Globus Medical (NYSE:GMED) Q4 2025 Earnings call February 24, 2026 04:30 PM ET Speaker10Welcome to Globus Medical's fourth quarter and full year 2025 earnings call. At this time, all lines will be on mute, and a question and answer session will be held after the prepared remarks. I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.Speaker1Thank you, Dana. Thank you everyone for being with us today. Joining today's c ...

Core Insights - Avantor, Inc. has appointed Gregory T. Lucier to its Board of Directors, bringing over 30 years of leadership experience in the life sciences industry [1][3] - Lucier is the founder and current Executive Chairman and CEO of Corza Medical, and has held significant leadership roles in other healthcare companies, including NuVasive and Life Technologies [2][4] - The appointment is expected to enhance Avantor's focus on growth and profitability in its Lab Solutions and Bioscience Production segments [3] Company Overview - Avantor is a global provider of mission-critical products and services to the life sciences and advanced technology industries, serving over 300,000 customer locations in 180 countries [6] - The company aims to enable breakthroughs in medicine, healthcare, and technology through its comprehensive portfolio [6] Leadership Background - Gregory T. Lucier has a proven track record of driving growth and innovation in the healthcare sector, having previously led Life Technologies to over $4 billion in sales before its acquisition by Thermo Fisher Scientific in 2014 [4] - Lucier holds a bachelor's degree in industrial engineering from Pennsylvania State University and an MBA from Harvard Business School [5]

Financial Data and Key Metrics Changes - Globus Medical reported Q2 sales of $745 million, with non-GAAP EPS of $0.86, reflecting growth of 18.4% and 14.1% respectively compared to the prior year quarter [14][42] - Free cash flow was $31.3 million, growing 18% despite the impact of the Nevro acquisition and higher CapEx spending [14][36] - Adjusted EBITDA margins for the base Globus business were 32.3%, growing 210 basis points over the prior year quarter [36][52] Business Line Data and Key Metrics Changes - The base business generated $651 million in revenue during Q2, growing 3.3% as reported and 4.9% day adjusted [14][46] - Nevro contributed $95 million in revenue during the quarter, with operational challenges largely subsided [15][47] - The U.S. Spine business grew 5.7% as reported or 7.4% on a day adjusted basis, driven by key procedures and consistent growth [16][17] Market Data and Key Metrics Changes - U.S. revenue during Q2 was $600.8 million, growing 20.3% as reported [49] - International revenue was $144.6 million, growing 11% as reported and 7.5% on a constant currency basis [51] - The EMEA region saw growth led by the UK, Spain, Germany, Ireland, and Italy, while the APAC region focused on Japan and Australia [21][23] Company Strategy and Development Direction - The company aims to become the preeminent musculoskeletal technology company, focusing on improving clinical outcomes and addressing unmet clinical needs [10][11] - There is a strong emphasis on integrating merged and acquired entities, accelerating product development, and maintaining financial discipline [12][13] - The strategy includes expanding the product portfolio and enhancing the sales force through competitive rep conversions [12][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's position in the market and the potential for organic growth, particularly in the U.S. Spine business [12][34] - The integration of Nevro is expected to drive top-line growth while rightsizing profitability [59] - The leadership transition is viewed as an inflection point for growth, with confidence in the new CEO and CFO [88][90] Other Important Information - The company remains debt-free while generating strong free cash flow and investing in business growth [36][57] - The acquisition of Nevro was seen as a strategic opportunity, enhancing the product portfolio and addressing a broader continuum of care [30][45] - The company has launched 21 new products since the beginning of 2024, with a focus on innovation and filling gaps in the product portfolio [32][33] Q&A Session Summary Question: Progress with Nevro - Management expressed cautious optimism about the integration of Nevro, highlighting energized sales force and early benefits from cost containment activities [66][70] Question: Enabling Technology and Robots - Enabling Technologies saw a bounce back in Q2, with the pipeline remaining active and no significant loss of deals to competition [71][73] Question: Investor Communication Strategy - The company plans to enhance investor outreach and will hold an Investor Day in the future [78][79] Question: Augmented Reality Headset Launch - The launch plan for the augmented reality headset is underway, with a focus on integrating it into the Excelsius ecosystem [81][83] Question: Leadership Transition - Management reassured investors about the continuity in leadership and the depth of the leadership bench, emphasizing stability and strategic focus [87][88] Question: Nevro's Growth Strategy - The strategy for Nevro includes stability in approach, honing product development, and consistent commercial strategy to ensure long-term growth [91][93]

