10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

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)

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 x   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files):

Yes x   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act):

Large Accelerated Filer   x	Accelerated Filer   ¨
Non-accelerated Filer  ¨ (Do not check if a smaller reporting company)	Smaller Reporting Company  ¨

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

 Yes ¨  No x

The number of shares outstanding of the issuer’s common stock (par value $0.001 per share) as of July 22, 2016 was 95,654,764 shares.

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited)
	June 30, 2016 and December 31, 2015	3
	Consolidated Statements of Income (Unaudited)
	Three and six months ended June 30, 2016 and June 30, 2015	4
	Consolidated Statements of Comprehensive Income (Unaudited)
	Three and six months ended June 30, 2016 and June 30, 2015	5
	Consolidated Statements of Cash Flows (Unaudited)
	Six months ended June 30, 2016 and June 30, 2015	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
	SIGNATURES	38
	Exhibit Index	39

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except par value)	June 30, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	95,342		$	60,152
Restricted cash	11,235			26,119
Short-term marketable securities	229,170			220,877
Accounts receivable, net of allowances of $2,338 and $2,513, respectively	74,713			77,681
Inventories	104,417			105,260
Prepaid expenses and other current assets	5,420			7,351
Income taxes receivable	15,132			8,672
Deferred income taxes	—			38,687
Total current assets	535,429			544,799
Property and equipment, net of accumulated depreciation of $151,752 and $139,114, respectively	119,077			114,743
Long-term marketable securities	65,625			48,762
Intangible assets, net	32,993			33,242
Goodwill	91,964			91,964
Other assets	302			590
Deferred income taxes	24,086			—
Total assets	$	869,476		$	834,100
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	11,628		$	15,971
Accrued expenses	47,887			53,769
Income taxes payable	664			763
Business acquisition liabilities, current	10,101			12,188
Total current liabilities	70,280			82,691
Business acquisition liabilities, net of current portion	17,950			21,126
Deferred income taxes	—			13,260
Other liabilities	1,715			1,699
Total liabilities	89,945			118,776
Commitments and contingencies (Note 12)
Equity:
Class A common stock; $0.001 par value. Authorized 500,000 shares; issued and outstanding 71,772 and 71,442 shares at June 30, 2016 and December 31, 2015, respectively	72			71
Class B common stock; $0.001 par value. Authorized 275,000 shares; issued and outstanding 23,878 at June 30, 2016 and December 31, 2015, respectively	24			24
Additional paid-in capital	202,797			192,629
Accumulated other comprehensive loss	(1,736		)	(1,958		)
Retained earnings	578,374			524,558
Total equity	779,531			715,324
Total liabilities and equity	$	869,476		$	834,100

See accompanying notes to consolidated financial statements.

3

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended					Six Months Ended
(In thousands, except per share amounts)	June 30, 2016			June 30, 2015		June 30, 2016			June 30, 2015
Sales	$	137,489		$	133,570	$	276,753		$	265,174
Cost of goods sold	32,856			32,579		64,500			64,686
Gross profit	104,633			100,991		212,253			200,488
Operating expenses:
Research and development	11,251			9,081		21,450			17,737
Selling, general and administrative	52,408			54,506		106,978			106,795
Provision for litigation	3,056			374		3,056			406
Total operating expenses	66,715			63,961		131,484			124,938
Operating income	37,918			37,030		80,769			75,550
Other income, net
Interest income, net	602			278		1,098			556
Foreign currency transaction gain/(loss)	(309		)	13		(201		)	(664		)
Other income	125			150		281			202
Total other income, net	418			441		1,178			94
Income before income taxes	38,336			37,471		81,947			75,644
Income tax provision	12,530			13,417		28,131			26,942
Net income	$	25,806		$	24,054	$	53,816		$	48,702
Earnings per share:
Basic	$	0.27		$	0.25	$	0.56		$	0.51
Diluted	$	0.27		$	0.25	$	0.56		$	0.51
Weighted average shares outstanding:
Basic	95,585			94,979		95,491			94,884
Dilutive stock options	841			1,070		868			1,093
Diluted	96,426			96,049		96,359			95,977
Anti-dilutive stock options excluded from weighted average calculation	5,469			3,398		5,338			3,059

See accompanying notes to consolidated financial statements.

4

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net income	$	25,806		$	24,054		$	53,816		$	48,702
Other comprehensive income/(loss):
Unrealized gain/(loss) on marketable securities, net of tax	60			(37		)	284			28
Foreign currency translation gain/(loss)	(143		)	183			(62		)	(60		)
Total other comprehensive income/(loss)	(83		)	146			222			(32		)
Comprehensive income	$	25,723		$	24,200		$	54,038		$	48,670

See accompanying notes to consolidated financial statements.

5

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
(In thousands)	June 30, 2016			June 30, 2015
Cash flows from operating activities:
Net income	$	53,816		$	48,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,698			11,579
Amortization of premium on marketable securities	2,085			1,370
Write-down for excess and obsolete inventories	4,536			4,730
Stock-based compensation expense	5,690			4,669
Excess tax benefit related to nonqualified stock options	(764		)	(1,317		)
Allowance for doubtful accounts	148			717
Change in deferred income taxes	1,625			(5,047		)
(Increase)/decrease in:
Restricted cash	14,884			(1,312		)
Accounts receivable	2,624			1,591
Inventories	(3,812		)	(11,651		)
Prepaid expenses and other assets	1,114			(897		)
Increase/(decrease) in:
Accounts payable	(1,707		)	(66		)
Accounts payable to related-party	—			(5,359		)
Accrued expenses and other liabilities	(10,078		)	(65		)
Income taxes payable/receivable	(5,796		)	187
Net cash provided by operating activities	78,063			47,831
Cash flows from investing activities:
Purchases of marketable securities	(172,886		)	(143,691		)
Maturities of marketable securities	129,495			85,444
Sales of marketable securities	16,602			39,085
Purchases of property and equipment	(20,142		)	(25,126		)
Acquisition of businesses, net of cash acquired	—			(48,016		)
Net cash used in investing activities	(46,931		)	(92,304		)
Cash flows from financing activities:
Payment of business acquisition liabilities	(400		)	(600		)
Proceeds from exercise of stock options	3,575			3,015
Excess tax benefit related to nonqualified stock options	764			1,317
Net cash provided by financing activities	3,939			3,732
Effect of foreign exchange rate on cash	119			35
Net increase/(decrease) in cash and cash equivalents	35,190			(40,706		)
Cash and cash equivalents, beginning of period	60,152			82,265
Cash and cash equivalents, end of period	$	95,342		$	41,559
Supplemental disclosures of cash flow information:
Interest paid	2			9
Income taxes paid	$	32,214		$	31,880

See accompanying notes to consolidated financial statements.

6

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) The Company

Globus Medical, Inc., together with its subsidiaries, is a medical device company focused on the design, development and commercialization of musculoskeletal implants. We are currently focused on implants that promote healing in patients with spine disorders. We have also recently begun to develop a robotic surgical navigation device and products to treat patients who have experienced orthopedic traumas, although those development efforts are still ongoing and we currently have no robotic or orthopedic trauma products that are cleared by the U.S. Food and Drug Administration for sale. We are an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures that assist surgeons in effectively treating their patients, respond to evolving surgeon needs and address new treatment options. Since our inception in 2003, we have launched over 160 products and offer a product portfolio addressing a broad array of spinal pathologies.

We are headquartered in Audubon, Pennsylvania, and market and sell our products through our exclusive sales force in the United States, as well as within North, Central & South America, Europe, Asia, Africa and Australia. Our sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors.

The terms “the Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc. and, where applicable, our consolidated subsidiaries.

(b) Basis of Presentation

The accompanying interim unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2015.

In the opinion of management, the statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position and of the results for the three- and six- month periods presented. The results of operations for any interim period are not indicative of results for the full year. Certain reclassifications have been made to prior period statements to conform to the current year presentation.

(c) Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Globus and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation.

(d) Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and

7

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, write-down for excess and obsolete inventory, useful lives of assets, the outcome of litigation, and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results.

(e) Restricted Cash

In December 2014, we set aside cash for the payment of a portion of the DePuy Synthes and Bianco litigation. We classified this cash as restricted, as the amount was placed in escrow to be used for payment of the litigation obligations, should we not be successful with our appeals. On January 13, 2016, we settled our litigation with DePuy Synthes and made a payment of $7.9 million and recovered approximately $8.4 million related to that settlement shortly thereafter. As of June 30, 2016, we have $11.2 million of restricted cash remaining related to the Bianco matter. See “Note 12. Commitments and Contingencies” below for more details regarding these litigations.

(f) Marketable Securities

Our marketable securities include municipal bonds, corporate debt securities, commercial paper, securities of U.S. government-sponsored agencies and asset-backed securities, and are classified as available-for-sale as of June 30, 2016. Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive loss on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets.

We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made.

(g) Inventories

Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast

8

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories.

(h) Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold.

(i) Recently Issued Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 amends the guidance in former Topic 605, Revenue Recognition, and most other existing revenue guidances in US GAAP. Under the new standard, an entity will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which the entity expects to be entitled in exchange for those goods or services and provide additional disclosures. As amended, the effective date for public entities is annual reporting periods beginning after December 15, 2017 and interim periods therein. Early adoption is not permitted prior to the first quarter of 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the timing and impact of the new standard on our financial position, results of operations, and disclosures.

In July 2015, the FASB released ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”) as part of the FASB’s Simplification Initiative. This update is intended to more closely align the measurement of inventory under GAAP with the measurement of inventory under International Financial Reporting Standards. Within the scope of the update, an entity is required to measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonable and predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for all public entities for fiscal years beginning after December 31, 2016, including interim reporting periods within that period, and is required to be applied prospectively, with early adoption permitted. We are currently evaluating the impact of the new standard on our financial position, results of operations, and disclosures.

In September 2015, the FASB released ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Prior to the issuance of the standard, entities were required to retrospectively apply adjustments made to provisional amounts recognized in a business combination. The amendments in ASU 2015-16 require an entity to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim

9

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

periods within those years, beginning after December 15, 2015, with early adoption permitted. The update is not expected to have a material impact on our financial position, results of operations, and disclosures.

In November 2015, the FASB released ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that all deferred income taxes are classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 also aligns the presentation of deferred taxes with that of International Financial Reporting Standards. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier application permitted for all entities as of the beginning of an interim or annual reporting period. We adopted ASU 2015-17 prospectively effective March 31, 2016, therefore prior periods were not adjusted.

In February 2016, the FASB released ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases with terms greater than 12 months, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures.

In March 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which will simplify the income tax consequences, accounting for forfeitures, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted, and will be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures.

NOTE 2. ACQUISITIONS

Branch Medical Group, Inc.

On February 25, 2015, we entered into an agreement to acquire Branch Medical Group, Inc. (“BMG”), a related-party manufacturer of high precision medical devices located in Audubon, PA. We closed this acquisition on March 11, 2015, for $57.0 million in cash, $5.3 million in deferred consideration, and $0.9 million of closing working capital adjustments. The amount payable to BMG on the date of acquisition of $5.2 million was also settled in connection with the acquisition. The deferred consideration was a holdback of a portion of the sale price, to allow time to properly account for all working capital adjustments in the event of an unfavorable adjustment to the sellers. The full holdback amount of $5.3 million was paid in cash in July 2016.

As previously disclosed in our definitive proxy statement, BMG had been a related-party supplier since 2005. As of February 24, 2015, David C. Paul's wife, David D. Davidar's wife, and David M. Demski collectively owned approximately 49% of the outstanding stock of BMG. In addition, since February 2010, Mr. Paul's wife and Mr. Davidar's wife had served as directors of BMG. Prior to the acquisition, we purchased

10

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

products and services from BMG pursuant to a standard Supplier Quality Agreement entered into in September 2010.

We accounted for the acquisition under the purchase method of accounting, and as a result, recorded goodwill of $39.0 million. We recorded the deferred consideration as a component of business acquisition liabilities, current, in our balance sheet. The results of operations of BMG have been included in our results of operations from the date of acquisition. Amounts recognized for assets acquired and liabilities assumed are based on purchase price allocations and on certain management judgments. These allocations are based on an analysis of the estimated fair values of assets acquired and liabilities assumed, including identifiable tangible assets, and estimates of the useful lives of tangible assets. We completed our final purchase price allocations during September 2015. The goodwill from this acquisition is not deductible for tax purposes.

NOTE 3. INTANGIBLE ASSETS

A summary of intangible assets is presented below:

		June 30, 2016
(In thousands)	Weighted Average Amortization Period (in years)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
In-process research & development	—	$	24,560	$	—		$	24,560
Supplier network	10.0	4,000		(667		)	3,333
Customer relationships & other intangibles	7.3	5,525		(2,895		)	2,630
Patents	16.1	3,035		(565		)	2,470
Total intangible assets		$	37,120	$	(4,127	)	$	32,993

		December 31, 2015
(In thousands)	Weighted Average Amortization Period (in years)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
In-process research & development	—	$	24,560	$	—		$	24,560
Supplier network	10.0	4,000		(467		)	3,533
Customer relationships & other intangibles	7.3	5,525		(2,384		)	3,141
Patents	17.0	2,495		(487		)	2,008
Total intangible assets		$	36,580	$	(3,338	)	$	33,242

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GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 4. MARKETABLE SECURITIES

The composition of our short-term and long-term marketable securities is as follows:

		June 30, 2016
(In thousands)	Contractual Maturity (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Municipal bonds	Less than 1	$	139,367	$	41	$	(7	)	$	139,401
Corporate debt securities	Less than 1	50,225		24		(1		)	50,248
Commercial paper	Less than 1	33,053		15		—			33,068
Securities of U.S. government-sponsored agencies	Less than 1	5,512		3		—			5,515
Asset-backed securities	Less than 1	938		—		—			938
Total short-term marketable securities		$	229,095	$	83	$	(8	)	$	229,170
Long-term:
Municipal bonds	1-2	$	19,530	$	22	$	—		$	19,552
Corporate debt securities	1-2	27,079		142		—			27,221
Asset-backed securities	1-2	18,830		22		—			18,852
Total long-term marketable securities		$	65,439	$	186	$	—		$	65,625

		December 31, 2015
(In thousands)	Contractual Maturity (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Municipal bonds	Less than 1	$	108,402	$	15	$	(81	)	$	108,336
Corporate debt securities	Less than 1	53,759		2		(57		)	53,704
Commercial paper	Less than 1	42,149		3		(1		)	42,151
Securities of U.S. government-sponsored agencies	Less than 1	14,511		4		(4		)	14,511
Asset-backed securities	Less than 1	2,175		—		—			2,175
Total short-term marketable securities		$	220,996	$	24	$	(143	)	$	220,877
Long-term:
Municipal bonds	1-2	$	18,508	$	—	$	(25	)	$	18,483
Corporate debt securities	1-2	12,033		—		(25		)	12,008
Asset-backed securities	1-2	18,294		—		(23		)	18,271
Total long-term marketable securities		$	48,835	$	—	$	(73	)	$	48,762

NOTE 5. FAIR VALUE MEASUREMENTS

Under the accounting for fair value measurements and disclosures, fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on

12

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories:

Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and

Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques.

The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows:

	Balance at
(In thousands)	June 30, 2016		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	18,774	$	7,285	$	11,489	$	—
Municipal bonds	158,953		—		158,953		—
Corporate debt securities	77,469		—		77,469		—
Commercial paper	33,068		—		33,068		—
Asset-backed securities	19,790		—		19,790		—
Securities of U.S. government-sponsored agencies	5,515		—		5,515		—
Liabilities
Contingent consideration	22,531		—		—		22,531

	Balance at
(In thousands)	December 31, 2015		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	12,700	$	1,701	$	10,999	$	—
Municipal bonds	126,819		—		126,819		—
Corporate debt securities	65,712		—		65,712		—
Commercial paper	42,151		—		42,151		—
Asset-backed securities	20,446		—		20,446		—
Securities of U.S. government-sponsored agencies	14,511		—		14,511		—
Liabilities
Contingent consideration	26,617		—		—		26,617

Our marketable securities are classified as Level 2 within the fair value hierarchy, as we measure their fair value using market prices for similar instruments and inputs such as actual trade data, benchmark

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

yields, broker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors.

Contingent consideration represents our contingent milestone, performance and revenue-sharing payment obligations related to our acquisitions and is measured at fair value, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. We assess these estimates on an ongoing basis as additional data impacting the assumptions is obtained. The balances of the fair value of contingent consideration are recognized within business acquisition liabilities on our consolidated balance sheets, and the changes in the fair value of contingent consideration are recognized within research and development and selling, general and administrative expenses in the consolidated statements of income.

The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:

	Fair Value at
(In thousands)	June 30, 2016		Valuation technique	Unobservable input	Range
				Discount rate	3.1	%	-	8.5	%
Revenue-based payments	$	14,787	Discounted cash flow	Probability of payment	87.0	%	-	97.5	%
				Projected year of payment	2017		-	2029
							-
				Discount rate	5.3	%	-	13.5	%
Milestone-based payments	$	7,744	Discounted cash flow	Probability of payment	80.0	%	-	100.0	%
				Projected year of payment	2016		-	2020

The following table provides a reconciliation of the beginning and ending balances of contingent consideration:

	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Beginning balance	$	22,260		$	24,831		$	26,617		$	24,335
Contingent payments	(1		)	(2		)	(5,001		)	(3		)
Non-cash settlement of certain contingent consideration	(1,522		)	—			(1,522		)	—
Changes in fair value of contingent consideration	1,794			705			2,437			1,202
Ending balance	$	22,531		$	25,534		$	22,531		$	25,534

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GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 6. INVENTORIES

(In thousands)	June 30, 2016		December 31, 2015
Raw materials	$	13,993	$	12,308
Work in process	7,078		7,091
Finished goods	83,346		85,861
Total inventories	$	104,417	$	105,260

NOTE 7. ACCRUED EXPENSES

(In thousands)	June 30, 2016		December 31, 2015
Compensation and other employee-related costs	$	16,916	$	21,151
Legal and other settlements and expenses	9,652		13,617
Accrued non-income taxes	7,473		6,808
Royalties	7,719		6,787
Other	6,127		5,406
Total accrued expenses	$	47,887	$	53,769

NOTE 8. DEBT

Line of Credit

In May 2011, we entered into a credit agreement with Wells Fargo Bank related to a revolving credit facility that provides for borrowings up to $50.0 million. At our request, and with the approval of the bank, the amount of borrowings available under the revolving credit facility can be increased to $75.0 million. The revolving credit facility includes up to a $25.0 million sub-limit for letters of credit. As amended to date, the revolving credit facility expires in May 2017. Cash advances bear interest at our option either at a fluctuating rate per annum equal to the daily LIBOR in effect for a one-month period plus 0.75%, or a fixed rate for a one- or three-month period equal to LIBOR plus 0.75%. The credit agreement governing the revolving credit facility also subjects us to various restrictive covenants, including the requirement to maintain maximum consolidated leverage. The covenants also include limitations on our ability to repurchase shares, to pay cash dividends or to enter into a sale transaction. As of June 30, 2016, we were in compliance with all financial covenants under the credit agreement, there were no outstanding borrowings under the revolving credit facility and available borrowings were $50.0 million. We may terminate the credit agreement at any time on ten days’ notice without premium or penalty.

