GLOBUS MEDICAL INC
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 5, 2024
GMED$71.05-12.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001562762-24-000199
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001562762-24-000254
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 90 current paragraphs.
61 unchanged; 15 reworded; 14 added; 13 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
In the United States, the increase in net sales was $186.5 million, or 60.3%, for the three month period ended September 30, 2024 and was significantly driven by the Merger. From a product standpoint, domestic musculoskeletal solutions sales increased by $172.9 million, mainly driven by sales increases in spine products of $146.1 million, and neuromonitoring solution product and services of $17.1 million. Domestic enabling technology sales increased by $13.5 million compared to the prior year, driven by higher unit placement.
Current report
International net sales increased by $55.6 million, or 74.8% for the three month period ended September 30, 2024 and was significantly driven by the Merger. From a product standpoint, the increase was mainly due to musculoskeletal solutions sales increase of $58.5 million, primarily due to spine products. Regionally, the increase was driven by sales growth in the Europe and Middle East (“EMEA”) region by $27.1 million, Latin America (“LATAM”) region by $6.4 million and Asia Pacific (“APAC”) region by $21.5 million. International enabling technology sales decreased by $2.9 million compared to the three months ended September 30, 2023.
Current report
The $135.1 million or 99.8% increase in cost of sales was driven primarily by increases to inventory product costs of $59.4 million from increased volume significantly due to the Merger. Additionally, there was increased amortization of inventory fair value step-up of $41.7 million, due to three months of post-acquisition amortization occurring in the current period as compared to one month in the prior period. Further, increases in costs of sales were also impacted by increased depreciation of $9.9 million, and increased changes in excess and obsolete inventory reserves of $5.2 million.
Current report
The increase of $84.5 million or 54.1% in selling, general and administrative expenses was primarily driven by increases to personnel related expenses by $60.3 million due to increased headcount primarily from the Merger, increases to taxes and fees by $4.6 million, consulting and outside service expenses by $4.6 million, and rent expenses by $4.1 million.
Current report
The $3.6 million decrease in provision for litigation, net was due to a favorable legal settlements of $0.7 million during the three months ended September 30, 2024, as compared to the provision expense recorded during the three months ended September 30, 2023.
Current report
The decrease in acquisition-related costs compared to prior year was due primarily to the closing of the merger with NuVasive during the three months ended September 30, 2023. During the prior period, costs incurred primarily related to employee-related costs of $34.0 million and banking and legal fees contingent on the merger closing of $9.5 million. In the current period, a benefit of $3.6 million was recognized due to an adjustment in the classification of associated costs.
Current report
The decrease in the effective tax rate was due primarily to a benefit from a release of tax reserves of $2.9 million in the current period and a higher stock compensation windfall benefit of $1.5 million, partially offset by higher income before income taxes of $54.5 million.
Current report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current report
In the United States, the increase in net sales was $689.3 million, or 87.4% for the nine month period ended September 30, 2024 and was significantly driven by the Merger. From a product standpoint, domestic musculoskeletal solutions increased by $667.6 million, mainly driven by sales increases in spine products of $556.1 million and neuromonitoring solution product and services of $77.4 million. Enabling technology increased by $21.7 million compared to the prior year, driven by higher unit placement.
Current report
International net sales increased by $220.9 million for the nine month period ended September 30, 2024 and was driven significantly by the Merger. From a product standpoint, it was mainly due to musculoskeletal solutions sales increase of $223.0 million, primarily due to spine products. The increase was driven by sales growth in the EMEA region by $95.8 million, the LATAM region by $25.7 million and the APAC region by $80.8 million, respectively. International enabling technology decreased by $2.1 million compared to the nine months ended September 30, 2023.
Current report
The $489.4 million or 173% increase in cost of sales was driven primarily by increases to inventory product costs of $220.0 million from increased volume significantly due to the Merger. Additionally, there was increased amortization of inventory fair value step-up of $149.0 million due to nine months of post-acquisition amortization occurring in the current period as compared to one month in the prior period. Further, increases in costs of sales were impacted by increased depreciation of $34.8 million, and increased changes in excess and obsolete inventory reserves of $11.8 million.
Current report
The net increase of $328.9 million or 82.5% in selling, general and administrative expenses was primarily due to increased personnel related expenses of $240.1 million driven by increased headcount primarily from the Merger. Additionally, taxes and fees increased by $21.4 million, consulting and outside service expenses by $14.9 million, and rent expenses by $11.3 million.
Current report
The provision for litigation was consistent across the periods, with net provision charge slightly higher in the current period as compared to the prior period. The main driver in the current period was a case accrual for $0.8 million along with adjustments to other reserves, partially offset by a favorable settlement of $0.7 million.
Current report
The decrease in the effective tax rate was due primarily to a benefit from a release of tax reserves of $3.7 million in the current period, a higher stock compensation windfall benefit of $2.1 million, and lower income before income taxes of $44.3 million.
Removed paragraphs (13)
Previous report
In the United States, the increase in net sales of $254.0 million for the three month period ended June 30, 2024 was due primarily to the addition of NuVasive, as well as increased spine product sales, including robotic spine instruments, resulting from penetration in existing territories and an increase in sales volume of enabling technologies.
