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GLOBUS MEDICAL INC (GMED) Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net sales fell slightly to $598.1M (-1.4% YoY; -0.8% constant currency) and non-GAAP diluted EPS rose to $0.68 (+8.5% YoY), but the quarter missed Wall Street consensus on both revenue and EPS as enabling technology deals slipped and integration-related supply chain issues constrained shipments. Management cited improving April trends and a robust Q2 start.
  • The company reaffirmed FY2025 revenue guidance at $2.80–$2.90B, but lowered non-GAAP EPS guidance to $3.00–$3.30 (from $3.10–$3.40), primarily to reflect carrying costs from closing the Nevro acquisition earlier than planned.
  • Globus returned to debt-free status after repaying the remaining $450M of convertible notes, generated record Q1 free cash flow of $141.2M, and completed the Nevro acquisition for $250M in cash (April 3), expanding into neuromodulation. A $500M share repurchase authorization followed on May 15.
  • Stock-relevant catalysts: EPS guide cut and enabling technology softness are near-term headwinds; debt repayment, improving Q2 momentum in U.S. spine and robots, plus the new buyback authorization support medium-term sentiment.

What Went Well and What Went Wrong

What Went Well

  • U.S. Spine grew ~2% with product strength in expandables, MIS screws, lateral and ACDF; management emphasized high salesforce retention and increasing implant pull-through from robotic procedures. “U.S. Spine grew 2% in Q1… increased product cross-selling and implant pull-through from robotic procedures.” — CEO Dan Scavilla
  • Profitability expanded meaningfully despite lower sales: GAAP gross margin rose to 63.6% (from 55.3% YoY), adjusted EBITDA margin reached 29.7% (vs. 25.4% YoY), driven by synergy capture and lower inventory step-up amortization.
  • Cash generation and balance sheet: record Q1 free cash flow of $141.2M; operating cash flow $177.3M; “we returned to a debt-free status, as we paid off the remaining $450 million of debt…” — COO-CFO Keith Pfeil

What Went Wrong

  • Enabling Technologies revenue dropped 31% YoY to $22.2M as capital deal closures elongated against tough comps; management said demand remains intact and deals are closing in Q2.
  • Temporary integration-related supply chain disruptions (manufacturing validation and in-sourcing timing) and the timing of international distributor orders pressured Q1 shipments; mgmt pegged ~$20M musculoskeletal revenue impact in the quarter.
  • Reimbursement headwinds: neuromonitoring revenue per case declined, and biologics (placental tissue for DFU wound care) faced reimbursement changes; company is realigning strategy.

Financial Results

Consolidated performance versus prior periods and estimates

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$625.7 $657.3 $598.1
GAAP Diluted EPS ($)$0.38 $0.19 $0.54
Non-GAAP Diluted EPS ($)$0.83 $0.84 $0.68
GAAP Gross Margin (%)53.0% 57.2% 63.6%
Adjusted Gross Margin (%)66.5% 67.1% 67.3%
Adjusted EBITDA Margin (%)31.0% 30.0% 29.7%
Operating Cash Flow ($USD Millions)$203.7 $210.3 $177.3
Free Cash Flow ($USD Millions)$161.7 $193.2 $141.2
Estimates Comparison (S&P Global)Q1 2025 EstimateQ1 2025 Actual
Revenue ($USD Millions)625.9*598.1
Primary EPS ($)0.744*0.68
# of EPS Estimates15*—
# of Revenue Estimates13*—
Values retrieved from S&P Global.

Segment net sales by product category

Segment ($USD Thousands)Q3 2024Q4 2024Q1 2025
Musculoskeletal Solutions$587,402 $610,341 $575,932
Enabling Technologies$38,303 $46,952 $22,189
Total Net Sales$625,705 $657,293 $598,121

Geographic mix (Q1 2025)

GeographyQ1 2025 ($USD Thousands)YoY ReportedConstant Currency YoY
United States$483,857 +0.2% +0.2%
International$114,264 -7.7% -4.6%
Total$598,121 -1.4% -0.8%

KPIs and operating detail (Q1 2025)

  • Robotic procedures surpassed 100,000 globally; +6% YoY, supporting implant pull-through.
  • Adjusted EBITDA $177.8M; non-GAAP net income $94.8M; non-GAAP gross profit $402.8M.
  • Liquidity: cash & equivalents $461.3M; total cash & marketable securities $461.3M (after debt repayment).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$2.80–$2.90B (with Nevro) $2.80–$2.90B Maintained
Non-GAAP EPSFY 2025$3.10–$3.40 (with Nevro) $3.00–$3.30 Lowered (top and bottom by $0.10)
CommentaryFY 2025—“Decrease… to account for additional carrying costs… closing Nevro earlier than planned.” —

Note: Company does not guide EBITDA margin; directionally, management expects high-20s EBITDA in 2025 given the earlier Nevro timing.

