DELAWARE | 001-35621 | 04-3744954 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | o |
Exhibit No. | Description |
99.1 | |
GLOBUS MEDICAL, INC. | ||
(Registrant) | ||
Dated: | February 21, 2019 | /s/ DANIEL T. SCAVILLA |
Daniel T. Scavilla | ||
Executive Vice President, | ||
Chief Financial Officer | ||
Chief Commercial Officer |
• | Worldwide sales increased 11.3% as reported to $195.9 million |
• | Fourth quarter net income was $36.8 million, or 18.8% of sales. |
• | Diluted earnings per share (EPS) were $0.36 |
• | Non-GAAP diluted EPS were $0.43 |
• | Non-GAAP adjusted EBITDA was 34.1% of sales |
• | Worldwide sales increased 12.1% as reported to $713.0 million |
• | Net income for the year was $156.5 million, or 21.9% of sales |
• | Diluted EPS were $1.54 |
• | Non-GAAP diluted EPS were $1.67 |
• | Non-GAAP adjusted EBITDA was 34.5% of sales |
Three Months Ended | Year Ended | ||||||||||||||
(In thousands, except per share amounts) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Sales | $ | 195,938 | $ | 176,034 | $ | 712,969 | $ | 635,977 | |||||||
Cost of goods sold | 45,954 | 40,856 | 159,410 | 150,453 | |||||||||||
Gross profit | 149,984 | 135,178 | 553,559 | 485,524 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 13,758 | 11,413 | 55,496 | 43,679 | |||||||||||
Selling, general and administrative | 83,642 | 72,958 | 311,591 | 267,817 | |||||||||||
Provision for litigation | 5,878 | (112 | ) | 5,878 | 2,668 | ||||||||||
Amortization of intangibles | 3,063 | 2,238 | 9,588 | 7,909 | |||||||||||
Acquisition related costs | 392 | 321 | 1,681 | 1,611 | |||||||||||
Total operating expenses | 106,733 | 86,818 | 384,234 | 323,684 | |||||||||||
Operating income | 43,251 | 48,360 | 169,325 | 161,840 | |||||||||||
Other income/(expense), net | 4,376 | 2,240 | 19,280 | 8,088 | |||||||||||
Income before income taxes | 47,627 | 50,600 | 188,605 | 169,928 | |||||||||||
Income tax provision | 10,876 | 26,224 | 32,131 | 62,580 | |||||||||||
Net income | $ | 36,751 | $ | 24,376 | $ | 156,474 | $ | 107,348 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.37 | $ | 0.25 | $ | 1.60 | $ | 1.12 | |||||||
Diluted | $ | 0.36 | $ | 0.25 | $ | 1.54 | $ | 1.10 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 98,516 | 96,489 | 97,884 | 96,243 | |||||||||||
Diluted | 101,627 | 98,726 | 101,316 | 97,887 |
(In thousands, except par value) | December 31, 2018 | December 31, 2017 | |||||
ASSETS | (unaudited) | ||||||
Current assets: | |||||||
Cash, cash equivalents, and restricted cash | $ | 139,747 | $ | 118,817 | |||
Short-term marketable securities | 199,937 | 254,890 | |||||
Accounts receivable, net of allowances of $4,226 and $3,963, respectively | 137,067 | 116,676 | |||||
Inventories | 131,254 | 108,409 | |||||
Prepaid expenses and other current assets | 15,387 | 11,166 | |||||
Current portion of note receivable | — | 1,667 | |||||
Income taxes receivable | 7,289 | 8,717 | |||||
Total current assets | 630,681 | 620,342 | |||||
Property and equipment, net of accumulated depreciation of $216,809 and $191,760, respectively | 171,873 | 143,167 | |||||
Long-term marketable securities | 263,117 | 56,133 | |||||
Note receivable | — | 28,333 | |||||
Intangible assets, net | 87,323 | 78,659 | |||||
Goodwill | 123,734 | 123,890 | |||||
Other assets | 10,364 | 7,947 | |||||
Deferred income taxes | 13,578 | 20,031 | |||||
Total assets | $ | 1,300,670 | $ | 1,078,502 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 25,895 | $ | 25,039 | |||
Accrued expenses | 59,878 | 52,594 | |||||
Income taxes payable | 917 | 3,274 | |||||
Business acquisition liabilities | 6,830 | 11,411 | |||||
Deferred revenue | 2,598 | 755 | |||||
Total current liabilities | 96,118 | 93,073 | |||||
Business acquisition liabilities, net of current portion | 3,288 | 4,508 | |||||
Deferred income taxes | 8,114 | 10,669 | |||||
Other liabilities | 7,634 | 2,474 | |||||
Total liabilities | 115,154 | 110,724 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Common stock; $0.001 par value. Authorized 785,000 shares; issued and outstanding 98,573 and 96,658 shares at December 31, 2018 and December 31, 2017, respectively | 98 | 97 | |||||
