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Globus Medical Reports Fourth Quarter and Full Year 2021 Results
Source: Nasdaq GlobeNewswire / 17 Feb 2022 16:20:00 America/New_York
AUDUBON, Pa., Feb. 17, 2022 (GLOBE NEWSWIRE) -- Globus Medical, Inc. (NYSE: GMED), a leading musculoskeletal solutions company, today announced its financial results for the fourth quarter and year ended December 31, 2021.
Fourth Quarter 2021:
- Worldwide net sales were $250.0 million, an increase of 7.1% as compared to the fourth quarter of 2020
- GAAP net income for the quarter was $15.1 million
- GAAP diluted earnings per share (“EPS”) was $0.14 and non-GAAP diluted EPS was $0.49
- Non-GAAP adjusted EBITDA was $85.2 million, or 34.1% of net sales
Full Year 2021:
- Worldwide net sales were $958.1 million, an increase of 21.4% as compared to the full year of 2020
- GAAP net income for the year was $149.2 million
- GAAP diluted EPS was $1.44 and non-GAAP diluted EPS was $2.04 for the year
- Non-GAAP adjusted EBITDA was $331.4 million, or 34.6% of net sales
“Our fourth quarter results topped off another record-breaking year for Globus Medical, as we continued to perform well above our peers in growth as well as profitability,” said Dave Demski, President and CEO. “The clinical superiority of ExcelsiusGPS® continues to be the primary factor driving Enabling Technology momentum, which produced a record $25 million in revenue for the fourth quarter and $81 million for 2021, a 100% increase over 2020. Musculoskeletal Solutions also completed another outstanding year of market-share gains, led by US Spine with 18% growth, International Spine with 12% growth and Trauma with 39% growth. I want to thank all of our customers and team members for their belief and support and look forward to a very bright future together.”
Worldwide net sales for the fourth quarter were $250.0 million, an as-reported increase of 7.1% over the fourth quarter of 2020, and an increase of 7.4% on a constant currency basis. U.S. net sales for the fourth quarter of 2021, including robotics, increased by 7.2% compared to the fourth quarter of 2020. International net sales increased by 6.8% over the fourth quarter of 2020 on an as-reported basis, and an increase of 8.7% on a constant currency basis.
Worldwide net sales for the full year of 2021 were $958.1 million, an increase of 21.4% as compared to the full year of 2020. Non-GAAP diluted EPS was $2.04 for the full year of 2021.
GAAP net income for the fourth quarter was $15.1 million, a decrease of 71.5% over the same period in the prior year, driven primarily by the acquisition of in-process research and development during the fourth quarter. Diluted EPS for the fourth quarter was $0.14, compared to $0.52 for the fourth quarter of 2020. Non-GAAP diluted EPS for the fourth quarter of 2021 was $0.49, compared to $0.58 in the fourth quarter of 2020, a decrease of 16.0% driven primarily by a higher tax rate and increased stock compensation expense.
Net cash provided by operating activities was $276.3 million, and non-GAAP free cash flow was $219.4 million for the full year of 2021. The Company remains debt free.
2022 Annual Guidance
Today the Company announced full year 2022 guidance with expected net sales of $1.025 billion and non-GAAP diluted earnings per share of $2.10.
Conference Call Information
Globus Medical will hold a teleconference to discuss its 2021 fourth quarter and full year results with the investment community at 4:30 p.m. Eastern Time today. Globus invites all interested parties to join the call by dialing:
1-877-313-2501 United States Participants
1-929-517-0907 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 www.globusmedical.com/investors.
The call will be archived until Thursday, February 24, 2022. 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 passcode for the audio replay is 117-3696.
About Globus Medical, Inc.
Based in Audubon, Pennsylvania, Globus Medical, Inc. 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 U.S. generally accepted accounting principles (“U.S. GAAP”), management uses certain non-GAAP financial measures. For example, non-GAAP Adjusted EBITDA, which represents net income before interest income, net and other non-operating expenses, provision for income taxes, depreciation and amortization, stock-based compensation expense, provision for litigation, acquisition related costs/licensing, and acquisition of in-process research and development, 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, asset base, income taxes and interest income and expense. Our management also uses non-GAAP Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. Provision for litigation represents costs incurred for litigation settlements or unfavorable verdicts when the loss is known or considered probable and the amount can be reasonably estimated, or in the case of a favorable settlement, when income is realized. Acquisition related costs/licensing represents the change in fair value of business-acquisition-related contingent consideration; costs related to integrating recently acquired businesses, including but not limited to costs to exit or convert contractual obligations, severance, and information system conversion; and specific costs related to the consummation of the acquisition process such as banker fees, legal fees, and other acquisition related professional fees, as well as one-time licensing fees. Acquisition of in-process research and development represents the expensing of acquired assets with no alternative future use and related fees.
