Globus Medical Reports 2013 First Quarter Results

Globus Medical Reports 2013 First Quarter Results

AUDUBON, Pa.--(BUSINESS WIRE)-- Globus Medical, Inc. (NYS: GMED) , a leading spinal implant manufacturer, today announced its financial results for the quarter ended March 31, 2013.

  • Worldwide sales were $105.0 million, a 10.9% increase from the first quarter of 2012

  • Net income was $19.9 million or $0.21 per diluted share

  • Non-GAAP Adjusted EBITDA was 33.8% of sales

"I am very pleased with this quarter's results, especially measured against our strong first quarter last year. Once again, our ability to deliver innovative products, attract top sales force talent and maintain financial discipline has enabled us to consistently deliver superior growth and profitability. We launched two products this quarter, and are on track to reach our annual target of 5-10 new products annually," commented David Paul, Chairman and CEO.


First quarter net sales were $105.0 million, compared to $94.7 million last year, representing a 10.9% increase. Sales in the US grew by 9.4%, over 2012, and International revenue grew by 30.0% over the same quarter in 2012 and currently represents 8.3% of total sales.

Net income for the quarter was $19.9 million or $0.21 per diluted share, as compared to $17.6 million, or $0.19 per diluted share in 2012. Non-GAAP Adjusted EBITDA was 33.8% of net sales, compared to 35.9% last year. Also impacting this quarter's non-GAAP Adjusted EBITDA was the Medical Device Excise Tax.

Cash, cash equivalents and marketable securities for the quarter increased by $11.7 million, ending the first quarter of 2013 at $224.1 million. The company remains debt free.

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, May 16, 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 5007-1177.

About Globus Medical, Inc.

Globus Medical, Inc. is a leading spinal implant manufacturer and is based in Audubon, Pennsylvania. The company was founded in 2003 by an experienced team of spine professionals with a shared vision to create products that enable spine surgeons to promote healing in patients with spinal disorders.

Non-GAAP Financial Measures

Adjusted EBITDA 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 settlements. This financial measure is not calculated in conformity with accounting principles generally accepted in the United States of America (GAAP). We present Adjusted EBITDA because we believe it is a useful indicator of our operating performance. Our management uses Adjusted EBITDA principally as a measure of our operating performance and believes that Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. We also believe Adjusted EBITDA is useful to our management and investors as a measure of comparative operating performance from period to period and among companies 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) and items outside the control of our management (primarily 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.

Adjusted EBITDA should not be considered in isolation or as a substitute for a measure of our liquidity or operating performance prepared in accordance with GAAP, and is not indicative of net income (loss) from operations as determined under GAAP. Adjusted EBITDA and other non-GAAP financial measures have limitations that should be considered before using these measures to evaluate our liquidity or financial performance. Adjusted EBITDA does not include certain expenses that may be necessary to review our operating results and liquidity requirements. Our definition and calculation of Adjusted EBITDA may differ from that of other companies.

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 Form 10-Q, Form 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

March 31,

March 31,

(In thousands, except per share amounts)

2013

2012

Sales

$

105,018

$

94,717

Cost of goods sold

23,493

18,391

Gross profit

81,525

76,326

Operating expenses:

Research and development

6,847

6,736

Selling, general and administrative

45,397

41,225

Provision for litigation settlements

50

307

Total operating expenses

52,294

48,268

Operating income

29,231

28,058

Other income, net

279

225

Income before income taxes

29,510

28,283

Income tax provision

9,619

10,707

Net income

$

19,891

$

17,576

Earnings per share:

Basic

$

0.22

$

0.20

Diluted

$

0.21

$

0.19

Weighted average shares outstanding:

Basic

91,805

88,221

Diluted

93,573

90,877

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31,

December 31,

(In thousands, except par value)

2013

2012

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

131,543

$

212,400

Short-term marketable securities

30,785

Accounts receivable, net of allowances of $1,098 and $961, respectively

59,425

53,496

Inventories

66,867

62,310

Prepaid expenses and other current assets

4,358

3,020

Income taxes receivable

5,546

5,105

Deferred income taxes

24,911

23,779

Total current assets

323,435

360,110

Property and equipment, net

62,533

61,089

Intangible assets, net

9,453

9,585

Goodwill

15,372

15,372

Long-term marketable securities

61,788

Other assets

1,039

977

Total assets

$

473,620

$

447,133

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

8,784

$

9,991

Accounts payable to related party

3,878

2,556

Accrued expenses

19,290

25,003

Income taxes payable

11,816

523

Business acquisition liabilities, current

1,506

1,435

Total current liabilities

45,274

39,508

Business acquisition liabilities, net of current portion

9,564

9,909

Deferred income taxes

6,966

7,714

Other liabilities

3,516

3,500

Total liabilities

65,320

60,631

Commitments and contingencies

Equity:

Common stock; $0.001 par value. Authorized 785,000 shares; issued and outstanding 91,933 and 91,270 shares at March 31, 2013 and December 31, 2012

92

91

Additional paid-in capital

139,000

136,501

Accumulated other comprehensive loss

(1,360

)

(767

)

Retained earnings

270,568

250,677

Total equity

408,300

386,502

Total liabilities and equity

$

473,620

$

447,133

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Three Months Ended

March 31,

March 31,

(In thousands)

2013

2012

Cash flows from operating activities:

Net income

$

19,891

$

17,576

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

4,610

4,381

Provision for excess and obsolete inventories

2,000

1,850

Stock-based compensation

1,312

1,111

Allowance for doubtful accounts

54

226

Deferred income taxes

(1,900

)

(949

)

(Increase) decrease in:

Accounts receivable

(6,197

)

(4,185

)

Inventories

(7,009

)

(3,730

)

Prepaid expenses and other assets

(850

)

(425

)

Increase (decrease) in:

Accounts payable

(320

)

(517

)

Accounts payable to related party

1,322

653

Accrued expenses and other liabilities

(5,490

)

(4,044

)

Income taxes payable/receivable

10,853

10,904

Net cash provided by operating activities

18,276

22,851

Cash flows from investing activities:

Purchases of marketable securities

(93,187

)

Purchases of property and equipment

(6,772

)

(6,313

)

Net cash used in investing activities

(99,959

)

(6,313

)

Cash flows from financing activities:

Payment of business acquisition liabilities

(400

)

(300

)

Net proceeds from issuance of common stock

885

88

Excess tax benefit related to nonqualified stock options

303

24

Net cash provided by/(used in) financing activities

788

(188

)

Effect of foreign exchange rate on cash

38

80

Net increase/(decrease) in cash and cash equivalents

(80,857

)

16,430

Cash and cash equivalents, beginning of period

212,400

142,668

Cash and cash equivalents, end of period

$

131,543

$

159,098

Supplemental disclosures of cash flow information:

Interest paid

17

6

Income taxes paid

$

418

$

376

The following is a reconciliation of Adjusted EBITDA (unaudited) to net income for the periods presented:

Three Months Ended

March 31,

March 31,

(In thousands, except percentages)

2013

2012

Net Income