gmed-20200805x8k
false0001237831DE00012378312020-08-052020-08-05

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2020  

GLOBUS MEDICAL, INC.

(Exact name of registrant as specified in charter)

DELAWARE

 

001-35621

 

04-3744954

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

2560 GENERAL ARMISTEAD AVENUE, AUDUBON, PA 19403

(Address of principal executive offices) (Zip Code)

(610) 930-1800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of exchange on which registered

Class A Common Stock, par value $.001 per share

GMED

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company     

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02. Results of Operations and Financial Condition.

On August 5, 2020, we issued a press release reporting, among other things, our sales and operating results for the three-month period ended June 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report.

In accordance with general instruction B.2 to Form 8-K, the information included in this Item 2.02, and the exhibits attached hereto, shall be deemed to be “furnished” and shall not be deemed to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.

Description

 

 

99.1

Press Release dated August 5, 2020

104

The cover page from this Current Report on Form 8-K, formatted as Inline XBRL.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GLOBUS MEDICAL, INC.

 

 

(Registrant)

 

 

 

Dated:

August 5, 2019

/s/ KEITH PFEIL

 

 

 

 

 

Keith Pfeil

 

 

Senior Vice President

 

 

Chief Financial Officer

Chief Accounting Officer

(Principal Financial Officer)

 

 

Exhibit 991 Earnings Release

Exhibit 99.1





Globus Medical Reports Second Quarter 2020 Results



AUDUBON, PA, August 5, 2020: Globus Medical, Inc. (NYSE: GMED), a leading musculoskeletal solutions company, today announced its financial results for the second quarter ended June 30, 2020.



·

Worldwide sales were $148.9 million, a decrease of 23.4% as reported



·

Second quarter net loss was $20.8 million



·

Diluted earnings per share (EPS) was $(0.21) and non-GAAP diluted EPS was $0.07



·

Non-GAAP adjusted EBITDA was 14.7% of sales



“The Globus Team performed extremely well in the second quarter, said Dave Demski, President and CEO.  “Our worldwide revenue was down 23% in the quarter, an exceptional result when compared to our peers within the industry.  Furthermore, we used the opportunity provided by the slowdown in procedures to strengthen ourselves for the future.  We critically evaluated all aspects of the business and trimmed back non-essential and less efficient areas; we continued to manufacture products at record levels, in anticipation of the bounce back we are already starting to see; we launched several new and innovative products; we continued to recruit competitive sales reps at record levels; and we are aggressively expanding our manufacturing capacity.” 



“We are highly encouraged by the rebound in spine procedures in the US,” said Demski.  “The spine business in the US bottomed in mid-April, but rebounded to produce double digit growth in June, which has accelerated into the mid-teens growth in July.  Interest in robotic technology has remained high and we were able to close several deals in June and July.  We are excited about the second half of 2020: Globus is poised for robust growth if the recent trends continue; and, if we do experience further disruption, our lean organization structure and strong liquidity will position us to weather the storm effectively.”



Worldwide sales for the second quarter were $148.9 million, a decrease of 23.4% over the second quarter of 2019 on an as-reported basis and 23.3% on a constant currency basis. Second quarter sales in the U.S., including robotics, decreased by 21.8% compared to the second quarter of 2019. International sales decreased by 31.2% over the second quarter of 2019 on an as-reported basis and 30.5% on a constant currency basis.



Second quarter GAAP net loss was $20.8 million, a  decrease of 154.6% over the same period last year. Diluted EPS for the second quarter was $(0.21), as compared to $0.38 for the second quarter 2019. Non-GAAP diluted EPS for the second quarter was $0.07, compared to $0.41 in the second quarter of 2019,  a decrease of 82.9%.



The Company generated net cash provided by operating activities of $23.1 million and non-GAAP free cash flow of 13.1 million in the second quarter, and ended the quarter with cash, cash equivalents and marketable securities of $636.2 million. The Company remains debt free. 