In addition, for the period ended December 31, 2021 and for other comparative periods, we are presenting non-GAAP net income and non-GAAP Diluted Earnings Per Share, which represent net income and diluted earnings per share excluding the provision for litigation, amortization of intangibles, acquisition related costs/licensing, acquisition of in-process research and development, and the tax effects of all of the foregoing adjustments. The tax effect adjustment represents the tax effect of the pre-tax non-GAAP adjustments excluded from non-GAAP net income. The tax impact of the non-GAAP adjustments is calculated based on the consolidated effective tax rate on a GAAP basis, applied to the non-GAAP adjustments, unless the underlying item has a materially different tax treatment, in which case the estimated tax rate applicable to the adjustment is used. We believe these non-GAAP measures are also useful indicators of our operating performance, and particularly as additional measures of comparative operating performance from period to period as they remove the effects of litigation, amortization of intangibles, acquisition related costs/licensing, acquisition of in-process research and development, and the tax effects of all of the foregoing adjustments, which we believe are not reflective of underlying business trends. Additionally, for the period ended December 31, 2021 and for other comparative periods, we also define the non-GAAP measure of free cash flow as the net cash provided by operating activities, adjusted for the impact of restricted cash, less the cash impact of purchases of property and equipment. We believe that this financial measure provides meaningful information for evaluating our overall financial performance for comparative periods as it facilitates an assessment of funds available to satisfy current and future obligations and fund acquisitions. Furthermore, the non-GAAP measure of constant currency net sales growth is calculated by translating current year net sales at the same average exchange rates in effect during the applicable prior year period. We believe constant currency net sales growth provides insight to the comparative increase or decrease in period net sales, in dollar and percentage terms, excluding the effects of fluctuations in foreign currency exchange rates.
Non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, free cash flow and constant currency net sales growth are not calculated in conformity with U.S. GAAP. 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. Our definitions of non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, free cash flow and constant currency net sales growth may differ from that of other companies and therefore may not be comparable.
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, health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic, 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 laws and regulations that are or may become 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 our 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)Three Months Ended Year Ended December 31, December 31, (In thousands, except per share amounts) 2021 2020 2019 2021 2020 2019 Net sales $ 250,021 $ 233,445 $ 211,667 $ 958,102 $ 789,042 $ 785,368 Cost of goods sold 61,796 60,859 48,760 239,223 217,463 179,975 Gross profit 188,225 172,586 162,907 718,879 571,579 605,393 Operating expenses: Research and development 51,022 15,241 15,496 97,346 84,519 60,073 Selling, general and administrative 106,560 92,047 92,138 408,149 354,757 354,757 Provision for litigation 5,410 (188 ) 565 5,921 9 2,190 Amortization of intangibles 4,556 4,788 3,397 18,526 16,831 13,809 Acquisition related costs 2,477 2,163 1,331 16,984 4,030 2,575 Total operating expenses 170,025 114,051 112,927 546,926 460,146 433,404 Operating income/(loss) 18,200 58,535 49,980 171,953 111,433 171,989 Other income, net Interest income/(expense), net 1,939 2,953 4,452 9,297 13,952 17,406 Foreign currency transaction gain/(loss) (454 ) 527 (48 ) (1,423 ) (279 ) 75 Other income/(expense) 143 198 66 580 793 476 Total other income/(expense), net 1,628 3,678 4,470 8,454 14,466 17,957 Income/(loss) before income taxes 19,828 62,213 54,450 180,407 125,899 189,946 Income tax provision 4,722 9,256 8,920 31,216 23,614 34,736 Net income $ 15,106 $ 52,957 $ 45,530 $ 149,191 $ 102,285 $ 155,210 Earnings per share: Basic $ 0.15 $ 0.54 $ 0.46 $ 1.48 $ 1.04 $ 1.57 Diluted $ 0.14 $ 0.52 $ 0.44 $ 1.44 $ 1.01 $ 1.52 Weighted average shares outstanding: Basic 101,495 98,958 99,601 100,734 98,580 99,150 Diluted 104,192 101,414 102,933 103,623 100,971 101,998 GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)December 31, (In thousands, except share and per share values) 2021 2020 ASSETS Current assets: Cash, cash equivalents, and restricted cash $ 193,069 $ 239,397 Short-term marketable securities 250,378 187,344 Accounts