Core Insights - iRhythm Technologies, Inc. announced the retirement of two long-serving board members, Mark Rubash and Ralph Snyderman, M.D., effective July 7, 2025, and appointed Karen McGinnis and Kevin O'Boyle to the board of directors [1][2][4] Group 1: Board Member Changes - Mark Rubash served on the board since 2016, contributing extensive experience in finance, accounting, and strategy [2] - Ralph Snyderman, M.D., joined the board in 2017, providing clinical expertise and guidance during early digital technology challenges [2] - The new board members, Karen McGinnis and Kevin O'Boyle, bring significant financial and operational experience from the medical and biotechnology sectors [3][4] Group 2: New Board Members' Background - Karen McGinnis has over 30 years of experience in leading international companies across various industries, including biotechnology and technology, and previously served as Chief Accounting Officer at Illumina, Inc. [5][6] - Kevin O'Boyle has over 20 years of executive leadership experience, notably as CFO at NuVasive, where he significantly increased the company's market capitalization [9][10] Group 3: Company Vision and Strategy - iRhythm Technologies focuses on creating solutions that detect, predict, and prevent disease through wearable biosensors and cloud-based data analytics [12] - The company aims to deliver better data, insights, and health outcomes for patients globally [12]

Company Overview - NeuroPace, Inc. is a medical device company focused on transforming the lives of people living with epilepsy by reducing or eliminating debilitating seizures through its RNS System, which is the first and only commercially available brain-responsive platform that delivers personalized, real-time treatment at the seizure source [5] Leadership Change - Patrick F. Williams has been appointed as Chief Financial Officer, effective June 20, 2025, bringing over 25 years of financial and operational management experience in public medical device companies [2][3] - Rebecca Kuhn will depart from her CFO role but will remain in an advisory capacity for twelve months, having contributed significantly to the company over her 25-year tenure [2][3] Strategic Importance - The appointment of Mr. Williams is seen as timely, as the company is at a critical point in its growth trajectory and has significant opportunities for its RNS System [3] - Mr. Williams expressed excitement about joining NeuroPace, highlighting the potential to serve approximately 1.2 million U.S. patients living with drug-resistant epilepsy and the goal of making the RNS System the standard of care [4] Market Potential - The RNS System is positioned to expand access and utilization, with a commitment to product and data development aimed at improving patient outcomes [4]

Core Viewpoint - The article highlights the advancements in spinal surgery technology, particularly focusing on the introduction of the Magnetically Controlled Growing Rod (MCGR) system by Beijing Aikang Yicheng Medical Equipment Co., Ltd. This innovation aims to address the limitations of traditional spinal fixation methods, especially for adolescent idiopathic scoliosis (AIS) patients, by reducing the need for multiple surgeries and associated risks [2][4][5]. R&D Background - Spinal diseases, including scoliosis and degenerative conditions, have a high incidence rate, with adolescent scoliosis affecting approximately 1-3% of the population. The aging population in China is expected to reach about 21% by 2024, leading to an increase in degenerative spinal diseases [2]. - Traditional spinal fixation methods require frequent surgeries for length adjustments in growing patients, increasing infection risks and patient discomfort. The need for precise placement of screws and rods during surgery poses additional challenges [2]. Product Introduction - The MCGR system is designed to treat thoracolumbar diseases, utilizing magnetic control technology for non-invasive length adjustments, thereby minimizing the need for secondary surgeries [5]. Market Overview - According to Global Market Insights, the global orthopedic device market is projected to reach $53 billion by 2024, with a compound annual growth rate (CAGR) of approximately 5.6% from 2019 to 2024. The orthopedic implant market, which includes spinal, trauma, and joint implants, is expected to account for about 60% of this market, valued at approximately $31.8 billion [6]. - In China, the orthopedic implant market was valued at 29.7 billion yuan in 2019, with a CAGR of 15.8% from 2010 to 2019. The market is expected to exceed 60 billion yuan by 2024, with spinal implants representing about 30% of this market [6]. Competitor Products - The NuVasive MAGEC System is a leading magnetic control growing rod system used for treating early-onset scoliosis, which has been widely adopted in Europe and the U.S. [7][10]. - Medtronic's CD Horizon system is a traditional spinal fixation system used for various thoracolumbar conditions, combining screws and rods for stable fixation [11]. Company Overview - Beijing Aikang Yicheng Medical Equipment Co., Ltd. was established in 2003 and is a pioneer in the commercialization of additive manufacturing technology in orthopedic implants. The company has developed several innovative products and has a strong presence in both domestic and international markets [13].

