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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, 2021

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

 

(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 2, 2021 was 101,470,823 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, 2021 and December 31, 2020

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 

 

Three and nine months ended September 30, 2021 and September 30, 2020

4

Condensed Consolidated Statements of Equity (Unaudited)

 

Three and nine months ended September 30, 2021 and September 30, 2020

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Three and nine months ended September 30, 2021 and September 30, 2020

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

30

Item 4.

Controls and Procedures

30

PART II.

OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

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)

2021

2020

ASSETS

Current assets:

Cash, cash equivalents, and restricted cash

$

361,876

$

239,397

Short-term marketable securities

191,319

187,344

Accounts receivable, net of allowances of $4,930 and $4,408, respectively

159,576

141,676

Inventories

234,368

229,153

Prepaid expenses and other current assets

16,207

17,771

Income taxes receivable

17,168

6,424

Total current assets

980,514

821,765

Property and equipment, net of accumulated depreciation of $301,163 and $276,451, respectively

215,665

216,879

Long-term marketable securities

431,814

358,522

Intangible assets, net

73,095

86,949

Goodwill

166,578

156,716

Other assets

33,574

32,039

Deferred income taxes

9,338

6,615

Total assets

$

1,910,578

$

1,679,485

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

20,678

$

18,205

Accrued expenses

81,480

78,334

Income taxes payable

1,971

1,101

Business acquisition liabilities

8,729

5,777

Deferred revenue

9,667

8,125

Payable to broker

9,250

Total current liabilities

122,525

120,792

Business acquisition liabilities, net of current portion

49,113

31,493

Deferred income taxes

4,792

6,202

Other liabilities

15,879

14,701

Total liabilities

192,309

173,188

Commitments and contingencies (Note 15)

 

 

Equity:

Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 79,029,625 and 77,284,007 shares at September 30, 2021 and December 31, 2020, respectively

79

77

Class B common stock; $0.001 par value. Authorized 275,000,000 shares; issued and outstanding 22,430,097 shares at September 30, 2021 and December 31, 2020

22

22

Additional paid-in capital

542,055

457,161

Accumulated other comprehensive income (loss)

(3,054)

3,955

Retained earnings

1,179,167

1,045,082

Total equity

1,718,269

1,506,297

Total liabilities and equity

$

1,910,578

$

1,679,485

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)

2021

2020

2021

2020

Net sales

$

229,721

$

216,098

$

708,081

$

555,597

Cost of goods sold

58,554

57,097

177,427

156,604

Gross profit

171,167

159,001

530,654

398,993

Operating expenses:

Research and development

15,853

14,421

46,324

69,278

Selling, general and administrative

96,444

89,152

301,589

262,710

Provision for litigation

605

511

197

Amortization of intangibles

4,573

4,152

13,970

12,043

Acquisition related costs

363

1,263

14,507

1,867

Total operating expenses

117,838

108,988

376,901

346,095

Operating income/(loss)

53,329

50,013

153,753

52,898

Other income/(expense), net:

Interest income/(expense), net

2,105

3,085

7,358

10,999

Foreign currency transaction gain/(loss)

(898)

(170)

(969)

(806)

Other income/(expense)

(84)

202

437

595

Total other income/(expense), net

1,123

3,117

6,826

10,788

Income/(loss) before income taxes

54,452

53,130

160,579

63,686

Income tax provision

7,241

8,914

26,494

14,358

Net income/(loss)

$

47,211

$

44,216

$

134,085

$

49,328

Other comprehensive income/(loss):

Unrealized gain/(loss) on marketable securities, net of tax

(991)

(770)

(3,431)

2,285

Foreign currency translation gain/(loss)

(491)

1,679

(3,578)

2,820

Total other comprehensive income/(loss)

(1,482)

909

(7,009)

5,105

Comprehensive income/(loss)

$

45,729

$

45,125

$

127,076

$

54,433

Earnings per share:

Basic

$

0.47

$

0.45

$

1.33

$

0.50

Diluted

$

0.45

$

0.44

$

1.30

$

0.49

Weighted average shares outstanding:

Basic

101,104

98,217

100,477

98,453

Diluted

104,418

100,485

103,430

100,823

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, 2020

77,284

$

77

22,430

$

22

$

457,161

$

3,955

$

1,045,082

$

1,506,297

Stock-based compensation

7,883

7,883

Grant of restricted stock units

163

163

Exercise of stock options

303

1

9,100

9,101

Comprehensive income/(loss)

(5,779)

45,329

39,550

Balance at March 31, 2021

77,587

$

78

22,430

$

22

$

474,307

$

(1,824)

$

1,090,411

$

1,562,994

Stock-based compensation

7,788

7,788

Grant of restricted stock units

197

197

Exercise of stock options

716

1

26,496

26,497

Comprehensive income/(loss)

252

41,545

41,797

Balance at June 30, 2021

78,303

$

79

22,430

$

22

$

508,788

$

(1,572)

$

1,131,956

$

1,639,273

Stock-based compensation

7,621