NOTE 9. EQUITY

Our amended and restated Certificate of Incorporation provides for a total of 785,000,000 authorized shares of common stock. Of the authorized number of shares of common stock, 500,000,000 shares are designated as Class A common stock (“Class A Common”), 275,000,000 shares are designated as Class B common stock (“Class B Common”) and 10,000,000 shares are designated as Class C common stock (“Class C Common”).

Our issued and outstanding common shares by Class were as follows:

(Shares)	Class A Common	Class B Common	Total
June 30, 2016	71,772,100	23,877,556	95,649,656
December 31, 2015	71,442,166	23,877,556	95,319,722

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table summarizes changes in total equity:

	Six Months Ended
(In thousands)	June 30, 2016
Total equity, beginning of period	$	715,324
Net income	53,816
Stock-based compensation cost	5,830
Exercise of stock options	3,575
Excess tax benefit of nonqualified stock options	764
Other comprehensive income	222
Total equity, end of period	$	779,531

The tables below present the changes in each component of accumulated other comprehensive income/(loss), including current period other comprehensive income/(loss) and reclassifications out of accumulated other comprehensive income/(loss):

(In thousands)	Unrealized gain/(loss) on marketable securities, net of tax			Foreign currency translation adjustments			Accumulated other comprehensive loss
Accumulated other comprehensive loss, net of tax, at December 31, 2015	$	(119	)	$	(1,839	)	$	(1,958	)
Other comprehensive income before reclassifications	284			(62		)	222
Amounts reclassified from accumulated other comprehensive income, net of tax	—			—			—
Other comprehensive income, net of tax	284			(62		)	222
Accumulated other comprehensive income/(loss), net of tax, at June 30, 2016	$	165		$	(1,901	)	$	(1,736	)

(In thousands)	Unrealized gain/(loss) on marketable securities, net of tax			Foreign currency translation adjustments			Accumulated other comprehensive loss
Accumulated other comprehensive loss, net of tax, at December 31, 2014	$	(64	)	$	(1,593	)	$	(1,657	)
Other comprehensive income/(loss) before reclassifications	26			(60		)	(34		)
Amounts reclassified from accumulated other comprehensive income, net of tax	2			—			2
Other comprehensive income/(loss), net of tax	28			(60		)	(32		)
Accumulated other comprehensive income/(loss), net of tax, at June 30, 2015	$	(36	)	$	(1,653	)	$	(1,689	)

NOTE 10. STOCK-BASED COMPENSATION

We have three stock plans: our Amended and Restated 2003 Stock Plan, our 2008 Stock Plan, and our 2012 Equity Incentive Plan (the “2012 Plan”).  The 2012 Plan is the only remaining active stock plan. The purpose of these stock plans was, and the 2012 Plan is, to provide incentive to employees, directors, and

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GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

consultants of Globus.  The Plans are administered by the Board of Directors of Globus (the “Board”) or its delegates. The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans. The options granted expire on a date specified by the Board, but generally not more than ten years from the grant date. Option grants to employees generally vest in varying installments over a four-year period.

The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012. Under the 2012 Plan, the aggregate number of shares of Class A Common stock that may be issued subject to options and other awards is equal to the sum of (i) 3,076,923 shares, (ii) any shares available for issuance under the 2008 Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3% of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board. The number of shares that may be issued or transferred pursuant to incentive stock options under the 2012 Plan is limited to 10,769,230 shares. The shares of Class A Common stock issuable under the 2012 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.

As of June 30, 2016, pursuant to the 2012 Plan, there were 12,003,652 shares of Class A Common stock reserved and 5,030,269 shares of Class A Common stock available for future grants.

The weighted average grant date per share fair values of the options awarded to employees were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Weighted average grant date per share fair value	$	7.76	$	8.11	$	7.80	$	8.91

Stock option activity during the six months ended June 30, 2016 is summarized as follows:  

	Option Shares(thousands)		Weighted average exercise price		Weighted average remaining contractual life (years)	Aggregate intrinsic value (thousands)
Outstanding at December 31, 2015	6,677		$	19.14
Granted	1,628		24.89
Exercised	(330	)	10.83
Forfeited	(256	)	22.71
Outstanding at June 30, 2016	7,719		$	20.59	7.7	$	29,965
Exercisable at June 30, 2016	3,230		$	15.60	6.0	$	27,477
Expected to vest at June 30, 2016	4,489		$	24.17	8.9	$	2,488

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GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The intrinsic value of stock options exercised and the compensation cost related to stock options granted to employees and non-employees under our stock plans was as follows:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Intrinsic value of stock options exercised	$	1,895	$	2,679	$	4,626	$	5,939
Stock-based compensation expense	$	2,920	$	2,538	$	5,690	$	4,669
Net stock-based compensation capitalized into inventory	69		—		140		—
Total stock-based compensation cost	$	2,989	$	2,538	$	5,830	$	4,669

As of June 30, 2016, there was $32.7 million of unrecognized compensation expense related to unvested employee stock options that are expected to vest over a weighted average period of three years.

NOTE 11. INCOME TAXES

In computing our income tax provision, we make certain estimates and management judgments, such as estimated annual taxable income or loss, annual effective tax rate, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets. Our estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. Should facts and circumstances change during a quarter causing a material change to the estimated effective income tax rate, a cumulative adjustment is recorded.

The following table provides a summary of our effective tax rate:

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Effective income tax rate	32.7	%	35.8	%	34.3	%	35.6	%

The period over period change in the effective income tax rate for the three months and six months ended is due primarily to ongoing benefits related to the reorganization of our domestic legal structure to better align our business operations, along with benefits obtained through the research and experimentation credit and jobs credit, neither of which were included for the period ended June 30, 2015. Additionally, for the six months ended June 30, 2016, these benefits are partially offset by a one-time impact to deferred tax assets as it relates to the domestic reorganization.

NOTE 12. COMMITMENTS AND CONTINGENCIES

We are involved in a number of proceedings, legal actions, and claims. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases,

18

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

significant judgment is required to estimate the amount and timing of a loss to be recorded. While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows.

N-Spine, Synthes and DePuy Synthes Litigation

In April 2010, N-Spine, Inc. and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. N-Spine, the patent owner, and Synthes USA, a licensee of the subject patent, allege that we infringe one or more claims of the patent by making, using, offering for sale or selling our TRANSITION^® stabilization system product. N-Spine and Synthes USA sought injunctive relief and an unspecified amount in damages. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million.

In a related matter, on January 8, 2014, DePuy Synthes Products, LLC (“DePuy Synthes”) filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. DePuy Synthes alleges that we infringe one or more claims of the asserted patent by making, using, offering for sale or selling our TRANSITION^® stabilization system product. DePuy Synthes seeks injunctive relief and an unspecified amount in damages. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million.

Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC Litigation

In July 2011, Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Synthes USA LLC, the patent owner, Synthes USA Products, LLC, a licensee to manufacture products of the subject patents, and Synthes USA Sales LLC, a licensee to sell products of the subject patents, allege that we infringed one or more claims of three patents by making, using, offering for sale or selling our COALITION^®, INDEPENDENCE^® and INTERCONTINENTAL^® products. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million.

L5 Litigation

In December 2009, we filed suit in the Court of Common Pleas of Montgomery County, Pennsylvania against our former exclusive independent distributor L5 Surgical, LLC and its principals, seeking an injunction and declaratory judgment concerning certain restrictive covenants made to L5 by its sales representatives. L5 brought counterclaims against us alleging tortious interference, unfair competition and conspiracy. The injunction phase was resolved in September 2010, and this matter is now in the discovery phase of litigation on the underlying damages claims. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.

Bianco Litigation

On March 21, 2012, Sabatino Bianco filed suit against us in the Federal District Court for the Eastern District of Texas claiming that we misappropriated his trade secret and confidential information and improperly utilized it in developing our CALIBER^® product. Bianco alleges that we engaged in

19

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

misappropriation of trade secrets, breach of contract, unfair competition, fraud and theft and seeks correction of inventorship, injunctive relief and exemplary damages. On April 20, 2012, Bianco filed a motion for a preliminary injunction, seeking to enjoin us from making, using, selling, importing or offering for sale our CALIBER^® product. On November 15, 2012, the court denied Bianco’s motion for preliminary injunction. On October 1, 2013, Bianco amended his complaint to claim that his trade secrets and confidential information were also used improperly in developing our RISE^® and CALIBER-L^® products.

On January 17, 2014, the jury in this case returned a verdict in favor of Bianco on a claim of misappropriation of trade secret. We accrued the verdict amount of $4.3 million as of December 31, 2013. The jury found against Bianco on the claims of breach of contract and disgorgement of profits. The court granted our motion for judgment as a matter of law and dismissed Bianco’s claims for unfair competition, fraud, and exemplary damages, and Bianco abandoned the claim of misappropriation of confidential information. Bianco’s claims of correction of inventorship, unjust enrichment, and permanent injunctive relief were not submitted to the jury. On March 7, 2014, the court denied Bianco’s claim for correction of inventorship and ruled he is not entitled to be named as a co-inventor on any of the patents at issue, and also denied his claim for unjust enrichment. On March 17, 2014, the court denied Bianco’s claim for permanent injunctive relief. On July 2, 2014, the court awarded Bianco an ongoing royalty of 5% of the net sales of the CALIBER^®, CALIBER^®-L, and RISE^® products, or products that are not colorably different from those products, for a fifteen year period on sales starting on January 18, 2014. The court entered final judgment on the jury verdict on July 17, 2014. On October 19, 2015, the United States Federal Circuit Court of Appeals affirmed the judgment without opinion. On March 22, 2016, we filed a Petition for a Writ of Certiorari with the United States Supreme Court and on June 20, 2016 the Writ was denied.

We do not expect the judgment to impact our ability to conduct our business or to have any material impact on our future revenues.

Bonutti Skeletal Innovations, LLC Litigation

On November 19, 2014, Bonutti Skeletal Innovations, LLC (“Bonutti Skeletal”) filed suit against us in the U.S. District Court for the Eastern District of Pennsylvania for patent infringement. Bonutti Skeletal, a non-practicing entity, alleges that Globus willfully infringes one or more claims of six patents by making, using, offering for sale or selling the CALIBER^®, CALIBER^®-L, COALITION^®, CONTINENTAL^®, FORGE^®, FORTIFY^®, INDEPENDENCE^®, INTERCONTINENTAL^®, MONUMENT^®, NIKO^®, RISE^®, SIGNATURE^®, SUSTAIN^®, and TRANSCONTINENTAL^® products. Bonutti Skeletal sought an unspecified amount in damages and injunctive relief. This matter was stayed on June 26, 2015 pending the resolution of inter partes reviews on the asserted patents by the USPTO. Globus Medical, Inc. and Bonutti Skeletal settled this matter on June 9, 2016.

Flexuspine, Inc. Litigation

On March 11, 2015, Flexuspine, Inc. filed suit against us in the U.S. District Court for the Eastern District of Texas for patent infringement. Flexuspine, Inc. alleges that Globus willfully infringes one or more claims of five patents by making, using, offering for sale or selling the CALIBER^®, CALIBER^®-L, and ALTERA^® products. Flexuspine seeks an unspecified amount in damages and injunctive relief. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.

20

GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Silverstein Litigation

On September 28, 2015, a putative securities class action lawsuit was filed against us and certain of our officers in the U.S. District Court for the Eastern District of Pennsylvania. Plaintiff in the lawsuit purports to represent a class of our stockholders who purchased shares between February 26, 2014 and August 5, 2014. The complaint purports to assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and seeks damages in an unspecified amount, attorney’s fees and other relief. We believe the allegations to be unfounded, and intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.

In addition, we are subject to legal proceedings arising in the ordinary course of business.

NOTE 13. RELATED-PARTY TRANSACTIONS

Prior to March 11, 2015, we had contracted with BMG, which at the time was a related-party manufacturer. On March 11, 2015, BMG was acquired by Globus, and therefore as of March 31, 2015, there were no further purchases from nor amounts payable to BMG. For the period of January 1, 2015 through March 11, 2015, we purchased $5.3 million from the related-party supplier. The amount payable to BMG on the date of acquisition of $5.2 million was settled in connection with the acquisition.

NOTE 14. SEGMENT AND GEOGRAPHIC INFORMATION

Operating segments are defined as components of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We globally manage the business within one reportable segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. Products are sold principally in the United States.

The following table represents total sales by geographic area, based on the location of the customer:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
United States	$	124,716	$	121,487	$	252,276	$	241,470
International	12,773		12,083		24,477		23,704
Total sales	$	137,489	$	133,570	$	276,753	$	265,174

We classify our products into two categories: innovative fusion products and disruptive technology products. The following table represents total sales by product category:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Innovative Fusion	$	69,442	$	71,571	$	139,488	$	141,941
Disruptive Technology	68,047		61,999		137,265		123,233
Total sales	$	137,489	$	133,570	$	276,753	$	265,174

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GLOBUS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 15. SUBSEQUENT EVENT

On July 25, 2016, we entered into an agreement to acquire the international operations and distribution channel of Alphatec Holdings, Inc., a publicly traded orthopedic company (Nasdaq: ATEC) for $80.0 million in cash, subject to certain closing adjustments. The parties expect the closing of the acquisition to occur by October 2016 following satisfaction of the applicable closing conditions.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim consolidated financial statements and related notes included elsewhere in this report.

Unless otherwise noted, the figures in the following discussions are unaudited.

Overview

We are a medical device company focused on the design, development and commercialization of musculoskeletal implants. We are currently focused on implants that promote healing in patients with spine disorders. We are an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures that assist surgeons in effectively treating their patients, respond to evolving surgeon needs and address new treatment options. Since our inception in 2003, we have launched over 160 products and offer a comprehensive product portfolio of innovative and differentiated products addressing a broad array of spinal pathologies, anatomies and surgical approaches. We have also recently begun to develop a robotic surgical navigation device and products to treat patients who have experienced orthopedic traumas, although those development efforts are still ongoing and we currently have no robotic or orthopedic trauma products that are cleared by the U.S. Food and Drug Administration for sale.

We sell implants and related disposables to our customers, primarily hospitals, for use by surgeons to treat spine disorders. All of our products fall into one of two categories: Innovative Fusion or Disruptive Technologies. Spinal fusion is a surgical procedure to correct problems with the individual vertebrae, the interlocking bones making up the spine, by preventing movement of the affected bones. Our Innovative Fusion products are used in cervical, thoracolumbar, sacral, and interbody/corpectomy fusion procedures to treat degenerative, deformity, tumor, and trauma conditions.

We define Disruptive Technologies as those that represent a significant shift in the treatment of spine disorders by allowing for novel surgical procedures, improvements to existing surgical procedures, the treatment of spine disorders by new physician specialties, and surgical intervention earlier in the continuum of care. Our current portfolio of approved and pipeline products includes a variety of Disruptive Technology products, which we believe offer material improvements to fusion procedures, such as minimally invasive surgical techniques, as well as new treatment alternatives including motion preservation technologies, such as dynamic stabilization, total disc replacement and interspinous process spacer products, and regenerative biologics technologies, as well as interventional pain management solutions, including treatments for vertebral compression fractures.

To date, the primary market for our products has been the United States, where we sell our products through a combination of direct sales representatives employed by us and distributor sales representatives employed by our exclusive independent distributors, who distribute our products on our behalf for a commission that is generally based on a percentage of sales. We believe there is significant opportunity to strengthen our position in the U.S. market by increasing the size of our U.S. sales force and we intend to add additional direct and distributor sales representatives in the future.

During the six months ended June 30, 2016, our international sales accounted for approximately 9% of our total sales. We sell our products in 35 countries outside the United States through a combination of direct sales representatives employed by us and international distributors. We believe there are significant opportunities for us to increase our presence in both existing and new international markets through the

23

continued expansion of our direct and distributor sales forces and the commercialization of additional products.

Recent Developments

On July 25, 2016, we entered into an agreement to acquire the international operations and distribution channel of Alphatec Holdings, Inc., a publicly traded orthopedic company (Nasdaq: ATEC) for $80.0 million in cash, subject to certain closing adjustments. The parties expect the closing of the acquisition to occur by October 2016 following satisfaction of the applicable closing conditions.

On January 13, 2016, we entered into a settlement agreement providing for the settlement of four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes (the “Settlement Agreement”). Pursuant to the terms of the Settlement Agreement, we are required to make a $7.9 million payment to DePuy Synthes. The Settlement Agreement also provides for covenants not to sue relating to certain of the products sold by each of the parties and cross-licenses of all of the patents asserted in each of the Settled Lawsuits and each of the patents in those respective patent families. The Company does not expect the Settlement Agreement to impact its ability to conduct its business or have any impact on its future revenues.

The settlement resulted in one-time financial benefits reflecting the difference from previously established provisions and the final settlement amount through a one-time net income benefit of approximately $7.6 million, recognized during the fourth quarter of 2015, and a one-time transfer of approximately $8.4 million from restricted cash account into the cash account, which we recognized during the first quarter of 2016.

The Consolidated Appropriations Act of 2016, which was signed into law in December 2015, includes a two-year suspension on the medical device excise tax, effective January 1, 2016. The 2.3% tax on sales in the United States of certain medical devices by a manufacturer, producer or importer was enacted as part of the Affordable Care Act in 2010 and applied to device sales beginning on January 1, 2013. Without further legislative action, the tax will be automatically reinstated for certain medical device sales in the United States starting on January 1, 2018. We incurred $3.8 million for this medical device excise tax for the six months ended June 30, 2015. We plan to redirect approximately 40% of this benefit into increased job creation initiatives in research and development and manufacturing in 2016.

Results of Operations

Three Months Ended June 30, 2016 Compared to the Three Months Ended June 30, 2015

Sales

The following tables set forth, for the periods indicated, our sales by product category and geography expressed as dollar amounts and the changes in sales between the specified periods expressed in dollar amounts and as percentages:

	Three Months Ended				Change
(In thousands, except percentages)	June 30, 2016		June 30, 2015		$			%
Innovative Fusion	$	69,442	$	71,571	$	(2,129	)	(3.0	)%
Disruptive Technology	68,047		61,999		6,048			9.8	%
Total sales	$	137,489	$	133,570	$	3,919		2.9	%

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Product launches continue to be a driving force in our sales growth, particularly from products launched during the last three years. The growth in Disruptive Technology of $6.0 million was due primarily to sales of regenerative biologics, expandable interbody products, and minimally invasive products launched during the past three years. Innovative Fusion sales decreased by $2.1 million as a result of U.S. sales force recruitment timing and onboarding.

	Three Months Ended				Change
(In thousands, except percentages)	June 30, 2016		June 30, 2015		$		%
United States	$	124,716	$	121,487	$	3,229	2.7	%
International	12,773		12,083		690		5.7	%
Total sales	$	137,489	$	133,570	$	3,919	2.9	%

In the United States, the increase in sales of $3.2 million was due primarily to increased penetration in existing territories. We saw higher sales in Disruptive Technology and certain Innovative Fusion products, led by sales of expandable interbody products, regenerative biologics and pedicle screw systems.

Internationally, the increase in sales of $0.7 million was negatively impacted due to changes in foreign currency exchange rates. On a constant currency basis, our international sales grew $1.0 million, or by 8.1%, due to expansion into new international territories and higher sales of our expandable interbody products. Our worldwide sales increased 3.1% on a constant currency basis.

Cost of Goods Sold

	Three Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Cost of goods sold	$	32,856		$	32,579		$	277	0.9	%
Percentage of sales	23.9		%	24.4		%

The increase in cost of goods sold was due primarily to increased inventory reserves and write offs of $2.0 million, and increased sales volume, mix and other charges of approximately $1.5 million. These variances were offset partially by the two year moratorium on the medical device excise tax (“MDET”), which began on January 1, 2016. The savings impact of MDET moratorium for the quarter was $2.1 million. In addition, we recognized approximately $1.0 million in savings due to the impact of Branch Medical Group (“BMG”).

Research and Development Expenses

	Three Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Research and development	$	11,251		$	9,081		$	2,170	23.9	%
Percentage of sales	8.2		%	6.8		%

The increase in research and development expenses was due primarily to an increase in employee compensation costs from additional headcount, including our Emerging Technologies group, and acquisition-related costs, for furthering research activities and developing new innovative products. A portion of this increase was funded by the suspension of MDET.

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Selling, General and Administrative Expenses

	Three Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$			%
Selling, general and administrative	$	52,408		$	54,506		$	(2,098	)	(3.8	)%
Percentage of sales	38.1		%	40.8		%

The decrease in selling, general and administrative expenses resulted primarily from a $1.9 millioncredit from the non-cash settlement of certain business acquisition liabilities.

Provision for Litigation

	Three Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Provision for litigation	$	3,056		$	374		$	2,682	717.1	%
Percentage of sales	2.2		%	0.3		%

The increase in the provision for litigation, which includes settlement and verdict costs, was due to the settlements of the Bonutti and other litigations during the current quarter.

Other Income, Net

	Three Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$			%
Other income, net	$	418		$	441		$	(23	)	(5.2	)%
Percentage of sales	0.3		%	0.3		%

Other income, net, which includes interest income, foreign exchange transaction gains/losses, and other non-operating income/expense, was nominal in the current and prior quarters.

Income Tax Provision

	Three Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$			%
Income tax provision	$	12,530		$	13,417		$	(887	)	(6.6	)%
Effective income tax rate	32.7		%	35.8		%

The change in the effective income tax rate between the current year and prior year periods is due primarily to ongoing benefits related to the reorganization of our domestic legal structure to better align our business operations, along with benefits obtained through the research and experimentation credit and jobs credit, neither of which were included for the period ended June 30, 2015.

Six Months EndedJune 30, 2016 Compared to the Six Months EndedJune 30, 2015

Sales

The following tables set forth, for the periods indicated, our sales by product category and geography expressed as dollar amounts and the changes in sales between the specified periods expressed in dollar amounts and as percentages:

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	Six Months Ended				Change
(In thousands, except percentages)	June 30, 2016		June 30, 2015		$			%
Innovative Fusion	$	139,488	$	141,941	$	(2,453	)	(1.7	)%
Disruptive Technology	137,265		123,233		14,032			11.4	%
Total sales	$	276,753	$	265,174	$	11,579		4.4	%

Product launches continue to be a driving force in our sales growth, particularly from products launched during the last three years. The growth in Disruptive Technology of $14.0 million was due primarily to sales of regenerative biologics, expandable interbody products, and minimally invasive products launched during the past three years. Innovative Fusion sales decreased by $2.5 million as a result of U.S. sales force recruitment timing and onboarding.

	Six Months Ended				Change
(In thousands, except percentages)	June 30, 2016		June 30, 2015		$		%
United States	$	252,276	$	241,470	$	10,806	4.5	%
International	24,477		23,704		773		3.3	%
Total sales	$	276,753	$	265,174	$	11,579	4.4	%

In the United States, the increase in sales of $10.8 million was due primarily to increased penetration in existing territories. We saw higher sales in Disruptive Technology and certain Innovative Fusion products, led by sales of expandable interbody products, regenerative biologics and pedicle screw systems.

Internationally, the increase in sales of $0.8 million was negatively impacted due to changes in foreign currency exchange rates. On a constant currency basis, our international sales grew $1.6 million, or by 6.7%, due to expansion into new international territories and higher sales of our expandable interbody products. Our worldwide sales increased 4.7% on a constant currency basis.

Cost of Goods Sold

	Six Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$			%
Cost of goods sold	$	64,500		$	64,686		$	(186	)	(0.3	)%
Percentage of sales	23.3		%	24.4		%

The decrease in cost of goods sold was due primarily to the two year moratorium on the MDET which began on January 1, 2016. The savings impact of MDET moratorium for the six months ended June 30, 2016 was approximately $4.0 million. In addition, we recognized approximately $1.8 million in savings due to the impact of BMG. These variances were offset partially by increased sales volume and mix of approximately $3.0 million and increased inventory reserves and write offs of $2.2 million.

Research and Development Expenses

	Six Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Research and development	$	21,450		$	17,737		$	3,713	20.9	%
Percentage of sales	7.8		%	6.7		%

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The increase in research and development expenses was due primarily to an increase in employee compensation costs from additional headcount, including our Emerging Technologies group, supplies, and acquisition-related costs, for furthering research activities and developing new innovative products. A portion of this increase was funded by the suspension of MDET.

Selling, General and Administrative Expenses

	Six Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Selling, general and administrative	$	106,978		$	106,795		$	183	0.2	%
Percentage of sales	38.7		%	40.3		%

The nominal increase in selling, general and administrative expenses resulted primarily from an increase of $2.3 million related to increased compensation and other costs to support increased sales volume and company growth. This increase was partially offset by a $1.9 million credit from the non-cash settlement of certain business acquisition liabilities.

Provision for Litigation

	Six Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Provision for litigation	$	3,056		$	406		$	2,650	652.7	%
Percentage of sales	1.1		%	0.2		%

The increase in the provision for litigation, which includes settlement and verdict costs, was due to the settlements of the Bonutti and other litigations during the six months ended June 30, 2016.

Other Income, Net

	Six Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Other income, net	$	1,178		$	94		$	1,084	1,153.2	%
Percentage of sales	0.4		%	—		%

The increase in other income, net is due primarily to increases in interest income, along with decreases in foreign exchange transaction losses.

Income Tax Provision

	Six Months Ended						Change
(In thousands, except percentages)	June 30, 2016			June 30, 2015			$		%
Income tax provision	$	28,131		$	26,942		$	1,189	4.4	%
Effective income tax rate	34.3		%	35.6		%

The change in the effective income tax rate between the current year and prior year periods is due primarily to ongoing benefits related to the reorganization of our domestic legal structure to better align our business operations and the research and experimentation credit and jobs credit, neither of which were included for the period ended June 30, 2015. These benefits for the period ending June 30, 2016 are partially offset by a one-time impact to deferred tax assets as it relates to the domestic reorganization.

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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, and acquisition related items, 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 items 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.

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

	Three Months Ended						Six Months Ended
(In thousands, except percentages)	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net Income	$	25,806		$	24,054		$	53,816		$	48,702
Interest income, net	(602		)	(278		)	(1,098		)	(556		)
Provision for income taxes	12,530			13,417			28,131			26,942
Depreciation and amortization	7,022			5,905			13,698			11,579
EBITDA	44,756			43,098			94,547			86,667
Stock-based compensation expense	2,920			2,538			5,690			4,669
Provision for litigation	3,056			374			3,056			406
Acquisition related items	(519		)	730			155			1,314
Adjusted EBITDA	$	50,213		$	46,740		$	103,448		$	93,056
Net income as a percentage of sales	18.8		%	18.0		%	19.4		%	18.4		%
Adjusted EBITDA as a percentage of sales	36.5		%	35.0		%	37.4		%	35.1		%

In addition, for the period ended June 30, 2016 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, acquisition related items, and adjusted for the tax effects of such adjustments. 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, acquisition related items, and adjusted for the tax effects of such adjustments, which we believe is not reflective of underlying business trends.

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The following is a reconciliation of net income computed in accordance with U.S. GAAP to non-GAAP net income for the periods presented.

	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net income	$	25,806		$	24,054		$	53,816		$	48,702
Provision for litigation	3,056			374			3,056			406
Acquisition related items	(519		)	730			155			1,314
Tax effect of adjusting items	(847		)	(398		)	(1,072		)	(614		)
Non-GAAP net income	$	27,496		$	24,760		$	55,955		$	49,808

The following is a reconciliation of Diluted Earnings Per Share as computed in accordance with U.S. GAAP to non-GAAP Diluted Earnings Per Share for the periods presented.

	Three Months Ended					Six Months Ended
(Per share amounts)	June 30, 2016			June 30, 2015		June 30, 2016			June 30, 2015
Diluted earnings per share, as reported	$	0.27		$	0.25	$	0.56		$	0.51
Provision for litigation	0.03			—		0.03			—
Acquisition related items	(0.01		)	0.01		—			0.01
Tax effect of adjusting items	(0.01		)	—		(0.01		)	(0.01		)
Non-GAAP diluted earnings per share*	$	0.29		$	0.26	$	0.58		$	0.52
* amounts might not add due to rounding

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.

Below is a reconciliation of net cash provided by operating activities as computed in accordance with U.S. GAAP to Free Cash Flow for the periods presented.

	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net cash provided by operating activities	$	23,016		$	13,161		$	78,063		$	47,831
Adjustment for impact of restricted cash	784			1,312			(14,884		)	1,312
Purchases of property and equipment	(10,776		)	(17,898		)	(20,142		)	(25,126		)
Free cash flow	$	13,024		$	(3,425	)	$	43,037		$	24,017

The adjustment for the impact of restricted cash is primarily related to the DePuy Synthes settlement on January 13, 2016, where we paid $7.9 million and recovered approximately $8.4 million previously set aside for the DePuy Synthes litigation obligation.

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.

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Below is a reconciliation of sales growth as reported in accordance with U.S. GAAP compared to constant currency sales growth for the periods presented.

	Three Months Ended				Reported Sales Growth		Currency Impact on Current Period Sales			Constant Currency Sales Growth
(In thousands, except percentages)	June 30, 2016		June 30, 2015
United States	$	124,716	$	121,487	2.7	%	—			2.7	%
International	12,773		12,083		5.7	%	$	(287	)	8.1	%
Total sales	$	137,489	$	133,570	2.9	%	$	(287	)	3.1	%

	Six Months Ended				Reported Sales Growth		Currency Impact on Current Period Sales			Constant Currency Sales Growth
(In thousands, except percentages)	June 30, 2016		June 30, 2015
United States	$	252,276	$	241,470	4.5	%	—			4.5	%
International	24,477		23,704		3.3	%	$	(823	)	6.7	%
Total sales	$	276,753	$	265,174	4.4	%	$	(823	)	4.7	%

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 within the meaning of Item 10 of Regulation S-K. 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. Additionally, we have recast prior periods for non-GAAP net income and non-GAAP Diluted Earnings Per Share.

Cash Flows

The following table summarizes, for the periods indicated, cash flows from operating, investing and financing activities:

	Six Months Ended						Change
(In thousands)	June 30, 2016			June 30, 2015			$
Net cash provided by operating activities	$	78,063		$	47,831		$	30,232
Net cash used in investing activities	(46,931		)	(92,304		)	45,373
Net cash provided by financing activities	3,939			3,732			207
Effect of foreign exchange rate changes on cash	119			35			84
Increase/(decrease) in cash and cash equivalents	$	35,190		$	(40,706	)	$	75,896

Cash Provided by Operating Activities

The increase in net cash provided by operating activities was due primarily to the recovery of a portion of our restricted cash related to the DePuy Synthes settlement on January 13, 2016 and lower inventory purchases. Additionally, in the prior year period, we paid the related-party payable as part of the BMG acquisition.

Cash Used in Investing Activities

The decrease in net cash used in investing activities was due primarily to the prior year period BMG acquisition, offset partially by current year period increases in net cash invested in marketable securities.

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Cash Provided by Financing Activities

The increase in cash provided by financing activities was due primarily to the increase in the proceeds from the exercise of stock options.

Liquidity and Capital Resources

The following table highlights certain information related to our liquidity and capital resources:

(In thousands)	June 30, 2016		December 31, 2015
Cash and cash equivalents	$	95,342	$	60,152
Short-term marketable securities	229,170		220,877
Long-term marketable securities	65,625		48,762
Total cash, cash equivalents and marketable securities	$	390,137	$	329,791
Available borrowing capacity under revolving credit facility	50,000		50,000
Working capital	$	465,149	$	462,108

On July 25, 2016, we entered into an agreement to acquire the international operations and distribution channel of Alphatec Holdings, Inc., a publicly traded orthopedic company (Nasdaq: ATEC) for $80.0 million in cash, subject to certain closing adjustments. The parties expect the closing of the acquisition to occur by October 2016 following satisfaction of the applicable closing conditions.

In May 2011, we entered into a credit agreement with Wells Fargo Bank related to a revolving credit facility that provided for borrowings up to $50.0 million. At our request, and with the approval of the bank, the amount of borrowings available under the revolving credit facility can be increased to $75.0 million. The revolving credit facility includes up to a $25.0 million sub-limit for letters of credit. As amended to date, the revolving credit facility expires in May 2017. Cash advances bear interest at our option either at a fluctuating rate per annum equal to the daily LIBOR in effect for a one-month period plus 0.75%, or a fixed rate for a one- or three-month period equal to LIBOR plus 0.75%. The credit agreement governing the revolving credit facility also subjects us to various restrictive covenants, including the requirement to maintain maximum consolidated leverage. The covenants also include limitations on our ability to repurchase shares, to pay cash dividends or to enter into a sale transaction. As of June 30, 2016, we were in compliance with all financial covenants under the credit agreement, there were no outstanding borrowings under the revolving credit facility and available borrowings were $50.0 million. We may terminate the credit agreement at any time on ten days’ notice without premium or penalty.

In addition to our existing cash and marketable securities balances, our principal sources of liquidity are our cash flows from operating activities and our revolving credit facility, which was fully available as of June 30, 2016. We believe these sources will provide sufficient liquidity for us to meet our liquidity requirements for the foreseeable future. Our principal liquidity requirements are to meet our working capital, research and development, including clinical trials, capital expenditure needs, principally for our surgical sets required to maintain and expand our business, and potential future business or intellectual property acquisitions. We expect to continue to make investments in surgical sets as we launch new products, increase the size of our U.S. sales force, and expand into international markets. We may, however, require additional liquidity as we continue to execute our business strategy. Our liquidity may be negatively impacted as a result of a decline in sales of our products, including declines due to changes in our customers’ ability to obtain third-party coverage and reimbursement for procedures that use our products; increased pricing pressures resulting from intensifying competition, cost increases and slower product development cycles

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resulting from a changing regulatory environment; and unfavorable results from litigation which will affect our cash flow. We anticipate that to the extent that we require additional liquidity, it will be funded through the incurrence of other indebtedness, additional equity financings or a combination of these potential sources of liquidity. The sale of additional equity may result in dilution to our stockholders. There is no assurance that we will be able to secure such additional funding on terms acceptable to us, or at all.

Contractual Obligations and Commitments

Our contractual obligations reflected in Part II, Item 7 of our 2015 Annual Report on Form 10-K for the fiscal year ended December 31, 2015 have materially changed as a result of a service agreement executed during the six months ended June 30, 2016. The additional undiscounted payment commitments under the service agreement are as follows:

	Payments Due by Period
(In thousands)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Additional purchase obligations	$	11,100	$	500	$	3,600	$	2,400	$	4,600

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality and Backlog

Our business is generally not seasonal in nature. However, our sales may be influenced by summer vacation and winter holiday periods during which we have experienced fewer spine surgeries taking place. Our sales generally consist of products that are in stock in our warehouse facilities or maintained at hospitals or with our sales representatives. Accordingly, we do not have a backlog of sales orders.

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Recently Issued Accounting Pronouncements

For further details on recently issued accounting pronouncements, please refer to “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note 1. Background and Summary of Significant Accounting Policies; (i) Recently Issued Accounting Pronouncements” above.

Cautionary Note Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are forward-looking statements. We have tried to identify forward-looking statements by using words such as “believe,” “may,” “might,” “could,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and similar words. 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, 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 successfully integrate the international operations acquired from Alphatec, both in general and on our anticipated timeline, our ability to transition Alphatec’s international customers to Globus Medical products, our ability to realize the expected benefits to our results from the Alphatec acquisition, our ability to comply with changes and applicable laws and regulations that are 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, and general economic conditions, and other risks set forth throughout our Annual Report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”), particularly those set forth under “Item 1A, Risk Factors” of the Form 10-K, and those discussed in other documents we file with the Securities and Exchange Commission (the “SEC”). 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 Quarterly Report speak only as of the date of this Quarterly Report. 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.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We have evaluated the information required under this item that was disclosed under Item 7A in our Annual Report on Form 10-K and there have been no significant changes to this information.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2016. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under

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the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation of our disclosure controls and procedures as of June 30, 2016, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. For example, these inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in a number of proceedings, legal actions and claims.  Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time.  In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues.  For further details on the material legal proceedings to which we are currently a party, please refer to “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note 12. Commitments and Contingencies” above.

In addition, we are subject to legal proceedings arising in the ordinary course of business.

Item 1A. Risk Factors

We are affected by risks specific to us as well as factors that affect all businesses operating in a global market. For a discussion of the specific risks that could materially adversely affect our business, financial condition or operation results, please see our Form 10-K under the heading “Part I; Item 1A. Risk Factors.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.  Where so indicated, exhibits that were previously filed are incorporated by reference.  For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated in parentheses.

Exhibit No.	Item
10.1*	Credit Agreement, dated May 3, 2016, by and between Globus Medical, Inc. and Globus Medical North America, Inc., and Wells Fargo Bank, National Association.
31.1*	Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
*	Filed herewith.
**	Furnished herewith.

