash and cash
equivalents at end of period |
|
$ |
467,292 |
|
|
$ |
150,466 |
|
|
$ |
193,069 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
Income taxes paid, net |
|
$ |
100,593 |
|
|
$ |
77,823 |
|
|
$ |
45,027 |
|
Non-cash investing and
financing activities: |
|
|
|
|
|
|
|
|
|
Equity issued in conjunction with the NuVasive merger |
|
$ |
2,153,883 |
|
|
$ |
— |
|
|
|
— |
|
Accrued purchases of property and equipment |
|
$ |
7,100 |
|
|
$ |
7,423 |
|
|
$ |
4,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Financial InformationNet
Sales by Product Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
(In
thousands) |
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
Musculoskeletal Solutions |
|
$ |
583,820 |
|
$ |
244,999 |
|
$ |
224,624 |
|
$ |
1,448,260 |
|
$ |
926,703 |
|
$ |
876,780 |
Enabling Technologies |
|
|
32,714 |
|
|
29,499 |
|
|
25,397 |
|
|
120,216 |
|
|
96,140 |
|
|
81,322 |
Total net sales |
|
$ |
616,534 |
|
$ |
274,498 |
|
$ |
250,021 |
|
$ |
1,568,476 |
|
$ |
1,022,843 |
|
$ |
958,102 |
Liquidity and Capital Resources: |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
(In
thousands) |
|
2023 |
|
2022 |
Cash and cash equivalents |
|
$ |
467,292 |
|
$ |
150,466 |
Short-term marketable
securities |
|
|
50,497 |
|
|
295,592 |
Long-term marketable
securities |
|
|
75,428 |
|
|
495,852 |
Total cash, cash equivalents
and marketable securities |
|
$ |
593,217 |
|
$ |
941,910 |
|
|
|
|
|
|
|
The following tables reconcile GAAP to Non-GAAP
financial measures.
Non-GAAP Adjusted EBITDA Reconciliation
Table: |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
(In thousands, except
percentages) |
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
Net income/(loss) |
$ |
15,034 |
|
|
$ |
50,065 |
|
|
$ |
15,106 |
|
|
$ |
122,873 |
|
|
$ |
190,169 |
|
|
$ |
149,191 |
|
Interest (income)/expense,
net |
|
2,581 |
|
|
|
(5,315 |
) |
|
|
(1,939 |
) |
|
|
(20,130 |
) |
|
|
(14,233 |
) |
|
|
(9,297 |
) |
Provision for income
taxes |
|
9,960 |
|
|
|
12,051 |
|
|
|
4,722 |
|
|
|
42,520 |
|
|
|
52,850 |
|
|
|
31,216 |
|
Depreciation and
amortization |
|
71,162 |
|
|
|
16,911 |
|
|
|
16,829 |
|
|
|
144,733 |
|
|
|
68,252 |
|
|
|
69,867 |
|
EBITDA |
|
98,737 |
|
|
|
73,712 |
|
|
|
34,718 |
|
|
|
289,996 |
|
|
|
297,038 |
|
|
|
240,977 |
|
Stock-based compensation
expense |
|
11,577 |
|
|
|
8,507 |
|
|
|
7,805 |
|
|
|
38,995 |
|
|
|
32,810 |
|
|
|
30,586 |
|
Provision for litigation,
net |
|
250 |
|
|
|
— |
|
|
|
5,410 |
|
|
|
434 |
|
|
|
2,341 |
|
|
|
5,921 |
|
Acquisition-related
costs/licensing |
|
76,431 |
|
|
|
7,791 |
|
|
|
2,934 |
|
|
|
148,498 |
|
|
|
6,854 |
|
|
|
19,622 |
|
Acquisition of in-process
research and development |
|
— |
|
|
|
150 |
|
|
|
34,312 |
|
|
|
— |
|
|
|
150 |
|
|
|
34,312 |
|
Net (gain) loss from strategic
investments |
|
(460 |
) |
|
|
— |
|
|
|
— |
|
|
|
(192 |
) |
|
|
— |
|
|
|
— |
|
Non-cash acquisition-related
foreign currency impacts |
