Globus Medical Reports First Quarter 2021 Results
05/04/2021 - 04:15 PM
AUDUBON, Pa., May 04, 2021 (GLOBE NEWSWIRE) -- Globus Medical, Inc. (NYSE: GMED), a leading musculoskeletal solutions company, today announced its financial results for the quarter ended March 31, 2021.
Worldwide net sales were $227.3 million , an increase of 19.3% as compared to the first quarter of 2020 GAAP net income for the quarter was $45.3 million , or 19.9% of net sales, which is an increase of 74.7% as compared to the first quarter of 2020 GAAP diluted earnings per share (“EPS”) was $0.44 and non-GAAP diluted EPS was $0.49 Non-GAAP adjusted EBITDA was $81.0 million , or 35.2% of net sales “We got off to a great start in the first quarter, continuing the momentum we established in 2020,” said Dave Demski, President and CEO. “On a day-adjusted basis, our U.S. Spine business grew by almost 22% over last year, as we continue to take meaningful market share. Pull through from robotics; contributions from new product introductions; a resurgence in our biologics business; and competitive recruiting were all factors driving growth. Enabling Technologies revenue increased 86% , as surgeon recognition of the clinical superiority of our robotic technology produced back-to-back quarters of strong year-over-year growth.”
Worldwide net sales for the first quarter of 2021 was $227.3 million , an as-reported increase of 19.3% over the first quarter of 2020, and an increase of 18.7% on a constant currency basis. U.S. net sales for the first quarter of 2021, including robotics, increased by 22.0% compared to the first quarter of 2020. International net sales for the first quarter of 2021 increased by 5.9% over the first quarter of 2020 as-reported and increased 2.1% on a constant currency basis.
GAAP net income for the first quarter of 2021 was $45.3 million , an increase of 74.7% over the same period last year. GAAP diluted EPS for the first quarter of 2021 was $0.44 , compared to $0.25 for the first quarter 2020, an increase of 74.2% . Non-GAAP diluted EPS for the first quarter of 2021 was $0.49 , compared to $0.29 in the first quarter of 2020, an increase of 66.9% .
The Company generated net cash from operating activities of $63.6 million and non-GAAP free cash flow of $49.9 million during the first quarter of 2021. Cash, cash equivalents and marketable securities were $838.4 million as of March 31, 2021. The Company remains debt free.
2021 Annual Guidance
The Company today increased guidance for full year 2021 net sales from $880 million to $925 million and non-GAAP diluted earnings per share of $1.83 t o $1.89 .
Conference Call Information
Globus Medical will hold a teleconference to discuss its first quarter 2021 results with the investment community at 4:30 p.m. Eastern Time today. Globus invites all interested parties to join the call by dialing:
1-855-533-7141 United States Participants
For interested parties who do not wish to ask questions, the teleconference will be webcast live and may be accessed through a link on the Globus Medical website at www.globusmedical.com/investors .
The call will be archived until Thursday, May 13, 2021. The audio archive can be accessed by calling 1-855-859-2056 in the U.S. or 1-404-537-3406 from outside the U.S. The passcode for the audio replay is 991-6828.
About Globus Medical, Inc.
Globus Medical, Inc. is a leading musculoskeletal solutions company based in Audubon, PA. The company 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, 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, 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.