Company Overview - Outset Medical, Inc. is a medical technology company focused on pioneering technology to reduce the cost and complexity of dialysis [4] - The company's flagship product, the Tablo® Hemodialysis System, is FDA cleared for use from hospital to home, representing a significant advancement in dialysis technology [4] - Tablo integrates water purification and on-demand dialysate production, allowing it to function as a mobile dialysis clinic with 2-way wireless data transmission and a proprietary data analytics platform [4] Leadership Changes - Kevin O'Boyle has been appointed to the Board of Directors and as chair of the Audit Committee, bringing over 20 years of healthcare leadership experience [2][3] - O'Boyle's previous roles include CFO of several publicly traded companies and board director of six public medical device companies, which will aid Outset in its growth [2] - Dale E. Jones has stepped down from the Board, with appreciation expressed for his contributions during a critical period for the company [3]

Core Viewpoint - Globus Medical reported a decline in net sales for Q1 2025, attributed to multiple factors including slowed technology transactions, supply chain disruptions, and fluctuations in international distributor orders, although the core U.S. spine business performed well [4][6]. Financial Performance - For Q1 2025, Globus Medical's global net sales were $598.1 million (approximately 4.3 billion RMB), a year-over-year decrease of 1.4%. On a constant currency basis, the decline was 0.8% [6]. - The GAAP net income for the quarter was $75.5 million, with a GAAP diluted earnings per share (EPS) of $0.54 and a non-GAAP diluted EPS of $0.68 [6]. - The company generated a record free cash flow of $141.2 million during the quarter and reaffirmed its full-year revenue guidance of $2.8 to $2.9 billion, while updating its non-GAAP EPS guidance to a range of $3.00 to $3.30 [6]. Mergers and Acquisitions - In February 2023, Globus Medical announced a $3.1 billion (approximately 21.1 billion RMB) acquisition of NuVasive, with NuVasive shareholders owning about 28% of the combined company post-transaction [4][7]. - The acquisition of Nevro for approximately $250 million was announced in early 2025, with a premium of 27% over Nevro's average stock price over the past 90 days [9][11]. Strategic Developments - The merger with NuVasive is expected to enhance the combined company's capabilities in the $50 billion global market for spine and orthopedic technologies, with analysts praising the integration as one of the most successful in the spine industry [7]. - The company launched 18 new products in 2024, including innovations that leverage the strengths of both companies, such as the ExcelsiusHub robotic platform integrated with Pulse neuro-monitoring technology [13]. Leadership Changes - In February 2025, the company announced that President Anthony L. Williams would leave by May 31, 2025, with CEO Dan Scavilla temporarily taking over the role to ensure operational stability during the transition [8].

Financial Data and Key Metrics Changes - Revenue for Q1 was $598 million, reflecting a slight decline of 0.8% year-over-year on a constant currency basis [7][21] - Non-GAAP EPS increased by 9% to $0.68 compared to the prior year [8][22] - Free cash flow reached a record $141 million, up 493% year-over-year [9][36] - GAAP net income was $75.5 million, translating to fully diluted GAAP earnings of $0.54 per share [22] Business Line Data and Key Metrics Changes - U.S. Spine revenue grew by 2% in Q1, driven by strong product portfolio performance [10][23] - Enabling Technologies revenue decreased by 31% to $22 million, impacted by market uncertainty [14][21] - International Spine implant business grew by 1% on a constant currency basis, affected by distributor order timing [15][29] - Combined trauma and NSO business declined by 8%, although core trauma grew by 34% [16] Market Data and Key Metrics Changes - U.S. Spine business showed above-market growth exiting April, with positive momentum expected in Q2 [11][12] - International revenue was $114.3 million, down 7.7% as reported, primarily due to supply chain disruptions [29] - The overall market for musculoskeletal products is expected to recover as supply chain issues are resolved [36] Company Strategy and Development Direction - The company aims to focus on sustained profitable growth and operational excellence while integrating the Nevro acquisition [10][18] - The acquisition of Nevro is seen as a strategic move to expand into the musculoskeletal market, adding a $3 billion market space [16][17] - The company plans to leverage its financial strength to accelerate investments in neuromodulation and improve cash flow [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in recovering from Q1 challenges, citing improvements in U.S. Spine and supply chain remediation [46][48] - The company anticipates a strong Q2 performance, with positive trends in sales and order fulfillment [40][41] - Management acknowledged the impact of market uncertainty but remains optimistic about long-term growth potential [76][78] Other Important Information - The company returned to debt-free status after paying off nearly $900 million in debt from the NuVasive merger [9][33] - The company has completed its share repurchase program, buying back over 20% of the dilution from the merger [34][35] - The company is actively addressing tariff impacts through cost action offsets and vendor negotiations [38][116] Q&A Session Summary Question: Confidence in recovery from Q1 performance - Management noted that supply chain disruptions and timing of distributor orders were temporary issues, with confidence in a recovery in Q2 [46][48] Question: Synergies from Nevro acquisition - Focus will be on reducing operational expenses and improving gross margins over time [50][51] Question: Impact of competitors on sales cycles - No significant impact from competitors was noted, although financing options are being explored [56] Question: Organic growth guidance - Organic growth components remain consistent, with expectations to recover lost sales from Q1 [72][82] Question: FDA warning letter status - Progress has been made, and management is awaiting inspection to resolve the issue [98] Question: Future M&A plans - Near-term focus will be on integrating Nevro and NuVasive before pursuing further acquisitions [99] Question: Market growth and procedural health - Management indicated some slowdown in market growth but emphasized the importance of clearing back orders and launching new products [101][102]

