10-Q 1 gmed-20240331x10q.htm 10-Q gmed-20240331x10q
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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 March 31, 2024

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 May 3, 2024 was 135,057,360 shares.


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Condensed Consolidated Balance Sheets (Unaudited)

 

 

March 31, 2024 and December 31, 2023

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 

 

Three months ended March 31, 2024 and March 31, 2023

4

Condensed Consolidated Statements of Equity (Unaudited)

 

Three months ended March 31, 2024 and March 31, 2023

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Three months ended March 31, 2024 and March 31, 2023

6

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

7

Item 2.

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

30

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

37

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

38

Item 6.

Exhibits

38

 

SIGNATURES

39

 

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

December 31,

(In thousands, except share and per share values)

2024

2023

ASSETS

Current assets:

Cash and cash equivalents

$

354,062

$

467,292

Short-term marketable securities

80,408

50,497

Accounts receivable, net of allowances of $11,527 and $8,934, respectively

534,333

503,235

Inventories

816,196

848,135

Prepaid expenses and other current assets

43,209

44,580

Income taxes receivable

366

1,635

Total current assets

1,828,574

1,915,374

Property and equipment, net of accumulated depreciation of $447,122 and $425,695, respectively

578,887

586,932

Operating lease right of use assets

56,347

59,931

Long-term marketable securities

51,256

75,428

Intangible assets, net

888,208

924,603

Goodwill

1,451,106

1,434,540

Other assets

78,216

78,590

Deferred income taxes

11,018

10,685

Total assets

$

4,943,612

$

5,086,083

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

50,487

$

56,671

Accrued expenses

210,011

240,460

Operating lease liabilities

11,749

11,967

Income taxes payable

43,058

3,845

Senior convertible notes

424,044

Business acquisition liabilities

29,649

61,035

Deferred revenue

17,077

18,369

Payable to broker

249

Total current liabilities

786,324

392,347

Business acquisition liabilities, net of current portion

81,661

78,323

Operating lease liabilities

89,809

91,037

Senior convertible notes

417,400

Deferred income taxes and other tax liabilities

39,952

84,421

Other liabilities

23,505

24,596

Total liabilities

1,021,251

1,088,124

Commitments and contingencies (Note 17)

 

 

Equity:

Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 112,626,136 and 113,905,565 shares at March 31, 2024 and December 31, 2023, respectively

113

114

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, 2024 and December 31, 2023, respectively

22

22

Additional paid-in capital

2,886,436

2,870,749

Accumulated other comprehensive income/(loss)

(11,045)

(10,192)

Retained earnings

1,046,835

1,137,266

Total equity

3,922,361

3,997,959

Total liabilities and equity

$

4,943,612

$

5,086,083

See accompanying notes to unaudited condensed consolidated financial statements.

3


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

March 31,

(In thousands, except per share amounts)

2024

2023

Net sales

$

606,666

$

276,688

Cost of sales

241,487

70,825

Gross profit

365,179

205,863

Operating expenses:

Research and development

57,268

21,082

Selling, general and administrative

248,710

122,416

Provision for litigation, net

(31)

Amortization of intangibles

29,676

4,601

Acquisition-related costs

2,418

1,361

Restructuring Costs

19,141

Total operating expenses

357,182

149,460

Operating income/(loss)

7,997

56,403

Other income/(expense), net

Interest income/(expense), net

(1,894)

6,497

Foreign currency transaction gain/(loss)

(15,371)

212

Other income/(expense)

710

77

Total other income/(expense), net

(16,555)

6,786

Income/(loss) before income taxes

(8,558)

63,189

Income tax provision/(benefit)

(1,441)

14,060

Net income/(loss)

$

(7,117)

$

49,129

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

Unrealized gain/(loss) on marketable securities

379

4,298

Foreign currency translation gain/(loss)

(1,232)

910

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

(853)

5,208

Comprehensive income/(loss)

$

(7,970)

$

54,337

Earnings per share:

Basic

$

(0.05)

$

0.49

Diluted

$

(0.05)

$

0.48

Weighted average shares outstanding:

Basic

135,358

100,279

Diluted

135,358

102,196

See accompanying notes to unaudited condensed consolidated financial statements.

 

4


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, 2023

113,906

$

114

22,430

$

22

$

2,870,749

$

(10,192)

$

1,137,266

$

3,997,959

Stock-based compensation

17,281

17,281

Grant of contingent restricted stock units

336

336

Exercise of stock options

112

3,413

3,413

Issuance of Class A common stock under employee and director equity option plans, net

205

(5,343)

(5,343)

Comprehensive income/(loss)

(853)

(7,117)

(7,970)

Repurchase and retirement of common stock

(1,597)

(1)

(83,314)

(83,315)

Balance at March 31, 2024

112,626

$

113

22,430

$

22

$

2,886,436

$

(11,045)

$

1,046,835

$

3,922,361

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, 2022

77,762

$

78

22,430

$

22

$

630,952

$

(24,630)

$

1,239,951

$

1,846,373

Stock-based compensation

9,032

9,032

Grant of contingent restricted stock units

219

219

Exercise of stock options

143

4,859

4,859

Comprehensive income/(loss)

5,208

49,129

54,337

Balance at March 31, 2023

77,905

$

78

22,430

$

22

$

645,062

$

(19,422)

$

1,289,080

$

1,914,820

See accompanying notes to unaudited condensed consolidated financial statements.

5


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

March 31,

(In thousands)

2024

2023

Cash flows from operating activities:

Net income

$

(7,117)

$

49,129

Adjustments to reconcile net income to net cash provided by operating activities:

Acquired in-process research and development

12,613

Depreciation and amortization

55,261

18,108

Amortization of premiums on marketable securities

24

482

Provision for excess and obsolete inventory

3,914

2,055

Amortization of inventory fair value step up

53,670

Amortization of 2025 Note fair value step up

6,658

Stock-based compensation expense

17,260

8,953

Allowance for doubtful accounts

2,968

810

Change in fair value of business acquisition liabilities

(165)

(446)

Change in deferred income taxes

(45,091)

(3,979)

(Gain)/loss on disposal of assets, net

34

81

Payment of business acquisition-related liabilities

(16,115)

(772)

Net (gain)/loss from foreign currency adjustment

11,191

(Increase) decrease in:

Accounts receivable

(36,393)

(9,861)

Inventories

(8,986)

(22,470)

Prepaid expenses and other assets

1,778

836

Increase (decrease) in:

Accounts payable

(5,753)

3,916

Accrued expenses and other liabilities

(33,881)

(9,969)

Income taxes payable/receivable

40,517

16,440

Net cash provided by/(used in) operating activities

52,387

53,313

Cash flows from investing activities:

Purchases of marketable securities

(8,017)

(69,141)

Maturities of marketable securities

85

85,546

Sales of marketable securities

2,565

13,240

Purchases of property and equipment

(28,568)

(15,991)

Acquisition of businesses, net of cash acquired and purchases of intangible and other assets

(12,649)

(2,662)

Net cash provided by/(used in) investing activities

(46,584)

10,992

Cash flows from financing activities: