Globus Medical, Inc. Class A

Welcome to the Globus Medical's third quarter 2021 earnings call. At this time, all lines will be on mute, and a Q&A session will be held after the prepared remarks. I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Thank you, Amanda, and thank you, everyone, for being with us today. Joining today's call from Globus Medical will be Dave Dembski, President and CEO of 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 the 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 SEC 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 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 Dembski, our president and CEO.

Thank you, Brian, and good afternoon, everyone. Globus had an outstanding quarter in Q3. Not only did we continue to take market share and perform well above our peers, we also accomplished several important strategic objectives. Historically, our growth has been fueled by three factors. new product introductions, robotic sales, and competitive recruiting. All three of these leading indicators were very strong in Q3. Revenue for the quarter was $230 million, up 6% over 3Q20. Non-GAAP EPS was $0.50 per share, a 3% increase, and adjusted EBITDA was a strong 34%. These results reflect an estimated $12 to $13 million in COVID-related revenue headwinds in the U.S. during the quarter. Tractoring that in would have resulted in revenue growth of 12% and upward revisions to both non-GAAP EPS and adjusted EBITDA. Our enabling technology momentum continues to build, resulting in revenue of $20 million in Q3, an increase of 124%. The third quarter is typically challenging for capital sales, but our team performed extremely well, narrowly missing an all-time record as they delivered a fourth straight quarter of robust growth. In fact, enabling technology revenue on a trailing 12-month basis reached $74 million, 57% higher than any full year in our history. The clinical superiority of Excelsior's GPS in the operating room continues to be the underlying factor driving this growing momentum. Adoption and utilization remain strong, even in the COVID-dampened third quarter, and prospective surging customers routinely acknowledge that Excelsior's GPS is the best-buying robot on the market. As we discussed last quarter, this virtuous cycle is driving an acceleration in our growth. The Excelsis GPS robot will soon be joined by the Excelsis 3D imaging system and the Excelsis HUB navigation platform, both of which gain FDA 510 clearance in Q3. This combination of robotics, imaging, and freehand navigation will become the Excelsis ecosystem, providing a seamless, scalable, and unmatched clinical experience for surgeons. We are putting the finishing touches on the products and ramping production in anticipation of strong demand. We are also excited to report the launch of the cranial application in Q3. We have multiple sites utilizing the technology with great results and enthusiasm. The accuracy, time savings, and efficiency of Excelsis over traditional approaches has been outstanding, exceeding our initial expectations. This latest advancement helps drive robotic sites to take full advantage of the capabilities and scalability of the Excelsis GPS platforms. U.S. fine continues to take significant market share, growing by 2% as reported, but 10% after fracturing in the impact of COVID-related shutdowns. This is on top of a challenging count from Q3 last year, when we reported 17% growth in our U.S. fine business. This results in a two-year adjusted stack growth of 27%. well in excess of any of our peers. Pull-through from robotics, contributions from new product introductions, and competitive recruiting were all factors driving growth. The number of competitive reps we added to our team in Q3 was the highest in over a year. Competitive recruiting, along with robotics sales, have historically been leading indicators of future growth, and we're excited by the implications of our strong Q3 performance. On the international front, our spinal implant business declined by 3% in the quarter. The trend of strong growth in most markets offset by declines in Japan continues as we work off the impact of our strategic moves in Japan last year. Trauma revenue was up 21% in 3Q20 and 9% sequentially. We added several competitive reps in Q3 and have a strong pipeline of recruits. The upcoming launch of our Anthem MiniFrag system is the first of several exciting new product launches planned in this space over the next year. Finally, it is my pleasure to announce the acquisition of Capstone Surgical Technologies. Founded by Dr. Peter Bono, a board-certified orthopedic surgeon in southeastern Michigan, Capstone has developed a unique patented surgical drill that leverages oscillating technology to accomplish bone removal, disc removal, and screw insertion in minimally invasive spine surgery. Oscillation significantly improves the safety profile of high-speed powered instruments compared to traditional drill technology. Furthermore, This technology is an important element in our plan to incorporate safe, efficient tissue removal capability into our robotic platforms in the future. We are looking forward to a strong finish to what has been an outstanding year. While COVID restrictions are still impacting certain markets, they began to abate late in Q3 and remain lower than their peak. Our robotics pipeline remains strong, and we've closed several deals already in Q4. We anticipate the launch of Excelsis 3D late in the quarter, and their recruiting pipelines in spine trauma and INR remain strong. I will now turn the call over to Keith.