|
(16,572 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13,674 |
) |
|
|
— |
|
|
|
— |
|
Adjusted EBITDA |
$ |
169,963 |
|
|
$ |
90,160 |
|
|
$ |
85,179 |
|
|
$ |
464,057 |
|
|
$ |
339,193 |
|
|
$ |
331,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) as a
percentage of net sales |
|
2.4 |
% |
|
|
18.2 |
% |
|
|
6.0 |
% |
|
|
7.8 |
% |
|
|
18.6 |
% |
|
|
15.6 |
% |
Adjusted EBITDA as a
percentage of net sales |
|
27.6 |
% |
|
|
32.8 |
% |
|
|
34.1 |
% |
|
|
29.6 |
% |
|
|
33.2 |
% |
|
|
34.6 |
% |
Non-GAAP Net Income Reconciliation Table: |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
(In
thousands) |
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
Net income/(loss) |
$ |
15,034 |
|
|
$ |
50,065 |
|
|
$ |
15,106 |
|
|
$ |
122,873 |
|
|
$ |
190,169 |
|
|
$ |
149,191 |
|
Provision for litigation,
net |
|
250 |
|
|
|
— |
|
|
|
5,410 |
|
|
|
434 |
|
|
|
2,341 |
|
|
|
5,921 |
|
Amortization of
intangibles |
|
28,123 |
|
|
|
4,506 |
|
|
|
4,556 |
|
|
|
51,032 |
|
|
|
17,735 |
|
|
|
18,526 |
|
Acquisition-related
costs/licensing |
|
76,431 |
|
|
|
7,791 |
|
|
|
2,934 |
|
|
|
148,498 |
|
|
|
6,854 |
|
|
|
19,622 |
|
Acquisition of in-process
research and development |
|
— |
|
|
|
150 |
|
|
|
34,312 |
|
|
|
— |
|
|
|
150 |
|
|
|
34,312 |
|
Non-cash acquisition-related
foreign currency impacts |
|
(16,572 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13,674 |
) |
|
|
— |
|
|
|
— |
|
Net gain/(loss) on strategic
investments |
|
(460 |
) |
|
|
— |
|
|
|
— |
|
|
|
(192 |
) |
|
|
— |
|
|
|
— |
|
Tax effect of adjusting
items |
|
(19,310 |
) |
|
|
(2,415 |
) |
|
|
(11,245 |
) |
|
|
(42,570 |
) |
|
|
(5,695 |
) |
|
|
(16,151 |
) |
Non-GAAP net
income/(loss) |
$ |
83,496 |
|
|
$ |
60,097 |
|
|
$ |
51,073 |
|
|
$ |
266,401 |
|
|
$ |
211,554 |
|
|
$ |
211,421 |
|
Non-GAAP Gross Profit Reconciliation Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
(In
thousands) |
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
Cost of sales |
$ |
265,486 |
|
|
$ |
70,591 |
|
|
$ |
61,796 |
|
|
$ |
548,174 |
|
|
$ |
263,725 |
|
|
$ |
239,223 |
|
Acquisition related
costs/licensing |
|
(52,591 |
) |
|
|
— |
|
|
|
— |
|
|
|
(71,656 |
) |
|
|
— |
|
|
|
— |
|
Adjusted cost of sales |
$ |
212,895 |
|
|
$ |
70,591 |
|
|
$ |
61,796 |
|
|
$ |
476,518 |
|
|
$ |
263,725 |
|
|
$ |
239,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit |
$ |
403,638 |
|
|
$ |
203,907 |
|
|
$ |
188,225 |
|
|
$ |
1,091,958 |
|
|
$ |
759,118 |
|
|
$ |
718,879 |
|
Adjusted gross profit as a
percentage |
|
65.5 |
% |
|
|
74.3 |
% |
|
|
75.3 |
% |
|
|
69.6 |
% |
|
|
74.2 |
% |
|
|
75.0 |
% |
Non-GAAP Diluted Earnings Per Share Reconciliation
Table: |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
(In
thousands) |
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
|
2021 |
Diluted earnings per share, as reported |
$ |
0.11 |
|
|
$ |
0.49 |
|
|
$ |
0.14 |
|
|
$ |
1.07 |
|
|
$ |
1.85 |
|