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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 thereunto duly authorized.

		GLOBUS MEDICAL, INC.
Dated:	July 27, 2016	/s/ DAVID C. PAUL
		David C. Paul
		Chairman
		Chief Executive Officer
		(Principal Executive Officer)
Dated:	July 27, 2016	/s/ DANIEL T. SCAVILLA
		Daniel T. Scavilla
		Senior Vice President
		Chief Financial Officer
		(Principal Financial Officer)

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EXHIBIT INDEX

Exhibit No.	Item
10.1*	Credit Agreement, dated May 3, 2016, by and between Globus Medical, Inc. and Globus Medical North America, Inc., and Wells Fargo Bank, National Association.
31.1*	Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
*	Filed herewith.
**	Furnished herewith.

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EX-10.1

Exhibit 10.1

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of May 3, 2016 by and between GLOBUS MEDICAL, INC., a Delaware corporation and GLOBUS MEDICAL NORTH AMERICA, INC., a Pennsylvania corporation (each individually, a “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”). Each reference herein to “Borrower” shall mean each and every party, collectively and individually, defined above as a Borrower.

RECITALS

Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I

CREDIT TERMS

SECTION 1.1.    LINE OF CREDIT.

(a)    Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including May 31, 2017, not to exceed at any time the aggregate principal amount of Fifty Million Dollars ($50,000,000.00) (“Line of Credit”), the proceeds of which shall be used to finance Borrower’s working capital requirements and issuance of standby letters of credit. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of May 3, 2016, as may be modified from time to time in a writing signed by the parties to be bound (“Line of Credit Note”), all terms of which are incorporated herein by this reference.

(b)    Borrowing and Repayment. Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.

(c)    Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank agrees from time to time during the term thereof to issue or cause an affiliate to issue standby letters of credit for the account of Borrower (each, a “Letter of Credit” and collectively, “Letters of Credit”); provided however, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed Twenty-Five Million Dollars ($25,000,000.00). The form and substance of each Letter of Credit shall be subject to approval by Bank, in its sole discretion. Each Letter of Credit shall be issued for a term not to exceed one hundred eighty (180) days, as designated by Borrower; provided however, that no Letter of Credit shall be issued with, nor shall Bank be required to renew or (if applicable) allow automatic renewal of any Letter of Credit so that it will have, an expiration date that is subsequent to the maturity date of the Line of Credit (with any such Letter of Credit with an expiration date subsequent to the maturity of the Line of Credit to be referred to as an “Extended Date Letter of Credit”) unless Borrower at the time of and as an additional condition

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to the issuance of an Extended Date Letter of Credit, provides Bank with cash collateral (which may be in addition to or, if agreed by Bank, may be a replacement for, such other collateral that may have been granted by Borrower to Bank, pursuant to this Agreement or otherwise), consisting of a deposit account maintained by Borrower with Bank in an amount that is not less than one hundred five percent (105%) of the undrawn amount of such Extended Date Letter of Credit, as evidenced by and subject to the security agreements and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank; and provided further, that in no event shall any Extended Date Letter of Credit have a then current expiration date more than one year beyond the maturity date of the Line of Credit. The undrawn amount of all Letters of Credit shall be reserved under the Line of Credit and shall not be available for borrowings thereunder. Each Letter of Credit shall be subject to the additional terms and conditions of the Letter of Credit agreements, applications and any related documents required by Bank in connection with the issuance thereof. Each drawing paid under a Letter of Credit shall be deemed an advance under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this Agreement applicable to such advances; provided however, that if advances under the Line of Credit are not available, for any reason, at the time any drawing is paid, the Borrower shall immediately pay to Bank the full amount drawn, together with interest hereon from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances under the Line of Credit. In such event Borrower agrees that Bank, in its sole discretion, may debit any account maintained by Borrower with Bank for the amount of any such drawing.

SECTION 1.2.    INTEREST/FEES.

(a)    Interest. The outstanding principal balance of each credit subject hereto shall bear interest at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith.

(b)    Computation and Payment. Interest shall be computed on the basis set forth in each promissory note or other instrument or document required hereby. Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.

(c)    Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the issuance of each Letter of Credit equal to seventy-five hundredths percent (0.75%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the payment or negotiation of each drawing under any Letter of Credit and fees upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank’s standard fees and charges then in effect for such activity.

SECTION 1.3.    COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all principal, interest and fees due under each credit subject hereto by debiting Borrower’s deposit account number 4124817552 with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

SECTION 1.4.    EXTENSION REQUEST. The maturity date of the Line of Credit is May 31, 2017. At any time within 60 days of May 1, 2017, so long as no Event of Default exists, the Borrower

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will have the right to request in writing that the Bank agree to extend the maturity date of the Line of Credit by an additional one year period, which agreement may be given by the Bank in its sole and absolute discretion. Bank agrees that it will advise the Borrower in writing within 15 days of receiving an extension request whether or not Bank agrees to so extend the maturity date for an additional one year period. Borrower understands that Bank’s decision whether to extend the Line of Credit is in Bank’s sole and absolute discretion, and subject to credit review and such other assurances, certificates, documents, consents or opinions as Bank may reasonably require.

SECTION 1.5.    INCREASE. Borrower may request in writing, at any time prior to the maturity date so long as no Event of Default exists, a one-time increase of the commitment amount in an amount not to exceed $25,000,000.00, which Bank will consider in its sole and absolute discretion. Bank agrees it will advise the Borrower in writing within 15 days of receiving an increase request whether or not Bank agrees to increase the commitment by the requested amount, and the effective date of the increase. Borrower understands that Bank’s decision whether to increase the commitment by the requested amount or any part thereof is in Bank’s sole and absolute discretion, and subject to credit review and such other assurances, certificates, documents, consents or opinions as Bank may reasonably require.

SECTION 1.6.    TERMINATION. Prior to the maturity date of the Line of Credit, Borrower may terminate this Agreement by sending ten days written notice of such termination to Bank, and paying in full all obligations outstanding hereunder, without premium or penalty.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.

SECTION 2.1.    LEGAL STATUS. GLOBUS MEDICAL, INC. is a corporation, duly organized and existing and in good standing under the laws of Delaware, and GLOBUS MEDICAL NORTH AMERICA, INC. is a corporation, duly organized and existing and in good standing under the laws of Pennsylvania, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower.

SECTION 2.2.    AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the “Loan Documents”) have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, or other law affecting or relating to creditor’s rights generally, and (ii) the availability of injunctive relief and other equitable measures.

SECTION 2.3.    NO VIOLATION. The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene

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any provision of the organizational and governing documents of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

SECTION 2.4.    LITIGATION. There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

SECTION 2.5.    CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement of Borrower dated December 31, 2014, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied except that unaudited financial statements may lack footnotes and other presentation items and are subject to year-end audit adjustments. Since the dates of such financial statements there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except (i) in favor of Bank, (ii) pursuant to a Permitted Lien (as defined below) or (iii) as otherwise permitted by Bank in writing.

SECTION 2.6.    INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.

SECTION 2.7.    NO SUBORDINATION. There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation of Borrower.

SECTION 2.8.    PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law; provided, that nothing contained herein shall prevent Borrower from electing, in its sole discretion, to terminate or abandon any regulatory approval or authority to sell any of its products once it ceases the production or sale of such products.

SECTION 2.9.    ERISA. Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.

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SECTION 2.10.    OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

SECTION 2.11.    ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower’s operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time. None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

ARTICLE III

CONDITIONS

SECTION 3.1.    CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank’s satisfaction of all of the following conditions:

(a)    Approval of Bank Counsel. All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank’s counsel.

(b)    Documentation. Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed:

(i) This Agreement and each promissory note or other instrument or document required hereby.

(ii) Corporate Resolution: Borrowing (2).

(iii) Certificate of Incumbency (2).

(iv) Such other documents as Bank may require under any other Section of this Agreement.

(c)    Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower or any Third Party Obligor hereunder, if any, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or any such Third Party Obligor, if any.

SECTION 3.2.    CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of the following conditions:

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(a)    Compliance. The representations and warranties contained herein and in each of the other Loan Documents shall be true in all materials respects on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.

(b)    Documentation. Bank shall have received all additional documents which may be required in connection with such extension of credit.

(c)    Letter of Credit Documentation. Prior to the issuance of any Letter of Credit, Bank shall have received a Letter of Credit Agreement and any other letter of credit documentation reasonably required by Bank, in case completed and duly executed by Borrower.

ARTICLE IV

AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:

SECTION 4.1.    PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.

SECTION 4.2.    ACCOUNTING RECORDS. Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower.

SECTION 4.3.    FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and detail satisfactory to Bank:

(a)     not later than 120 days after and as of the end of each fiscal year, a consolidated and consolidating audited financial statement of Borrower, prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement and statement of cash flow; and

(b)    not later than 60 days after and as of the end of each quarter, a consolidated financial statement of Borrower, prepared by Borrower, to include balance sheet, income statement, statement of cash flow and source and application of funds statement; and

(c)    in the event that Borrower or IPO Parent (as defined in Section 5 below) becomes subject to the reporting requirements under the Securities Exchange Act of 1934, as amended,

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within 5 days of filing, copies of all periodic and other reports, proxy statement and other materials filed by Borrower and/or IPO Parent with the SEC or with any national securities exchange distributed to its shareholders, as the case may be; documents required to be delivered may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower and/or IPO Parent posts such documents, or provides a link thereto, on Borrower’s and/or IPO Parent’s website on the Borrower’s and/or IPO Parent’s website address; and

(d)    contemporaneously with each quarterly financial statement of Borrower required hereby, a certificate of the president or chief financial officer, a general partner or a member of Borrower as applicable that said financial statements are accurate and that there exists no Event of Default nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default; and

(e)    from time to time such other information as Bank may reasonably request.

SECTION 4.4.    COMPLIANCE. Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower and/or its business; provided, that nothing contained herein shall prevent Borrower from electing, in its sole discretion, to terminate or abandon any regulatory approval or authority to sell any of its products once it ceases the production or sale of such products.

SECTION 4.5.    INSURANCE. Maintain and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of business, including but not limited to fire, extended coverage, public liability, flood, and, if required, hurricane, windstorm, seismic property damage and workers’ compensation, with all such insurance carried in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank’s request schedules setting forth all insurance then in effect. Borrower may self-insure or obtain from an insurer or through an insurance agent of Borrower’s choice, provided that any insurer chosen by Borrower is acceptable to Bank on such reasonable grounds as may be permitted under applicable law.

SECTION 4.6.    FACILITIES. Keep all properties useful or necessary to Borrower’s business in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

SECTION 4.7.    TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank’s satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

SECTION 4.8.    LITIGATION. Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower which is not covered by Borrower’s insurance policies and claimed damages exceed five million dollars ($5,000,000.00).

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SECTION 4.9.    FINANCIAL CONDITION. Maintain Borrower’s financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

(a)    Consolidated Leverage Ratio not greater than 2.5 to 1.0 to be maintained at all times and to be tested as of the last day of each fiscal quarter. “Consolidated Leverage Ratio” means the ratio of (a) Funded Indebtedness to (b) EBITDA for the twelve month period immediately preceding the most recently occurring last day of any fiscal quarter of Borrower. “Funded Indebtedness” is defined as of any date of determination, for Borrower and its subsidiaries, on a consolidated basis, as the outstanding principal amount of all indebtedness of Borrower and its subsidiaries, whether current or long-term (including the obligations under this Agreement. “EBITDA” shall mean, as calculated on a consolidated basis for Borrower and its subsidiaries for any period as of any date of determination, (a) Net Income, plus (b) the following to the extent deducted in the calculation of Net Income, (i) Interest Expense, (ii) depreciation expense and amortization expense, (iii) income tax expense, (iv) other non­ recurring expenses of Borrower and its subsidiaries reducing such Net Income which do not represent a cash item in such period or any future period, and (v) non-cash compensation paid to employees in the form of common stock, minus (c) all non-cash items increasing Net Income for such period. “Net Income” means, as calculated on a consolidated basis for Borrower and its subsidiaries for any period as at any date of determination, the net profit (or loss), after provision for taxes, of Borrower and its subsidiaries for such period taken as a single accounting period.

Interest Expense means, as calculated on a consolidated basis for Borrower and its subsidiaries, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including interest expense with respect to any credit extension and other indebtedness of Borrower and its subsidiaries, including, without limitation, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).

SECTION 4.10.    NOTICE TO BANK. Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give written notice to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower’s property.

SECTION 4.11.    OPERATING ACCOUNTS. Maintain Borrower’s primary domestic operating accounts with Bank.

ARTICLE V

NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in

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full of all obligations of Borrower subject hereto, Borrower will not without Bank’s prior written consent:

SECTION 5.1.    USE OF FUNDS. Use any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof.

SECTION 5.2.    LEASE EXPENDITURES. Incur any operating lease expense in any fiscal year in excess of an aggregate of $5,000,000.00.

SECTION 5.3.    OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness or liabilities or permit its subsidiaries to create, incur, assume or permit to exist any indebtedness or liabilities, resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, and (b) any other liabilities of Borrower and its subsidiaries existing as of, and disclosed to Bank prior to, the date hereof and (c) any trade payables incurred in the ordinary course of business.

SECTION 5.4.    MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any other entity in a transaction where the stockholders of Borrower immediately prior to such transaction do not own at least 51% of the outstanding equity interests in the combined company immediately after such transaction; make any substantial change in the nature of Borrower’s business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity unless such entity is in the life sciences business; nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower’s assets except in the ordinary course of its business.

SECTION 5.5.    GUARANTIES. Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank, and except additional guaranties in amounts not to exceed an aggregate of $5,000,000.00 outstanding at any time.

SECTION 5.6.    LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments in any person or entity, except any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof.

SECTION 5.7.     DIVIDENDS, DISTRIBUTIONS.  Declare or pay any dividend or distribution either in cash, stock or any other property on Borrower's stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower's stock now or hereafter outstanding; provided however, that Borrower may pay up to $30,000,000.00 for the repurchase of Borrower’s shares. Notwithstanding, nothing herein shall restrict or otherwise inhibit Globus Medical North America, Inc.’s right to declare or pay any dividend or distribution of cash, stock, or any other property to Globus Medical, Inc.

SECTION 5.8.    PLEDGE OF ASSETS. Other than Permitted Liens, mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of Borrower’s assets now owned or hereafter acquired, except any of the foregoing in favor of Bank or which is existing as of, and disclosed to Bank in writing prior to, the date hereof. “Permitted Liens” shall mean (i) Liens

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existing on the date hereof, (ii) Liens for taxes, fees, assessments or other government charges or levies, either (A) not due and payable, or (B) being contested in good faith and for which Borrower maintains adequate reserves, (iii) purchase money Liens for items or property acquired or held by Borrower or its subsidiaries incurred for financing the acquisition thereof, (iv) capital leases, (v) synthetic or off balance sheet leases, (vi) Liens of carriers, warehousemen, suppliers or other persons or entities that are possessory in nature, (vii) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations, (viii) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in clauses (i) through (iii), but only if such Liens are limited to the property encumbered by the Liens described in clauses (i) through (iii) and the principal amount of the indebtedness does not increase, (ix) leases or subleases of real property or leases, subleases, non-exclusive licenses or sublicenses of personal property granted in the ordinary course of Borrower’s business, (x) Liens arising from attachments or judgments, orders or decrees in circumstances not constituting an Event of Default under Section 6.1 (f); and (xi) Liens in favor of other financial institutions arising in connection with Borrower’s deposit or securities accounts held at such institutions; provided however that the purchase money Liens in this subsection (iii), capital leases in this subsection (iv) and synthetic or off balance sheet leases in this subsection (v) shall secure no more than Ten Million Dollars ($10,000,000) in the aggregate amount outstanding.

“Lien” means any claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise.

SECTION 5.9. CHANGE IN BUSINESS, MANAGEMENT OR OWNERSHIP. (i)(a) Engage in any business other than the businesses currently engaged in by Borrower; (b) liquidate or dissolve; or (c)(i) have a change in senior management which results in David Paul ceasing to be either the Chief Executive Officer or Chief Scientific Officer of Borrower and no replacement thereof reasonably acceptable to Bank shall have been found within ninety (90) days following such cessation; or (ii)(A) enter into any transaction or series of related transactions in which stockholders of Borrowers who were not stockholders immediately prior to the first such transaction own more than forty percent (40% ) of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the sale of Borrower’s equity securities in a public offering or to venture capital investors so long as Borrower identifies to Bank the venture capital investors prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction), or (B) upon and after the consummation of a Qualifying IPO (as defined in Section 5) in which the IPO Parent is the issuer of equity interests in such Qualifying IPO, the IPO Parent (as defined in Section 5) fails to directly own beneficially, or to control voting rights with respect to, one hundred percent (100.0%) of equity interests of Borrower.

SECTION 5.10. INITIAL PUBLIC OFFERING. Nothing in this Agreement shall prohibit or otherwise restrict Borrower from making an initial public offering of its stock so long as: (a) no change of control under Section 6.1(i) will result therefrom; and (b) no Event of Default then exists or could reasonably be expected to result therefrom, including without limitation, any and all covenants relating to the IPO Parent. “IPO Parent” means a corporation formed to issue equity interests in a Qualifying IPO and to hold all of the equity interests of Borrower in connection therewith. “Qualifying IPO” means the consummation by either (a) Borrower or (b) the IPO Parent, on or before the maturity date of the Line of Credit, an initial public offering of its common stock.

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ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.1.    The occurrence of any of the following shall constitute an “Event of Default” under this Agreement:

(a)    Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.

(b)    Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.

(c)    Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an “Event of Default” in this section 6.1), and with respect to any such default that by its nature can be cured, such default shall continue for a period of twenty (20) days from its occurrence.

(d)    Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a “Third Party Obligor”) has incurred any debt or other liability to any person or entity, including Bank that is not cured within the time period therefor.

(e)    Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

(f)    The filing of a notice of judgment lien against Borrower or any Third Party Obligor; or the recording of any abstract or transcript of judgment against Borrower or any Third Party Obligor in any county or recording district in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party

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Obligor, in each case in an amount in excess of $5,000,000.00 individually or in the aggregate under this Section 6.1 (f).

(g)    There shall exist or occur any event or condition that Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower, any Third Party Obligor, or the general partner of either if such entity is a partnership, of its obligations under any of the Loan Documents.

(h)    The death or incapacity of Borrower or any Third Party Obligor if an individual. The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any Third Party Obligor if a partnership. The dissolution or liquidation of Borrower or any Third Party Obligor if a corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor.

(i)    The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of fifty-one percent (51%) or more of the common stock, members’ equity or other ownership interest (other than a limited partnership interest).

