Globus Medical, Inc. (GMED)

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Globus Medical (GMED)

Q4 2012 Earnings Conference Call

February 27, 2013, 05:30 PM ET


David C Paul - Chairman and CEO

David M Demski - President and COO

Richard A. Baron - SVP and CFO


Matt Miksic - Piper Jaffray & Co.

Richard Newitter - Leerink Swann & Co.

David Roman - Goldman Sachs Group

Matthew O'Brien - William Blair & Co.

Bob Hopkins - Stifel Nicolaus

Steven Lichtman - Oppenheimer & Company.



Welcome to Globus Medical Fourth Quarter and Year-End Earnings Call. At this time, all lines will be on mute and a Q&A session will be held after the prepared remarks. Joining today’s call from Globus Medical will be David Paul, Chairman and CEO; Dave Demski, President and COO; and Richard Baron, Senior Vice President of Finance and CFO of Globus Medical.

I will now turn the call over to Rick.

Richard A. Baron

Thank you for being with us today. I will now read our required legal disclaimer. During this call, certain items maybe discussed that are not based entirely on historical fact. These items should be considered forward-looking statements and are subject to many risks, uncertainties and other factors that are difficult to predict and may affect our business and operation. As a result, our actual results may differ materially and adversely from those expressed or implied by our forward-looking statements.

A discussion of some of these risks, uncertainties and other factors is set forth in today’s press release and in our periodic reports on file with the SEC. These documents are available at and the Investor Relations section of our website at

We undertake no obligation and do not intend to update any forward-looking statements as a result of new information or future events or circumstances arising after the date on which it was made. The financial information discussed in connection with this call, reflects estimates based on information available at this time, and could differ materially from the amounts ultimately reported in our annual report.

Our revenue earnings, operating margins and similar items are sometimes expressed are non-GAAP basis and have been adjusted to exclude certain items including among other things, interest expense, depreciation and amortization, taxes, provision for litigation settlements, and stock-based compensation. The comparable GAAP financial information and a reconciliation of non-GAAP amounts can be founded in tables included in today’s earnings release, which is available on the Globus Medical Investor Relations webpage at

I will now turn this call over to David Paul, our Chairman and CEO.

David C Paul

Thank you, Rick. Thank you for joining us on the call today to discuss our 2012 results. We are pleased to report to you our record results for 2012. Our annual sales of $386 million, net income of $73.8 million, adjusted EBITDA of $136.6 million and diluted EPS of $0.80 were all records for our Company.

2012 was a tremendous year for Globus, with industry leading revenue growth, continued strong profitability, the completion of a successful IPO, and the launch of 14 new products, including our first PMA approved product, the SECURE-C cervical disc replacement device. We were able to grow our international presence to 24 countries. We continue to take market share from our competitors and expect to continue that momentum into 2013 and beyond.

In 2012, we also launched Algea Therapies and have made significant investments in a dedicated sales force and product development group to focus in – on this market opportunity in interventional pain management. Our first product, the AFFIRM Kyphoplasty was introduced in February and will cater to the approximately $500 million vertebral compression fracture market.

We are developing a suit of differentiated products in this area and will begin further product introduction this year. We expect this ongoing investment to contribute to our growth and profitability over time. We are confident in our ability to take market share in the back drop of the current spine market climate and provide strong double-digit industry leading growth and maintain our profit margins for the foreseeable future.

Our strategy of utilizing our product development engine to rapidly develop new products, while expanding our sales footprint worldwide will continue to provide the fuel of profitable growth into the future.

I will now turn the call over to Dave Demski, our President and Chief Operating Officer to discuss our results in more detail.

David M Demski

Thank you, David. As David mentioned, we’re very pleased with the record sales of profit this year. Worldwide sales were $386 million, up 16.4% over 2011. Net income for the year was up 21.5% over 2011 at $73.8 million or $0.80 per diluted share. Our non-GAAP adjusted EBITDA margin was 35.4% for the year compared to 35.8% for the year of 2011.

In the fourth quarter, our total worldwide sales top $100 million for the first time, an increase of 14.3% over the fourth quarter of 2011. Fourth quarter net income of $20.8 million represents an increase of 53% over the fourth quarter of 2011. Fully diluted earnings per share were $0.22, an increase of 46.7% over the fourth quarter of 2011. Non-GAAP adjusted EBITDA for the fourth quarter including our investment in Algea Therapies with 34.6% compared to 34.4% in the fourth quarter of 2011. Excluding Algea, the fourth quarter adjusted EBITDA would have been 38%.

Internationally we made our target expansion into new countries as well as increased our sales overall, achieving annual sales of $30.4 million, up 48.6% over 2011. Fourth quarter OUS sales were $8.6 million, up 36.9% over the fourth quarter of 2011. We continue to remain focused on hiring and expanding our sales footprint both in the U.S. and internationally and are very satisfied with our ability to attract top industry talent.

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