receivable, net of allowances of $4,962 and $4,408, respectively 164,436 141,676 Inventories 237,001 229,153 Prepaid expenses and other current assets 18,417 17,771 Income taxes receivable 1,215 6,424 Total current assets 864,516 821,765 Property and equipment, net of accumulated depreciation of $305,575 and $276,451, respectively 221,076 216,879 Long-term marketable securities 562,475 358,522 Intangible assets, net 68,660 86,949 Goodwill 179,708 156,716 Other assets 36,334 32,039 Deferred income taxes 24,494 6,615 Total assets $ 1,957,263 $ 1,679,485 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 21,955 $ 18,205 Accrued expenses 91,168 78,334 Income taxes payable 1,046 1,101 Business acquisition liabilities 11,770 5,777 Deferred revenue 12,025 8,125 Payable to broker 2,200 9,250 Total current liabilities 140,164 120,792 Business acquisition liabilities, net of current portion 58,755 31,493 Deferred income taxes 4,314 6,202 Other liabilities 12,642 14,701 Total liabilities 215,875 173,188 Equity: Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding
79,113,916 and 77,284,007 shares at December 31, 2021 and December 31, 2020, respectively79 77 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 December 31, 2021 and December 31, 2020, respectively22 22 Additional paid-in capital 553,787 457,161 Accumulated other comprehensive loss (6,772 ) 3,955 Retained earnings 1,194,272 1,045,082 Total equity 1,741,388 1,506,297 Total liabilities and equity $ 1,957,263 $ 1,679,485 GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)Year Ended December 31, (In thousands) 2021 2020 2019 Cash flows from operating activities: Net income $ 149,191 $ 102,285 $ 155,210 Adjustments to reconcile net income to net cash provided by operating activities: Acquired in-process research and development 34,312 24,418 — Depreciation and amortization 69,867 62,874 52,734 Amortization of premium (discount) on marketable securities 2,781 587 (1,089 ) Write-down for excess and obsolete inventories, net 6,143 17,741 2,498 Stock-based compensation expense 30,586 27,073 26,085 Allowance for doubtful accounts 1,200 2,960 3,026 Change in fair value of business acquisition liabilities 16,807 2,674 1,787 Change in deferred income taxes (17,615 ) (4,338 ) 4,302 (Gain)/loss on disposal of assets, net 464 809 866 Payment of business acquisition related liabilities (210 ) (700 ) — (Increase)/decrease in: Accounts receivable (25,895 ) 10,696 (18,306 ) Inventories (11,971 ) (50,111 ) (50,018 ) Prepaid expenses and other assets (6,178 ) (11,088 ) (12,263 ) Increase/(decrease) in: Accounts payable 3,684 (6,352 ) 773 Accrued expenses and other liabilities 17,896 17,608 7,043 Income taxes payable/receivable 5,212 1,657 (673 ) Net cash provided by/(used in) operating activities 276,274 198,793 171,975 Cash flows from investing activities: Purchases of marketable securities (622,359 ) (223,540 ) (346,526 ) Maturities of marketable securities 227,908 134,462 247,008 Sales of marketable securities 109,898 68,897 53,786 Purchases of property and equipment (56,898 ) (63,658 ) (70,750 ) Acquisition of businesses, net of cash acquired and purchases of intangible and other assets (34,488 ) (33,483 ) (23,799 ) Net cash provided by/(used in) investing activities (375,939 ) (117,322 ) (140,281 ) Cash flows from financing activities: Payment of business acquisition liabilities (9,349 ) (6,316 ) (6,597 ) Proceeds from exercise of stock options 63,496 72,322 31,036 Repurchase of common stock — (104,669 ) — Net cash provided by/(used in) financing activities 54,147 (38,663 ) 24,439 Effect of foreign exchange rate on cash (810 ) 865 (156 ) Net increase in cash, cash equivalents, and restricted cash (46,328 ) 43,673 55,977 Cash, cash equivalents, and restricted cash at beginning of period 239,397 195,724 139,747 Cash, cash equivalents, and restricted cash at end of period $ 193,069 $ 239,397 $ 195,724 Supplemental disclosures of cash flow information: Income taxes paid $ 45,027 $ 25,437 $ 34,139 Purchases of property and equipment included in accounts payable and accrued expenses $ 4,551 $ 4,210 $ 4,226 Supplemental Financial Information Net Sales by Product Category: Three Months Ended Year Ended December 31, December 31, (In thousands) 2021 2020 2019 2021 2020 2019 Musculoskeletal Solutions $ 224,623 $ 215,361 $ 197,757 $ 876,780 $ 748,446 $ 738,377 Enabling Technologies 25,398 18,084 13,910 81,322 40,596 46,991 Total net sales $ 250,021 $ 233,445 $ 211,667 $ 958,102 $ 789,042 $ 785,368 Liquidity and Capital Resources: December 31, December 31, (In thousands) 2021 2020 Cash, cash equivalents, and restricted cash $ 193,069 $ 239,397 Short-term marketable securities 250,378 187,344 Long-term marketable securities 562,475 358,522 Total cash, cash equivalents, restricted cash and marketable securities $ 1,005,922 $ 785,263 The following tables reconcile GAAP to Non-GAAP financial measures.
