Globus Medical, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Financial Performance: Full year 2024 revenue was $2.519 billion, up 61% vs prior year. Non-GAAP EPS was $3.04, up 31%. Free cash flow was $405 million, an all-time high. Q4 2024 revenue was $657 million, up 7% vs prior year. Non-GAAP EPS was $0.84, up 40% vs prior year.
• Product Launches: Launched 18 new products in 2024, including QUARTEX MIS system, ALLEGIANCE Retractor System, Modulus ALIF anchoring blades, ExcelsiusFlex robotic navigation platform, and ACTIFY™ Unicondylar Knee System.
• Integration and Synergies: Exceeded 2024 synergy targets. For year 2 synergies, continuing to implement common systems, expand in-house production, consolidate vendors, and drive cross-selling.
• Acquisition of Nevro Corporation: Announced acquisition of Nevro for ~$250 million, expanding into musculoskeletal market, leveraging high-frequency technology, and complementing existing spinal portfolio.

Segment Performance

• U.S. Spine: Grew 4% in Q4 2024 with gains in expandables, MIS screws, cervical offerings, and 3D printed spacers. Driven by high retention rate, strong product offering, cross-selling, and implant pull-through from robotic procedures.
• Enabling Technology: Q4 2024 sales were $47 million, up 44% vs prior year. Q4 was highest number of unit placements since launch, growing 47% over prior Q4. Robotic procedures accelerated 17% vs prior year, exceeding 94,000 since launch.
• International Spine Implant: Delivered record Q4 sales and 13% constant currency growth in 2024, driven by Japan, UK, Italy, and Ireland.
• Combined Trauma and NSO: Grew 8% in Q4 2024, driven by base trauma business and NuVasive specialty orthopedic uptake, partially offset by supply chain disruption.

Guidance

• Stand-alone Globus Medical: Reaffirms full year 2025 revenue guidance of $2.66 billion to $2.69 billion and non-GAAP EPS range of $3.40 to $3.50.
• Including Nevro Acquisition: Anticipates 2025 net sales of $2.8 billion to $2.9 billion and non-GAAP EPS range of $3.10 to $3.40, expecting Nevro to be accretive in the second year.

Risks

• Foreign Currency Impact: Unfavorable foreign currency movements can impact financial results, as seen in Q4 2024 with a 0.72% unfavorable impact to adjusted EBITDA.
• Supply Chain Disruption: Temporary supply chain issues affected the combined Trauma and NSO business in Q4 2024, though rectified in Q1 2025.
• Regulatory and Approval Risks: Delays or issues with regulatory approvals for new products, such as the XR augmented reality headset, could impact product launches and market penetration.

Q: On the deal to acquire Nevro, why was this the right time and why was Nevro the right target?

A: Dan Scavilla mentioned it was due to rapid integration with NuVasive creating depth to pursue the opportunity, and Nevro's high-frequency technology has long-term growth potential.

Q: How deep into robot deals are Globus colleagues?

A: Dan Scavilla stated they're just starting to penetrate, with Reline and Modulus ready and focused on 2025 penetration.

Q: Thoughts on spine market prospects in 2025?

A: Daniel Scavilla expects low single-digit growth historically, but aims to outpace through innovation and investment.

Q: Tariff exposure?

A: Keith Pfeil noted exposure is very limited, with ~95% of products U.S.-based or sourced.