(j)    The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary, involuntary or by operation of law, without Bank’s prior written consent, of all or any part of or interest in any real property collateral required hereby.

SECTION 6.2.    REMEDIES. Upon the occurrence of any Event of Default: (a) all principal, unpaid interest outstanding and other indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank’s option and without notice (except as expressly provided in any mortgage or deed of trust pursuant to which Borrower has provided Bank a lien on any real property collateral) become immediately due and payable without presentment, demand, protest or any notices of any kind, including without limitation, notice of nonperformance, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

ARTICLE VII

MISCELLANEOUS

SECTION 7.1.    NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of

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any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

SECTION 7.2.    NOTICES. All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address:

BORROWER:    GLOBUS MEDICAL, INC.

GLOBUS MEDICAL NORTH AMERICA, INC.

2560 General Armistead Avenue

Audubon, Pennsylvania 19403

Attn: Director of Financial Planning and Analysis

BANK:    WELLS FARGO BANK, NATIONAL ASSOCIATION

MAC Y1392-080

300 Barr Harbor Drive

Floor 08

Conshohocken, Pennsylvania 19428

or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

SECTION 7.3.    COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank immediately upon demand the full amount of all reasonable out-of-pocket payments, advances, charges, costs and expenses, including, to the extent permitted by applicable law, reasonable attorneys’ fees (to include outside counsel fees but excluding in-house counsel to the extent permissible), expended or incurred by Bank in connection with (a) the enforcement of Bank’s rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, whether or not suit is brought, and (b) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity. Notwithstanding anything in this Agreement to the contrary, reasonable attorneys’ fees shall not exceed the amount permitted by law. Whenever in this Agreement and the other Loan Documents Borrower is obligated to pay for the attorneys’ fees of Bank, or the phrase “reasonable attorneys’ fees” or a similar phrase is used, it shall be Borrower’s obligation to pay the attorneys’ fees actually incurred or allocated, at standard hourly rates, without regard to any statutory interpretation, which shall not apply, Borrower hereby waiving the application of any such statute.

SECTION 7.4.    SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder without Bank’s prior written consent. Bank reserves the right to sell, assign,

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transfer, negotiate or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan Documents. In connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, if any, or any collateral required hereunder; provided that any recipient thereof agrees not to use or disclose any confidential information of Borrower or its subsidiaries other than to evaluate a potential acquisition of rights under the Loan Documents.

SECTION 7.5.    ENTIRE AGREEMENT; AMENDMENT. To the full extent permitted by law, this Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof. This Agreement may be amended or modified only in writing signed by each party hereto.

SECTION 7.6.    NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.

SECTION 7.7.    TIME. Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.

SECTION 7.8.    SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.

SECTION 7.9.    COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.

SECTION 7.10.    GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of Pennsylvania (such State, Commonwealth or District is referred to herein as the “State”), but giving effect to federal laws applicable to national banks, without reference to the conflicts of law or choice of law principles thereof.

SECTION 7.11.    BUSINESS PURPOSE. Borrower represents and warrants that each credit subject hereto is made for (a) a business, commercial, investment, agricultural or other similar purpose, (b) the purpose of acquiring or carrying on a business, professional or commercial activity, or (c) the purpose of acquiring any real or personal property as an investment and not primarily for a personal, family or household use.

SECTION 7.12.    RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of an Event of Default, (a) Borrower hereby authorizes Bank, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Bank shall have declared any credit subject hereto to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower’s obligations and liabilities under the Loan Documents (whether matured or unmatured, fixed or contingent, liquidated or

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unliquidated), any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Bank, in its sole discretion, may elect. Borrower hereby grants to Bank a security interest in all deposits and accounts maintained with Bank to secure the payment of all obligations and liabilities of Borrower to Bank under the Loan Documents.

SECTION 7.13.    ARBITRATION.

(a)    Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit; provided, however, that nothing herein shall preclude or limit Bank’s right to confess judgment pursuant to a warrant of attorney provision set forth in any Loan Document; and provided, further, that no party shall have the right to demand binding arbitration of any claim, dispute or controversy seeking to (iii) strike-off or open a judgment obtained by confession pursuant to a warrant of attorney contained in any Loan Document, (iv) challenge the waiver of a right to prior notice and a hearing before judgment is entered, or after judgment is entered, but before execution upon the judgment, which such claims, disputes or controversies shall be commenced and prosecuted in accordance with the procedures set forth, and in the forum specified by, Rules 2950 through and including Rule 2986 of the Pennsylvania Rules of Civil Procedure or any such other applicable federal or state law. In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.

(b)    Governing Rules. Any arbitration proceeding will (i) proceed in a location in the State selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

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(c)    No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d)    Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State or a neutral retired judge of the state or federal judiciary of the State, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of the State and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in the State or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

(e)    Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available.

(f)    Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

(g)    Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.

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(h)    Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

(i)    Small Claims Court. Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

SECTION 7.14.    JOINT AND SEVERAL LIABILITY.

(a)     Each Borrower has determined and represents to Bank that it is a legitimate business purpose and in its best interests to induce Bank to extend credit pursuant to this Agreement. Each Borrower acknowledges and represents that its business is related to the business of every other Borrower hereunder, and all commitments, advances and other credit extensions under this Agreement will individually and collectively benefit each Borrower hereunder.

(b)    Each Borrower has determined and represents to Bank that it has, and after giving effect to the transactions contemplated by this Agreement will have, assets having a fair market value in excess of its liabilities, after giving effect to any available rights of contribution or subrogation, and each Borrower has, and will have, access to adequate capital for the conduct of its business and the ability to pay its debts as they mature.

(c)    Each Borrower agrees that it is jointly and severally and unconditionally liable to Bank for, and as a surety as though it were a primary obligor for, and will pay to Bank when due, the full amount of all existing and future indebtedness arising in connection with any facility extended under this Agreement, and all modifications, extensions and renewals thereto, including without limitation all principal and interest, and all fees, costs and expenses chargeable to each Borrower individually or collectively in connection with any facility hereunder. These obligations shall be in addition to any other obligations of any Borrower under any other agreement with Bank entered into before or after the date of this Agreement, unless such other agreement is expressly modified or revoked in writing, and this Agreement shall not affect or invalidate the terms of any such other agreement, unless otherwise expressly provided herein.

(d)    The liability of a Borrower for indebtedness hereunder shall be reinstated and revived and the rights of Bank shall continue if and to the extent that for any reason any amount at any time paid on account of any facility under this Agreement by any Borrower or any other person or entity is rescinded or must otherwise be restored by Bank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid.

(e)    Each Borrower authorizes Bank, without notice to or demand on such Borrower, and without affecting such Borrower’s liability for indebtedness incurred under any facility extended

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under this Agreement, from time to time to: (i) alter, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of, the indebtedness of any other Borrower to Bank on account of any such facilities; (ii) take and hold security from any other Borrower for the payment of indebtedness incurred under any facility extended under this Agreement, and exchange, enforce, waive, subordinate or release any such security; (iii) apply such security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage, or deed of trust, as Bank in its discretion may determine; (iv) release or substitute any one or more of the endorsers or any guarantors of any facility hereunder, or any other party obligated thereon; and (v) apply payments received by Bank from any other Borrower to indebtedness of such other Borrower to Bank other than to any facility extended under this Agreement. Notwithstanding the above, Bank shall endeavor, without being obligated to do so, to provide advance written notice to Borrower, provided that, failure to do so shall, in no event, invalidate any such action taken by Bank hereunder or otherwise constitute a defense to enforcement of any rights of Bank.

(f)    Each Borrower represents and warrants to Bank that it has established adequate means of obtaining from every other Borrower on a continuing basis financial and other information relating to the financial condition of every other Borrower, and each Borrower agrees to keep adequately informed by such means of any facts, events or circumstances which might in any way affect its risks hereunder. Each Borrower further agrees that Bank shall have no obligation to disclose to it any information or material about any other Borrower which is acquired by Bank in any manner.

(g)    Each Borrower waives any right to require Bank to: (i) proceed against any other Borrower or any other person; (ii) proceed against or exhaust any security held from any other Borrower or any other person; (iii) pursue any other remedy in Bank’s power; (iv) apply payments received by Bank from any other Borrower to any facility extended under this Agreement; (v) unless otherwise required by this Agreement or the Letter of Credit, make any presentments or demands for performance, or give any notices of nonperformance, protests, notices of protest or notices of any kind, including without limitation, any notice of nonperformance, protest, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration; or (vi) set off against the indebtedness the fair value of any real or personal property given as collateral for the indebtedness (whether such right of setoff arises under statute or otherwise). In addition to the foregoing, each Borrower specifically waives any statutory right it might have to require Bank to proceed against other Borrowers or any collateral that secures the indebtedness.

(h)    Each Borrower waives to the extent permitted by applicable law any defense to its liability for repaying any facility extended under this Agreement based upon or arising by reason of: (i) any disability or other defense of any other Borrower or any other person; (ii) the cessation or limitation from any cause whatsoever, other than payment in full, of the liability of any other Borrower for the facility extended under this Agreement; (iii) any lack of authority of any officer, director, partner, agent or other person acting or purporting to act on behalf of any other Borrower or any defect in the formation of any other Borrower; (iv) the application by any other Borrower of the proceeds of any facility extended under this Agreement for purposes other than the purposes intended or understood by Bank or each other Borrower; (v) any act or omission by Bank which directly or indirectly results in or aids the discharge of any other Borrower by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Bank against any other Borrower. Notwithstanding, the waiver in this Section 7.14.(h)(v) shall not affect, modify, or otherwise undermine any separate legally enforceable, written agreement entered into by the

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parties wherein Bank expressly agrees to discharge Borrower’s debt obligations or impair or suspend its rights or remedies against Borrower; (vi) any impairment of the value of any interest in any security for any facility extended under this Agreement, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; or (vii) any modification of the indebtedness of any other Borrower for any facility extended under this Agreement, including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the indebtedness of any Borrower for any facility extended under this Agreement, including increase or decrease of the rate of interest thereon.

(i)    Until each facility extended under this Agreement and all indebtedness arising under or in connection with this Agreement shall have been paid in full, no Borrower shall have any right of subrogation. Each Borrower waives all rights and defenses it may have arising out of (i) any election of remedies by Bank, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for each facility extended under this Agreement, destroys its rights of subrogation or its rights to proceed against any other Borrower for reimbursement, or (ii) any loss of rights it may suffer by reason of any rights, powers or remedies of any other Borrower in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging any Borrower’s indebtedness for each facility extended under this Agreement, whether by operation of law, or otherwise, including any rights Borrower may have to claim a fair market credit with respect to a deficiency or have a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness, and Borrower waives any right Borrower may have under any “one-action” rule. Borrower further waives the benefit of any homestead, exemption or other similar laws.

Until all indebtedness of each Borrower to Bank arising under or in connection with this Agreement shall have been paid in full, each Borrower waives any right to enforce any remedy which Bank now has or may hereafter have against any other Borrower or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Bank. To the fullest extent permitted by applicable law, Borrower waives all rights of a surety and the benefits of any applicable suretyship law, statute or regulation, and without limiting any of the waivers set forth herein, Borrower further waives any other fact or event that, in the absence of this provision, would or might constitute or afford a legal or equitable discharge or release of or defense to Borrower.

-19-

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be executed as a sealed instrument as of the day and year first written above.

GLOBUS MEDICAL, INC.	WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ ANTHONY L. WILLIAMS       (SEAL)	By: /s/ JOSEPH J. DEMARCO, JR.
ANTHONY WILLIAMS	JOSEPH J. DEMARCO, JR.
PRESIDENT	SENIOR VICE PRESIDENT
GLOBUS MEDICAL NORTH AMERICA, INC.
By: /s/ ANTHONY L. WILLIAMS       (SEAL)
ANTHONY WILLIAMS
PRESIDENT

-20-

EX-31.1

EXHIBIT 31.1

Certification By Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David C. Paul, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Globus Medical, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 27, 2016	/s/ DAVID C. PAUL
		David C. Paul
		Chairman
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification By Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Daniel T. Scavilla, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Globus Medical, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 27, 2016	/s/ DANIEL T. SCAVILLA
		Daniel T. Scavilla
		Senior Vice President
		Chief Financial Officer

EX-32

EXHIBIT 32

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), David C. Paul, Chairman and Chief Executive Officer, and Daniel T. Scavilla, President and Chief Operating Officer of Globus Medical, Inc. (the “Company”), each certifies with respect to the QuarterlyReport of the Company on Form 10-Q for the period ended June 30, 2016 (the “Report”) that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	July 27, 2016	/s/ DAVID C. PAUL
		David C. Paul
		Chairman
		Chief Executive Officer
Dated:	July 27, 2016	/s/ DANIEL T. SCAVILLA
		Daniel T. Scavilla
		Senior Vice President
		Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 22, 2016
Document Information
Entity Registrant Name	GLOBUS MEDICAL INC
Entity Central Index Key	0001237831
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		95,654,764

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 95,342	$ 60,152
Restricted cash	11,235	26,119
Short-term marketable securities	229,170	220,877
Accounts receivable, net of allowances of $2,338 and $2,513, respectively	74,713	77,681
Inventories	104,417	105,260
Prepaid expenses and other current assets	5,420	7,351
Income taxes receivable	15,132	8,672
Deferred income taxes	0	38,687
Total current assets	535,429	544,799
Property and equipment, net of accumulated depreciation of $151,752 and $139,114, respectively	119,077	114,743
Long-term marketable securities	65,625	48,762
Intangible assets, net	32,993	33,242
Goodwill	91,964	91,964
Other assets	302	590
Deferred income taxes	24,086	0
Total assets	869,476	834,100
LIABILITIES AND EQUITY
Accounts payable	11,628	15,971
Accrued expenses	47,887	53,769
Income taxes payable	664	763
Business acquisition liabilities, current	10,101	12,188
Total current liabilities	70,280	82,691
Business acquisition liabilities, net of current portion	17,950	21,126
Deferred income taxes	0	13,260
Other liabilities	1,715	1,699
Total liabilities	89,945	118,776
Commitments and contingencies (Note 12)
Equity:
Additional paid-in capital	202,797	192,629
Accumulated other comprehensive loss	(1,736)	(1,958)
Retained earnings	578,374	524,558
Total equity	779,531	715,324
Total liabilities and equity	869,476	834,100
Class A Common
Equity:
Common stock	72	71
Class B Common
Equity:
Common stock	$ 24	$ 24

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Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current Assets:
Allowance for doubtful accounts	$ 2,338	$ 2,513
Property, Plant and Equipment, Net
Accumulated depreciation	$ 151,752	$ 139,114
Equity:
Common stock, shares authorized	785,000,000
Common stock, shares issued	95,649,656	95,319,722
Common stock, shares outstanding	95,649,656	95,319,722
Class A Common
Equity:
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	71,772,100	71,442,166
Common stock, shares outstanding	71,772,100	71,442,166
Class B Common
Equity:
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	275,000,000	275,000,000
Common stock, shares issued	23,877,556	23,877,556
Common stock, shares outstanding	23,877,556	23,877,556

XML

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Sales	$ 137,489	$ 133,570	$ 276,753	$ 265,174
Cost of goods sold	32,856	32,579	64,500	64,686
Gross profit	104,633	100,991	212,253	200,488
Operating expenses:
Research and development	11,251	9,081	21,450	17,737
Selling, general and administrative	52,408	54,506	106,978	106,795
Provision for litigation	3,056	374	3,056	406
Total operating expenses	66,715	63,961	131,484	124,938
Operating Income	37,918	37,030	80,769	75,550
Other income, net
Interest income, net	602	278	1,098	556
Foreign currency transaction gain/(loss)	(309)	13	(201)	(664)
Other income	125	150	281	202
Total other income, net	418	441	1,178	94
Income before income taxes	38,336	37,471	81,947	75,644
Income tax provision	12,530	13,417	28,131	26,942
Net Income	$ 25,806	$ 24,054	$ 53,816	$ 48,702
Earnings per share:
Basic	$ 0.27	$ 0.25	$ 0.56	$ 0.51
Diluted	$ 0.27	$ 0.25	$ 0.56	$ 0.51
Weighted average shares outstanding:
Basic	95,585	94,979	95,491	94,884
Dilutive stock options	841	1,070	868	1,093
Diluted	96,426	96,049	96,359	95,977
Anti-dilutive stock options excluded from weighted average calculation	5,469	3,398	5,338	3,059

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 25,806	$ 24,054	$ 53,816	$ 48,702
Other comprehensive income/(loss):
Unrealized gain/(loss) on marketable securities, net of tax	60	(37)	284	28
Foreign currency translation gain/(loss)	(143)	183	(62)	(60)
Total other comprehensive income/(loss)	(83)	146	222	(32)
Comprehensive Income	$ 25,723	$ 24,200	$ 54,038	$ 48,670

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net income	$ 53,816	$ 48,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,698	11,579
Amortization of premium on marketable securities	2,085	1,370
Write-down for excess and obsolete inventories	4,536	4,730
Stock-based compensation expense	5,690	4,669
Excess tax benefit related to nonqualified stock options	(764)	(1,317)
Allowance for doubtful accounts	148	717
Change in deferred income taxes	1,625	(5,047)
(Increase)/decrease in:
Restricted cash	14,884	(1,312)
Accounts receivable	2,624	1,591
Inventories	(3,812)	(11,651)
Prepaid expenses and other assets	1,114	(897)
Increase/(decrease) in:
Accounts payable	(1,707)	(66)
Accounts payable to related-party	0	(5,359)
Accrued expenses and other liabilities	(10,078)	(65)
Income taxes payable/receivable	(5,796)	187
Net cash provided by operating activities	78,063	47,831
Cash flows from investing activities:
Purchases of marketable securities	(172,886)	(143,691)
Maturities of marketable securities	129,495	85,444
Sales of marketable securities	16,602	39,085
Purchases of property and equipment	(20,142)	(25,126)
Acquisition of businesses, net of cash acquired	0	(48,016)
Net cash used in investing activities	(46,931)	(92,304)
Cash flows from financing activities:
Payment of business acquisition liabilities	(400)	(600)
Proceeds from exercise of stock options	3,575	3,015
Excess tax benefit related to nonqualified stock options	764	1,317
Net cash provided by financing activities	3,939	3,732
Effect of foreign exchange rate on cash	119	35
Net increase/(decrease) in cash and cash equivalents	35,190	(40,706)
Cash and cash equivalents, beginning of period	60,152	82,265
Cash and cash equivalents, end of period	95,342	41,559
Supplemental disclosures of cash flow information:
Interest paid	2	9
Income taxes paid	$ 32,214	$ 31,880

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BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2016

BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Background and Summary of Significant Accounting Policies

BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) The Company

Globus Medical, Inc., together with its subsidiaries, is a medical device company focused on the design, development and commercialization of musculoskeletal implants. We are currently focused on implants that promote healing in patients with spine disorders. We have also recently begun to develop a robotic surgical navigation device and products to treat patients who have experienced orthopedic traumas, although those development efforts are still ongoing and we currently have no robotic or orthopedic trauma products that are cleared by the U.S. Food and Drug Administration for sale. We are an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures that assist surgeons in effectively treating their patients, respond to evolving surgeon needs and address new treatment options. Since our inception in 2003, we have launched over 160 products and offer a product portfolio addressing a broad array of spinal pathologies.

