GMED 6.30.13 8K

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2013
 
 
GLOBUS MEDICAL, INC.
(Exact name of registrant as specified in charter)
 
 
 
 
 
 
 
 
DELAWARE
 
001-35621
 
04-3744954
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
2560 GENERAL ARMISTEAD AVENUE, AUDUBON, PA 19403
(Address of principal executive offices) (Zip Code)
(610) 930-1800
(Registrant's telephone number, including area code)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 




Item 2.02. Results of Operations and Financial Condition.
On August 1, 2013 we issued a press release reporting, among other things, our sales and operating results for the six-month period ended June 30, 2013. A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated by reference into this Item 2.02 as is fully set forth herein.
In accordance with general instruction B.2 to Form 8-K, the information included in this Item 2.02, and the exhibits attached hereto, shall be deemed to be “furnished” and shall not be deemed to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.


Item 9.01. Financial Statements and Exhibits.
Exhibit No.
Description
 
 
99.1
Press Release dated August 1, 2013


SIGNATURES

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
GLOBUS MEDICAL, INC.
 
 
(Registrant)
 
 
 
Dated:
August 1, 2013
/s/ RICHARD A. BARON
 
 
 
 
 
Richard A. Baron
 
 
Senior Vice President
 
 
Chief Financial Officer



EXHIBIT LIST
Exhibit No.
Description
 
 
99.1
Press Release dated August 1, 2013



GMED 6.30.13 8K Exhibit 99.1


Exhibit 99.1


Globus Medical Reports 2013 Second Quarter Results
Record Quarterly Sales


AUDUBON, PA, August 1, 2013: Globus Medical, Inc. (NYSE:GMED), a leading musculoskeletal implant manufacturer, today announced its financial results for the quarter ended June 30, 2013.

Worldwide sales were $107.0 million, a 11.5% increase from the second quarter of 2012
Net income was $7.4 million or $0.08 per diluted share; Non-GAAP diluted EPS was $0.21
Non-GAAP Adjusted EBITDA was 34.0% of sales

David Paul, Chairman and CEO commented, We are very pleased with our performance this quarter and for the first half of 2013. Our revenue growth and profitability margins remain at industry leading levels, driven by our focus on rapid product innovation, expanding our sales footprint, and efficient operational execution. This quarter we launched six new products, including LATISTM, the first laterally expanding unitary interbody fusion spacer on the market to offer the benefits of a traditional anterior implant through a posterior approach.

Second quarter net sales were $107.0 million, compared to $96.0 million last year, representing an 11.5% increase. Sales in the US and international grew by 10.8% and 20.3%, respectively, over the same quarter in 2012. International sales currently represents 8.3% of total sales.

Net income for the quarter was $7.4 million, or $0.08 per diluted share, as compared to $19.0 million, or $0.21 per diluted share, for the second quarter of 2012. Non-GAAP earnings per diluted share were $0.21 and $0.20 for the quarters ending June 30, 2013 and 2012, respectively. The non-GAAP earnings per diluted share excludes the after-tax effect of the provisions for litigation losses. Non-GAAP Adjusted EBITDA for the quarter was 34.0% of net sales, compared to 36.1% for the same period last year. The Medical Device Excise Tax, which was not in effect in 2012, reduced Adjusted EBITDA by 1.6% for the second quarter of 2013.

Cash, cash equivalents and marketable securities for the quarter increased by $7.6 million, ending the second quarter of 2013 at $231.7 million. The company remains debt free.

Revenue Outlook and Non-GAAP Diluted Earnings per Share Guidance
The company today reiterated its revenue outlook and non-GAAP diluted earnings per share guidance for 2013. For 2013, the company continues to expect full-year revenue to be approximately $432 million and non-GAAP annual diluted earnings per share, which excludes provisions for litigation losses, to be approximately $0.81.


Conference Call Information
Globus Medical will hold a teleconference to discuss its performance with the investment community at 5:30 p.m. Eastern Time today. Globus invites all interested parties to join the call by dialing:
 
1-855-533-7141     United States Participants
1-720-545-0060     International Participants
There is no pass code for the teleconference.