2020 Annual Guidance



On April 16, 2020, due to the rapidly evolving environment and continued uncertainties resulting from the COVID-19 pandemic, Globus Medical withdrew previously announced full year 2020 guidance. At this time, Globus Medical cannot predict the specific extent, or duration, of the impact of COVID-19 on its financial and operating results.


 



Conference Call Information



Globus Medical will hold a teleconference to discuss its 2020 second quarter 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 Wednesday, August 12, 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 724-7657.



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, 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 June 30, 2020 and for other comparative periods, we are presenting non-GAAP net income and non-GAAP Diluted Earnings Per Share, which represents 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 June 30, 2020 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, 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

 

Six Months Ended



 

June 30,

 

June 30,

(In thousands, except per share amounts)

 

2020

 

2019

 

2020

 

2019

Sales

 

$

148,922 

 

$

194,539 

 

$

339,499 

 

$

377,486 

Cost of goods sold

 

 

50,643 

 

 

43,990 

 

 

99,507 

 

 

85,828 

Gross profit

 

 

98,279 

 

 

150,549 

 

 

239,992 

 

 

291,658 



 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

39,455 

 

 

15,746 

 

 

54,857 

 

 

30,069 

Selling, general and administrative

 

 

80,019 

 

 

88,379 

 

 

173,558 

 

 

174,163 

Provision for litigation

 

 

197 

 

 

 —

 

 

197 

 

 

 —

Amortization of intangibles

 

 

4,115 

 

 

3,449 

 

 

7,891 

 

 

6,792 

Acquisition related costs

 

 

56 

 

 

106 

 

 

604 

 

 

685 

Total operating expenses

 

 

123,842 

 

 

107,680 

 

 

237,107 

 

 

211,709 



 

 

 

 

 

 

 

 

 

 

 

 

Operating income/(loss)

 

 

(25,563)

 

 

42,869 

 

 

2,885 

 

 

79,949 



 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/(expense), net

 

 

3,590 

 

 

4,417 

 

 

7,914 

 

 

8,576 

Foreign currency transaction gain/(loss)

 

 

(168)

 

 

(210)

 

 

(636)

 

 

(22)

Other income/(expense)

 

 

199 

 

 

17 

 

 

393 

 

 

241 

Total other income/(expense), net

 

 

3,621 

 

 

4,224 

 

 

7,671 

 

 

8,795 



 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) before income taxes

 

 

(21,942)

 

 

47,093 

 

 

10,556 

 

 

88,744 

Income tax provision

 

 

(1,105)

 

 

8,930 

 

 

5,444 

 

 

17,370 



 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

(20,837)

 

$

38,163 

 

$

5,112 

 

$

71,374 



 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.21)

 

$

0.39 

 

$

0.05 

 

$

0.72 

Diluted

 

$

(0.21)

 

$

0.38 

 

$

0.05 

 

$

0.70 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

97,509 

 

 

99,023 

 

 

98,572 

 

 

98,875 

Dilutive stock options

 

 

 —

 

 

2,559 

 

 

2,420 

 

 

2,600 

Diluted

 

 

97,509 

 

 

101,582 

 

 

100,992 

 

 

101,475 



 

 

 

 

 

 

 

 

 

 

 

 

Anti-dilutive stock options excluded from weighted average calculation

 

 

11,680 

 

 

5,021 

 

 

6,645 

 

 

4,854 




 

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)







 

 

 

 

 

 



 

 

 

 

 

 



 

June 30,

 

December 31,

(In thousands, except par value)

 

2020

 

2019

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash

 

$

165,554 

 

$

195,724 

Short-term marketable securities

 

 

151,181 

 

 

115,763 

Accounts receivable, net of allowances of $8,117 and $5,599, respectively

 

 

132,092 

 

 

154,326 

Inventories

 

 

224,457 

 

 

196,314 

Prepaid expenses and other current assets

 

 

19,625 

 

 

17,243 

Income taxes receivable

 

 

3,982 

 

 