We are headquartered in Audubon, Pennsylvania, and market and sell our products through our exclusive sales force in the United States, as well as within North, Central & South America, Europe, Asia, Africa and Australia. Our sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors.

The terms “the Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc. and, where applicable, our consolidated subsidiaries.

(b) Basis of Presentation

The accompanying interim unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2015.

In the opinion of management, the statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position and of the results for the three- and six- month periods presented. The results of operations for any interim period are not indicative of results for the full year. Certain reclassifications have been made to prior period statements to conform to the current year presentation.

(c) Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Globus and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation.

(d) Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, write-down for excess and obsolete inventory, useful lives of assets, the outcome of litigation, and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results.

(e) Restricted Cash

In December 2014, we set aside cash for the payment of a portion of the DePuy Synthes and Bianco litigation. We classified this cash as restricted, as the amount was placed in escrow to be used for payment of the litigation obligations, should we not be successful with our appeals. On January 13, 2016, we settled our litigation with DePuy Synthes and made a payment of $7.9 million and recovered approximately $8.4 million related to that settlement shortly thereafter. As of June 30, 2016, we have $11.2 million of restricted cash remaining related to the Bianco matter. See “Note 12. Commitments and Contingencies” below for more details regarding these litigations.

(f) Marketable Securities

Our marketable securities include municipal bonds, corporate debt securities, commercial paper, securities of U.S. government-sponsored agencies and asset-backed securities, and are classified as available-for-sale as of June 30, 2016. Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive loss on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets.

We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made.

(g) Inventories

Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories.

(h) Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold.

(i) Recently Issued Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 amends the guidance in former Topic 605, Revenue Recognition, and most other existing revenue guidances in US GAAP. Under the new standard, an entity will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which the entity expects to be entitled in exchange for those goods or services and provide additional disclosures. As amended, the effective date for public entities is annual reporting periods beginning after December 15, 2017 and interim periods therein. Early adoption is not permitted prior to the first quarter of 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the timing and impact of the new standard on our financial position, results of operations, and disclosures.

In July 2015, the FASB released ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”) as part of the FASB’s Simplification Initiative. This update is intended to more closely align the measurement of inventory under GAAP with the measurement of inventory under International Financial Reporting Standards. Within the scope of the update, an entity is required to measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonable and predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for all public entities for fiscal years beginning after December 31, 2016, including interim reporting periods within that period, and is required to be applied prospectively, with early adoption permitted. We are currently evaluating the impact of the new standard on our financial position, results of operations, and disclosures.

In September 2015, the FASB released ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Prior to the issuance of the standard, entities were required to retrospectively apply adjustments made to provisional amounts recognized in a business combination. The amendments in ASU 2015-16 require an entity to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The update is not expected to have a material impact on our financial position, results of operations, and disclosures.

In November 2015, the FASB released ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that all deferred income taxes are classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 also aligns the presentation of deferred taxes with that of International Financial Reporting Standards. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier application permitted for all entities as of the beginning of an interim or annual reporting period. We adopted ASU 2015-17 prospectively effective March 31, 2016, therefore prior periods were not adjusted.

In February 2016, the FASB released ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases with terms greater than 12 months, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures.

In March 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which will simplify the income tax consequences, accounting for forfeitures, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted, and will be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures.

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ACQUISITIONS

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Business Combination Disclosure

ACQUISITIONS

Branch Medical Group, Inc.

On February 25, 2015, we entered into an agreement to acquire Branch Medical Group, Inc. (“BMG”), a related-party manufacturer of high precision medical devices located in Audubon, PA. We closed this acquisition on March 11, 2015, for $57.0 million in cash, $5.3 million in deferred consideration, and $0.9 million of closing working capital adjustments. The amount payable to BMG on the date of acquisition of $5.2 million was also settled in connection with the acquisition. The deferred consideration was a holdback of a portion of the sale price, to allow time to properly account for all working capital adjustments in the event of an unfavorable adjustment to the sellers. The full holdback amount of $5.3 million was paid in cash in July 2016.

As previously disclosed in our definitive proxy statement, BMG had been a related-party supplier since 2005. As of February 24, 2015, David C. Paul's wife, David D. Davidar's wife, and David M. Demski collectively owned approximately 49% of the outstanding stock of BMG. In addition, since February 2010, Mr. Paul's wife and Mr. Davidar's wife had served as directors of BMG. Prior to the acquisition, we purchased products and services from BMG pursuant to a standard Supplier Quality Agreement entered into in September 2010.

We accounted for the acquisition under the purchase method of accounting, and as a result, recorded goodwill of $39.0 million. We recorded the deferred consideration as a component of business acquisition liabilities, current, in our balance sheet. The results of operations of BMG have been included in our results of operations from the date of acquisition. Amounts recognized for assets acquired and liabilities assumed are based on purchase price allocations and on certain management judgments. These allocations are based on an analysis of the estimated fair values of assets acquired and liabilities assumed, including identifiable tangible assets, and estimates of the useful lives of tangible assets. We completed our final purchase price allocations during September 2015. The goodwill from this acquisition is not deductible for tax purposes.

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INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2016

Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure

INTANGIBLE ASSETS

A summary of intangible assets is presented below:

		June 30, 2016
(In thousands)	Weighted Average Amortization Period (in years)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
In-process research & development	—	$	24,560	$	—		$	24,560
Supplier network	10.0	4,000		(667		)	3,333
Customer relationships & other intangibles	7.3	5,525		(2,895		)	2,630
Patents	16.1	3,035		(565		)	2,470
Total intangible assets		$	37,120	$	(4,127	)	$	32,993

		December 31, 2015
(In thousands)	Weighted Average Amortization Period (in years)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
In-process research & development	—	$	24,560	$	—		$	24,560
Supplier network	10.0	4,000		(467		)	3,533
Customer relationships & other intangibles	7.3	5,525		(2,384		)	3,141
Patents	17.0	2,495		(487		)	2,008
Total intangible assets		$	36,580	$	(3,338	)	$	33,242

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MARKETABLE SECURITIES

6 Months Ended

Jun. 30, 2016

Marketable Securities [Abstract]

Marketable Securities

MARKETABLE SECURITIES

The composition of our short-term and long-term marketable securities is as follows:

		June 30, 2016
(In thousands)	Contractual Maturity (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Municipal bonds	Less than 1	$	139,367	$	41	$	(7	)	$	139,401
Corporate debt securities	Less than 1	50,225		24		(1		)	50,248
Commercial paper	Less than 1	33,053		15		—			33,068
Securities of U.S. government-sponsored agencies	Less than 1	5,512		3		—			5,515
Asset-backed securities	Less than 1	938		—		—			938
Total short-term marketable securities		$	229,095	$	83	$	(8	)	$	229,170
Long-term:
Municipal bonds	1-2	$	19,530	$	22	$	—		$	19,552
Corporate debt securities	1-2	27,079		142		—			27,221
Asset-backed securities	1-2	18,830		22		—			18,852
Total long-term marketable securities		$	65,439	$	186	$	—		$	65,625

		December 31, 2015
(In thousands)	Contractual Maturity (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Municipal bonds	Less than 1	$	108,402	$	15	$	(81	)	$	108,336
Corporate debt securities	Less than 1	53,759		2		(57		)	53,704
Commercial paper	Less than 1	42,149		3		(1		)	42,151
Securities of U.S. government-sponsored agencies	Less than 1	14,511		4		(4		)	14,511
Asset-backed securities	Less than 1	2,175		—		—			2,175
Total short-term marketable securities		$	220,996	$	24	$	(143	)	$	220,877
Long-term:
Municipal bonds	1-2	$	18,508	$	—	$	(25	)	$	18,483
Corporate debt securities	1-2	12,033		—		(25		)	12,008
Asset-backed securities	1-2	18,294		—		(23		)	18,271
Total long-term marketable securities		$	48,835	$	—	$	(73	)	$	48,762

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Under the accounting for fair value measurements and disclosures, fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories:

Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and

Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques.

The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows:

	Balance at
(In thousands)	June 30, 2016		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	18,774	$	7,285	$	11,489	$	—
Municipal bonds	158,953		—		158,953		—
Corporate debt securities	77,469		—		77,469		—
Commercial paper	33,068		—		33,068		—
Asset-backed securities	19,790		—		19,790		—
Securities of U.S. government-sponsored agencies	5,515		—		5,515		—
Liabilities
Contingent consideration	22,531		—		—		22,531

	Balance at
(In thousands)	December 31, 2015		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	12,700	$	1,701	$	10,999	$	—
Municipal bonds	126,819		—		126,819		—
Corporate debt securities	65,712		—		65,712		—
Commercial paper	42,151		—		42,151		—
Asset-backed securities	20,446		—		20,446		—
Securities of U.S. government-sponsored agencies	14,511		—		14,511		—
Liabilities
Contingent consideration	26,617		—		—		26,617

Our marketable securities are classified as Level 2 within the fair value hierarchy, as we measure their fair value using market prices for similar instruments and inputs such as actual trade data, benchmark yields, broker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors.

Contingent consideration represents our contingent milestone, performance and revenue-sharing payment obligations related to our acquisitions and is measured at fair value, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. We assess these estimates on an ongoing basis as additional data impacting the assumptions is obtained. The balances of the fair value of contingent consideration are recognized within business acquisition liabilities on our consolidated balance sheets, and the changes in the fair value of contingent consideration are recognized within research and development and selling, general and administrative expenses in the consolidated statements of income.

The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:

	Fair Value at
(In thousands)	June 30, 2016		Valuation technique	Unobservable input	Range
				Discount rate	3.1	%	-	8.5	%
Revenue-based payments	$	14,787	Discounted cash flow	Probability of payment	87.0	%	-	97.5	%
				Projected year of payment	2017		-	2029
							-
				Discount rate	5.3	%	-	13.5	%
Milestone-based payments	$	7,744	Discounted cash flow	Probability of payment	80.0	%	-	100.0	%
				Projected year of payment	2016		-	2020

The following table provides a reconciliation of the beginning and ending balances of contingent consideration:

	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Beginning balance	$	22,260		$	24,831		$	26,617		$	24,335
Contingent payments	(1		)	(2		)	(5,001		)	(3		)
Non-cash settlement of certain contingent consideration	(1,522		)	—			(1,522		)	—
Changes in fair value of contingent consideration	1,794			705			2,437			1,202
Ending balance	$	22,531		$	25,534		$	22,531		$	25,534

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INVENTORIES

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

(In thousands)	June 30, 2016		December 31, 2015
Raw materials	$	13,993	$	12,308
Work in process	7,078		7,091
Finished goods	83,346		85,861
Total inventories	$	104,417	$	105,260

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ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2016

Payables and Accruals [Abstract]

Accrued Expenses

ACCRUED EXPENSES

(In thousands)	June 30, 2016		December 31, 2015
Compensation and other employee-related costs	$	16,916	$	21,151
Legal and other settlements and expenses	9,652		13,617
Accrued non-income taxes	7,473		6,808
Royalties	7,719		6,787
Other	6,127		5,406
Total accrued expenses	$	47,887	$	53,769

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DEBT

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

DEBT

Line of Credit

In May 2011, we entered into a credit agreement with Wells Fargo Bank related to a revolving credit facility that provides for borrowings up to $50.0 million. At our request, and with the approval of the bank, the amount of borrowings available under the revolving credit facility can be increased to $75.0 million. The revolving credit facility includes up to a $25.0 million sub-limit for letters of credit. As amended to date, the revolving credit facility expires in May 2017. Cash advances bear interest at our option either at a fluctuating rate per annum equal to the daily LIBOR in effect for a one-month period plus 0.75%, or a fixed rate for a one- or three-month period equal to LIBOR plus 0.75%. The credit agreement governing the revolving credit facility also subjects us to various restrictive covenants, including the requirement to maintain maximum consolidated leverage. The covenants also include limitations on our ability to repurchase shares, to pay cash dividends or to enter into a sale transaction. As of June 30, 2016, we were in compliance with all financial covenants under the credit agreement, there were no outstanding borrowings under the revolving credit facility and available borrowings were $50.0 million. We may terminate the credit agreement at any time on ten days’ notice without premium or penalty.

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EQUITY

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Equity

EQUITY

Our amended and restated Certificate of Incorporation provides for a total of 785,000,000 authorized shares of common stock. Of the authorized number of shares of common stock, 500,000,000 shares are designated as Class A common stock (“Class A Common”), 275,000,000 shares are designated as Class B common stock (“Class B Common”) and 10,000,000 shares are designated as Class C common stock (“Class C Common”).

Our issued and outstanding common shares by Class were as follows:

(Shares)	Class A Common	Class B Common	Total
June 30, 2016	71,772,100	23,877,556	95,649,656
December 31, 2015	71,442,166	23,877,556	95,319,722

The following table summarizes changes in total equity:

	Six Months Ended
(In thousands)	June 30, 2016
Total equity, beginning of period	$	715,324
Net income	53,816
Stock-based compensation cost	5,830
Exercise of stock options	3,575
Excess tax benefit of nonqualified stock options	764
Other comprehensive income	222
Total equity, end of period	$	779,531

The tables below present the changes in each component of accumulated other comprehensive income/(loss), including current period other comprehensive income/(loss) and reclassifications out of accumulated other comprehensive income/(loss):

(In thousands)	Unrealized gain/(loss) on marketable securities, net of tax			Foreign currency translation adjustments			Accumulated other comprehensive loss
Accumulated other comprehensive loss, net of tax, at December 31, 2015	$	(119	)	$	(1,839	)	$	(1,958	)
Other comprehensive income before reclassifications	284			(62		)	222
Amounts reclassified from accumulated other comprehensive income, net of tax	—			—			—
Other comprehensive income, net of tax	284			(62		)	222
Accumulated other comprehensive income/(loss), net of tax, at June 30, 2016	$	165		$	(1,901	)	$	(1,736	)

(In thousands)	Unrealized gain/(loss) on marketable securities, net of tax			Foreign currency translation adjustments			Accumulated other comprehensive loss
Accumulated other comprehensive loss, net of tax, at December 31, 2014	$	(64	)	$	(1,593	)	$	(1,657	)
Other comprehensive income/(loss) before reclassifications	26			(60		)	(34		)
Amounts reclassified from accumulated other comprehensive income, net of tax	2			—			2
Other comprehensive income/(loss), net of tax	28			(60		)	(32		)
Accumulated other comprehensive income/(loss), net of tax, at June 30, 2015	$	(36	)	$	(1,653	)	$	(1,689	)

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

We have three stock plans: our Amended and Restated 2003 Stock Plan, our 2008 Stock Plan, and our 2012 Equity Incentive Plan (the “2012 Plan”).  The 2012 Plan is the only remaining active stock plan. The purpose of these stock plans was, and the 2012 Plan is, to provide incentive to employees, directors, and consultants of Globus.  The Plans are administered by the Board of Directors of Globus (the “Board”) or its delegates. The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans. The options granted expire on a date specified by the Board, but generally not more than ten years from the grant date. Option grants to employees generally vest in varying installments over a four-year period.

The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012. Under the 2012 Plan, the aggregate number of shares of Class A Common stock that may be issued subject to options and other awards is equal to the sum of (i) 3,076,923 shares, (ii) any shares available for issuance under the 2008 Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3% of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board. The number of shares that may be issued or transferred pursuant to incentive stock options under the 2012 Plan is limited to 10,769,230 shares. The shares of Class A Common stock issuable under the 2012 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.

As of June 30, 2016, pursuant to the 2012 Plan, there were 12,003,652 shares of Class A Common stock reserved and 5,030,269 shares of Class A Common stock available for future grants.

The weighted average grant date per share fair values of the options awarded to employees were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Weighted average grant date per share fair value	$	7.76	$	8.11	$	7.80	$	8.91

Stock option activity during the six months ended June 30, 2016 is summarized as follows:  

	Option Shares(thousands)		Weighted average exercise price		Weighted average remaining contractual life (years)	Aggregate intrinsic value (thousands)
Outstanding at December 31, 2015	6,677		$	19.14
Granted	1,628		24.89
Exercised	(330	)	10.83
Forfeited	(256	)	22.71
Outstanding at June 30, 2016	7,719		$	20.59	7.7	$	29,965
Exercisable at June 30, 2016	3,230		$	15.60	6.0	$	27,477
Expected to vest at June 30, 2016	4,489		$	24.17	8.9	$	2,488

The intrinsic value of stock options exercised and the compensation cost related to stock options granted to employees and non-employees under our stock plans was as follows:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Intrinsic value of stock options exercised	$	1,895	$	2,679	$	4,626	$	5,939
Stock-based compensation expense	$	2,920	$	2,538	$	5,690	$	4,669
Net stock-based compensation capitalized into inventory	69		—		140		—
Total stock-based compensation cost	$	2,989	$	2,538	$	5,830	$	4,669

As of June 30, 2016, there was $32.7 million of unrecognized compensation expense related to unvested employee stock options that are expected to vest over a weighted average period of three years.

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INCOME TAXES

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

In computing our income tax provision, we make certain estimates and management judgments, such as estimated annual taxable income or loss, annual effective tax rate, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets. Our estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. Should facts and circumstances change during a quarter causing a material change to the estimated effective income tax rate, a cumulative adjustment is recorded.

The following table provides a summary of our effective tax rate:

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Effective income tax rate	32.7	%	35.8	%	34.3	%	35.6	%

The period over period change in the effective income tax rate for the three months and six months ended is due primarily to ongoing benefits related to the reorganization of our domestic legal structure to better align our business operations, along with benefits obtained through the research and experimentation credit and jobs credit, neither of which were included for the period ended June 30, 2015. Additionally, for the six months ended June 30, 2016, these benefits are partially offset by a one-time impact to deferred tax assets as it relates to the domestic reorganization.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

We are involved in a number of proceedings, legal actions, and claims. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows.

N-Spine, Synthes and DePuy Synthes Litigation

In April 2010, N-Spine, Inc. and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. N-Spine, the patent owner, and Synthes USA, a licensee of the subject patent, allege that we infringe one or more claims of the patent by making, using, offering for sale or selling our TRANSITION^® stabilization system product. N-Spine and Synthes USA sought injunctive relief and an unspecified amount in damages. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million.