For interested parties who do not wish to ask questions, the teleconference will be webcast live and may be accessed through a link on the Globus Medical website at investors.globusmedical.com.






If you are unable to participate during the live teleconference, the call will be archived until Thursday, August 15, 2013. The audio archive can be accessed by calling 1-855-859-2056 in the U.S. or 1-404-537-3406 from outside the U.S. The pass code for the audio replay is 2053-0308.


About Globus Medical, Inc.
Globus Medical, Inc. is a leading musculoskeletal implant company based in Audubon, PA. The company was founded in 2003 by an experienced team of professionals with a shared vision to create products that enable surgeons to promote healing in patients with musculoskeletal disorders. Additional information can be accessed at www.globusmedical.com.








Non-GAAP Financial Measures


To supplement our financial statements prepared in accordance with generally accepted in the United States of America (U.S. GAAP), management uses certain non-GAAP financial measures. For example, Adjusted EBITDA, which represents net income before interest (income)/expense, net and other non-operating expenses, provision for income taxes, depreciation and amortization, stock-based compensation, changes in the fair value of contingent consideration in connection with business acquisitions and provision for litigation loss/(income) and provision for litigation loss - cost of goods sold, is useful as an additional measure of operating performance, and particularly as a measure of comparative operating performance from period to period, as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our capital structure (primarily interest expense), asset base (primarily depreciation and amortization), income taxes and interest income and expense. Our management also uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. In addition, for the quarter ended June 30, 2013 and for other comparative periods, we are presenting a non-GAAP measure of diluted earnings per share, which represents diluted earnings per share before provision for litigation loss/(income) and provision for litigation loss - cost of goods sold, net of the tax effects of such provisions. We believe this non-GAAP measure is also a useful indicator of our operating performance, and particularly as an additional measure of comparative operative performance from period to period as it removes the effects of litigation, and specifically the litigation brought against us by DePuy Synthes Products, LLC, in which a jury verdict was returned in June 2013, which we believe is not reflective of underlying business trends.
Adjusted EBITDA and non-GAAP Diluted Earnings Per Share are not calculated in conformity with U.S. GAAP within the meaning of Item 10 of Regulation S-K. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP. These measures do not include certain expenses that may be necessary to evaluate our liquidity or operating results.


Safe Harbor Statements

All statements included in this press release other than statements of historical fact are forward-looking statements and may be identified by their use of words such as believe, may, might, could, will, aim, estimate, continue, anticipate, intend, expect, plan and other similar terms. These forward-looking statements are based on our current assumptions, expectations and estimates of future events and trends. Forward-looking statements are only predictions and are subject to many risks, uncertainties and other factors that may affect our businesses and operations and could cause actual results to differ materially from those predicted. These risks and uncertainties include, but are not limited to, factors affecting our quarterly results, our ability to manage our growth, our ability to sustain our profitability, demand for our products, our ability to compete successfully (including without limitation our ability to convince surgeons to use our products and our ability to attract and retain sales and other personnel), our ability to rapidly develop and introduce new products, our ability to develop and execute on successful business strategies, our ability to comply with changing laws and regulations that are applicable to our businesses, our ability to safeguard our intellectual property, our success in defending legal proceedings brought against us, trends in the medical device industry, general economic conditions, and other risks. For a discussion of these and other risks, uncertainties and other factors that could affect our results, you should refer to the disclosure contained in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, including the sections labeled Risk Factors and Cautionary Note Concerning Forward-Looking Statements, and in our Forms 10-Q, Forms 8-K and other filings with the Securities and Exchange Commission. These documents are available at www.sec.gov. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on its business or the





extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements contained in this press release speak only as of the date of this press release. We undertake no obligation to update any forward-looking statements as a result of new information, events or circumstances or other factors arising or coming to our attention after the date hereof.








GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

 
Three Months Ended
 
Six Months Ended
(In thousands, except per share amounts)
June 30,
2013
 
June 30,
2012
 
June 30,
2013
 
June 30,
2012
Sales
$
107,009

 
$
95,977

 
$
212,027

 
$
190,694

Cost of goods sold
23,501

 
18,379

 
46,994

 
36,770

Provision for litigation loss
1,260

 

 
1,260

 

Gross profit
82,248

 
77,598

 
163,773

 
153,924

 
 
 
 
 
 
 
 
 Operating expenses:
 
 
 
 
 
 
 
Research and development
7,037

 
6,940

 
13,884

 
13,676

Selling, general and administrative
45,750

 
41,231

 
91,147

 
82,456

Provision for litigation loss/(income)
18,269

 
(1,138
)
 
18,319

 
(831
)
Total operating expenses
71,056

 
47,033

 
123,350

 
95,301

 
 
 
 
 
 
 
 
Operating income
11,192

 
30,565

 
40,423

 
58,623

Other income/(expense), net
(221
)
 
(304
)
 
58

 
(79
)
Income before income taxes
10,971

 
30,261

 
40,481

 
58,544

Income tax provision
3,545

 
11,260

 
13,164

 
21,967

 
 
 
 
 
 
 
 
Net income
$
7,426

 
$
19,001

 
$
27,317

 
$
36,577

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.08

 
$
0.22

 
$
0.30

 
$
0.41

Diluted
$
0.08

 
$
0.21

 
$
0.29

 
$
0.40

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
92,415

 
88,354

 
92,110

 
88,288

Diluted
93,970

 
91,254

 
93,772

 
91,055









GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


(In thousands, except par value)
June 30,
2013
 
December 31,
2012
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
92,314

 
$
212,400

Short-term marketable securities
68,844

 

Accounts receivable, net of allowances of $1,138 and $961, respectively
57,531

 
53,496

Inventories
71,356

 
62,310

Prepaid expenses and other current assets
5,456

 
3,020

Income taxes receivable
14,050

 
5,105

Deferred income taxes
28,331

 
23,779

Total current assets
337,882

 
360,110

Property and equipment, net
63,934

 
61,089

Long-term marketable securities
70,517

 

Intangible assets, net
9,321

 
9,585

Goodwill
15,372

 
15,372

Other assets
1,049

 
977

Total assets
$
498,075

 
$
447,133

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
9,172

 
$
9,991

Accounts payable to related party
5,201

 
2,556

Accrued expenses
40,436

 
25,003

Income taxes payable
246

 
523

Business acquisition liabilities, current
1,580

 
1,435

Total current liabilities
56,635

 
39,508

Business acquisition liabilities, net of current portion
9,312

 
9,909

Deferred income taxes
6,464

 
7,714

Other liabilities
3,531

 
3,500

Total liabilities
75,942

 
60,631

Commitments and contingencies


 


Equity:
 
 
 
Common stock; $0.001 par value. Authorized 785,000 shares; issued and outstanding 92,816 and 91,270 shares at June 30, 2013 and December 31, 2012
93

 
91

Additional paid-in capital
145,418

 
136,501

Accumulated other comprehensive loss
(1,372
)
 
(767
)
Retained earnings
277,994

 
250,677

Total equity
422,133

 
386,502

Total liabilities and equity
$
498,075

 
$
447,133








GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
Six Months Ended
(In thousands)
June 30,
2013
 
June 30,
2012
Cash flows from operating activities:
 
 
 
Net income
$
27,317

 
$
36,577

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
9,352

 
8,888

Provision for excess and obsolete inventories
3,463

 
3,700

Stock-based compensation
2,478

 
2,137

Allowance for doubtful accounts
89

 
315

Deferred income taxes
(5,806
)
 
(1,872
)
(Increase) decrease in:
 
 
 
Accounts receivable
(4,410
)
 
(3,050
)
Inventories
(12,955
)
 
(9,329
)
Prepaid expenses and other assets
(1,746
)
 