Non-GAAP Adjusted EBITDA Reconciliation Table: Three Months Ended Year Ended December 31, December 31, (In thousands, except percentages) 2021 2020 2019 2021 2020 2019 Net income/(loss) $ 15,106 $ 52,957 $ 45,530 $ 149,191 $ 102,285 $ 155,210 Interest (income)/expense, net (1,939 ) (2,953 ) (4,452 ) (9,297 ) (13,952 ) (17,406 ) Provision for income taxes 4,722 9,256 8,920 31,216 23,614 34,736 Depreciation and amortization 16,829 16,904 14,046 69,867 62,874 52,734 EBITDA 34,718 76,164 64,044 240,977 174,821 225,274 Stock-based compensation expense 7,805 5,935 6,437 30,586 27,073 26,085 Provision for litigation 5,410 (188 ) 565 5,921 9 2,190 Acquisition related costs/licensing 2,934 2,698 1,652 19,622 5,877 3,664 Acquisition of in-process research and development 34,312 — — 34,312 24,418 — Adjusted EBITDA $ 85,179 $ 84,609 $ 72,698 $ 331,418 $ 232,198 $ 257,213 Net income/(loss) as a percentage of net sales 6.0 % 22.7 % 21.5 % 15.6 % 13.0 % 19.8 % Adjusted EBITDA as a percentage of net sales 34.1 % 36.2 % 34.3 % 34.6 % 29.4 % 32.8 % Non-GAAP Net Income Reconciliation Table: Three Months Ended Year Ended December 31, December 31, (In thousands) 2021 2020 2019 2021 2020 2019 Net income/(loss) $ 15,106 $ 52,957 $ 45,530 $ 149,191 $ 102,285 $ 155,210 Provision for litigation 5,410 (188 ) 565 5,921 9 2,190 Amortization of intangibles 4,556 4,788 3,397 18,526 16,831 13,809 Acquisition related costs/licensing 2,934 2,698 1,652 19,622 5,877 3,664 Acquisition of in-process research and development 34,312 — — 34,312 24,418 — Tax effect of adjusting items (11,245 ) (1,086 ) (920 ) (16,151 ) (4,504 ) (3,581 ) Non-GAAP net income/(loss) $ 51,073 $ 59,169 $ 50,224 $ 211,421 $ 144,916 $ 171,292 Non-GAAP Diluted Earnings Per Share Reconciliation Table: Three Months Ended Year Ended December 31, December 31, (In thousands) 2021 2020 2019 2021 2020 2019 Diluted earnings per share, as reported $ 0.14 $ 0.52 $ 0.44 $ 1.44 $ 1.01 $ 1.52 Provision for litigation 0.06 — 0.01 0.06 — 0.02 Amortization of intangibles 0.04 0.05 0.03 0.18 0.17 0.14 Acquisition related costs/licensing 0.03 0.03 0.02 0.19 0.06 0.04 Acquisition of in-process research and development 0.33 — — 0.33 0.24 — Tax effect of adjusting items (0.11 ) (0.01 ) (0.01 ) (0.16 ) (0.04 ) (0.04 ) Non-GAAP diluted earnings per share $ 0.49 $ 0.58 $ 0.49 $ 2.04 $ 1.44 $ 1.68 *amounts might not add due to rounding Non-GAAP Free Cash Flow Reconciliation Table: Three Months Ended Year Ended December 31, December 31, (In thousands) 2021 2020 2019 2021 2020 2019 Net cash provided by operating activities $ 76,253 $ 80,184 $ 54,266 $ 276,274 $ 198,793 $ 171,975 Purchases of property and equipment (17,045 ) (14,063 ) (15,793 ) (56,898 ) (63,658 ) (70,750 ) Free cash flow $ 59,208 $ 66,121 $ 38,473 $ 219,376 $ 135,135 $ 101,225 Non-GAAP Net Sales on a Constant Currency Basis Comparative Table: Three Months Ended Reported Currency
Impact onConstant
CurrencyDecember 31, Net Sales Current Net Sales (In thousands, except percentages) 2021 2020 Growth Period Net Sales Growth United States $ 212,963 $ 198,749 7.2% $ — 7.2% International 37,058 34,696 6.8% 645 8.7% Total net sales $ 250,021 $ 233,445 7.1% $ 645 7.4% Year Ended Reported Currency
Impact onConstant
CurrencyDecember 31, Net Sales Current Net Sales (In thousands, except percentages) 2021 2020 Growth Period Net Sales Growth United States $ 819,571 $ 664,454 23.3% $ — 23.3% International 138,531 124,588 11.2% (1,613 ) 9.9% Total net sales $ 958,102 $ 789,042 21.4% $ (1,613 ) 21.2% Contact:
Brian Kearns
Senior Vice President, Business Development and Investor Relations
Phone: (610) 930-1800
Email: investors@globusmedical.com
www.globusmedical.com