SEC Filing | Globus Medical, Inc.

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gmed-20230630x10q

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

 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.

Table of Contents

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

‎

Table of Contents

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.

‎

Table of Contents

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.

‎

Table of Contents

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