GLOBUS MEDICAL INC (GMED) Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered worldwide net sales of $657.3M (+6.6% YoY; +6.9% constant currency), non-GAAP EPS of $0.84, GAAP EPS of $0.19, and adjusted EBITDA of $196.9M (30.0% of sales). U.S. revenue was $521.9M (+6.3% YoY) and International revenue was $135.4M (+7.7% YoY; +8.9% cc) .
• Free cash flow was a quarterly record at $193.2M; full-year free cash flow reached $405.2M and operating cash flow was $520.6M. Management plans to pay off the $450M senior convertible notes in cash by March 2025, returning to a debt-free posture exiting Q1 2025 .
• Enabling Technologies revenue rose to $47.0M (+43.5% YoY), with record quarterly capital placements; cumulative robotic procedures exceeded 94,000 since launch. Management expects capital sales to remain cyclically heavier in Q2 and Q4. XR headset clearance is expected near-term, augmenting navigation offerings .
• 2025 guidance was reaffirmed on a stand-alone basis (revenue $2.66–$2.69B; non-GAAP EPS $3.40–$3.50) and introduced on a combined basis post-Nevro close (revenue $2.80–$2.90B; non-GAAP EPS $3.10–$3.40; accretive in year two). Adjusted gross margin is expected at 67.5–68.5% in 2025, with larger expansion in 2026 from insourcing .
• Integration synergies exceeded year-1 targets (~55% captured); management emphasized continued cost actions, manufacturing insourcing, and cross-selling to drive margin and growth. Tariff exposure is minimal (~95% U.S.-sourced) .

What Went Well and What Went Wrong

What Went Well

• Record free cash generation with Q4 operating cash flow of $210.3M and free cash flow of $193.2M; full-year operating cash flow $520.6M and free cash flow $405.2M. “The strong cash flow will enable us to return to a debt-free status as we exit Q1 2025” .
• Enabling Technologies momentum: revenue +43.5% YoY to $47.0M in Q4 with record unit placements; robotic procedures grew 17% YoY and surpassed 94,000 cumulative. “We delivered our highest quarterly enabling tech sales and unit placements to date” .
• Synergies and integration execution: ~55% of $170M three-year synergy plan realized in year 1; management reiterated 40% in year 2 and remaining in year 3, with manufacturing insourcing driving gross margin gains in 2026. “We exceeded our 2024 synergy targets” .

What Went Wrong

• FX headwinds and inventory write-offs weighed on profitability: Q4 non-GAAP EPS had ~$0.06 FX headwind and adjusted EBITDA saw ~1.5% unfavorable FX impact; higher inventory write-offs trimmed gross margin by a few tenths .
• Neuromonitoring net revenue per case softness partially offset musculoskeletal strength in Q4; SG&A benefited from synergies but carried year-end compensation impacts .
• Ongoing regulatory process for a prior FDA warning letter regarding complaint-handling (not product safety): management is implementing remediation and expects reinspection; acknowledged some customer hesitation, though believed impact was not significant .

Financial Results

Revenue, EPS, and EBITDA vs prior quarters and prior year

Notes:

• YoY Q4 revenue growth +6.6% and +6.9% cc; U.S. +6.3%, International +7.7% (+8.9% cc) .
• Estimates comparison unavailable (see Estimates Context).

Gross Margin progression

Segment Net Sales

Geographic Revenue

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “Globus finished 2024 with a great fourth quarter… Non-GAAP EPS was a record $3.04… free cash flow was an all-time high of $405 million… return to a debt-free status as we exit Q1 2025” .
• CFO: “Q4 adjusted EBITDA was 30%, and we generated a record $193.2 million of free cash flow… cash, cash equivalents and marketable securities were $956.2 million… plan to pay off our senior convertible notes in cash totaling $450 million” .
• CEO on integration: “We exceeded our 2024 synergy targets… year 2 synergies will continue implementing common systems… expand in-house production… consolidate vendors” .
• CFO on margins: “We expect our full year adjusted gross margin to be in the range of 67.5% to 68.5% [2025]… long-term goal to be a mid-70s adjusted gross profit business” .

Q&A Highlights

• Nevro acquisition rationale and economics: Management sees high-frequency technology as clinically differentiated with applications beyond neuromodulation; purchase price roughly at tangible book; accretive in year two; combined FY25 guidance assumes late Q2 close .
• Gross margin cadence: Modest improvement expected quarter-to-quarter in 2025; majority margin expansion in 2026 as insourced inventory flows through COGS .
• Capital cycle and placement mix: Capital demand healthy; placements are heavier in Q2 and Q4; rental/lease programs available but outright purchases remain majority .
• Sales force retention and recruiting: Retention “really high” post-merger; strong competitive rep recruiting pipeline; dispelled rumors of widespread guarantees .
• Tariff exposure: Minimal due to ~95% U.S.-sourced products; residual 5% largely instrumentation .

Estimates Context

• S&P Global Wall Street consensus estimates for Q4 2024 could not be retrieved due to system limits; as a result, we cannot provide a definitive beat/miss analysis versus consensus. Values comparison to estimates was therefore unavailable (Values retrieved from S&P Global were unavailable).

Key Takeaways for Investors

• Cash generation and balance sheet strength create optionality: record Q4 and FY free cash flow; ~$956M liquidity at YE; planned $450M convert repayment in March 2025 supports a cleaner equity story .
• Margin trajectory is favorable: adjusted gross margin guided to 67.5–68.5% in 2025 with larger gains in 2026 from manufacturing insourcing; long-term target mid-70s adjusted gross margin remains intact .
• Enabling Tech drives implant pull-through: record placements, expanding navigation (Hub) and expected XR headset clearance in early 2025 should sustain implant momentum into NuVasive accounts through 2025 .
• Integration synergies are tracking ahead: ~55% captured in year 1; continued cost discipline and cross-selling should support EPS resilience despite FX and inventory write-offs in Q4 .
• Nevro adds new TAM and medium-term EPS accretion: combined FY25 guidance introduced; accretive in year two with cost rationalization and scale benefits; near-term focus on operational integration .
• Low tariff risk and diversified geography underpin stability: ~95% U.S.-sourced products; OUS growth broad-based (Japan, UK, Italy, Ireland) offers incremental leverage .
• Near-term trading implications: strong FCF and debt paydown, reaffirmed stand-alone FY25 outlook, and ET momentum are positives; investors should watch 2025 gross margin cadence, NuVasive robot pull-through, and Nevro close/execution as stock catalysts .