Additional paid-in capital | 299,869 | 238,341 | |||||
Accumulated other comprehensive loss | (7,172 | ) | (6,907 | ) | |||
Retained earnings | 892,721 | 736,247 | |||||
Total equity | 1,185,516 | 967,778 | |||||
Total liabilities and equity | $ | 1,300,670 | $ | 1,078,502 |
Year Ended | |||||||
(In thousands) | December 31, 2018 | December 31, 2017 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 156,474 | $ | 107,348 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 41,630 | 42,067 | |||||
Amortization of premium on marketable securities | 1,677 | 2,671 | |||||
Write-down for excess and obsolete inventories | 10,475 | 11,519 | |||||
Stock-based compensation expense | 21,899 | 14,686 | |||||
Allowance for doubtful accounts | 957 | 1,718 | |||||
Change in fair value of business acquisition liabilities | 985 | 1,240 | |||||
Impairment of intangible assets | — | 516 | |||||
Change in deferred income taxes | 971 | 8,292 | |||||
(Gain)/loss on disposal of assets, net | (3,557 | ) | — | ||||
(Increase)/decrease in: | |||||||
Accounts receivable | (21,789 | ) | (24,955 | ) | |||
Inventories | (31,382 | ) | (5,277 | ) | |||
Prepaid expenses and other assets | (7,496 | ) | (4,774 | ) | |||
Increase/(decrease) in: | |||||||
Accounts payable | (3,008 | ) | 9,843 | ||||
Accrued expenses and other liabilities | 14,728 | (2,064 | ) | ||||
Income taxes payable/receivable | (921 | ) | (3,772 | ) | |||
Net cash provided by operating activities | 181,643 | 159,058 | |||||
Cash flows from investing activities: | |||||||
Purchases of marketable securities | (537,942 | ) | (392,895 | ) | |||
Maturities of marketable securities | 278,049 | 240,353 | |||||
Sales of marketable securities | 106,388 | 122,512 | |||||
Purchases of property and equipment | (59,697 | ) | (51,303 | ) | |||
Collections/(issuance) of note receivable | 30,000 | — | |||||
Proceeds from sale of assets | 5,000 | — | |||||
Acquisition of businesses, net of cash acquired, and purchases of intangible and other assets | (14,825 | ) | (29,944 | ) | |||
Net cash used in investing activities | (193,027 | ) | (111,277 | ) | |||
Cash flows from financing activities: | |||||||
Payment of business acquisition liabilities | (6,739 | ) | (10,109 | ) | |||
Proceeds from exercise of stock options | 39,309 | 11,735 | |||||
Net cash provided by financing activities | 32,570 | 1,626 | |||||
Effect of foreign exchange rate on cash | (256 | ) | 1,979 | ||||
Net increase in cash, cash equivalents, and restricted cash | 20,930 | 51,386 | |||||
Cash, cash equivalents, and restricted cash, beginning of period | 118,817 | 67,431 | |||||
Cash, cash equivalents, and restricted cash, end of period | $ | 139,747 | $ | 118,817 | |||
Supplemental disclosures of cash flow information: | |||||||
Interest paid | 6 | 3 | |||||
Income taxes paid | $ | 30,552 | $ | 59,111 |
(Unaudited) | Three Months Ended | Year Ended | |||||||||||||
(In thousands) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
United States | $ | 163,788 | $ | 148,012 | $ | 593,878 | $ | 529,882 | |||||||
International | 32,150 | 28,022 | 119,091 | 106,095 | |||||||||||
Total sales | $ | 195,938 | $ | 176,034 | $ | 712,969 | $ | 635,977 |
(Unaudited) | Three Months Ended | Year Ended | |||||||||||||
(In thousands) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Musculoskeletal Solutions products | $ | 181,638 | $ | 165,114 | $ | 666,040 | $ | 625,057 | |||||||
Enabling Technologies products | 14,300 | 10,920 | 46,929 | 10,920 | |||||||||||
Total sales | $ | 195,938 | $ | 176,034 | $ | 712,969 | $ | 635,977 |
(Unaudited) | Three Months Ended | Year Ended | |||||||||||||
(In thousands) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Spine products | $ | 181,254 | $ | 165,087 | $ | 665,403 | $ | 625,027 | |||||||
Emerging Technology Products | 14,684 | 10,947 | 47,566 | 10,950 | |||||||||||
Total sales | $ | 195,938 | $ | 176,034 | $ | 712,969 | $ | 635,977 |
(Unaudited) | December 31, 2018 | December 31, 2017 | |||||
(In thousands) | |||||||
Cash, cash equivalents, and restricted cash | $ | 139,747 | $ | 118,817 | |||
