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Product / Company Performance

Globus Medical Reports 3Q18 Revenue of $169.2MM, +11.5% vs. 3Q17 -

By Mike Evers, ORTHOWORLD

Globus Medical continued its strong performance with a fourth consecutive quarter of double-digit organic growth. The company posted $169.2MM in revenue for 3Q18, +11.5% vs. 3Q17.

Their U.S. spine business accelerated due to implant pull-through from the ExcelsiusGPS robot and competitive reps hired in 2017 coming off non-competes. Internationally, spine revenue grew in high single digits with leadership calling out Japan, Australia, Germany and Italy as key markets that performed well. As has been the case with many companies in the quarter, U.K. performance lagged but Globus remains encouraged by the prospects of that market. In Japan, the company is actively converting surgeons from Alphatec to Globus products and expects 2019 to be a strong year for sales in the country where they have 10 product systems with regulatory clearance.

Spinal implant product launches for 1H18 slowed compared to the company’s normal cadence due to focus on growing the Excelsius platform, ramping up the trauma franchise and producing products to integrate the distribution channels acquired from Alphatec Spine in 2016. However, in 3Q18 Globus saw sales contributions from COALITION MIS titanium, an integrated cervical interbody fusion device combining central surface treatment with advanced anchoring, and launch of the CREO side loading system, the latest addition to the CREO stabilization system.

Revenue in the company’s Emerging Technologies segment, which includes its robotics, navigation and trauma products, was driven primarily by placements of ExcelsiusGPS units, including the first ever international placement in Greece. Despite the seasonally soft capital spending in third quarters, the company remains very bullish on the prospects of their robot in 4Q18 and is confident in head-to-head comparisons against competitive units, like Medtronic’s Mazor X Stealth. Within the quarter, Globus acquired Surgimap, a surgical planning software suite, to strengthen ExcelsiusGPS by streamlining workflow and enabling data analytics.

The trauma franchise continues to ramp up, but leadership noted that the production of inventory and the logistics of full launch have been a short-term challenge. By expanding internal and external capacity, leadership expects to have all core systems launched by the end of the year. To staff the salesforce for the franchise, Globus has remained aggressive in hiring and onboarding competitive reps in 2018. Leadership estimates that the hires are, on average, about half-way through their non-compete cycles.

Globus Medical once again increased guidance for full year 2018 by $5MM to total revenue of $705MM, +10.9% vs. 2017.

ORTHOWORLD estimates 3Q18 and YTD segment sales and growth on an as-reported basis as follows.

  3Q18 3Q17 $ Change % Change
Spine $160.5 $144.3 $16.2 11.2%
Trauma $0.6 n/a n/a n/a
Orthobiologics $8.1 $7.5 $0.7 9.1%
Total  $169.2 $151.7 $17.5 11.5%

 

  YTD18 YTD17 $ Change % Change
Spine $492.1 $437.4 $54.7 12.5%
Trauma $0.9 n/a n/a n/a
Orthobiologics $24.0 $22.6 $1.5 6.5%
Total  $517.0 $459.9 $57.1 12.4%

 

Globus Medical’s revenue by geographic region as follows.

Geographic Region 3Q18 3Q17 $ Change % Change
US $139.1 $125.9 $13.2 10.5%
Ex-US $30.1 $25.8 $4.3 16.8%
Total  $169.2 $151.7 $17.5 11.5%

 

3Q18 net earnings are as follows.

3Q18 Amount ($MM) % of Sales
Sales $169.2  
   Cost of Sales -$37.8 22.4%
   Administrative -$75.1 44.4%
   R&D -$15.5 9.2%
   Other -$5.5 3.3%
Net Earnings  $35.2 20.8%

 

Sources: Globus Medical; ORTHOWORLD estimates. All revenue figures presented in USD $MM.

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.

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