8,098 

Total current assets

 

 

696,891 

 

 

687,468 

Property and equipment, net of accumulated depreciation of $257,885 and $243,732, respectively

 

 

211,902 

 

 

199,841 

Long-term marketable securities

 

 

319,483 

 

 

409,514 

Intangible assets, net

 

 

85,226 

 

 

78,812 

Goodwill

 

 

129,184 

 

 

128,775 

Other assets

 

 

21,070 

 

 

21,741 

Deferred income taxes

 

 

2,046 

 

 

5,926 

Total assets

 

$

1,465,802 

 

$

1,532,077 



 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

27,715 

 

$

24,614 

Accrued expenses

 

 

69,243 

 

 

63,283 

Income taxes payable

 

 

1,990 

 

 

1,057 

Business acquisition liabilities

 

 

665 

 

 

6,727 

Deferred revenue

 

 

6,513 

 

 

5,402 

Payable to broker

 

 

 -

 

 

10,320 

Total current liabilities

 

 

106,126 

 

 

111,403 

Business acquisition liabilities, net of current portion

 

 

3,551 

 

 

2,822 

Deferred income taxes

 

 

5,046 

 

 

6,023 

Other liabilities

 

 

14,164 

 

 

9,377 

Total liabilities

 

 

128,887 

 

 

129,625 



 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Class A common stock; $0.001 par value.  Authorized 500,000 shares; issued and outstanding 75,327 and 77,395 shares at June 30, 2020 and December 31, 2019, respectively

 

 

75 

 

 

77 

Class B common stock; $0.001 par value.  Authorized 275,000 shares; issued and outstanding 22,430 and 22,430 shares at June 30, 2020 and December 31, 2019, respectively

 

 

22 

 

 

22 

Additional paid-in capital

 

 

387,611 

 

 

357,320 

Accumulated other comprehensive income (loss)

 

 

1,298 

 

 

(2,898)

Retained earnings

 

 

947,909 

 

 

1,047,931 

Total equity

 

 

1,336,915 

 

 

1,402,452 

Total liabilities and equity

 

$

1,465,802 

 

$

1,532,077 




 

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)





 

 

 

 

 

 



 

 

 

 

 

 



 

Six Months Ended



 

June 30,

(In thousands)

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

5,112 

 

$

71,374 

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

 

 

 

 

 

 

Acquired in-process research and development

 

 

24,418 

 

 

 —

Depreciation and amortization

 

 

29,669 

 

 

25,113 

Amortization of premium (discount) on marketable securities

 

 

104 

 

 

(736)

Write-down for excess and obsolete inventories

 

 

7,216 

 

 

2,468 

Stock-based compensation expense

 

 

14,118 

 

 

12,749 

Allowance for doubtful accounts

 

 

2,455 

 

 

1,229 

Change in fair value of business acquisition liabilities

 

 

463 

 

 

579 

Change in deferred income taxes

 

 

(1,127)

 

 

1,424 

(Gain)/loss on disposal of assets, net

 

 

625 

 

 

295 

(Increase)/decrease in:

 

 

 

 

 

 

Accounts receivable

 

 

19,306 

 

 

(6,532)

Inventories

 

 

(34,371)

 

 

(28,094)

Prepaid expenses and other assets

 

 

(2,875)

 

 

(2,933)

Increase/(decrease) in:

 

 

 

 

 

 

Accounts payable

 

 

2,974 

 

 

(901)

Accrued expenses and other liabilities

 

 

(7,756)

 

 

(8,744)

Income taxes payable/receivable

 

 

5,030 

 

 

(5,491)

Net cash provided by operating activities

 

 

65,361 

 

 

61,800 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of marketable securities

 

 

(57,418)

 

 

(210,606)

Maturities of marketable securities

 

 

88,383 

 

 

161,568 

Sales of marketable securities

 

 

17,405 

 

 

25,490 

Purchases of property and equipment

 

 

(32,270)

 

 

(42,895)