In a related matter, on January 8, 2014, DePuy Synthes Products, LLC (“DePuy Synthes”) filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. DePuy Synthes alleges that we infringe one or more claims of the asserted patent by making, using, offering for sale or selling our TRANSITION^® stabilization system product. DePuy Synthes seeks injunctive relief and an unspecified amount in damages. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million.

Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC Litigation

In July 2011, Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Synthes USA LLC, the patent owner, Synthes USA Products, LLC, a licensee to manufacture products of the subject patents, and Synthes USA Sales LLC, a licensee to sell products of the subject patents, allege that we infringed one or more claims of three patents by making, using, offering for sale or selling our COALITION^®, INDEPENDENCE^® and INTERCONTINENTAL^® products. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million.

L5 Litigation

In December 2009, we filed suit in the Court of Common Pleas of Montgomery County, Pennsylvania against our former exclusive independent distributor L5 Surgical, LLC and its principals, seeking an injunction and declaratory judgment concerning certain restrictive covenants made to L5 by its sales representatives. L5 brought counterclaims against us alleging tortious interference, unfair competition and conspiracy. The injunction phase was resolved in September 2010, and this matter is now in the discovery phase of litigation on the underlying damages claims. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.

Bianco Litigation

On March 21, 2012, Sabatino Bianco filed suit against us in the Federal District Court for the Eastern District of Texas claiming that we misappropriated his trade secret and confidential information and improperly utilized it in developing our CALIBER^® product. Bianco alleges that we engaged in misappropriation of trade secrets, breach of contract, unfair competition, fraud and theft and seeks correction of inventorship, injunctive relief and exemplary damages. On April 20, 2012, Bianco filed a motion for a preliminary injunction, seeking to enjoin us from making, using, selling, importing or offering for sale our CALIBER^® product. On November 15, 2012, the court denied Bianco’s motion for preliminary injunction. On October 1, 2013, Bianco amended his complaint to claim that his trade secrets and confidential information were also used improperly in developing our RISE^® and CALIBER-L^® products.

On January 17, 2014, the jury in this case returned a verdict in favor of Bianco on a claim of misappropriation of trade secret. We accrued the verdict amount of $4.3 million as of December 31, 2013. The jury found against Bianco on the claims of breach of contract and disgorgement of profits. The court granted our motion for judgment as a matter of law and dismissed Bianco’s claims for unfair competition, fraud, and exemplary damages, and Bianco abandoned the claim of misappropriation of confidential information. Bianco’s claims of correction of inventorship, unjust enrichment, and permanent injunctive relief were not submitted to the jury. On March 7, 2014, the court denied Bianco’s claim for correction of inventorship and ruled he is not entitled to be named as a co-inventor on any of the patents at issue, and also denied his claim for unjust enrichment. On March 17, 2014, the court denied Bianco’s claim for permanent injunctive relief. On July 2, 2014, the court awarded Bianco an ongoing royalty of 5% of the net sales of the CALIBER^®, CALIBER^®-L, and RISE^® products, or products that are not colorably different from those products, for a fifteen year period on sales starting on January 18, 2014. The court entered final judgment on the jury verdict on July 17, 2014. On October 19, 2015, the United States Federal Circuit Court of Appeals affirmed the judgment without opinion. On March 22, 2016, we filed a Petition for a Writ of Certiorari with the United States Supreme Court and on June 20, 2016 the Writ was denied.

We do not expect the judgment to impact our ability to conduct our business or to have any material impact on our future revenues.

Bonutti Skeletal Innovations, LLC Litigation

On November 19, 2014, Bonutti Skeletal Innovations, LLC (“Bonutti Skeletal”) filed suit against us in the U.S. District Court for the Eastern District of Pennsylvania for patent infringement. Bonutti Skeletal, a non-practicing entity, alleges that Globus willfully infringes one or more claims of six patents by making, using, offering for sale or selling the CALIBER^®, CALIBER^®-L, COALITION^®, CONTINENTAL^®, FORGE^®, FORTIFY^®, INDEPENDENCE^®, INTERCONTINENTAL^®, MONUMENT^®, NIKO^®, RISE^®, SIGNATURE^®, SUSTAIN^®, and TRANSCONTINENTAL^® products. Bonutti Skeletal sought an unspecified amount in damages and injunctive relief. This matter was stayed on June 26, 2015 pending the resolution of inter partes reviews on the asserted patents by the USPTO. Globus Medical, Inc. and Bonutti Skeletal settled this matter on June 9, 2016.

Flexuspine, Inc. Litigation

On March 11, 2015, Flexuspine, Inc. filed suit against us in the U.S. District Court for the Eastern District of Texas for patent infringement. Flexuspine, Inc. alleges that Globus willfully infringes one or more claims of five patents by making, using, offering for sale or selling the CALIBER^®, CALIBER^®-L, and ALTERA^® products. Flexuspine seeks an unspecified amount in damages and injunctive relief. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.

Silverstein Litigation

On September 28, 2015, a putative securities class action lawsuit was filed against us and certain of our officers in the U.S. District Court for the Eastern District of Pennsylvania. Plaintiff in the lawsuit purports to represent a class of our stockholders who purchased shares between February 26, 2014 and August 5, 2014. The complaint purports to assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and seeks damages in an unspecified amount, attorney’s fees and other relief. We believe the allegations to be unfounded, and intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.

In addition, we are subject to legal proceedings arising in the ordinary course of business.

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RELATED-PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related-Party Transactions

RELATED-PARTY TRANSACTIONS

Prior to March 11, 2015, we had contracted with BMG, which at the time was a related-party manufacturer. On March 11, 2015, BMG was acquired by Globus, and therefore as of March 31, 2015, there were no further purchases from nor amounts payable to BMG. For the period of January 1, 2015 through March 11, 2015, we purchased $5.3 million from the related-party supplier. The amount payable to BMG on the date of acquisition of $5.2 million was settled in connection with the acquisition.

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SEGMENT AND GEOGRAPHIC INFORMATION

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment And Geographic Information

SEGMENT AND GEOGRAPHIC INFORMATION

Operating segments are defined as components of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We globally manage the business within one reportable segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. Products are sold principally in the United States.

The following table represents total sales by geographic area, based on the location of the customer:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
United States	$	124,716	$	121,487	$	252,276	$	241,470
International	12,773		12,083		24,477		23,704
Total sales	$	137,489	$	133,570	$	276,753	$	265,174

We classify our products into two categories: innovative fusion products and disruptive technology products. The following table represents total sales by product category:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Innovative Fusion	$	69,442	$	71,571	$	139,488	$	141,941
Disruptive Technology	68,047		61,999		137,265		123,233
Total sales	$	137,489	$	133,570	$	276,753	$	265,174

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2016

Subsequent Event

Subsequent Event

SUBSEQUENT EVENT

On July 25, 2016, we entered into an agreement to acquire the international operations and distribution channel of Alphatec Holdings, Inc., a publicly traded orthopedic company (Nasdaq: ATEC) for $80.0 million in cash, subject to certain closing adjustments. The parties expect the closing of the acquisition to occur by October 2016 following satisfaction of the applicable closing conditions.

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BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2016

BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Globus and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, write-down for excess and obsolete inventory, useful lives of assets, the outcome of litigation, and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results.

Marketable Securities

Marketable Securities

Our marketable securities include municipal bonds, corporate debt securities, commercial paper, securities of U.S. government-sponsored agencies and asset-backed securities, and are classified as available-for-sale as of June 30, 2016. Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive loss on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets.

We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made.

Inventories

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories.

Revenue Recognition

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 amends the guidance in former Topic 605, Revenue Recognition, and most other existing revenue guidances in US GAAP. Under the new standard, an entity will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which the entity expects to be entitled in exchange for those goods or services and provide additional disclosures. As amended, the effective date for public entities is annual reporting periods beginning after December 15, 2017 and interim periods therein. Early adoption is not permitted prior to the first quarter of 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the timing and impact of the new standard on our financial position, results of operations, and disclosures.

In July 2015, the FASB released ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”) as part of the FASB’s Simplification Initiative. This update is intended to more closely align the measurement of inventory under GAAP with the measurement of inventory under International Financial Reporting Standards. Within the scope of the update, an entity is required to measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonable and predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for all public entities for fiscal years beginning after December 31, 2016, including interim reporting periods within that period, and is required to be applied prospectively, with early adoption permitted. We are currently evaluating the impact of the new standard on our financial position, results of operations, and disclosures.

In September 2015, the FASB released ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Prior to the issuance of the standard, entities were required to retrospectively apply adjustments made to provisional amounts recognized in a business combination. The amendments in ASU 2015-16 require an entity to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The update is not expected to have a material impact on our financial position, results of operations, and disclosures.

In November 2015, the FASB released ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that all deferred income taxes are classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 also aligns the presentation of deferred taxes with that of International Financial Reporting Standards. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier application permitted for all entities as of the beginning of an interim or annual reporting period. We adopted ASU 2015-17 prospectively effective March 31, 2016, therefore prior periods were not adjusted.

In February 2016, the FASB released ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases with terms greater than 12 months, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures.

In March 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which will simplify the income tax consequences, accounting for forfeitures, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted, and will be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures.

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INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2016

Intangible Assets Disclosure [Abstract]

Intangible Assets Acquired as Part of Business Combination

A summary of intangible assets is presented below:

		June 30, 2016
(In thousands)	Weighted Average Amortization Period (in years)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
In-process research & development	—	$	24,560	$	—		$	24,560
Supplier network	10.0	4,000		(667		)	3,333
Customer relationships & other intangibles	7.3	5,525		(2,895		)	2,630
Patents	16.1	3,035		(565		)	2,470
Total intangible assets		$	37,120	$	(4,127	)	$	32,993

		December 31, 2015
(In thousands)	Weighted Average Amortization Period (in years)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
In-process research & development	—	$	24,560	$	—		$	24,560
Supplier network	10.0	4,000		(467		)	3,533
Customer relationships & other intangibles	7.3	5,525		(2,384		)	3,141
Patents	17.0	2,495		(487		)	2,008
Total intangible assets		$	36,580	$	(3,338	)	$	33,242

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MARKETABLE SECURITIES (Tables)

6 Months Ended

Jun. 30, 2016

Marketable Securities [Abstract]

Marketable Securities

The composition of our short-term and long-term marketable securities is as follows:

		June 30, 2016
(In thousands)	Contractual Maturity (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Municipal bonds	Less than 1	$	139,367	$	41	$	(7	)	$	139,401
Corporate debt securities	Less than 1	50,225		24		(1		)	50,248
Commercial paper	Less than 1	33,053		15		—			33,068
Securities of U.S. government-sponsored agencies	Less than 1	5,512		3		—			5,515
Asset-backed securities	Less than 1	938		—		—			938
Total short-term marketable securities		$	229,095	$	83	$	(8	)	$	229,170
Long-term:
Municipal bonds	1-2	$	19,530	$	22	$	—		$	19,552
Corporate debt securities	1-2	27,079		142		—			27,221
Asset-backed securities	1-2	18,830		22		—			18,852
Total long-term marketable securities		$	65,439	$	186	$	—		$	65,625

		December 31, 2015
(In thousands)	Contractual Maturity (in years)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Municipal bonds	Less than 1	$	108,402	$	15	$	(81	)	$	108,336
Corporate debt securities	Less than 1	53,759		2		(57		)	53,704
Commercial paper	Less than 1	42,149		3		(1		)	42,151
Securities of U.S. government-sponsored agencies	Less than 1	14,511		4		(4		)	14,511
Asset-backed securities	Less than 1	2,175		—		—			2,175
Total short-term marketable securities		$	220,996	$	24	$	(143	)	$	220,877
Long-term:
Municipal bonds	1-2	$	18,508	$	—	$	(25	)	$	18,483
Corporate debt securities	1-2	12,033		—		(25		)	12,008
Asset-backed securities	1-2	18,294		—		(23		)	18,271
Total long-term marketable securities		$	48,835	$	—	$	(73	)	$	48,762

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows:

	Balance at
(In thousands)	June 30, 2016		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	18,774	$	7,285	$	11,489	$	—
Municipal bonds	158,953		—		158,953		—
Corporate debt securities	77,469		—		77,469		—
Commercial paper	33,068		—		33,068		—
Asset-backed securities	19,790		—		19,790		—
Securities of U.S. government-sponsored agencies	5,515		—		5,515		—
Liabilities
Contingent consideration	22,531		—		—		22,531

	Balance at
(In thousands)	December 31, 2015		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	12,700	$	1,701	$	10,999	$	—
Municipal bonds	126,819		—		126,819		—
Corporate debt securities	65,712		—		65,712		—
Commercial paper	42,151		—		42,151		—
Asset-backed securities	20,446		—		20,446		—
Securities of U.S. government-sponsored agencies	14,511		—		14,511		—
Liabilities
Contingent consideration	26,617		—		—		26,617

Significant unobservable inputs

The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:

	Fair Value at
(In thousands)	June 30, 2016		Valuation technique	Unobservable input	Range
				Discount rate	3.1	%	-	8.5	%
Revenue-based payments	$	14,787	Discounted cash flow	Probability of payment	87.0	%	-	97.5	%
				Projected year of payment	2017		-	2029
							-
				Discount rate	5.3	%	-	13.5	%
Milestone-based payments	$	7,744	Discounted cash flow	Probability of payment	80.0	%	-	100.0	%
				Projected year of payment	2016		-	2020

Rollforward of contingent consideration

The following table provides a reconciliation of the beginning and ending balances of contingent consideration:

	Three Months Ended						Six Months Ended
(In thousands)	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Beginning balance	$	22,260		$	24,831		$	26,617		$	24,335
Contingent payments	(1		)	(2		)	(5,001		)	(3		)
Non-cash settlement of certain contingent consideration	(1,522		)	—			(1,522		)	—
Changes in fair value of contingent consideration	1,794			705			2,437			1,202
Ending balance	$	22,531		$	25,534		$	22,531		$	25,534

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Schedule of Inventory

(In thousands)	June 30, 2016		December 31, 2015
Raw materials	$	13,993	$	12,308
Work in process	7,078		7,091
Finished goods	83,346		85,861
Total inventories	$	104,417	$	105,260

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ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2016

Payables and Accruals [Abstract]

Accrued Expenses

(In thousands)	June 30, 2016		December 31, 2015
Compensation and other employee-related costs	$	16,916	$	21,151
Legal and other settlements and expenses	9,652		13,617
Accrued non-income taxes	7,473		6,808
Royalties	7,719		6,787
Other	6,127		5,406
Total accrued expenses	$	47,887	$	53,769

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Schedule of Issued and Outstanding Shares by Class

Our issued and outstanding common shares by Class were as follows:

(Shares)	Class A Common	Class B Common	Total
June 30, 2016	71,772,100	23,877,556	95,649,656
December 31, 2015	71,442,166	23,877,556	95,319,722

Schedule of Stockholders Equity

The following table summarizes changes in total equity:

	Six Months Ended
(In thousands)	June 30, 2016
Total equity, beginning of period	$	715,324
Net income	53,816
Stock-based compensation cost	5,830
Exercise of stock options	3,575
Excess tax benefit of nonqualified stock options	764
Other comprehensive income	222
Total equity, end of period	$	779,531

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EQUITY Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2016

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income/(Loss), Net of Tax

The tables below present the changes in each component of accumulated other comprehensive income/(loss), including current period other comprehensive income/(loss) and reclassifications out of accumulated other comprehensive income/(loss):

(In thousands)	Unrealized gain/(loss) on marketable securities, net of tax			Foreign currency translation adjustments			Accumulated other comprehensive loss
Accumulated other comprehensive loss, net of tax, at December 31, 2015	$	(119	)	$	(1,839	)	$	(1,958	)
Other comprehensive income before reclassifications	284			(62		)	222
Amounts reclassified from accumulated other comprehensive income, net of tax	—			—			—
Other comprehensive income, net of tax	284			(62		)	222
Accumulated other comprehensive income/(loss), net of tax, at June 30, 2016	$	165		$	(1,901	)	$	(1,736	)

(In thousands)	Unrealized gain/(loss) on marketable securities, net of tax			Foreign currency translation adjustments			Accumulated other comprehensive loss
Accumulated other comprehensive loss, net of tax, at December 31, 2014	$	(64	)	$	(1,593	)	$	(1,657	)
Other comprehensive income/(loss) before reclassifications	26			(60		)	(34		)
Amounts reclassified from accumulated other comprehensive income, net of tax	2			—			2
Other comprehensive income/(loss), net of tax	28			(60		)	(32		)
Accumulated other comprehensive income/(loss), net of tax, at June 30, 2015	$	(36	)	$	(1,653	)	$	(1,689	)

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Grants in Period, Weighted Average Grant Date Fair Value

The weighted average grant date per share fair values of the options awarded to employees were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Weighted average grant date per share fair value	$	7.76	$	8.11	$	7.80	$	8.91

Summary of Stock Option Activity

Stock option activity during the six months ended June 30, 2016 is summarized as follows:  

	Option Shares(thousands)		Weighted average exercise price		Weighted average remaining contractual life (years)	Aggregate intrinsic value (thousands)
Outstanding at December 31, 2015	6,677		$	19.14
Granted	1,628		24.89
Exercised	(330	)	10.83
Forfeited	(256	)	22.71
Outstanding at June 30, 2016	7,719		$	20.59	7.7	$	29,965
Exercisable at June 30, 2016	3,230		$	15.60	6.0	$	27,477
Expected to vest at June 30, 2016	4,489		$	24.17	8.9	$	2,488

Intrinsic Value and Stock-based Compensation Schedule

The intrinsic value of stock options exercised and the compensation cost related to stock options granted to employees and non-employees under our stock plans was as follows:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Intrinsic value of stock options exercised	$	1,895	$	2,679	$	4,626	$	5,939
Stock-based compensation expense	$	2,920	$	2,538	$	5,690	$	4,669
Net stock-based compensation capitalized into inventory	69		—		140		—
Total stock-based compensation cost	$	2,989	$	2,538	$	5,830	$	4,669

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Effective income tax rate

The following table provides a summary of our effective tax rate:

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Effective income tax rate	32.7	%	35.8	%	34.3	%	35.6	%

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SEGMENT AND GEOGRAPHIC INFORMATION (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Schedule of Revenue from External Customers by Geographical Area

The following table represents total sales by geographic area, based on the location of the customer:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
United States	$	124,716	$	121,487	$	252,276	$	241,470
International	12,773		12,083		24,477		23,704
Total sales	$	137,489	$	133,570	$	276,753	$	265,174

Revenue from External Customers by Products and Services

The following table represents total sales by product category:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Innovative Fusion	$	69,442	$	71,571	$	139,488	$	141,941
Disruptive Technology	68,047		61,999		137,265		123,233
Total sales	$	137,489	$	133,570	$	276,753	$	265,174

