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GLOBUS MEDICAL INC (GMED) Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered above-market growth led by U.S. Spine; revenue was $745.3M (+18.4% YoY) and non-GAAP EPS was $0.86, both ahead of consensus; GAAP EPS was $1.49 boosted by a $110.6M bargain purchase gain and a $34.8M discrete tax benefit .
  • U.S. revenue rose 20.3% YoY; Enabling Technologies rebounded 58% sequentially but remained down 4.4% YoY, reflecting elongated robotics sales cycles; adjusted gross margin held at 67.4% (vs. 67.2% LY) .
  • Management reaffirmed FY25 guidance: revenue $2.80–$2.90B and non-GAAP EPS $3.00–$3.30; non-GAAP tax rate expected ~25% for the year .
  • Strategic catalysts: clearance and upcoming launch of Excelsius XR (AR navigation headset), expanding DuraPro oscillating drill with navigation, and Nevro integration with early cost actions; pipeline and cross-selling to NuVasive accounts support H2 momentum .

What Went Well and What Went Wrong

What Went Well

  • U.S. Spine posted sustained momentum (+5.7% reported, +7.4% day-adjusted), with 19 consecutive weeks of implant growth; CEO: “US Spine had sustained momentum… highest sequential revenue growth since Q2 2022” .
  • Record quarterly non-GAAP EPS of $0.86 and adjusted gross margin steady at 67.4%, reflecting operational efficiencies and synergy capture .
  • Nevro closed April 3; early headcount and OpEx actions drove near breakeven adjusted EBITDA at Nevro, with $95M contribution to revenue; CFO highlighted ~$141.5M of deferred tax assets utilization for long-term cash tax savings .

What Went Wrong

  • Robotics selling cycles elongated; Enabling Technologies down 4% YoY despite 58% sequential recovery; management still expects to close deals but timing has stretched .
  • International growth modest (+11% reported, +7.5% cc), with softness in Brazil and lingering Q1 supply impacts; LatAm remained challenged and APAC essentially flat on cc basis .
  • Adjusted EBITDA margin ticked down to 28.0% (from 30.2% LY) due to mix and Nevro inclusion; SG&A rose to 40.7% of sales (from 38.0% LY), including Nevro’s >60% SG&A as percentage of sales .

Financial Results

Actuals vs Prior Periods and vs Consensus

MetricQ2 2024Q1 2025Q2 2025Q2 2025 ConsensusSurprise
Revenue ($USD Millions)$629.691 $598.121 $745.342 $742.726*+$2.616M vs est.
GAAP Diluted EPS ($)$0.23 $0.54 $1.49 N/AN/A
Non-GAAP Diluted EPS ($)$0.75 $0.68 $0.86 $0.754*+$0.106 vs est.
Adjusted EBITDA ($USD Millions)$190.435 $177.833 $208.682 $199.123*+$9.559M vs est.
Adjusted EBITDA Margin (%)30.2% 29.7% 28.0% N/AN/A
Adjusted Gross Margin (%)67.2% 67.3% 67.4% N/AN/A

Values with asterisk (*) retrieved from S&P Global.

Segment/Product Category Breakdown

Product CategoryQ2 2024 ($M)Q1 2025 ($M)Q2 2025 ($M)
Musculoskeletal Solutions$592.913 $575.932 $710.182
Enabling Technologies$36.778 $22.189 $35.160
Total Net Sales$629.691 $598.121 $745.342

Geographic Breakdown

GeographyQ2 2024 ($M)Q1 2025 ($M)Q2 2025 ($M)YoY Growth
United States$499.459 $483.857 $600.784 20.3%
International$130.232 $114.264 $144.558 11.0% (7.5% cc)
Total$629.691 $598.121 $745.342 18.4% (17.6% cc)

KPIs and Other Items

KPIQ2 2024Q1 2025Q2 2025
Base Business Net Sales ($M)$629.691 N/A$650.756
Nevro Net Sales ($M)——$94.586
Operating Cash Flow ($M)$54.258 $177.300 $77.865
Free Cash Flow ($M)$26.460 $141.197 $31.303
GAAP Gross Margin (%)55.2% 63.6% 63.3%
Adjusted Gross Margin (%)67.2% 67.3% 67.4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$2.80–$2.90B (Feb and Q1 reaffirmation) $2.80–$2.90B Maintained
Non-GAAP EPSFY 2025$3.00–$3.30 (updated from $3.10–$3.40 in Q1) $3.00–$3.30 Maintained
Non-GAAP Tax RateFY 2025~25% (introduced Q2) ~25% Maintained
Capital AllocationOngoing$500M repurchase authorization (May) Expanded by additional $500M; $475M remaining as of 6/30/25 Increased authorization

