GMED 6.30.12 8K

 
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 21, 2012
 
 
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:
 
¨
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))
 
 
 




Item 2.02. Results of Operations and Financial Condition.
On August 21, 2012 we issued a press release reporting, among other things, our sales and operating results for the three and six month periods ended June 30, 2012. A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated by reference into this Item 2.02 as is fully set forth herein.
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 21, 2012





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 21, 2012
/s/ RICHARD A. BARON
 
 
 
 
 
Richard A. Baron
 
 
Senior Vice President
 
 
Chief Financial Officer





EXHIBIT LIST
Exhibit No.
Description
 
 
99.1
Press Release dated August 21, 2012





GMED 6.30.12 8K Exhibit 99.1
Exhibit 99.1


Globus Medical Reports 2012 Second Quarter Results


AUDUBON, PA, August 21, 2012: Globus Medical, Inc. (NYSE:GMED), a leading spinal implant manufacturer, today announced its financial results for the quarter ended June 30, 2012.

Sales were $96.0 million, an 18.6% increase from the second quarter of 2011
Net income increased 19.4% to $19.0 million, or $0.21 per diluted share
Non-GAAP Adjusted EBITDA was 36.1% of sales, comparable with last year

David Paul, Chairman and CEO commented, “I am extremely pleased with our second quarter results. We continue to grow well in excess of the industry averages by introducing better solutions for our customers and patients. In addition, we have maintained our focus on efficient operations and healthy cash flow.”
 
Second quarter net sales were $96.0 million, compared to $80.9 million last year, representing an 18.6% increase. Increased sales were primarily driven by growth from key disruptive products, including our minimally invasive surgical (MIS) and lateral platform products. International sales grew 38.2% over the same quarter in 2011 and currently represent 7.7% of total sales.

Selling, general and administrative expenses (SG&A) were $41.2 million in the quarter, or 43.0% of sales, up slightly from 41.7% last year. The increase in SG&A is attributable primarily to increased investment in headcount associated with the Company's Algea Therapies interventional pain management division.

Net Income for the quarter was $19.0 million or $0.21 per diluted share, as compared to $15.9 million, or $0.18 per diluted share in 2011. Non-GAAP Adjusted EBITDA was 36.1% of net sales, compared to 35.9% last year.

Cash and cash equivalents for the quarter increased by $6.5 million, to end the first half of 2012 at $165.6 million.




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

This press release includes Adjusted EBITDA, a “non-GAAP financial measure”, as defined by the Securities and Exchange Commission. 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. We present Adjusted EBITDA because we believe it is a useful indicator of our operating performance. 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 U.S. generally accepted accounting principles (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

“Safe Harbor” statements under the Private Securities Litigation Reform Act of 1995: This press release contains estimates and forward-looking statements. All statements other than statements of historical fact contained in this press release are forward-looking statements. The estimates and forward-looking statements contained in this press release are based mainly on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to numerous risks and uncertainties and are made in light of information currently available to us as of the date of this presentation. Many important factors may adversely affect our results as indicated in forward-looking statements. For a discussion of some of the important factors that could affect our results, you should refer to the disclosure contained in our prospectus file with the Securities and Exchange Commission on August 3, 2012, as amended, including the sections labeled “Risk Factors,” “Cautionary Note Concerning Forward-Looking Statements,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations.” Additional information will also be set forth in our quarterly report on Form 10-Q that will be filed for the quarter ended June 30, 2012, which should be read in conjunction with these financial results. These documents may be obtained by visiting our Investor Relations website at http://investors.globusmedical.com or the Securities and Exchange Commission's website 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.

Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. As a result of these risks and uncertainties, the estimates and forward-looking statements discussed in this press release might not occur and our future results and performance may differ materially from those expressed in these forward-looking statements. Because of these uncertainties, you should not place undue reliance on these forward-looking statements. The results we report in our quarterly report on Form 10-Q for the three months ended June 30, 2012, could differ from the preliminary results announced in this press release. In addition, please note that the date of this press release is August 21, 2012, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.






GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

 
Three Months Ended
 
Six Months Ended
(In thousands, except per share amounts)
June 30,
2012
 
June 30,
2011
 
June 30,
2012
 
June 30,
2011
Sales
$
95,977

 
$
80,936

 
$
190,694

 
$
159,215

Cost of goods sold
18,379

 
17,269

 
36,770

 
32,168

Gross profit
77,598

 
63,667

 
153,924

 
127,047

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
6,940

 
5,735

 
13,676

 
11,775

Selling, general and administrative
41,231

 
33,753

 
82,456

 
67,767

Provision for litigation settlements
(1,138
)
 
370

 
(831
)
 
384

Total operating expenses
47,033

 
39,858

 
95,301

 
79,926

 
 
 
 
 
 
 
 
Operating income
30,565

 
23,809

 
58,623

 
47,121

Other expense, net
(304
)
 
(25
)
 
(79
)
 
(21
)
Income before income taxes
30,261

 
23,784

 
58,544

 
47,100

Income tax provision
11,260

 
7,864

 
21,967

 
16,749

 
 
 
 
 
 
 
 
Net income
$
19,001

 
$
15,920

 
$
36,577

 
$
30,351

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.22

 
$
0.18

 
$
0.41

 
$
0.34

Diluted
$
0.21

 
$
0.18

 
$
0.40

 
$
0.33

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
72,757

 
72,430

 
72,691

 
72,549

Diluted
75,657

 
74,652

 
75,458

 
75,102






GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)
June 30,
2012
 
December 31,
2011
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
165,577

 
$
142,668

Accounts receivable, net of allowances of $906 and $602, respectively
49,475

 
46,727

Inventories
53,122

 
47,369

Prepaid expenses and other current assets
4,035

 
2,515

Income taxes receivable
3,812

 
3,336

Deferred income taxes
17,747

 
16,160

Total current assets
293,768

 
258,775

Property and equipment, net
55,772

 
52,394

Intangible assets, net
7,238

 
7,433

Goodwill
9,808

 
9,808

Other assets
718

 
980

Total assets
$
367,304

 
$
329,390

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
7,371

 
$
5,323

Accounts payable to related party
483

 
1,178

Accrued expenses
19,207

 
21,268

Income taxes payable
764

 
302

Business acquisition liabilities, current
1,200

 
1,200

Total current liabilities
29,025

 
29,271

Business acquisition liabilities, net of current portion
8,333

 
9,089

Deferred income taxes
5,500

 
5,755

Other liabilities
2,758

 
2,799

Total liabilities
45,616

 
46,914




 


Equity:
 
 
 
Convertible preferred stock; $0.001 par value. Authorized, issued and outstanding 50,691 shares at June 30, 2012 and December 31, 2011
51

 
51

Common stock; $0.001 par value. Authorized 785,000 and 679,178 shares; issued and outstanding 72,780 and 72,529 shares at June 30, 2012 and December 31, 2011
73

 
73

Additional paid-in capital
109,269

 
106,708

Accumulated other comprehensive loss
(1,128
)
 
(1,202
)
Retained earnings
213,423

 
176,846

Total equity
321,688

 
282,476

Total liabilities and equity
$
367,304

 
$
329,390





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

 
Three Months Ended
 
Six Months Ended
(In thousands, except per share amounts)
June 30,
2012
 
June 30,
2011
 
June 30,
2012
 
June 30,
2011
Net Income
$
19,001

 
$
15,920

 
$
36,577

 
$
30,351

Interest (income)/expense, net
(53
)
 
75

 
(62
)
 
57

Provision for income taxes
11,260

 
7,864

 
21,967

 
16,749

Depreciation and amortization
4,507

 
4,054

 
8,888

 
7,876

EBITDA
34,715

 
27,913

 
67,370

 
55,033

Stock-based compensation
1,026

 
585

 
2,137

 
1,386

Provision for legal settlements
(1,138
)
 
370

 
(831
)
 
384

Change in fair value of contingent consideration
62

 
152

 
(40
)
 
152

Adjusted EBITDA
$
34,665

 
$
29,020

 
$
68,636

 
$
56,955

Adjusted EBITDA as a percentage of sales
36.1
%
 
35.9
%
 
36.0
%
 
35.8
%


Contact:

Ed Joyce
Director, Investor Relations
Phone: (610) 930-1800
Email:     investors@globusmedical.com
www.globusmedical.com