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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, 2023

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, 2023 was 100,460,697 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, 2023 and December 31, 2022

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 

 

Three and six months ended June 30, 2023 and June 30, 2022

4

Condensed Consolidated Statements of Equity (Unaudited)

 

Three and six months ended June 30, 2023 and June 30, 2022

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Six months ended June 30, 2023 and June 30, 2022

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

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

37

 

SIGNATURES

39

 

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)

2023

2022

ASSETS

Current assets:

Cash and cash equivalents

$

306,452

$

150,466

Short-term marketable securities

306,376

295,592

Accounts receivable, net of allowances of $6,245 and $4,724, respectively

240,184

213,247

Inventories

335,556

298,981

Prepaid expenses and other current assets

19,684

20,997

Income taxes receivable

1,758

4,061

Total current assets

1,210,010

983,344

Property and equipment, net of accumulated depreciation of $364,215 and $343,036, respectively

248,048

243,729

Long-term marketable securities

391,521

495,852

Intangible assets, net

54,901

63,574

Goodwill

198,932

197,471

Other assets

47,215

43,311

Deferred income taxes

61,838

48,845

Total assets

$

2,212,465

$

2,076,126

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

33,811

$

36,101

Accrued expenses

89,606

94,705

Income taxes payable

1,758

990

Business acquisition liabilities

13,595

13,308

Deferred revenue

14,945

14,100

Payable to broker

1,505

-

Total current liabilities

155,220

159,204

Business acquisition liabilities, net of current portion

52,455

54,950

Deferred income taxes

5,299

1,779

Other liabilities

14,426

13,820

Total liabilities

227,400

229,753

Commitments and contingencies (Note 15)

 

 

Equity:

Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 78,013,122 and 77,762,282 shares at June 30, 2023 and December 31, 2022, respectively

78

78

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, 2023 and December 31, 2022, respectively

22

22

Additional paid-in capital

657,240

630,952

Accumulated other comprehensive income/(loss)

(19,067)

(24,630)

Retained earnings

1,346,792

1,239,951

Total equity

1,985,065

1,846,373

Total liabilities and equity

$

2,212,465

$

2,076,126

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)

2023

2022

2023

2022

Net sales

$

291,615

$

263,648

$

568,303

$

494,197

Cost of goods sold

76,473

68,470

147,298

127,637

Gross profit

215,142

195,178

421,005

366,560

Operating expenses:

Research and development

21,347

17,395

42,429

34,807

Selling, general and administrative

120,069

106,718

242,485

207,466

Provision for litigation, net

(2,740)

(2,740)

2,341

Amortization of intangibles

4,547

4,393

9,148

8,905

Acquisition related costs

5,707

(1,104)

7,068

(1,180)

Total operating expenses

148,930

127,402

298,390

252,339

Operating income/(loss)

66,212

67,776

122,615

114,221

Other income/(expense), net

Interest income/(expense), net

8,294

2,476

14,791

5,019

Foreign currency transaction gain/(loss)

(548)

(1,107)

(336)

(1,498)

Other income/(expense)

716

1,395

793

1,696

Total other income/(expense), net

8,462

2,764

15,248

5,217

Income/(loss) before income taxes

74,674

70,540

137,863

119,438

Income tax provision

16,962

15,950

31,022

26,764

Net income/(loss)

$

57,712

$

54,590

$

106,841

$

92,674

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

Unrealized gain/(loss) on marketable securities

40

(5,031)

4,338

(13,859)

Foreign currency translation gain/(loss)

315

(3,170)

1,225

(4,737)

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

355

(8,201)

5,563

(18,596)

Comprehensive income/(loss)

$

58,067

$

46,389

$

112,404

$

74,078

Earnings per share:

Basic

$

0.57

$

0.54

$

1.06

$

0.92

Diluted

$

0.57

$

0.53

$

1.05

$

0.90

Weighted average shares outstanding:

Basic

100,373

100,671

100,326

101,136

Diluted

101,782

102,884

101,989

103,480

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, 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 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

Stock-based compensation

8,639

8,639

Grant of restricted stock units

340

340

Exercise of stock options

108

3,199

3,199

Comprehensive income/(loss)

355

57,712

58,067

Balance at June 30, 2023

78,013

$

78

22,430

$

22

$

657,240

$

(19,067)

$

1,346,792

$

1,985,065

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