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Enabling Tech demand/placementsRecord placements; strong pipeline; Hub launch; AR headset planned Highest quarterly enabling tech sales; strong Q4 placements Q1 softness from elongated sales cycles; robust pipeline; Q2 off to good start Demand intact; timing volatility; improving Q2
Supply chain/in-sourcingIntegration ongoing; synergies accelerating In-sourcing machinery landing; gross margin expansion expected 2026 Temporary disruptions impacted shipments; remediation underway Near-term headwinds; easing into Q2
Tariffs/macroCapital market healthy; competition arriving Minimal tariff exposure (~95% U.S.-based production) Minimal impact; offsets via pricing, sourcing Monitored; immaterial to margins
Nevro acquisitionAnnounced intent; strategic rationale Guidance including Nevro (late Q2 close) Closed Apr 3; focus on reducing OpEx; conservative revenue view Integration starting; EPS carry costs near term
FDA warning letter (robot complaints process)Clarified scope; working to resolve —Progress; awaiting re-inspection; not product-related Resolution expected; not material to demand
U.S. Spine performanceStrong pro forma growth; cross-selling Continued growth; recruiter pipeline robust +2% growth; momentum improving; pull-through from robots Stable growth; improving cadence
International distributorsHigh double-digit growth Q3 Strong implant growth Q4 Q1 impacted by order timing; recovery in Q2 Temporary Q1 dip; restocking in Q2
R&D/product launchesMultiple launches (Hub, ACTIFY 3D) 18 products in 2024; ExcelsiusFlex launch New spine products (Cohere ALIF spacer; ReLine GPS); rich pipeline Sustained innovation cadence

Management Commentary

  • “Our first quarter results were impacted by softer Enabling Technology deal closures, temporary integration related supply chain disruption, and timing of international distributor orders, partially offset by strength in our core US spine business.” — CEO Dan Scavilla
  • “During the quarter, we returned to a debt-free status… paid off the remaining $450 million of debt assumed from the NuVasive merger. We delivered record Q1 free cash flow…” — COO-CFO Keith Pfeil
  • “We are reaffirming net sales guidance… but decreasing… fully diluted non-GAAP EPS… to account for the additional carrying costs… closing [Nevro] earlier than planned.” — COO-CFO Keith Pfeil
  • “Nevro technology has potential beyond its current application to benefit our cranial enabling technology, next-generation spinal implants, adaptive AI… Combining Nevro into Globus’ existing infrastructure will improve profitability and cash flow.” — CEO Dan Scavilla

Q&A Highlights

  • Enabling tech sales cycles lengthened; mix shifting to include more financing/rental options, but most sales remain outright purchases; management expects closure of delayed deals through Q2.
  • Nevro integration focus is on OpEx reduction to drive profitability; gross margin expansion possible over time.
  • EBITDA margin direction: not formally guided; target to achieve “the 30s” longer term; expect high-20s in 2025 given Nevro timing.
  • Salesforce retention remains strong post-merger; no unusual departures impacting Q1.
  • FDA warning letter update: process-related; company ready for re-inspection; not product-safety related.
  • Capital allocation: priority on internal investment; share repurchases opportunistic when valuation disconnect arises.

Estimates Context

  • Q1 2025 revenue and EPS missed consensus: revenue $598.1M vs $625.9M*; EPS $0.68 vs $0.744*; 13* and 15* covering estimates respectively. Management attributed the miss to elongated capital cycles, integration-related supply chain delays, and distributor order timing; noted April strength and Q2 momentum.
    Values retrieved from S&P Global.

  • Implications: Near-term estimate revisions likely to reflect lower enabling tech revenue cadence and the $0.10 FY EPS guide reduction; medium-term estimate stability supported by synergy capture, improving supply chain, and Nevro integration.

Key Takeaways for Investors

  • Q1 was a timing/integration “blip” rather than demand erosion: enabling tech pipeline is intact and deals are closing in Q2; U.S. Spine momentum improved in April.
  • Profitability resilience: margins expanded despite lower sales; synergy capture and reduced step-up amortization cushioned earnings; free cash flow generation remains robust.
  • FY 2025 outlook: revenue unchanged at $2.80–$2.90B; EPS lowered to $3.00–$3.30 due to earlier Nevro close; expect high-20s EBITDA this year with larger gross margin gains as in-sourcing benefits phase through in 2026.
  • Balance sheet strength: debt fully repaid; ample liquidity supports continued investment, integration, and opportunistic buybacks under the new $500M authorization.
  • Watch near-term catalysts: Q2 robots/imaging deal closures, international restocking, enabling tech cadence; any FDA re-inspection resolution.
  • Strategic expansion: Nevro adds a sizable neuromodulation TAM with technology synergies (including adaptive AI and next-gen implants); near-term focus on cost discipline and profitable growth.
  • Trading setup: EPS guide cut and Q1 miss weigh on near term, but improving Q2 execution, durable spine trends, and buyback authorization are supportive for medium-term thesis.

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