Acquisition of businesses, net of cash acquired and purchases of intangible and other assets

 

 

(21,991)

 

 

(24,135)

Net cash used in investing activities

 

 

(5,891)

 

 

(90,578)

Cash flows from financing activities:

 

 

 

 

 

 

Payment of business acquisition liabilities

 

 

(853)

 

 

(5,633)

Proceeds from exercise of stock options

 

 

15,964 

 

 

12,268 

Repurchase of common stock

 

 

(104,669)

 

 

 —

Net cash used in/provided by financing activities

 

 

(89,558)

 

 

6,635 

Effect of foreign exchange rate on cash

 

 

(82)

 

 

186 

Net increase/(decrease) in cash, cash equivalents, and restricted cash

 

 

(30,170)

 

 

(21,957)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

195,724 

 

 

139,747 

Cash, cash equivalents, and restricted cash at end of period

 

$

165,554 

 

$

117,790 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Interest paid

 

 

 

 

Income taxes paid

 

$

2,147 

 

$

23,975 






 

Supplemental Financial Information



Sales by Geographic Area:



 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,

(In thousands)

 

2020

 

2019

 

2020

 

2019

United States

 

$

125,154 

 

$

159,989 

 

$

283,601 

 

$

307,527 

International

 

 

23,768 

 

 

34,550 

 

 

55,898 

 

 

69,959 

Total Sales

 

$

148,922 

 

$

194,539 

 

$

339,499 

 

$

377,486 





Sales by Revenue Stream:







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,

(In thousands)

 

2020

 

2019

 

2020

 

2019

Musculoskeletal Solutions products

 

$

143,480 

 

$

182,538 

 

$

326,022 

 

$

358,296 

Enabling Technologies products

 

 

5,442 

 

 

12,001 

 

 

13,477 

 

 

19,190 

Total Sales

 

$

148,922 

 

$

194,539 

 

$

339,499 

 

$

377,486 



Liquidity and Capital Resources:





 

 

 

 

 

 



 

 

 

 

 

 



 

June 30,

 

December 31,

(In thousands)

 

2020

 

2019

Cash, cash equivalents, and restricted cash

 

$

165,554 

 

$

195,724 

Short-term marketable securities

 

 

151,181 

 

 

115,763 

Long-term marketable securities

 

 

319,483 

 

 

409,514 

Total cash, cash equivalents, restricted cash and marketable securities

 

$

636,218 

 

$

721,001 





The following tables reconcile GAAP to Non-GAAP financial measures.



Non-GAAP Adjusted EBITDA Reconciliation Table:





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,

(In thousands, except percentages)

 

2020

 

2019

 

2020

 

2019

Net income/(loss)

 

$

(20,837)

 

$

38,163 

 

$

5,112 

 

$

71,374 

Interest income/(expense), net

 

 

(3,590)

 

 

(4,417)

 

 

(7,914)

 

 

(8,576)

Provision for income taxes

 

 

(1,105)

 

 

8,930 

 

 

5,444 

 

 

17,370 

Depreciation and amortization

 

 

15,101 

 

 

12,858 

 

 

29,669 

 

 

25,113 

EBITDA

 

 

(10,431)

 

 

55,534 

 

 

32,311 

 

 

105,281 

Stock-based compensation expense

 

 

7,311 

 

 

6,297 

 

 

14,118 

 

 

12,749 

Provision for litigation

 

 

197 

 

 

 —

 

 

197 

 

 

 —

Acquisition related costs/licensing

 

 

469 

 

 

335 

 

 

1,426 

 

 

971 

Acquisition of in-process research and development

 

 

24,418 

 

 

 —

 

 

24,418 

 

 

 —

Adjusted EBITDA

 

$

21,964 

 

$

62,166 

 

$

72,470 

 

$

119,001 



 

 

 

 

 

 

 

 

 

 

 

 

Net income as a percentage of sales

 

 

-14.0%

 

 

19.6% 

 

 

1.5% 

 

 

