Globus Medical Reports Fourth Quarter and Full Year 2019 Results
AUDUBON, Pa., Feb. 20, 2020 (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, 2019.
Fourth Quarter:
- Worldwide sales increased 8.0% as reported to $211.7 million
- Fourth quarter net income was $45.5 million, or 21.5% of sales
- Diluted EPS were $0.44
- Non-GAAP diluted EPS were $0.49
- Non-GAAP adjusted EBITDA was 34.3% of sales.
Full Year 2019:
- Worldwide sales increased 10.2% as reported to $785.4 million
- Net income for the year was $155.2 million, or 19.8% of sales
- Diluted EPS were $1.52
- Non-GAAP diluted EPS were $1.68
- Non-GAAP adjusted EBITDA was 32.8% of sales.
“Globus Medical capped off a great 2019 performance with strong fourth quarter results. Full year revenue was a record $785.4 million, representing a 10.2% increase over 2018, our third consecutive year of double digit growth,” said Dave Demski, CEO. “Our organic growth rate in Spine sales far exceeded the market and was the highest among the top 6 spinal implant competitors. We sustained a strong finish in Enabling Technologies, demonstrating our ability to compete effectively against much larger players. We showed significant improvement in adjusted EBITDA, as our second half adjusted EBITDA reached 33.9%, despite heavy investments in INR and Trauma. We launched 17 new products across Spine and Trauma in 2019 and completed significant work on several exciting enhancements to our INR portfolio that are expected to launch in 2020.”
Full year 2019 sales were $785.4 million, a 10.2% increase over 2018, and non-GAAP diluted EPS was $1.68. Worldwide sales for the fourth quarter were $211.7 million, an increase of 8.0% over the fourth quarter of 2018. Revenue from Enabling Technology was primarily due to continued demand for the ExcelsiusGPS® robotics and navigation system.
Fourth quarter sales in the U.S., including robotics, increased by 8.3% compared to the fourth quarter of 2018. International sales increased by 6.4% over the fourth quarter of 2018 on an as-reported basis and 6.2% on a constant currency basis.
Fourth quarter GAAP net income was $45.5 million, an increase of 23.9% over the same period last year. Diluted EPS for the fourth quarter was $0.44, as compared to $0.36 for the fourth quarter 2018. Non-GAAP diluted EPS for the fourth quarter was $0.49, compared to $0.43 in the fourth quarter of 2018, an increase of 12.3%.
The company generated net cash provided by operating activities of $172.0 million and non-GAAP free cash flow of $101.2 million in 2019. The Company ended the year with cash, cash equivalents and marketable securities of $721.0 million. The company remains debt free.
2020 Annual Guidance
The Company today confirmed full year 2020 guidance with expected sales of $850 million and non-GAAP diluted earnings per share of $1.82.
Conference Call Information
Globus Medical will hold a teleconference to discuss its 2019 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:
1-855-533-7141 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 www.globusmedical.com/investors.
The call will be archived until Thursday, February 27, 2020. 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 377-7276.
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, provisions for litigation, and acquisition related costs/licensing, and net gain from the sale of assets, 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. Net gain from sale of assets represents the gain on sale of assets and the offsetting impact of costs incurred through the sale.
In addition, for the period ended December 31, 2019 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, net gain from the sale of assets, impacts of the U.S. Tax Reform Act and the tax effects of such adjustments. 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, net gain from the sale of assets and the tax effects of such adjustments, which we believe are not reflective of underlying business trends. Additionally, for the periods ended December 31, 2019 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 sales growth is calculated by translating current year sales at the same average exchange rates in effect during the applicable prior year period. We believe constant currency sales growth provides insight to the comparative increase or decrease in period 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 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 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, 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 successfully integrate the international operations acquired from Alphatec, both in general and on our anticipated timeline, our ability to transition Alphatec’s international customers to Globus products, our ability to realize the expected benefits to our results from the Alphatec acquisition, 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) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||
| Sales | $ | 211,667 | $ | 195,938 | $ | 176,034 | $ | 785,368 | $ | 712,969 | $ | 635,977 | |||||||||||
| Cost of goods sold | 48,760 | 45,954 | 40,856 | 179,975 | 159,410 | 150,453 | |||||||||||||||||
| Gross profit | 162,907 | 149,984 | 135,178 | 605,393 | 553,559 | 485,524 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 15,496 | 13,758 | 11,413 | 60,073 | 55,496 | 43,679 | |||||||||||||||||
| Selling, general and administrative | 92,138 | 83,642 | 72,958 | 354,757 | 311,591 | 267,817 | |||||||||||||||||
| Provision for litigation | 565 | 5,878 | (112 | ) | 2,190 | 5,878 | 2,668 | ||||||||||||||||
| Amortization of intangibles | 3,397 | 3,063 | 2,238 | 13,809 | 9,588 | 7,909 | |||||||||||||||||
| Acquisition related costs | 1,331 | 392 | 321 | 2,575 | 1,681 | 1,611 | |||||||||||||||||
| Total operating expenses | 112,927 | 106,733 | 86,818 | 433,404 | 384,234 | 323,684 | |||||||||||||||||
| Operating income | 49,980 | 43,251 | 48,360 | 171,989 | 169,325 | 161,840 | |||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Interest income/(expense), net | 4,452 | 4,167 | 1,863 | 17,406 | 13,278 | 6,608 | |||||||||||||||||
| Foreign currency transaction gain/(loss) | (48 | ) | 47 | 227 | 75 | 360 | 909 | ||||||||||||||||
| Other income/(expense) | 66 | 162 | 150 | 476 | 5,642 | 571 | |||||||||||||||||
| Total other income/(expense), net | 4,470 | 4,376 | 2,240 | 17,957 | 19,280 | 8,088 | |||||||||||||||||
| Income before income taxes | 54,450 | 47,627 | 50,600 | 189,946 | 188,605 | 169,928 | |||||||||||||||||
| Income tax provision | 8,920 | 10,876 | 26,224 | 34,736 | 32,131 | 62,580 | |||||||||||||||||
| Net income | $ | 45,530 | $ | 36,751 | $ | 24,376 | $ | 155,210 | $ | 156,474 | $ | 107,348 | |||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.46 | $ | 0.37 | $ | 0.25 | $ | 1.57 | $ | 1.60 | $ | 1.12 | |||||||||||
| Diluted | $ | 0.44 | $ | 0.36 | $ | 0.25 | $ | 1.52 | $ | 1.54 | $ | 1.10 | |||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 99,601 |
By: GlobeNewswire
- 20 Feb 2020
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