Previous report
International net sales increased by $84.1 million for the three month period ended June 30, 2024 due to the addition of NuVasive and increased spine product sales resulting from penetration in existing territories.
Previous report
The $183.6 million increase in cost of sales was due to the addition of NuVasive, amortization of inventory fair value step-up, and increased volume and product mix.
Previous report
The $118.1 million increase in selling, general and administrative expenses was due to the addition of NuVasive, and an increase in personnel related expenses resulting primarily from higher product sales, and meeting expenses.
Previous report
The $4.1 million increase in provision for litigation, net was due to receipt of a legal settlement during the three months ended June 30, 2024, as compared to the net amount of settlement receipts during the three months ended June 30, 2023.
Previous report
The increase in the effective tax rate was due primarily to lower pretax earnings over the comparative period, and one-time tax adjustments as a percentage of pretax earnings.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
In the United States, the increase in net sales of $502.8 million for the six month period ended June 30, 2024 was due primarily to the addition of NuVasive, as well as increased spine product sales, including robotic spine instruments, resulting from increased penetration in existing territories and an increase in sales volume of enabling technologies.
Previous report
International net sales increased by $165.3 million for the six month period ended June 30, 2024 due to the addition of NuVasive and increased spine product sales resulting from penetration in existing territories.
Previous report
The $354.2 million increase in cost of sales was due to the addition of NuVasive, amortization of inventory fair value step-up, and increased volume and product mix.
Previous report
The $244.3 million increase in selling, general and administrative expenses was due to the addition of NuVasive, and an increase in personnel related expenses resulting primarily from higher product sales, and meeting expenses.
Previous report
The $4.0 million increase in provision for litigation, net was due to receipt of a legal settlement during the six months ended June 30, 2024, as compared to the net amount of settlement receipts during the six months ended June 30, 2023.
Previous report
The increase in the effective tax rate was due primarily to lower pretax earnings over the comparative period, and one-time tax adjustments as a percentage of pretax earnings.
Reworded paragraphs (15)
Previous wording
During the six months ended June 30, 2024, international net sales accounted for approximately 20.5% of our total net sales. We have sold our products and services in approximately 64 countries other than the United States through a combination of sales representatives employed by us and exclusive international distributors. We believe there are significant opportunities for us to increase our presence in both existing and new international markets through the continued expansion of our direct and distributor sales forces and through the commercialization of additional products.
Current wording
During the nine months ended September 30, 2024, international net sales accounted for approximately 20.6% of our total net sales. We have sold our products and services in approximately 65 countries other than the United States through a combination of sales representatives employed by us and exclusive international distributors. We believe there are significant opportunities for us to increase our presence in both existing and new international markets through the continued expansion of our direct and distributor sales forces and through the commercialization of additional products.
Previous wording
The $16.4 million increase in research and development expenses was due primarily to the addition of NuVasive and an increase in personnel related expenses due to our continued investment in product development.
Current wording
The $6.1 million or 20.6% increase in research and development expenses shows our continued investment in product development. This increase was primarily driven by increased personnel related expenses of $4.7 million due to increased headcount and parts expended in development of $1.3 million.
Previous wording
Amortization of intangibles increased for the three month period ended June 30, 2024 compared to the three month period ended June 30, 2023, due to the impact of the intangibles acquired from NuVasive.
Current wording
Amortization of intangibles increased by $16.3 million or 118.6% for the three month period ended September 30, 2024 compared to the three month period ended September 30, 2023, due to the impact of the intangibles acquired from NuVasive, which had $25.9 million amortization in the current period.
Previous wording
The restructuring costs for the three months ended June 30, 2024 were driven by 2024 Synergy Plan accrued expense balance changes. These costs were primarily related toemployee termination benefits.
Current wording
The restructuring costs of $5.2 million for the three months ended September 30, 2024 were driven by 2024 Synergy Plan employee termination benefits.
Previous wording
The decrease in other income/(expense), was due primarily to foreign currency losses, lower interest income from a lower average marketable securities portfolio size in the current period and interest expense from amortization of the fair value adjustment on the 2025 Notes from acquisition accounting.
Current wording
The increase of $6.8 million in other income/(expense), was primarily due to $15.6 million of foreign currency gain offset by increases in interest expense of $6.0 million, from amortization of the fair value adjustment on the 2025 Notes from acquisition accounting and other contractual interest incurred. Additionally, interest income decreased by $2.5 million driven by a lower average marketable securities portfolio size in the current period.
Previous wording
The $52.5 million increase in research and development expenses was due primarily to the addition of NuVasive, acquired IPR&D and an increase in personnel related expenses due to our continued investment in product development.
Current wording
The $58.6 million or 81.6% increase in research and development expenses shows our continued investment in product development. This increase was primarily driven by increased personnel related expenses of $35.7 million due to increased headcount, and acquired IPR&D charge of $12.6 million from the asset acquisition closed in the first quarter of 2024.