|
$ |
1.44 |
|
Provision for litigation,
net |
|
0.00 |
|
|
|
— |
|
|
|
0.06 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.06 |
|
Amortization of
intangibles |
|
0.20 |
|
|
|
0.04 |
|
|
|
0.04 |
|
|
|
0.45 |
|
|
|
0.17 |
|
|
|
0.18 |
|
Acquisition-related
costs/licensing |
|
0.55 |
|
|
|
0.08 |
|
|
|
0.03 |
|
|
|
1.30 |
|
|
|
0.07 |
|
|
|
0.19 |
|
Acquisition of in-process
research and development |
|
— |
|
|
|
— |
|
|
|
0.33 |
|
|
|
— |
|
|
|
— |
|
|
|
0.33 |
|
Net (gain) loss from strategic
investments |
|
(0.00 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.00 |
) |
|
|
— |
|
|
|
— |
|
Non-cash acquisition-related
foreign currency impacts |
|
(0.12 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.12 |
) |
|
|
— |
|
|
|
— |
|
Tax effect of adjusting
items |
|
(0.14 |
) |
|
|
(0.02 |
) |
|
|
(0.11 |
) |
|
|
(0.37 |
) |
|
|
(0.06 |
) |
|
|
(0.16 |
) |
Non-GAAP diluted earnings per
share |
$ |
0.60 |
|
|
$ |
0.59 |
|
|
$ |
0.49 |
|
|
$ |
2.32 |
|
|
$ |
2.06 |
|
|
$ |
2.04 |
|
*amounts might not add due to rounding
Non-GAAP Free Cash Flow Reconciliation Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
(In
thousands) |
2023 |
|
|
2022 |
|
|
2021 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
Net cash provided by operating activities |
$ |
104,674 |
|
|
$ |
63,975 |
|
|
$ |
76,253 |
|
|
$ |
243,499 |
|
|
$ |
178,468 |
|
|
$ |
276,274 |
|
Purchases of property and
equipment |
|
(22,881 |
) |
|
|
(18,340 |
) |
|
|
(17,045 |
) |
|
|
(78,274 |
) |
|
|
(74,047 |
) |
|
|
(56,898 |
) |
Free cash flow |
$ |
81,793 |
|
|
$ |
45,635 |
|
|
$ |
59,208 |
|
|
$ |
165,225 |
|
|
$ |
104,421 |
|
|
$ |
219,376 |
|
Non-GAAP Net Sales on a Constant Currency Basis Comparative
Table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
EndedDecember 31, |
|
ReportedNet
SalesGrowth |
|
CurrencyImpact
on CurrentPeriod Net
Sales |
|
ConstantCurrencyNet
SalesGrowth |
|
|
|
|
|
|
(In thousands, except
percentages) |
|
2023 |
|
2022 |
|
|
|
United States |
|
$ |
490,841 |
|
$ |
233,232 |
|
110.5% |
|
$ |
— |
|
110.5% |
|
International |
|
|
125,693 |
|
|
41,266 |
|
204.6% |
|
|
2,331 |
|
198.9% |
|
Total net sales |
|
$ |
616,534 |
|
$ |
274,498 |
|
124.6% |
|
$ |
2,331 |
|
123.8% |
|
|
|
Year EndedDecember 31, |
|
ReportedNet
SalesGrowth |
|
CurrencyImpact
on CurrentPeriod Net
Sales |
|
ConstantCurrencyNet
SalesGrowth |
|
|
|
|
|
|
(In thousands, except
percentages) |
|
2023 |
|
2022 |
|
|
|
United States |
|
$ |
1,279,765 |
|
$ |
871,939 |
|
46.8% |
|
$ |
— |
|
46.8% |
|
International |
|
|
288,711 |
|
|
150,904 |
|
91.3% |
|
|
860 |
|
90.8% |
|
Total net sales |
|
$ |
1,568,476 |
|
$ |
1,022,843 |
|
53.3% |
|
$ |
860 |
|
53.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:Brian KearnsSenior
Vice President, Business Development and Investor RelationsPhone:
(610) 930-1800Email:
investors@globusmedical.comwww.globusmedical.com
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