Earnings Call Themes & Trends

TopicQ-2 (Q4 2024)Q-1 (Q1 2025)Current (Q2 2025)Trend
Enabling Technologies / RoboticsEnabling tech +46,952 in Q4; strong innovation narrative Softer deals; elongated cycles impacted revenue (-1.4% total) 58% sequential rebound; YoY -4%; cycles elongated; pipeline robust Improving sequentially; timing risk persists
Supply Chain / ManufacturingIntegration progress; plan for synergies Temporary supply chain disruption; insourcing ramp Q2 supply challenges largely resolved; ramping sets; manufacturing initiatives driving inventory and margin trajectory Normalizing supply; margin benefit expected in 2026
International / RegionsInternational +7.7% in Q4 International -7.7% YoY (cc -4.6%) EMEA growth; APAC flat cc; LatAm/Brazil softness; sequential improvement Gradual recovery; targeted “go deeper” strategy
Product Performance (Spine/Trauma)Strong spine contribution Core US spine strength U.S. Spine +5.7%; 19 weeks growth; trauma +35% YoY; DuraPro accelerating Sustained growth drivers
Regulatory/Technology——FDA clearance for Excelsius XR; launch planning underway New tech catalyst
Nevro Integration—Deal closed April 3; early integration plans Near breakeven adj. EBITDA; cost actions; strategic rationale and IP leverage Integration on track; profitability work continues
Tariffs/Macro——Tariff impacts present but not material Monitored; limited impact

Management Commentary

  • CEO Keith Pfeil: “US Spine had sustained momentum during the quarter, posting its highest sequential revenue growth since the second quarter of 2022… Enabling Technologies showed a modest bounce back… focused on accelerating deal timelines to make robotic assisted surgery the standard of care” .
  • CFO Kyle Kline: “We achieved record quarterly non-GAAP earnings per share… closed the Nevro acquisition and began diligently working to identify and execute synergy actions… well positioned… to deliver on our commitments in the second half of 2025” .
  • CFO on Nevro DTA: “We… recognize and utilize $141.5M of… deferred tax assets… which will generate cash tax savings over a prolonged period” .
  • CEO on technology roadmap: “We recently received FDA clearance for Excelsius XR… head mounted augmented reality navigation… we look forward to bringing this… technology to surgeons in the coming months” .

Q&A Highlights

  • Nevro trajectory and accretion: Near breakeven adjusted EBITDA; accretion still targeted in year two; sales could be influenced by ongoing cost actions; SG&A (>60% of sales) is primary focus for synergy reductions .
  • Enabling Tech outlook: Double-digit 2025 growth “in the realm of possibility” given pipeline and quotes; cycles elongated, but deals not losing to competition; Medtronic is primary competitor .
  • XR launch and integration: Finished goods supply ready; pairing XR with ExcelsiusHub/E3D initially; value proposition is surgeon line-of-sight and sterility-preserving hand tracking .
  • Manufacturing margin path: Initiatives drive lower cash inventory cost now; P&L gross margin expansion expected to flow through in 2026; mid-70s adjusted gross margin target over time .
  • Cross-selling: Robots being sold to legacy NuVasive accounts; RELINE compatibility a gating item now resolved; broader implant cross-sell underway .

Estimates Context

  • Q2 2025 beats: Revenue $745.342M vs $742.726M*, non-GAAP EPS $0.86 vs $0.754*, EBITDA $208.682M vs $199.123M*; beat driven by U.S. Spine momentum and sequential Enabling Tech recovery .
  • FY 2025: Consensus Primary EPS at 3.76* sits above reiterated non-GAAP EPS guidance of $3.00–$3.30; expect estimates to converge toward guidance as integration and margin timing are better understood .
  • Definitions matter: Company reports adjusted EBITDA ($208.7M) whereas consensus uses EBITDA; investors should reconcile to non-GAAP definitions used by GMED when comparing profitability metrics .

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • U.S. Spine momentum is durable and broad-based, supported by set availability, competitive hiring, and targeted conversions—an H2 growth catalyst .
  • Robotics remains a medium-term driver; cycles are elongated but pipeline and competitive positioning vs. Medtronic remain intact; XR AR navigation should strengthen the ecosystem narrative .
  • Profitability mix and synergies: Adjusted gross margin steady; manufacturing initiatives suggest tangible gross margin expansion in 2026 as lower-cost inventory flows through; near-term EBITDA margin reflects mix and Nevro .
  • Nevro integration: Early OpEx actions delivered near breakeven adjusted EBITDA; SG&A is key synergy lever; strategic IP and SCS indications broaden GMED’s pain continuum exposure .
  • International: EMEA leading; APAC stable; LatAm/Brazil will take time; sequential improvement supports trend reversal into H2 .
  • Capital deployment: Debt-free; robust cash generation; expanded $500M buyback with $475M remaining improves per-share compounding while maintaining investment in sets and R&D .
  • Near-term trading: Expect focus on robotics deal closures and XR launch cadence; medium-term thesis hinges on margin expansion from insourcing, Nevro synergy capture, and continued U.S. Spine share gains .

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