Short-term marketable securities | 199,937 | 254,890 | |||||
Long-term marketable securities | 263,117 | 56,133 | |||||
Total cash, cash equivalents, restricted cash, and marketable securities | $ | 602,801 | $ | 429,840 |
(Unaudited) | Three Months Ended | Year Ended | |||||||||||||
(In thousands, except percentages) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Net income | $ | 36,751 | $ | 24,376 | $ | 156,474 | $ | 107,348 | |||||||
Interest income, net | (4,164 | ) | (1,862 | ) | (13,278 | ) | (6,608 | ) | |||||||
Provision for income taxes | 10,876 | 26,224 | 32,131 | 62,580 | |||||||||||
Depreciation and amortization | 11,936 | 8,294 | 41,630 | 42,067 | |||||||||||
EBITDA | 55,399 | 57,032 | 216,957 | 205,387 | |||||||||||
Stock-based compensation expense | 4,821 | 4,027 | 21,899 | 14,686 | |||||||||||
Provision for litigation | 5,878 | (112 | ) | 5,878 | 2,668 | ||||||||||
Acquisition related costs/licensing | 641 | 553 | 4,488 | 3,391 | |||||||||||
Net gain from sale of assets | — | — | (3,593 | ) | — | ||||||||||
Adjusted EBITDA | $ | 66,739 | $ | 61,500 | $ | 245,629 | $ | 226,132 | |||||||
Net income as a percentage of sales | 18.8 | % | 13.8 | % | 21.9 | % | 16.9 | % | |||||||
Adjusted EBITDA as a percentage of sales | 34.1 | % | 34.9 | % | 34.5 | % | 35.6 | % |
(Unaudited) | Three Months Ended | Year Ended | |||||||||||||
(In thousands) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Net income | $ | 36,751 | $ | 24,376 | $ | 156,474 | $ | 107,348 | |||||||
Provision for litigation | 5,878 | (112 | ) | 5,878 | 2,668 | ||||||||||
Amortization of intangibles | 3,063 | 2,238 | 9,588 | 7,909 | |||||||||||
Acquisition related costs/licensing | 641 | 553 | 4,488 | 3,391 | |||||||||||
Net gain from sale of assets | — | — | (3,593 | ) | — | ||||||||||
Tax reform impact | — | 11,014 | — | 11,014 | |||||||||||
Tax effect of adjusting items | (2,189 | ) | (796 | ) | (3,437 | ) | (4,239 | ) | |||||||
Non-GAAP net income | $ | 44,144 | $ | 37,273 | $ | 169,398 | $ | 128,091 |
(Unaudited) | Three Months Ended | Year Ended | |||||||||||||
(Per share amounts) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Diluted earnings per share, as reported | $ | 0.36 | $ | 0.25 | $ | 1.54 | $ | 1.10 | |||||||
Provision for litigation | 0.06 | — | 0.06 | 0.03 | |||||||||||
Amortization of intangibles | 0.03 | 0.02 | 0.09 | 0.08 | |||||||||||
Acquisition related costs/licensing | 0.01 | 0.01 | 0.05 | 0.03 | |||||||||||
Net gain from sale of assets | — | — | (0.04 | ) | — | ||||||||||
Tax reform impact | — | 0.11 | — | 0.11 | |||||||||||
Tax effect of adjusting items | (0.02 | ) | (0.01 | ) | (0.03 | ) | (0.04 | ) | |||||||
Non-GAAP diluted earnings per share | $ | 0.43 | $ | 0.38 | $ | 1.67 | $ | 1.31 | |||||||
* amounts might not add due to rounding |
(Unaudited) | Three Months Ended | Year Ended | |||||||||||||
(In thousands) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Net cash provided by operating activities | $ | 44,291 | $ | 44,837 | $ | 181,643 | $ | 159,058 | |||||||
Purchases of property and equipment | (17,159 | ) | (13,425 | ) | (59,697 | ) | (51,303 | ) | |||||||
Non-GAAP free cash flow | $ | 27,132 | $ | 31,412 | $ | 121,946 | $ | 107,755 |
(Unaudited) | Three Months Ended | Reported Growth | Currency Impact on 2018 Sales | Constant Currency Sales Growth | |||||||||||||
(In thousands, except percentages) | December 31, 2018 | December 31, 2017 | |||||||||||||||
United States | $ | 163,788 | $ | 148,012 | 10.7 | % | — | 10.7 | % | ||||||||
International | 32,150 | 28,022 | 14.7 | % | $ | 570 | 16.8 | % | |||||||||
Total sales | $ | 195,938 | $ | 176,034 | 11.3 | % | $ | 570 | 11.6 | % |
(Unaudited) | Year Ended | Reported Growth | Currency Impact on 2018 Sales | Constant Currency Sales Growth | |||||||||||||
(In thousands, except percentages) | December 31, 2018 | December 31, 2017 | |||||||||||||||
United States | $ | 593,878 | $ | 529,882 | 12.1 | % | — | 12.1 | % | ||||||||
International | 119,091 | 106,095 | 12.2 | % | $ | (1,494 | ) | 10.8 | % | ||||||||
Total sales | $ | 712,969 | $ | 635,977 | 12.1 | % | $ | (1,494 | ) | 11.9 | % |