Financial Data and Key Metrics Changes - Revenue for Q1 was $598 million, reflecting a slight decline of 0.8% year-over-year on a constant currency basis, primarily due to softer enabling technology sales and supply chain disruptions [6][19] - Non-GAAP EPS increased by 9% to $0.68 compared to the prior year, despite a higher diluted share count and a one-time EPS gain not repeated in 2025 [6][20] - Free cash flow reached a record $141 million, up 493% from the previous year, with the company returning to debt-free status after paying off nearly $900 million from the NuVasive merger [7][30] - GAAP net income was $75.5 million, translating to fully diluted GAAP earnings of $0.54 per share, an increase from the prior year quarter [20] Business Line Data and Key Metrics Changes - U.S. Spine revenue grew by 2% in Q1, driven by strong retention rates and product cross-selling, despite temporary supply chain disruptions [8][21] - Enabling Technologies revenue decreased by 31% to $22 million, impacted by a tough prior year comparison and elongated selling cycles [12][19] - The combined trauma and NSO business declined by 8%, although core trauma delivered 34% growth [14][21] - International spine implant business grew by 1% on a constant currency basis, affected by timing of distributor orders and supply chain issues [13][21] Market Data and Key Metrics Changes - U.S. revenue was $483.9 million, essentially flat compared to the prior year, while international revenue decreased by 7.7% [26] - The overall market growth was described as slow, with surgeons noting longer approval times from insurance companies [95] Company Strategy and Development Direction - The company aims to focus on sustained profitable growth, leveraging financial strength to accelerate top-line results while maintaining strong EPS and free cash flow [7][8] - The acquisition of Nevro for $250 million is expected to expand the company's reach into the musculoskeletal market, adding a $3 billion market space [14][15] - The company is committed to integrating Nevro into its existing infrastructure to improve profitability and cash flow [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in recovering from Q1 challenges, citing positive trends in U.S. Spine and ongoing remediation of supply chain issues [45][46] - The company reaffirmed its 2025 net sales guidance of $2.8 billion to $2.9 billion but lowered non-GAAP EPS guidance to $3.0 to $3.3 due to additional costs from the Nevro acquisition [36][37] - Management remains optimistic about the second quarter, expecting to see improved results as supply chain disruptions ease [37][38] Other Important Information - The company has completed its share repurchase program, buying back over 20% of the dilution created from the NuVasive merger [30][31] - The company is actively addressing tariff impacts through cost action offsets, including price increases and vendor negotiations [35][112] Q&A Session Summary Question: Confidence in Q2 performance after a challenging Q1 - Management indicated that supply chain disruptions and timing of distributor orders were temporary issues, with confidence in a recovery in Q2 [45][46] Question: Synergies from the Nevro acquisition - Focus will be on reducing operational expenses and improving gross margins, with a commitment to driving profitable sales growth [48][49] Question: Impact of competitors on sales cycles - Management noted that while selling cycles have elongated, they have not seen competitors causing delays in closing deals [53][54] Question: Expectations for cash use post-Nevro acquisition - The company plans to prioritize internal investments and may consider tuck-in acquisitions, with share repurchases remaining part of the capital structure [62][64] Question: Integration status of Nevro and NuVasive - Management reassured that Nevro's integration is separate from ongoing NuVasive activities, with confidence in managing both integrations effectively [86][88] Question: Update on FDA warning letter - Management reported progress with the FDA and is awaiting inspection, expressing readiness to resolve the matter [92] Question: Impact of tariffs on margins - Management stated that tariffs are not expected to materially impact margins due to the company's vertical integration and U.S.-based production [111][112]