In addition, for the period ended March 31, 2021 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, and the tax effects of all of the foregoing adjustments. 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 litigation, amortization of intangibles, acquisition related costs/licensing, acquisition of in-process research and development, and the tax effects of all of the foregoing adjustments, which we believe are not reflective of underlying business trends. Additionally, for the period ended March 31, 2021 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, 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, 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, health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic, 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 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 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 SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended March 31, (In thousands, except per share amounts) 2021 2020 Net sales $ 227,344 $ 190,577 Cost of goods sold 55,027 48,864 Gross profit 172,317 141,713 Operating expenses: Research and development 14,924 15,402 Selling, general and administrative 97,891 93,539 Provision for litigation (94 ) — Amortization of intangibles 4,774 3,776 Acquisition related costs 274 548 Total operating expenses 117,769 113,265 Operating income/(loss) 54,548 28,448 Other income/(expense), net Interest income/(expense), net 2,712 4,324 Foreign currency transaction gain/(loss) (280 ) (468 ) Other income/(expense) 214 194 Total other income/(expense), net 2,646 4,050 Income/(loss) before income taxes 57,194 32,498 Income tax provision 11,865 6,549 Net income/(loss) $ 45,329 $ 25,949 Other comprehensive income/(loss): Unrealized gain/(loss) on marketable securities, net of tax (1,666 ) (3,842 ) Foreign currency translation gain/(loss) (4,113 ) 474 Total other comprehensive income/(loss) (5,779 ) (3,368 ) Comprehensive income/(loss) $ 39,550 $ 22,581 Earnings per share: Basic $ 0.45 $ 0.26 Diluted $ 0.44 $ 0.25 Weighted average shares outstanding: Basic 99,866 99,635 Diluted 102,420 102,146
GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
March 31, December 31, (In thousands, except share and per share values) 2021 2020 ASSETS Current assets: Cash, cash equivalents, and restricted cash $ 184,848 $ 239,397 Short-term marketable securities 218,711 187,344 Accounts receivable, net of allowances of $4,358 and $4,408 , respectively 160,939 141,676 Inventories 232,007 229,153 Prepaid expenses and other current assets 16,132 17,771 Income taxes receivable 1,736 6,424 Total current assets 814,373 821,765 Property and equipment, net of accumulated depreciation of $282,346 and $276,451 , respectively 216,186 216,879 Long-term marketable securities 434,877 358,522 Intangible assets, net 80,414 86,949 Goodwill 155,373 156,716 Other assets 28,693 32,039 Deferred income taxes 7,974 6,615 Total assets $ 1,737,890 $ 1,679,485 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 22,409 $ 18,205 Accrued expenses 69,908 78,334 Income taxes payable 8,434 1,101 Business acquisition liabilities 6,048 5,777 Deferred revenue 8,653 8,125 Payable to broker 8,225 9,250 Total current liabilities 123,677 120,792 Business acquisition liabilities, net of current portion 29,973 31,493 Deferred income taxes 5,925 6,202 Other liabilities 15,321 14,701 Total liabilities 174,896 173,188 Equity: Class A common stock; $0.00 1 par value. Authorized 500,000,000 shares; issued and outstanding 77,587,013 and 77,284,007 shares at March 31, 2021 and December 31, 2020, respectively 78 77 Class B common stock; $0.00 1 par value. Authorized 275,000,000 shares; issued and outstanding 22,430,097 shares at March 31, 2021 and December 31, 2020 22 22 Additional paid-in capital 474,307 457,161 Accumulated other comprehensive income (loss) (1,824 ) 3,955 Retained earnings 1,090,411 1,045,082 Total equity 1,562,994 1,506,297 Total liabilities and equity $ 1,737,890 $ 1,679,485
GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended March 31, (In thousands) 2021 2020 Cash flows from operating activities: Net income $ 45,329 $ 25,949 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,157 14,568 Amortization of premium (discount) on marketable securities 520 20 Write-down of excess and obsolete inventories 1,550 679 Stock-based compensation expense 7,698 6,807 Allowance for doubtful accounts 80 756 Change in fair value of business acquisition liabilities 258 506 Change in deferred income taxes (808 ) (2,895 ) (Gain)/loss on disposal of assets, net 103 207 (Increase)/decrease in: Accounts receivable (20,346 ) 14,131 Inventories (3,997 ) (12,108 ) Prepaid expenses and other assets 4,516 (205 ) Increase/(decrease) in: Accounts payable 4,212 (283 ) Accrued expenses and other liabilities (4,783 ) (13,702 ) Income taxes payable/receivable 12,081 7,863 Net cash provided by operating activities 63,570 42,293 Cash flows from investing activities: Purchases of marketable securities (185,110 ) (57,418 ) Maturities of marketable securities 39,850 71,766 Sales of marketable securities 33,818 5,374 Purchases of property and equipment (13,672 ) (22,314 ) Net cash used in investing activities (125,114 ) (2,592 ) Cash flows from financing activities: Payment of business acquisition related liabilities (1,537 ) (566 ) Proceeds from exercise of stock options 9,101 5,763 Repurchase of common stock — (73,864 ) Net cash used in/provided by financing activities 7,564 (68,667 ) Effect of foreign exchange rates on cash (569 ) (16 ) Net increase in cash, cash equivalents, and restricted cash (54,549 ) (28,982 ) Cash, cash equivalents, and restricted cash at beginning of period 239,397 195,724 Cash, cash equivalents, and restricted cash at end of period $ 184,848 $ 166,742 Supplemental disclosures of cash flow information: Income taxes paid $ 570 $ 1,791 Purchases of property and equipment included in accounts payable and accrued expenses $ 2,620 $ 5,287
Supplemental Financial Information
Net Sales by Geographic Area:
Three Months Ended March 31, (In thousands) 2021 2020 United States $ 193,317 $ 158,447 International 34,027 32,130 Total net sales $ 227,344 $ 190,577
Net Sales by Product Category:
Three Months Ended March 31, (In thousands) 2021 2020 Musculoskeletal Solutions $ 212,416 $ 182,542 Enabling Technologies 14,928 8,035 Total net sales $ 227,344 $ 190,577
Liquidity and Capital Resources:
March 31, December 31, (In thousands) 2021 2020 Cash, cash equivalents, and restricted cash $ 184,848 $ 239,397 Short-term marketable securities 218,711 187,344 Long-term marketable securities 434,877 358,522 Total cash, cash equivalents, restricted cash and marketable securities $ 838,436 $ 785,263
The following tables reconcile GAAP to Non-GAAP financial measures.
Non-GAAP Adjusted EBITDA Reconciliation Table:
Three Months Ended March 31, (In thousands, except percentages) 2021 2020 Net income/(loss) $ 45,329 $ 25,949 Interest income/(expense), net (2,712 ) (4,324 ) Provision for income taxes 11,865 6,549 Depreciation and amortization 17,157 14,568 EBITDA 71,639 42,742 Stock-based compensation expense 7,698 6,807 Provision for litigation (94 ) — Acquisition related costs/licensing 883 957 Adjusted EBITDA $ 80,126 $ 50,506 Net income as a percentage of net sales 19.9 % 13.6 % Adjusted EBITDA as a percentage of net sales 35.2 % 26.5 %
Non-GAAP Net Income Reconciliation Table:
Three Months Ended March 31, (In thousands) 2021 2020 Net income/(loss) $ 45,329 $ 25,949 Provision for litigation (94 ) — Amortization of intangibles 4,774 3,776 Acquisition related costs/licensing 883 957 Tax effect of adjusting items (1,154 ) (956 ) Non-GAAP net income $ 49,738 $ 29,726
Non-GAAP Diluted Earnings Per Share Reconciliation Table:
Three Months Ended March 31, (Per share amounts) 2021 2020 Diluted earnings per share, as reported $ 0.44 $ 0.25 Provision for litigation — — Amortization of intangibles 0.05 0.04 Acquisition related costs/licensing 0.01 0.01 Tax effect of adjusting items (0.01 ) (0.01 ) Non-GAAP diluted earnings per share $ 0.49 $ 0.29
* Amounts might not add due to rounding
Non-GAAP Free Cash Flow Reconciliation Table:
Three Months Ended March 31, (In thousands) 2021 2020 Net cash provided by operating activities $ 63,570 $ 42,293 Purchases of property and equipment (13,672 ) (22,314 ) Free cash flow $ 49,898 $ 19,979
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) 2021 2020 Growth Period Net Sales Growth United States $ 193,317 $ 158,447 22.0 % $ — 22.0 % International 34,027 32,130 5.9 % 1,208 2.1 % Total net sales $ 227,344 $ 190,577 19.3 % $ 1,208 18.7 %
Contact : investors@globusmedical.com www.globusmedical.com
