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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, 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

 

(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 6, 2022 was 101,750,825 shares.

1


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Condensed Consolidated Balance Sheets (Unaudited)

 

 

March 31, 2022 and December 31, 2021

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 

 

Three months ended March 31, 2022 and March 31, 2021

4

Condensed Consolidated Statements of Equity (Unaudited)

 

Three months ended March 31, 2022 and March 31, 2021

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Three months ended March 31, 2022 and March 31, 2021

6

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

7

Item 2.

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

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

PART II.

OTHER INFORMATION

29

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

29

 

SIGNATURES

31

 

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)

2022

2021

ASSETS

Current assets:

Cash and cash equivalents

$

229,789

$

193,069

Short-term marketable securities

243,505

250,378

Accounts receivable, net of allowances of $4,186 and $4,962, respectively

166,222

164,436

Inventories

253,886

237,001

Prepaid expenses and other current assets

19,587

18,417

Income taxes receivable

3,609

1,215

Total current assets

916,598

864,516

Property and equipment, net of accumulated depreciation of $313,514 and $305,575, respectively

227,541

221,076

Long-term marketable securities

546,881

562,475

Intangible assets, net

64,385

68,660

Goodwill

179,045

179,708

Other assets

34,307

36,334

Deferred income taxes

29,937

24,494

Total assets

$

1,998,694

$

1,957,263

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

26,093

$

21,955

Accrued expenses

75,531

91,168

Income taxes payable

16,525

1,046

Business acquisition liabilities

11,535

11,770

Deferred revenue

11,807

12,025

Payable to broker

2,200

Total current liabilities

141,491

140,164

Business acquisition liabilities, net of current portion

56,501

58,755

Deferred income taxes

3,811

4,314

Other liabilities

11,519

12,642

Total liabilities

213,322

215,875

Commitments and contingencies (Note 15)

 

 

Equity:

Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 79,297,823 and 79,113,916 shares at March 31, 2022 and December 31, 2021, respectively

79

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 March 31, 2022 and December 31, 2021, respectively

22

22

Additional paid-in capital

570,082

553,787

Accumulated other comprehensive income/(loss)

(17,167)

(6,772)

Retained earnings

1,232,356

1,194,272

Total equity

1,785,372

1,741,388

Total liabilities and equity

$

1,998,694

$

1,957,263

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)

2022

2021

Net sales

$

230,549

$

227,344

Cost of goods sold

59,167

55,027

Gross profit

171,382

172,317

Operating expenses:

Research and development

17,412

14,924

Selling, general and administrative

100,748

97,891

Provision for litigation

2,341

(94)

Amortization of intangibles

4,512

4,774

Acquisition related costs

(76)

274

Total operating expenses

124,937

117,769

Operating income/(loss)

46,445

54,548

Other income/(expense), net

Interest income/(expense), net

2,543

2,712

Foreign currency transaction gain/(loss)

(391)

(280)

Other income/(expense)

301

214

Total other income/(expense), net

2,453

2,646

Income/(loss) before income taxes

48,898

57,194

Income tax provision

10,814

11,865

Net income/(loss)

$

38,084

$

45,329

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

Unrealized gain/(loss) on marketable securities

(8,828)

(1,666)

Foreign currency translation gain/(loss)

(1,567)

(4,113)

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

(10,395)

(5,779)

Comprehensive income/(loss)

$

27,689

$

39,550

Earnings per share:

Basic

$

0.37

$

0.45

Diluted

$

0.37

$

0.44

Weighted average shares outstanding:

Basic

101,600

99,866

Diluted

104,077

102,420

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, 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

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

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)

2022

2021

Cash flows from operating activities:

Net income

$

38,084

$

45,329

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

Depreciation and amortization

16,837

17,157

Amortization of premium (discount) on marketable securities

1,690

520

Write-down for excess and obsolete inventories, net

1,834

1,550

Stock-based compensation expense

8,152

7,698

Allowance for doubtful accounts

(728)

80

Change in fair value of business acquisition liabilities

(263)

258

Change in deferred income taxes

(2,994)

(808)

(Gain)/loss on disposal of assets, net

115

103

Payment of business acquisition related liabilities

(743)

(Increase)/decrease in:

Accounts receivable

(1,614)

(20,346)

Inventories

(17,939)

(3,997)

Prepaid expenses and other assets

547

4,516

Increase/(decrease) in:

Accounts payable

4,160

4,212

Accrued expenses and other liabilities

(15,428)

(4,783)

Income taxes payable/receivable

12,980

12,081

Net cash provided by/(used in) operating activities

44,690

63,570

Cash flows from investing activities:

Purchases of marketable securities

(142,145)

(185,110)

Maturities of marketable securities

106,549

39,850

Sales of marketable securities

42,673

33,818

Purchases of property and equipment

(19,971)

(13,672)

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

(1,000)

Net cash provided by/(used in) investing activities

(13,894)

(125,114)

Cash flows from financing activities: