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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File No. 001-35621

GLOBUS MEDICAL, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

04-3744954

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

2560 General Armistead Avenue, Audubon, PA 19403-5214

 

(610) 930-1800

(Address of principal executive offices) (Zip Code)

 

(Registrant’s telephone number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of exchange on which registered

Class A Common Stock, par value $.001 per share

GMED

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files):

Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes   No 

The number of shares outstanding of the issuer’s common stock (par value $0.001 per share) as of November 4, 2022 was 99,842,557 shares.

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Condensed Consolidated Balance Sheets (Unaudited)

 

 

September 30, 2022 and December 31, 2021

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 

 

Three and nine months ended September 30, 2022 and September 30, 2021

4

Condensed Consolidated Statements of Equity (Unaudited)

 

Three and nine months ended September 30, 2022 and September 30, 2021

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Nine months ended September 30, 2022 and September 30, 2021

6

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

33

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

33

Item 6.

Exhibits

33

 

SIGNATURES

35

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

December 31,

(In thousands, except share and per share values)

2022

2021

ASSETS

Current assets:

Cash and cash equivalents

$

134,223

$

193,069

Short-term marketable securities

271,063

250,378

Accounts receivable, net of allowances of $4,284 and $4,962, respectively

206,307

164,436

Inventories

282,408

237,001

Prepaid expenses and other current assets

23,803

18,417

Income taxes receivable

2,197

1,215

Total current assets

920,001

864,516

Property and equipment, net of accumulated depreciation of $332,917 and $305,575, respectively

236,342

221,076

Long-term marketable securities

503,965

562,475

Intangible assets, net

54,057

68,660

Goodwill

181,774

179,708

Other assets

35,654

36,334

Deferred income taxes

44,719

24,494

Total assets

$

1,976,512

$

1,957,263

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

31,971

$

21,955

Accrued expenses

88,361

91,168

Income taxes payable

1,308

1,046

Business acquisition liabilities

11,329

11,770

Deferred revenue

12,286

12,025

Payable to broker

2,200

Total current liabilities

145,255

140,164

Business acquisition liabilities, net of current portion

52,965

58,755

Deferred income taxes

1,578

4,314

Other liabilities

12,603

12,642

Total liabilities

212,401

215,875

Commitments and contingencies (Note 15)

 

 

Equity:

Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 77,401,459 and 79,113,916 shares at September 30, 2022 and December 31, 2021, respectively

77

79

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 September 30, 2022 and December 31, 2021, respectively

22

22

Additional paid-in capital

606,352

553,787

Accumulated other comprehensive income/(loss)

(32,226)

(6,772)

Retained earnings

1,189,886

1,194,272

Total equity

1,764,111

1,741,388

Total liabilities and equity

$

1,976,512

$

1,957,263

See accompanying notes to unaudited condensed consolidated financial statements.


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands, except per share amounts)

2022

2021

2022

2021

Net sales

$

254,148

$

229,721

$

748,345

$

708,081

Cost of goods sold

65,497

58,554

193,134

177,427

Gross profit

188,651

171,167

555,211

530,654

Operating expenses:

Research and development

18,701

15,853

53,508

46,324

Selling, general and administrative

106,576

96,444

314,042

301,589

Provision for litigation

605

2,341

511

Amortization of intangibles

4,324

4,573

13,229

13,970

Acquisition related costs

(652)

363

(1,832)

14,507

Total operating expenses

128,949

117,838

381,288

376,901

Operating income/(loss)

59,702

53,329

173,923

153,753

Other income/(expense), net

Interest income/(expense), net

3,899

2,105

8,918

7,358

Foreign currency transaction gain/(loss)

(2,210)

(898)

(3,708)

(969)

Other income/(expense)

74

(84)

1,770

437

Total other income/(expense), net

1,763

1,123

6,980

6,826

Income/(loss) before income taxes

61,465

54,452

180,903

160,579

Income tax provision

14,034

7,241

40,799

26,494

Net income/(loss)

$

47,431

$

47,211

$

140,104

$

134,085

Other comprehensive income/(loss), net of tax:

Unrealized gain/(loss) on marketable securities

(4,380)

(991)

(18,239)

(3,431)

Foreign currency translation gain/(loss)

(2,478)

(491)

(7,215)

(3,578)

Total other comprehensive income/(loss), net of tax

(6,858)

(1,482)

(25,454)

(7,009)

Comprehensive income/(loss)

$

40,573

$

45,729

$

114,650

$

127,076

Earnings per share:

Basic

$

0.48

$

0.47

$

1.39

$

1.33

Diluted

$

0.47

$

0.45

$

1.36

$

1.30

Weighted average shares outstanding:

Basic

99,652

101,104

100,638

100,477

Diluted

101,417

104,418

102,789

103,430

See accompanying notes to unaudited condensed consolidated financial statements.

 

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

Class A
Common Stock

Class B
Common Stock

Additional paid-in

Accumulated other comprehensive

Retained

(In thousands)

Shares

$

Shares

$

capital

income/(loss)

earnings

Total

Balance at December 31, 2021

79,114

$

79

22,430

$

22

$

553,787

$

(6,772)

$

1,194,272

$

1,741,388

Stock-based compensation

8,353

8,353

Grant of restricted stock units

196

196

Exercise of stock options

184

7,746

7,746

Comprehensive income/(loss)

(10,395)

38,084

27,689

Balance at March 31, 2022

79,298

$

79

22,430

$

22

$

570,082

$

(17,167)

$

1,232,356

$

1,785,372

Stock-based compensation

8,020

8,020

Grant of restricted stock units

220

220

Exercise of stock options

90

3,585

3,585

Comprehensive income/(loss)

(8,201)

54,590

46,389

Repurchase and retirement of common stock

(2,351)

(2)

(144,491)

(144,493)

Balance at June 30, 2022

77,037

$

77

22,430

$

22

$

581,907

$

(25,368)