(1,284
)
Increase (decrease) in:
 
 
 
Accounts payable
243

 
1,823

Accounts payable to related party
2,645

 
(695
)
Accrued expenses and other liabilities
15,824

 
(2,211
)
Income taxes payable/receivable
(9,238
)
 
(119
)
Net cash provided by operating activities
27,256

 
34,880

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of marketable securities
(144,062
)
 

Maturities of marketable securities
3,900

 

Purchases of property and equipment
(12,956
)
 
(11,849
)
Net cash used in investing activities
(153,118
)
 
(11,849
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Payment of business acquisition liabilities
(700
)
 
(600
)
Net proceeds from issuance of common stock
4,254

 
480

Excess tax benefit related to nonqualified stock options
2,187

 
57

Net cash provided by/(used in) financing activities
5,741

 
(63
)
 
 
 
 
Effect of foreign exchange rate on cash
35

 
(59
)
 
 
 
 
Net increase/(decrease) in cash and cash equivalents
(120,086
)
 
22,909

Cash and cash equivalents, beginning of period
212,400

 
142,668

Cash and cash equivalents, end of period
$
92,314

 
$
165,577

 
 
 
 
Supplemental disclosures of cash flow information:
 
 
 
Interest paid
30

 
26

Income taxes paid
$
25,891

 
$
23,422









The following tables reconcile GAAP to Non-GAAP financial measures.

Non-GAAP Adjusted EBITDA Reconciliation Table:
(Unaudited)
Three Months Ended
 
Six Months Ended
(In thousands, except percentages)
June 30,
2013
 
June 30,
2012
 
June 30,
2013
 
June 30,
2012
Net Income
$
7,426

 
$
19,001

 
$
27,317

 
$
36,577

Interest income, net
(144
)
 
(53
)
 
(190
)
 
(62
)
Provision for income taxes
3,545

 
11,260

 
13,164

 
21,967

Depreciation and amortization
4,742

 
4,507

 
9,352

 
8,888

EBITDA
15,569

 
34,715

 
49,643

 
67,370

Stock-based compensation
1,166

 
1,026

 
2,478

 
2,137

Provision for litigation loss/(income)
18,269

 
(1,138
)
 
18,319

 
(831
)
Provision for litigation loss - cost of goods sold
1,260

 

 
1,260

 

Change in fair value of contingent consideration
74

 
62

 
144

 
(40
)
Adjusted EBITDA
$
36,338

 
$
34,665

 
$
71,844

 
$
68,636

Adjusted EBITDA as a percentage of sales
34.0
%
 
36.1
%
 
33.9
%
 
36.0
%

Non-GAAP Diluted Earnings Per Share Reconciliation Table:
(Unaudited)
Three Months Ended
 
Six Months Ended
(Per share amounts)
June 30,
2013
 
June 30,
2012
 
June 30,
2013
 
June 30,
2012
Diluted EPS, as reported
$
0.08

 
$
0.21

 
$
0.29

 
$
0.40

Provision for litigation loss/(income), net of taxes
0.12

 
(0.01
)
 
0.13

 
0.00

Provision for litigation loss - cost of goods sold, net of taxes
0.01

 

 
0.01

 

Non-GAAP Diluted EPS
$
0.21

 
$
0.20

 
$
0.43

 
$
0.40



The following table highlights certain information related to our liquidity and capital resources:
(In thousands)
June 30,
2013
 
December 31,
2012
 
(unaudited)
 
Cash and cash equivalents
$
92,314

 
$
212,400

Short-term marketable securities
68,844

 

Long-term marketable securities
70,517

 

Total cash, cash equivalents and marketable securities
$
231,675

 
$
212,400

 
 
 
 
Available borrowing capacity under revolving credit facility
50,000

 
50,000

Working capital
$
281,247

 
$
320,602



Contact:





Ed Joyce
Director of Investor Relations
Phone: (610) 930-1800
Email:     investors@globusmedical.com
www.globusmedical.com