Globus Medical, Inc. Class A

Welcome to the Globus Medical's second quarter 2022 earnings call. At this time, all lines will be on mute and a Q&A session will be held after the prepared remarks. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference call is being recorded. 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, Hope, and thank you everyone for being with us today. Joining today's call from Globus Medical will be Dan Scavillo, President and Chief Executive 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.globismedical.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 10-K for the 2021 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 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 on the schedules accompanying the press release and on the investor relations section of the Globus Medical website. With that, I'll now turn the call over to Dan Scavilla, our president and CEO.

Thanks, Brian, and good afternoon, everyone. It's good to connect with you again to review our solid results for the second quarter. Q2 was a record sales quarter for GLOLUS, with revenues reaching $264 million or 5% growth, surpassing the difficult Q2-21 comp where we had achieved 69% growth. In addition, Q2 had 14% sequential growth versus Q1, with stronger performance throughout the portfolio, setting a new monthly sales record in June where we exceeded $100 million in monthly sales for the first time. Adjusted EBITDA was 35%, and non-GAAP EPS was $0.56, including significant non-operational headwinds for currency and tax rate that Keith will discuss further in his section. U.S. spine had a record quarter with 2.5% growth against a challenging prior year comp of 64% growth. The primary drivers of U.S. gains were competitive rep conversions and robotic pull-throughs. Our recruiting pipeline is strong and should lead to a record rep recruiting year. I feel we are well positioned to deliver strong second half growth this year in our U.S. spine business. Enabling technology sales were $29 million, up 44% on a constant currency basis versus prior year. Setting new quarterly records in both domestic and international sales. Robotic procedures and implant pull-through continue to accelerate, growing 30% versus prior year. and surpassing approximately 35,000 robotic procedures performed since launch. Entering Q3, our pipeline is strong for both robots and imaging systems, but we recognize that the remainder of the year contains several macro risks, including inflation, labor shortages, supply chain disruptions, and potential recession that may impact us and our customers' purchasing cycles. We'll continue to work with our customers to get the best technology in their hands as we all work through these environmental challenges. In May, we shipped our first Excelsius 3D imaging systems and continue to sell units throughout the quarter. We've successfully completed over 150 procedures in Q2. Surgeons have said this is a game changer. Excelsius 3D is a three-in-one imaging platform offering three image modalities in a single cart with high maneuverability, a large field of view, and a seamless integration with our Xcelcius GPS robotic navigation system. It is a key component to realizing the Globus ecosystem in the operating room, an ecosystem that is built and designed from the ground up to communicate together seamlessly. Market interest is high for this state-of-the-art technology, and customer orders continue to grow. Xcelcius 3D is positioned to be a major growth driver for us as we continue to penetrate the market. On the international front, our spinal implant business grew 8% on a constant currency basis compared to the second quarter of prior year. We delivered double-digit growth in several markets, including Belgium, Brazil, India, and Poland, where growth rates exceeded 40% for each market. International growth was partially offset by continued declines in Japan, a trend we identified last year and expect to continue through the third quarter. We remain positive on the progress and potential of our international business for long-term growth as we continue to reset the Japanese market. Our trauma business delivered its strongest quarter to date with 67% annual and 5% sequential growth, driven by Salesforce expansion, strong uptake of our Anthem mini fragment plating system, and the second quarter launch of Anthem distal femur fracture system. We achieved double-digit growth in every product family, We're on track to launch meaningful products throughout the rest of 2022, and our recruiting pipeline is strong. Despite being faced with supply chain challenges, we've been able to offset vendor delivery delays and supply shortages without significant impact of sales. To remediate the extended vendor lead times, we've altered our ordering pattern to increase inventory levels. The electronic component market remains difficult, but has been offset so far by a nimble procurement team. In addition to these disruptions, freight surcharges continue to impact our cost of goods sold. We continue to seek to mitigate the impact of these challenges where possible. As we move into the rest of 2022, we remain focused on three core elements for long-term growth. Innovative new product introductions, robot imaging placements, and competitive rep recruiting. I am pleased with the record sales in the quarter, the highest monthly sales record in June, and the successful launches of the Excelsis 3D imaging system and Anthem distal femur fracture system. The second half of 2022 is all about focus and execution to deliver value to our customers and drive growth. I feel Globus Medical is well positioned to achieve our mission of becoming the preeminent musculoskeletal company in the world. I will now turn the call over to Keith.