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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 June 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 August 1, 2022 was 99,515,064 shares.

1


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Condensed Consolidated Balance Sheets (Unaudited)

 

 

June 30, 2022 and December 31, 2021

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 

 

Three and six months ended June 30, 2022 and June 30, 2021

4

Condensed Consolidated Statements of Equity (Unaudited)

 

Three and six months ended June 30, 2022 and June 30, 2021

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Six months ended June 30, 2022 and June 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

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

32

Item 3.

Defaults Upon Senior Securities

32

Item 4.

Mine Safety Disclosures

32

Item 5.

Other Information

32

Item 6.

Exhibits

33

 

SIGNATURES

35

 

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

December 31,

(In thousands, except share and per share values)

2022

2021

ASSETS

Current assets:

Cash and cash equivalents

$

150,772

$

193,069

Short-term marketable securities

257,238

250,378

Accounts receivable, net of allowances of $4,182 and $4,962, respectively

192,814

164,436

Inventories

266,043

237,001

Prepaid expenses and other current assets

18,579

18,417

Income taxes receivable

5,722

1,215

Total current assets

891,168

864,516

Property and equipment, net of accumulated depreciation of $321,999 and $305,575, respectively

238,882

221,076

Long-term marketable securities

473,663

562,475

Intangible assets, net

59,131

68,660

Goodwill

182,702

179,708

Other assets

34,007

36,334

Deferred income taxes

35,159

24,494

Total assets

$

1,914,712

$

1,957,263

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

34,195

$

21,955

Accrued expenses

82,543

91,168

Income taxes payable

3,471

1,046

Business acquisition liabilities

12,623

11,770

Deferred revenue

13,185

12,025

Payable to broker

2,200

Total current liabilities

146,017

140,164

Business acquisition liabilities, net of current portion

55,691

58,755

Deferred income taxes

2,511

4,314

Other liabilities

11,400

12,642

Total liabilities

215,619

215,875

Commitments and contingencies (Note 15)

 

 

Equity:

Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 77,037,205 and 79,113,916 shares at June 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 June 30, 2022 and December 31, 2021, respectively

22

22

Additional paid-in capital

581,907

553,787

Accumulated other comprehensive income/(loss)

(25,368)

(6,772)

Retained earnings

1,142,455

1,194,272

Total equity

1,699,093

1,741,388

Total liabilities and equity

$

1,914,712

$

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

Six Months Ended

June 30,

June 30,

(In thousands, except per share amounts)

2022

2021

2022

2021

Net sales

$

263,648

$

251,016

$

494,197

$

478,360

Cost of goods sold

68,470

63,846

127,637

118,873

Gross profit

195,178

187,170

366,560

359,487

Operating expenses:

Research and development

17,395

15,547

34,807

30,471

Selling, general and administrative

106,718

107,254

207,466

205,145

Provision for litigation

2,341

(94)

Amortization of intangibles

4,393

4,623

8,905

9,397

Acquisition related costs

(1,104)

13,870

(1,180)

14,144

Total operating expenses

127,402

141,294

252,339

259,063

Operating income/(loss)

67,776

45,876

114,221

100,424

Other income/(expense), net

Interest income/(expense), net

2,476

2,541

5,019

5,253

Foreign currency transaction gain/(loss)

(1,107)

209

(1,498)

(71)

Other income/(expense)

1,395

307

1,696

521

Total other income/(expense), net

2,764

3,057

5,217

5,703

Income/(loss) before income taxes

70,540

48,933

119,438

106,127

Income tax provision

15,950

7,388

26,764

19,253

Net income/(loss)

$

54,590

$

41,545

$

92,674

$

86,874

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

Unrealized gain/(loss) on marketable securities

(5,031)

(774)

(13,859)

(2,440)

Foreign currency translation gain/(loss)

(3,170)

1,026

(4,737)

(3,087)

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

(8,201)

252

(18,596)

(5,527)

Comprehensive income/(loss)

$

46,389

$

41,797

$

74,078

$

81,347

Earnings per share:

Basic

$

0.54

$

0.41

$

0.92

$

0.87

Diluted

$

0.53

$

0.40

$

0.90

$

0.84

Weighted average shares outstanding:

Basic

100,671

100,449

101,136

100,159

Diluted

102,884

103,475

103,480

102,931

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

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)

$

1,142,455

$

1,699,093