Globus Medical, Inc. Class A

Welcome to Globus Medical's second quarter 2021 earnings call. At this time, all lines will be on mute and the Q&A session will be held after the prepared remarks. I will now turn the call over to Kelly Huller, Senior Vice President, General Counsel. Ms. Huller, please go ahead.

Thank you for being with us today. Joining today's call from Globus Medical will be Dave Demski, President and CEO, Dan Scavilla, Executive Vice President, Chief Commercial Officer, and Keith Feil, Senior Vice President and Chief Financial Officer. This review is being made available via webcast accessible through our investor relations section of the Globus Medical website at www.globusmedical.com. Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2020 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our CESEC filings, including the 10-K, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website. With that, I will now turn the call over to Dave Demski, our President and CEO.

Thank you, Kelly, and good afternoon, everyone. Globus had another outstanding quarter in Q2, building on the momentum we've established over the past two years as we continue to take market share. Given the impact of COVID-19, it's difficult to draw meaningful insights about the business by comparing the results to Q2 2020, so my comments will be primarily focused on comparisons to the second quarter of 2019. Revenue for the quarter was a record $251 million, up 29% over 2Q19. Non-GAAP EPS was $0.56 per share, a 38% increase, and adjusted EBITDA was a strong 35%. Once again, INR and U.S. fine led the way. INR revenue was a record $21 million, up 73% over 2Q19, and our third consecutive quarter of strong growth. The clinical superiority of Excelsius GPS continues to be recognized by surgeons, as reflected in our recent announcement of surpassing 20,000 procedures using Excelsius. More significantly, the average number of procedures per robot reached an all-time high in 2021, reflecting an acceleration in adoption. U.S. Spine continues to take significant market share, growing by 30% over Q2 2019. Pull through from robotics, contributions from new product introductions, a resurgence in our biologics business, and competitive recruiting were all factors driving growth. We're beginning to see several virtuous cycles emerge, all emanating from the value created by the adoption of our robotic technology. We have surgeons who utilize Excelsis for the majority of their cases, master increasingly complex pathologies because of their technology, and may even perform surgery in situations that would be considered inoperable without robotic assistance. These surgeons wholeheartedly endorse Excelsis to their peers, leading to additional robot sales. We have surgeons who have not previously used Globus implants, but due to Excelsis, gain exposure to our entire line of innovative spinal implants and have begun to utilize Globus for non-robotic cases as well. We have surgeons who may not have initially championed the purchase of the robot, but after seeing the success of their colleagues, also adopted technology, which has driven globus implant usage and led to the purchase of additional robots. Finally, we have attracted successful competitive reps who, after losing a portion of their business to a robotic conversion, had decided to join the team with the best technology, bringing additional business with them. As these scenarios increasingly play out, we are seeing what amounts to a flywheel effect on our business. At the heart of it is the utilization and value created by the Excelsior's technology. It's not about merely placing robots. It's a focus on utilizing technology to improve spine surgery. The growth we have seen in our U.S. business over the past two years is a testament to the power of the transformation taking place. On the international front, our spinal implant business grew by 5% in the quarter. Strong growth in most markets was offset by declines in Japan, a trend we identified last quarter and expect to continue throughout 2021. Unfortunately, the transition in Japan, while necessary for the long-term health of our business, is masking a very strong performance by much of the rest of the world. We launched Hedron L in Q2, adding a 3D printed spacer to Rise L, Elsa, Corbel, and Transcontinental to create the most comprehensive suite of lateral interbody solutions on the market today. This broad product portfolio gives surgeons the ability to perform lateral access surgery utilizing multiple expandable options, multiple static spacers, and integrated plate spacer solutions to address all levels of the lumbar spine through either a prone or lateral patient position. Furthermore, the Excelsius Lateral 360 procedural solution allows surgeons to safely and efficiently treat multiple inner body levels and place MIS pedicle screws while the patient remains in a single position. Moving to INR product development, we are awaiting 510K clearance for the Excelsis 3D imaging system and remain cautiously optimistic regarding clearance and launch of the system late in Q3. The full launch of the Excelsis cranial module is slated for later this quarter as well. Shifting to trauma, revenue is up over 250% compared to the second quarter of 2019, 29% over the second quarter of last year, and relatively flat sequentially. We are focused on Salesforce expansion and have several exciting product launches planned for the second half of this year in 2022. In summary, we're off to a fantastic start in 2021. It promises to be an amazing year if we continue to execute the way we did in the first half. All parts of the company are performing well and we're working together as a team. I'm grateful for the dedication, ability, and effort of our worldwide Globus team members as they serve our customers and patients. I will now turn the call over to Keith.