Globus Medical, Inc. Class A

Welcome to Globus Medical's third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone, and you will then hear an automated message advising you that your hand is raised. Please be advised that today's conference 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, Stacey, and thank you everyone for being with us today. Joining today's call from Globus Medical will be Dan Scavilla, President and CEO, and Keith Files, 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 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 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 Dan Scavilla, our President and CEO.

Thanks, Brian, and good afternoon, everyone. We achieved a strong third quarter with growth throughout our business, delivering sales of $254 million, 11% as reported, or 13% in constant currency growth with non-GAAP EPS of $0.50, including significant non-operational headwinds for currency and tax rate that Keith will discuss later in the call. US Spine had a great quarter with 9% growth and notable gains across our product portfolio in expandables, 3D printed implants, cervical and lateral offerings, biologics and pedicle screws. The gains are driven by competitive rep conversions and robotic pull through. Our competitive recruiting is tracking ahead of prior year, and as we enter into Q4, the strong recruiting pipeline should lead to a record recruiting year, setting the stage for meaningful growth in 2023. I'm pleased with the growth acceleration delivered by the U.S. team. Enabling technology sales are $24 million, up 20% on a constant currency basis versus prior year, driven by robotic and imaging system sales. We're seeing increased interest and placements both domestically and internationally. This was our highest Q3 since launching enabling tech, surpassing last year's Q3 sales that delivered 124% growth post-COVID. Robotic procedures continue to accelerate, growing 48% versus prior year, and exceeding approximately 40,000 robotic procedures performed to date. The Excelsis 3D imaging system rollout is going well as we continue to penetrate the market and increase orders for future deliveries. Entering Q4, our pipeline is strong for both robots and imaging systems. Excelsis GPS and Excelsis 3D are two foundational pieces of the digital ecosystem we have been talking about, designed and built from the ground up to communicate between each component and surge in seamlessly in the operating room. The system provides a scalable and unmatched clinical experience for the surgeons. The successful rollout and market acceptance of Excelsis GPS and Excelsis 3D validates our direction and strategy. We're making significant progress developing other components of the ecosystem with plans to enhance our offering over the next several quarters to fulfill our goal of changing the way musculoskeletal surgery is performed. On the international front, our spinal implant business delivered a record sales in Q3, growing 25% on a constant currency basis compared to prior year. We delivered double digit growth in most markets, including the UK, Australia, Brazil, India, and Poland, where growth rates continue to exceed 40% for each market. I remain impressed with our international team's performance and the potential of our international business to contribute to our long-term growth. Our trauma business delivered another record sales quarter, growing 83% versus prior year and 20% sequentially versus Q2 2022. Trauma performance is driven by Salesforce expansion and strong uptake in all 14 product lines, delivering high double-digit growth in each product offering. In Q4, we have two meaningful launches planned to further strengthen our offerings and fuel continued growth. Our recruiting pipeline is strong entering into Q4. As I mentioned last quarter, Despite being faced with supply chain challenges, we've been able to offset vendor delivery delays and supply shortages without significant impact to 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 our nimble procurement team. In addition to these disruptions, freight surcharges continue to impact our cost of goods. We will continue to seek offsets to mitigate these challenges. Our product development engine continues to make progress focusing on procedural solutions, designing implants, instrumentation, and procedures that will function together with our Globus ecosystem for a seamless and comprehensive approach in spine, trauma, and joints. At the same time, we are expanding our solutions to cover the comprehensive continuum of care, supporting surgeons in preoperative planning, intraoperative execution, and postoperative patient care capturing outcome data that can be used to enhance future surgical planning. While this complex approach has extended development timelines beyond our historical rapid pace, I believe the upcoming launches will have greater significance in shaping procedures of the future. In addition, we've increased our investment in supply chain to boost output, streamline manufacturing, and enhance production capacity, supporting our continued growth. As we move into the final quarter of 2022, We remain focused on three core elements for long-term growth, innovative new product introductions, robot and imaging system sales, and competitive rep recruiting. I'm pleased with the Q3 results throughout the business with high single-digit growth in U.S. spine, strong performance from enabling tech, record international and trauma sales, and meaningful progress in bringing the ecosystem and procedural solutions closer to reality. Q4 is all about focus and execution to deliver value to our customers and drive growth. I know we are well positioned to achieve our mission of becoming the preeminent musculoskeletal company in the world. I will now turn the call over to Keith.