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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File No. 001-35621

GLOBUS MEDICAL, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

04-3744954

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

2560 General Armistead Avenue, Audubon, PA 19403

 

(610) 930-1800

(Address of principal executive offices) (Zip Code)

 

(Registrant’s telephone number, including Area Code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files):

Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes   No 

The number of shares outstanding of the issuer’s common stock (par value $0.001 per share) as of August 2, 2021 was 100,890,673 shares.

1


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Condensed Consolidated Balance Sheets (Unaudited)

 

 

June 30, 2021 and December 31, 2020

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 

 

Three and six months ended June 30, 2021 and June 30, 2020

4

Condensed Consolidated Statements of Equity (Unaudited)

 

Three and six months ended June 30, 2021 and June 30, 2020

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Three and six months ended June 30, 2021 and June 30, 2020

6

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

33

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

33

Item 6.

Exhibits

33

 

SIGNATURES

35

 

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

December 31,

(In thousands, except share and per share values)

2021

2020

ASSETS

Current assets:

Cash, cash equivalents, and restricted cash

$

268,783

$

239,397

Short-term marketable securities

191,644

187,344

Accounts receivable, net of allowances of $4,687 and $4,408, respectively

165,852

141,676

Inventories

231,208

229,153

Prepaid expenses and other current assets

15,200

17,771

Income taxes receivable

19,311

6,424

Total current assets

891,998

821,765

Property and equipment, net of accumulated depreciation of $293,534 and $276,451, respectively

210,749

216,879

Long-term marketable securities

453,726

358,522

Intangible assets, net

76,153

86,949

Goodwill

155,777

156,716

Other assets

33,147

32,039

Deferred income taxes

8,663

6,615

Total assets

$

1,830,213

$

1,679,485

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

21,270

$

18,205

Accrued expenses

78,453

78,334

Income taxes payable

3,427

1,101

Business acquisition liabilities

8,182

5,777

Deferred revenue

9,005

8,125

Payable to broker

9,705

9,250

Total current liabilities

130,042

120,792

Business acquisition liabilities, net of current portion

39,813

31,493

Deferred income taxes

5,474

6,202

Other liabilities

15,611

14,701

Total liabilities

190,940

173,188

Commitments and contingencies (Note 15)

 

 

Equity:

Class A common stock; $0.001 par value. Authorized 500,000,000 shares; issued and outstanding 78,303,475 and 77,284,007 shares at June 30, 2021 and December 31, 2020, respectively

79

77

Class B common stock; $0.001 par value. Authorized 275,000,000 shares; issued and outstanding 22,430,097 shares at June 30, 2021 and December 31, 2020

22

22

Additional paid-in capital

508,788

457,161

Accumulated other comprehensive income (loss)

(1,572)

3,955

Retained earnings

1,131,956

1,045,082

Total equity

1,639,273

1,506,297

Total liabilities and equity

$

1,830,213

$

1,679,485

See accompanying notes to unaudited condensed consolidated financial statements.


3


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands, except per share amounts)

2021

2020

2021

2020

Net sales

$

251,016

$

148,922

$

478,360

$

339,499

Cost of goods sold

63,846

50,643

118,873

99,507

Gross profit

187,170

98,279

359,487

239,992

Operating expenses:

Research and development

15,547

39,455

30,471

54,857

Selling, general and administrative

107,254

80,019

205,145

173,558

Provision for litigation

197

(94)

197

Amortization of intangibles

4,623

4,115

9,397

7,891

Acquisition related costs

13,870

56

14,144

604

Total operating expenses

141,294

123,842

259,063

237,107

Operating income/(loss)

45,876

(25,563)

100,424

2,885

Other income/(expense), net

Interest income/(expense), net

2,541

3,590

5,253

7,914

Foreign currency transaction gain/(loss)

209

(168)

(71)

(636)

Other income/(expense)

307

199

521

393

Total other income/(expense), net

3,057

3,621

5,703

7,671

Income/(loss) before income taxes

48,933

(21,942)

106,127

10,556

Income tax provision

7,388

(1,105)

19,253

5,444

Net income/(loss)

$

41,545

$

(20,837)

$

86,874

$

5,112

Other comprehensive income/(loss):

Unrealized gain/(loss) on marketable securities, net of tax

(774)

6,897

(2,440)

3,055

Foreign currency translation gain/(loss)

1,026

667

(3,087)

1,141

Total other comprehensive income/(loss)

252

7,564

(5,527)

4,196

Comprehensive income/(loss)

$

41,797

$

(13,273)

$

81,347

$

9,308

Earnings per share:

Basic

$

0.41

$

(0.21)

$

0.87

$

0.05

Diluted

$

0.40

$

(0.21)

$

0.84

$

0.05

Weighted average shares outstanding:

Basic

100,449

97,509

100,159

98,572

Diluted

103,475

97,509

102,931

100,992

See accompanying notes to unaudited condensed consolidated financial statements.

 

4


GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

Class A
Common Stock

Class B
Common Stock

Additional paid-in

Accumulated other comprehensive

Retained

(In thousands)

Shares

$

Shares

$

capital

income/(loss)

earnings

Total

Balance at December 31, 2020

77,284

$

77

22,430

$

22

$

457,161

$

3,955

$

1,045,082

$

1,506,297

Stock-based compensation

7,883

7,883

Grant of restricted stock units

163

163

Exercise of stock options

303

1

9,100

9,101

Comprehensive income/(loss)

(5,779)

45,329

39,550

Balance at March 31, 2021

77,587

$

78

22,430

$

22

$

474,307

$

(1,824)

$

1,090,411

$

1,562,994

Stock-based compensation

7,788

7,788

Grant of restricted stock units

197

197

Exercise of stock options

716

1

26,496

26,497

Comprehensive income/(loss)

252

41,545

41,797

Balance at June 30, 2021

78,303

$

79

22,430

$

22

$

508,788

$

(1,572)

$

1,131,956

$

1,639,273

Class A
Common Stock