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BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Summary of Significant Accounting Policies
Restricted cash	$ 11,235	$ 26,119
Minimum
Summary of Significant Accounting Policies
Number of Products Launched Since Inception	160
Synthes related Litigations
Summary of Significant Accounting Policies
Payments for Legal Settlements	$ 7,900
Recovery of Restricted Cash	$ 8,400

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ACQUISITIONS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2016	Mar. 11, 2015
Business Acquisition
Goodwill	$ 91,964	$ 91,964
Acquisition 2015
Business Acquisition
Payments to Acquire Businesses, Gross	57,042
Deferred consideration	5,290
Closing adjustment payable	$ 944
Accounts payable to related-party			$ 5,200
Related party ownership percentage			49.00%
Goodwill			$ 38,968

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INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Acquired Intangible Assets
Intangible assets, gross	$ 37,120	$ 36,580
Accumulated amortization	(4,127)	(3,338)
Intangible assets, net	$ 32,993	$ 33,242
Supplier Network
Acquired Intangible Assets
Weighted average amortization period	10 years	10 years
Gross carrying amount	$ 4,000	$ 4,000
Accumulated amortization	(667)	(467)
Finite-lived intangible assets, net	$ 3,333	$ 3,533
Customer Relationships & Other Intangibles
Acquired Intangible Assets
Weighted average amortization period	7 years 3 months	7 years 3 months
Gross carrying amount	$ 5,525	$ 5,525
Accumulated amortization	(2,895)	(2,384)
Finite-lived intangible assets, net	$ 2,630	$ 3,141
Patents
Acquired Intangible Assets
Weighted average amortization period	16 years 1 month 6 days	17 years
Gross carrying amount	$ 3,035	$ 2,495
Accumulated amortization	(565)	(487)
Finite-lived intangible assets, net	2,470	2,008
In-Process Research & Development
Acquired Intangible Assets
Indefinite-lived intangible assets	$ 24,560	$ 24,560

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MARKETABLE SECURITIES (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Short-term Marketable Securities
Schedule of Marketable Securities
Amortized Cost	$ 229,095	$ 220,996
Gross Unrealized Gains	83	24
Gross Unrealized Losses	(8)	(143)
Fair Value	229,170	220,877
Short-term Marketable Securities | Municipal Bonds
Schedule of Marketable Securities
Amortized Cost	139,367	108,402
Gross Unrealized Gains	41	15
Gross Unrealized Losses	(7)	(81)
Fair Value	$ 139,401	$ 108,336
Short-term Marketable Securities | Municipal Bonds | Maximum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Short-term Marketable Securities | Corporate Debt Securities
Schedule of Marketable Securities
Amortized Cost	$ 50,225	$ 53,759
Gross Unrealized Gains	24	2
Gross Unrealized Losses	(1)	(57)
Fair Value	$ 50,248	$ 53,704
Short-term Marketable Securities | Corporate Debt Securities | Maximum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Short-term Marketable Securities | Commercial Paper
Schedule of Marketable Securities
Amortized Cost	$ 33,053	$ 42,149
Gross Unrealized Gains	15	3
Gross Unrealized Losses	0	(1)
Fair Value	$ 33,068	$ 42,151
Short-term Marketable Securities | Commercial Paper | Maximum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Short-term Marketable Securities | Asset-backed Securities
Schedule of Marketable Securities
Amortized Cost	$ 938	$ 2,175
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	$ 938	$ 2,175
Short-term Marketable Securities | Asset-backed Securities | Maximum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Short-term Marketable Securities | Securities of U.S. government-sponsored agencies
Schedule of Marketable Securities
Amortized Cost	$ 5,512	$ 14,511
Gross Unrealized Gains	3	4
Gross Unrealized Losses	0	(4)
Fair Value	$ 5,515	$ 14,511
Short-term Marketable Securities | Securities of U.S. government-sponsored agencies | Maximum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Long-term Marketable Securities
Schedule of Marketable Securities
Amortized Cost	$ 65,439	$ 48,835
Gross Unrealized Gains	186	0
Gross Unrealized Losses	0	(73)
Fair Value	65,625	48,762
Long-term Marketable Securities | Municipal Bonds
Schedule of Marketable Securities
Amortized Cost	19,530	18,508
Gross Unrealized Gains	22	0
Gross Unrealized Losses	0	(25)
Fair Value	$ 19,552	$ 18,483
Long-term Marketable Securities | Municipal Bonds | Minimum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Long-term Marketable Securities | Municipal Bonds | Maximum
Schedule of Marketable Securities
Contractual Maturity	2 years	2 years
Long-term Marketable Securities | Corporate Debt Securities
Schedule of Marketable Securities
Amortized Cost	$ 27,079	$ 12,033
Gross Unrealized Gains	142	0
Gross Unrealized Losses	0	(25)
Fair Value	$ 27,221	$ 12,008
Long-term Marketable Securities | Corporate Debt Securities | Minimum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Long-term Marketable Securities | Corporate Debt Securities | Maximum
Schedule of Marketable Securities
Contractual Maturity	2 years	2 years
Long-term Marketable Securities | Asset-backed Securities
Schedule of Marketable Securities
Amortized Cost	$ 18,830	$ 18,294
Gross Unrealized Gains	22	0
Gross Unrealized Losses	0	(23)
Fair Value	$ 18,852	$ 18,271
Long-term Marketable Securities | Asset-backed Securities | Minimum
Schedule of Marketable Securities
Contractual Maturity	1 year	1 year
Long-term Marketable Securities | Asset-backed Securities | Maximum
Schedule of Marketable Securities
Contractual Maturity	2 years	2 years

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring Basis
Contingent consideration	$ 22,260	$ 24,831	$ 26,617	$ 24,335	$ 22,531	$ 26,617
Contingent Consideration Payment [Roll Forward]
Contingent consideration, beginning balance	22,260	24,831	26,617	24,335
Contingent payments	(1)	(2)	(5,001)	(3)
Non cash settlement of certain contingent consideration	(1,522)	0	(1,522)	0
Changes in fair value of contingent consideration	1,794	705	2,437	1,202
Contingent consideration, ending balance	22,531	$ 25,534	22,531	$ 25,534
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Cash equivalents					18,774	12,700
Contingent consideration	22,531		26,617		22,531	26,617
Contingent Consideration Payment [Roll Forward]
Contingent consideration, beginning balance			26,617
Contingent consideration, ending balance	22,531		22,531
Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Cash equivalents					7,285	1,701
Contingent consideration	0		0		0	0
Contingent Consideration Payment [Roll Forward]
Contingent consideration, beginning balance			0
Contingent consideration, ending balance	0		0
Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Cash equivalents					11,489	10,999
Contingent consideration	0		0		0	0
Contingent Consideration Payment [Roll Forward]
Contingent consideration, beginning balance			0
Contingent consideration, ending balance	0		0
Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Cash equivalents					0	0
Contingent consideration	22,531		26,617		22,531	26,617
Contingent Consideration Payment [Roll Forward]
Contingent consideration, beginning balance			26,617
Contingent consideration, ending balance	22,531		22,531
Municipal Bonds | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					158,953	126,819
Municipal Bonds | Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Municipal Bonds | Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					158,953	126,819
Municipal Bonds | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Corporate Debt Securities | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					77,469	65,712
Corporate Debt Securities | Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Corporate Debt Securities | Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					77,469	65,712
Corporate Debt Securities | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Commercial Paper | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					33,068	42,151
Commercial Paper | Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Commercial Paper | Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					33,068	42,151
Commercial Paper | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Asset-backed Securities | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					19,790	20,446
Asset-backed Securities | Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Asset-backed Securities | Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					19,790	20,446
Asset-backed Securities | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Securities of U.S. government-sponsored agencies | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					5,515	14,511
Securities of U.S. government-sponsored agencies | Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	0
Securities of U.S. government-sponsored agencies | Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					5,515	14,511
Securities of U.S. government-sponsored agencies | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Marketable Securities					0	$ 0
Revenue-based payments | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Contingent consideration	14,787		14,787		14,787
Contingent Consideration Payment [Roll Forward]
Contingent consideration, ending balance	14,787		$ 14,787
Revenue-based payments | Fair Value, Measurements, Recurring | Level 3 | Minimum
Fair Value, Assets and Liabilities Measured on Recurring Basis
Discount rate			3.10%
Probability of payment			87.00%
Revenue-based payments | Fair Value, Measurements, Recurring | Level 3 | Maximum
Fair Value, Assets and Liabilities Measured on Recurring Basis
Discount rate			8.50%
Probability of payment			97.50%
Milestone-based payments | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Contingent consideration	7,744		$ 7,744		$ 7,744
Contingent Consideration Payment [Roll Forward]
Contingent consideration, ending balance	$ 7,744		$ 7,744
Milestone-based payments | Fair Value, Measurements, Recurring | Level 3 | Minimum
Fair Value, Assets and Liabilities Measured on Recurring Basis
Discount rate			5.30%
Probability of payment			80.00%
Milestone-based payments | Fair Value, Measurements, Recurring | Level 3 | Maximum
Fair Value, Assets and Liabilities Measured on Recurring Basis
Discount rate			13.50%
Probability of payment			100.00%

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INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw Materials	$ 13,993	$ 12,308
Work in process	7,078	7,091
Finished goods	83,346	85,861
Total inventories	$ 104,417	$ 105,260

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ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Compensation and other employee-related costs	$ 16,916	$ 21,151
Legal and other settlements and expenses	9,652	13,617
Accrued non-income taxes	7,473	6,808
Royalties	7,719	6,787
Other	6,127	5,406
Total accrued expenses	$ 47,887	$ 53,769

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DEBT (Details) - Revolving Credit Facility $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Debt Instrument
Credit facility, current borrowing capacity	$ 50.0
Credit facility, maximum borrowing capacity	75.0
Credit facility, outstanding borrowings	$ 0.0
Credit facility, termination period without penalty	10 days
Fluctuating Rate Per Annum
Debt Instrument
Credit facility, variable rate	LIBOR
Credit facility, period of variable rate	1 month
Credit facility, basis spread on variable rate	0.75%
Fixed Rate
Debt Instrument
Credit facility, variable rate	LIBOR
Credit facility, basis spread on variable rate	0.75%
Fixed Rate | Minimum
Debt Instrument
Credit facility, period of variable rate	1 month
Fixed Rate | Maximum
Debt Instrument
Credit facility, period of variable rate	3 months
Letter of Credit
Debt Instrument
Credit facility, maximum borrowing capacity	$ 25.0

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EQUITY (Textuals) (Details) - shares	Jun. 30, 2016	Dec. 31, 2015
Class of Stock
Common stock, shares authorized	785,000,000
Class A Common
Class of Stock
Common stock, shares authorized	500,000,000	500,000,000
Class B Common
Class of Stock
Common stock, shares authorized	275,000,000	275,000,000
Class C Common
Class of Stock
Common stock, shares authorized	10,000,000

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EQUITY (Schedule of Issued and Outstanding Shares) (Details) - shares	Jun. 30, 2016	Dec. 31, 2015
Class of Stock
Common stock, shares issued	95,649,656	95,319,722
Common stock, shares outstanding	95,649,656	95,319,722
Class A Common
Class of Stock
Common stock, shares issued	71,772,100	71,442,166
Common stock, shares outstanding	71,772,100	71,442,166
Class B Common
Class of Stock
Common stock, shares issued	23,877,556	23,877,556
Common stock, shares outstanding	23,877,556	23,877,556

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EQUITY Stockholders' Equity Rollforward (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Increase (Decrease) in Stockholders' Equity
Total equity, beginning of period			$ 715,324
Net income	$ 25,806	$ 24,054	53,816	$ 48,702
Stock-based compensation cost			5,830
Exercise of stock options			3,575
Excess tax benefit of nonqualified stock options			764
Other comprehensive income/(loss)	(83)	$ 146	222	$ (32)
Total equity, end of period	$ 779,531		$ 779,531

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EQUITY Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Accumulated other comprehensive income/(loss), net of tax	$ (1,736)	$ (1,689)	$ (1,736)	$ (1,689)	$ (1,958)	$ (1,657)
Other comprehensive income/(loss) before reclassifications			222	(34)
Amounts reclassified from accumulated other comprehensive income, net of tax			0	2
Other comprehensive income/(loss), net of tax	(83)	146	222	(32)
Foreign Currency Translation Adjustment
Accumulated other comprehensive income/(loss), net of tax	(1,901)	(1,653)	(1,901)	(1,653)	(1,839)	(1,593)
Other comprehensive income/(loss) before reclassifications			(62)	(60)
Amounts reclassified from accumulated other comprehensive income, net of tax			0	0
Other comprehensive income/(loss), net of tax			(62)	(60)
Unrealized Gain/(Loss) on Marketable Securities, Net of Tax
Accumulated other comprehensive income/(loss), net of tax	$ 165	$ (36)	165	(36)	$ (119)	$ (64)
Other comprehensive income/(loss) before reclassifications			284	26
Amounts reclassified from accumulated other comprehensive income, net of tax			0	2
Other comprehensive income/(loss), net of tax			$ 284	$ 28

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STOCK-BASED COMPENSATION (Textuals) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award
Number of stock plans	3
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Maximum contractual term	10 years
Unrecognized compensation expense, unvested stock options | $	$ 32.7
Weighted average period of recognition, unvested stock options	3 years
Stock Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Employee award vesting period	4 years
2012 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award
Base number of shares that may be issuable under stock plan	3,076,923
2012 Equity Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Number of shares available for grant	10,769,230
Annual percentage limit for incremental shares that may be issued	3.00%
2012 Equity Incentive Plan | Class A Common
Share-based Compensation Arrangement by Share-based Payment Award
Number of shares available for grant	5,030,269
Shares reserved under the 2012 Equity Incentive Plan	12,003,652

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STOCK-BASED COMPENSATION (Grant Date Fair Values of Options Awarded to Employees) (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Weighted average grant date per share fair value	$ 7.76	$ 8.11	$ 7.80	$ 8.91

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STOCK-BASED COMPENSATION (Stock Option Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding
Number of shares outstanding beginning balance | shares	6,677
Number of shares granted | shares	1,628
Number of shares exercised | shares	(330)
Number of shares forfeited | shares	(256)
Number of shares outstanding ending balance | shares	7,719
Number of shares exercisable | shares	3,230
Number of shares expected to vest | shares	4,489
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price
Weighted average exercise price per share outstanding beginning balance | $ / shares	$ 19.14
Weighted average exercise price per share granted | $ / shares	24.89
Weighted average exercise price per share exercised | $ / shares	10.83
Weighted average exercise price per share forfeited | $ / shares	22.71
Weighted average exercise price per share outstanding ending balance | $ / shares	20.59
Weighted average exercise price per share exercisable | $ / shares	15.60
Weighted average exercise price per share expected to vest | $ / shares	$ 24.17
Weighted average remaining contractual life outstanding	7 years 8 months 12 days
Weighted average remaining contractual life exercisable	6 years
Weighted average remaining contractual life expected to vest	8 years 10 months 24 days
Aggregate intrinsic value outstanding | $	$ 29,965
Aggregate intrinsic value exercisable | $	27,477
Aggregate intrinsic value expected to vest | $	$ 2,488

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STOCK-BASED COMPENSATION (Compensation Expense Related to Stock Options and Their Intrinsic Values) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Intrinsic value of stock options exercised	$ 1,895	$ 2,679	$ 4,626	$ 5,939
Stock-based compensation expense	2,920	2,538	5,690	4,669
Net stock-based compensation capitalized into inventory	69	0	140	0
Total stock-based compensation cost	$ 2,989	$ 2,538	$ 5,830	$ 4,669

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INCOME TAXES (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Effective income tax rate	32.70%	35.80%	34.30%	35.60%

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COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2013 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2014	Mar. 11, 2015 claim	Nov. 19, 2014 claim	Jul. 31, 2011 claim	Apr. 30, 2010 claim
Loss Contingencies
Provision for litigation | $	$ 3,056	$ 374		$ 3,056	$ 406
Synthes USA, LLC, Synthes USA Products, LLC, and Synthes USA Sales, LLC Litigation
Loss Contingencies
Loss Contingency, Pending Claims, Number									3
Synthes USA, LLC, Synthes USA Products, LLC, and Synthes USA Sales, LLC Litigation | Minimum
Loss Contingencies
Loss Contingency, Pending Claims, Number									1
Bianco Litigation
Loss Contingencies
Combined litigation loss | $			$ 4,300
Royalty Rate						5.00%
N-Spine and Synthes Litigation | Minimum
Loss Contingencies
Loss Contingency, Pending Claims, Number										1
Synthes related Litigations
Loss Contingencies
Loss Contingency, Claims Settled, Number				4
Payments for Legal Settlements | $				$ 7,900
Bonutti Skeletal Innovations LLC Litigation
Loss Contingencies
Loss Contingency, Pending Claims, Number								6
Bonutti Skeletal Innovations LLC Litigation | Minimum
Loss Contingencies
Loss Contingency, Pending Claims, Number								1
Flexuspine Inc. Litigation
Loss Contingencies
Loss Contingency, Pending Claims, Number							5
Flexuspine Inc. Litigation | Minimum
Loss Contingencies
Loss Contingency, Pending Claims, Number							1

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RELATED-PARTY TRANSACTIONS (Details) $ in Millions	2 Months Ended
	Mar. 11, 2015 USD ($)
Related Party Transaction
Purchases from related-party supplier	$ 5.3
Acquisition 2015
Related Party Transaction
Accounts payable to related-party	$ 5.2

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SEGMENT AND GEOGRAPHIC INFORMATION (Geographic Location) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) segments	Jun. 30, 2015 USD ($)
Revenues from External Customers
Number of Reportable Segments | segments			1
Total sales	$ 137,489	$ 133,570	$ 276,753	$ 265,174
United States
Revenues from External Customers
Total sales	124,716	121,487	252,276	241,470
International
Revenues from External Customers
Total sales	$ 12,773	$ 12,083	$ 24,477	$ 23,704

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SEGMENT AND GEOGRAPHIC INFORMATION (Products) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) categories	Jun. 30, 2015 USD ($)
Revenue from External Customer
Total sales	$ 137,489	$ 133,570	$ 276,753	$ 265,174
Textuals [Abstract]
Number of product categories | categories			2
Innovative Fusion
Revenue from External Customer
Total sales	69,442	71,571	$ 139,488	141,941
Disruptive Technology
Revenue from External Customer
Total sales	$ 68,047	$ 61,999	$ 137,265	$ 123,233

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SUBSEQUENT EVENTS (Details) $ in Millions	Jul. 25, 2016 USD ($)
Subsequent Event
Subsequent Event
Payments to Acquire Businesses, Gross	$ 80.0