Globus Medical, Inc. Q1 FY2025 earnings call

Key Points - Dan Scavilla: Q1 was flat with -0.8% growth on constant currency. Drivers included softer enabling tech sales, supply chain disruptions, but U.S. Spine had momentum. Launched two new products: Cohere ALIF spacer and Reline eGPS fixation system. - Keith Pfeil: Q1 revenue $598.1M, down 1.4% reported and 0.8% constant currency. Profitability expanded, free cash flow a record $141.2M. Addressed supply chain impacts, neuromonitoring and biologics impacts, Nevro acquisition, and guidance reaffirmation.

In Q1, U.S. Spine grew 2% with gains across product portfolio. Enabling technology sales were $22 million, a decrease of 31% compared to prior year. International spine implant business grew 1% on constant currency basis. Combined trauma and NSO business declined 8% in Q1. U.S. Spine growth was impacted by temporary integration-related supply chain disruptions and planned reduction in third party biologic sales. Enabling technology sales were down due to elongated selling cycles and market uncertainty. International revenue was affected by distributor orders, supply chain disruptions, and lower robotic sales.

Reaffirmed net sales guidance of $2.8 billion to $2.9 billion but decreased fully diluted non-GAAP earnings per share guidance to a range between $3 to $3.3 due to additional carrying costs related to closing the Nevro deal earlier than planned.

• Supply chain disruptions impacting legacy NuVasive products and international distributor orders. - Market uncertainty causing elongated selling cycles for enabling technology. - Reimbursement changes affecting neuromonitoring and biologics businesses. - Potential tariff impacts, though minimized through cost action offsets.

Q: So, it goes without saying, think this isn’t the quarter anyone was expecting. Maybe if you could talk a little bit about your confidence here coming into April. I think you mentioned operating on or above your metrics, but how much of what happened in Q1 maybe spilled into Q2? What amount of what happened in Q1 do you think could recover somewhat in Q2 in rapid fashion? What’s going take a little more heavy lifting?

A: Yeah. So Matt, I’ll go first. At the end of the day, there’s a couple of things. As we transition facilities into new ones and validate them, whereas we continue to scale up our in house manufacturing, right? There are some things that took longer than planned that created some back orders. Think that coupled with timing of distributor orders, again, heavy in Q4, light in Q1, probably coming back. And then ultimately, the real thing here is the elongated selling process that we experienced in Q1 with all of the market uncertainty that really is the impact there. What I think is without getting deep into Q2, we’ve seen positive effects in our U.S. Spine business that really is solid. We are remedying and supplying the products from the back orders. I see that as a temporary issue that will recover in second quarter. And that will have an impact throughout international and trauma as well as U.S. And we are seeing deals occur at a decent pace within the robot. So it’s going well in all of those aspects. So if you ask me, I have confidence that this feels like a blip and we’re moving back to who we need to be. And look, we own a bad quarter. We’re going to go fix it and drive it forward and come out with the right results here.

Q: Thanks for taking the questions. I think I know the answer and I think it’s yes. But can you just confirm that all of Nevro is in the guidance dilution and revenue? And if it is, what’s the what’s your organic growth guidance?

A: So Rich, this is Keith. I will tell you that yes, it is included in business. We haven’t broken out the parts and pieces of it, though as we move forward when we report, we are going to show base business Globus versus prior year versus acquisitions.