Previous wording
Amortization of intangibles increased for the six month period ended June 30, 2024, as compared to the six month period ended June 30, 2023, due to the impact of the intangibles acquired from NuVasive.
Current wording
Amortization of intangibles increased by $66.6 million, or 290.5%, for the nine month period ended September 30, 2024, as compared to the nine month period ended September 30, 2023, due to the impact of the intangibles acquired from NuVasive, which had $77.3 million amortization in the current period.
Previous wording
The increase in acquisition-related costs was due primarily to charges recorded to the fair value of business acquisition liabilities resulting from changes in contract terms, market conditions and the achievement of certain performance conditions.
Current wording
The decrease in acquisition-related costs compared to prior year was due primarily to the closing of the merger with NuVasive during the three months ended September 30, 2023. During the current period, the cost of $12.5 million was primarily driven by the charge of $8.6 million recorded as a change to the fair value of business acquisition liabilities resulting from changes in contract terms, market conditions and the achievement of certain performance conditions. Additionally, there was an increase of $1.5 million in employee related costs. During the prior period, costs incurred are primarily related to the closing of the Merger, including employee-related costs personnel related charges for fees and severance of $34.0 million and banking and legal fees contingent on the merger closing of $9.5 million.
Previous wording
The restructuring costs for the six months ended June 30, 2024 were due to costs associated with the 2024 Synergy Plan. These costs were primarily related toemployee termination benefits.
Current wording
The restructuring costs of $23.8 million for the nine months ended September 30, 2024 were due toemployee termination benefits associated with the 2024 Synergy Plan.
Previous wording
The decrease in other income/(expense), was due primarily to foreign currency losses, lower interest income from a lower average marketable securities portfolio size in the current period and interest expense from amortization of the fair value adjustment on the 2025 Notes from acquisition accounting.
Current wording
The decrease of $27.0 million in other income/(expense), was primarily due to higher interest expense of $20.7 million, from amortization of the fair value adjustment on the 2025 Notes from acquisition accounting and other contractual interest incurred. In addition, interest income decreased by $7.0 million driven from a lower average marketable securities portfolio size in the current period.
Previous wording
A discussion of our Results of Operations for the six months ended June 30, 2023 can be found in “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations: Results of Operations; Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022.” on our Form 10-Q filed on August 3, 2023.
Current wording
A discussion of our Results of Operations for the nine months ended September 30, 2023 can be found in “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations: Results of Operations; Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022.” on our Form 10-Q filed on November 7, 2023.
Previous wording
The higher net cash provided by operating activities for the six month period ended June 30, 2024 was primarily the result of higher net income after adjusting out non-cash add-backs and non-cash expenses, such as amortization of purchase accounting related fair value step up, amortization, and stock-based compensation, partially offset by unfavorable changes in accounts receivable, deferred income taxes, and accrued expenses and other liabilities.
Current wording
The higher net cash provided by operating activities for the nine month period ended September 30, 2024 was primarily the result of higher net income after adjusting out non-cash add-backs and non-cash expenses, primarily due to the Merger. These include increased amortization of purchase accounting related fair value step up of inventory of $149.0 million, increased depreciation and amortization of $112.2 million, and increased amortization of the fair value step up with respect to our 2025 Note of $20.0 million, partially offset by unfavorable changes in accounts receivable of $63.6 million, deferred income taxes of $46.7 million, and accrued expenses and other liabilities of $20.2 million.
Previous wording
The higher cash used in investing activities for the six month period ended June 30, 2024 was due primarily to increased net outflows for the acquisition of businesses, net of cash acquired, and increased purchases of property and equipment, less inflows from net maturities of marketable securities.
Current wording
The higher cash used in investing activities for the nine month period ended September 30, 2024 was due primarily to less inflows from net maturities of marketable securities of $289.8 million as we manage our liquidity, as well as increased purchases of property and equipment of $42.9 million primarily from increased production resulting from the Merger. These were partially offset by decreased outflows for the acquisition of businesses, net of cash acquired of $278.4 million, with immaterial acquisitions occurring in the current period as compared to the prior period that was primarily driven by the Merger.
Previous wording
The higher net cash used in financing activities for thesix month period ended June 30, 2024 was primarily the result of increased repurchases of Class A common stock, and increased payments of business acquisition-related liabilities, partially offset by higher proceeds from the exercise of stock options.
Current wording
The higher net cash used in financing activities for thenine month period ended September 30, 2024 was primarily the result of increased repurchases of Class A common stock of $84.8 million, and increased payments of business acquisition-related liabilities of $31.1 million, partially offset by higher proceeds from the exercise of stock options of $29.8 million.
Previous wording
A discussion of our Cash Flows for the three months ended June 30, 2023 can be found in “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations: Results of Operations; Cash Flows.” on our Form 10-Q filed on August 3, 2023.
Current wording
A discussion of our Cash Flows for the nine months ended September 30, 2023 can be found in “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations: Results of Operations; Cash Flows.” on our Form 10-Q filed on November 7, 2023.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The increase in acquisition-related costs was due primarily to charges recorded to the fair value of business acquisition liabilities resulting from changes in contract terms, market conditions and the achievement of certain performance conditions.