18.9% 

Adjusted EBITDA as a percentage of sales

 

 

14.7% 

 

 

32.0% 

 

 

21.3% 

 

 

31.5% 




 

Non-GAAP Net Income Reconciliation Table:





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,

(In thousands)

 

2020

 

2019

 

2020

 

2019

Net income/(loss)

 

$

(20,837)

 

$

38,163 

 

$

5,112 

 

$

71,374 

Provision for litigation

 

 

197 

 

 

 —

 

 

197 

 

 

 —

Amortization of intangibles

 

 

4,115 

 

 

3,449 

 

 

7,891 

 

 

6,792 

Acquisition related costs/licensing

 

 

469 

 

 

335 

 

 

1,426 

 

 

971 

Acquisition of in-process research and development

 

 

24,418 

 

 

 —

 

 

24,418 

 

 

 —

Tax effect of adjusting items

 

 

(1,470)

 

 

(717)

 

 

(2,426)

 

 

(1,524)

Non-GAAP net income

 

$

6,892 

 

$

41,230 

 

$

36,618 

 

$

77,613 





Non-GAAP Diluted Earnings Per Share Reconciliation Table:





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,

(Per share amounts)

 

2020

 

2019

 

2020

 

2019

Diluted earnings per share, as reported

 

$

(0.21)

 

$

0.38 

 

$

0.05 

 

$

0.70 

Provision for litigation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Amortization of intangibles

 

 

0.04 

 

 

0.03 

 

 

0.08 

 

 

0.07 

Acquisition related costs/licensing

 

 

 —

 

 

 —

 

 

0.01 

 

 

0.01 

Acquisition of in-process research and development

 

 

0.25 

 

 

 —

 

 

0.24 

 

 

 —

Tax effect of adjusting items

 

 

(0.02)

 

 

(0.01)

 

 

(0.02)

 

 

(0.02)

Non-GAAP diluted earnings per share

 

$

0.07 

 

$

0.41 

 

$

0.36 

 

$

0.76 

* Amounts might not add due to rounding





Non-GAAP Free Cash Flow Reconciliation Table:





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,

(In thousands)

 

2020

 

2019

 

2020

 

2019

Net cash provided by operating activities

 

$

23,068 

 

$

22,597 

 

$

65,361 

 

$

61,800 

Purchases of property and equipment

 

 

(9,956)

 

 

(14,740)

 

 

(32,270)

 

 

(42,895)

Free cash flow

 

$

13,112 

 

$

7,857 

 

$

33,091 

 

$

18,905 





Non-GAAP Sales on a Constant Currency Basis Comparative Table:





 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Reported

 

Currency
Impact on 

 

Constant
Currency



 

June 30,

 

Sales

 

Current

 

Sales

(In thousands, except percentages)

 

2020

 

2019

 

Growth

 

Period Sales  

 

Growth

United States

 

$

125,154 

 

$

159,989 

 

-21.8%

 

$

 —

 

-21.8%

International

 

 

23,768 

 

 

34,550 

 

-31.2%

 

 

(230)

 

-30.5%

Total Sales

 

$

148,922 

 

$

194,539 

 

-23.4%

 

$

(230)

 

-23.3%











 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended

 

Reported

 

Currency
Impact on 

 

Constant
Currency



 

June 30,

 

Sales

 

Current

 

Sales

(In thousands, except percentages)

 

2020

 

2019

 

Growth

 

Period Sales  

 

Growth

United States

 

$

283,601 

 

$

307,527 

 

-7.8%

 

$

 —

 

-7.8%

International

 

 

55,898 

 

 

69,959 

 

-20.1%

 

 

(563)

 

-19.3%

Total Sales

 

$

339,499 

 

$

377,486 

 

-10.1%

 

$

(563)

 

-9.9%


 

Contact:

Brian Kearns

Senior Vice President, Business Development and Investor Relations

Phone: (610) 930-1800

Email:    investors@globusmedical.com

www.globusmedical.com