Globus Medical, Inc. Class A

Welcome to Globus Medical's fourth quarter and full year 2025 earnings call. At this time, all lines will be on mute, and a question and answer session will be held after the prepared remarks. I will now turn the call over to Brian Kern, Senior Vice President of Business Development and Investor Relations. Mr. Kern, please go ahead.

Thank you, Dana, and thank you, everyone, for being with us today. Joining today's call from Globus Medical will be Keith Feil, President and CEO, and Kyle Klein, 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 2025 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 Keith Feil, our president and CEO.

Thanks, Brian, and good afternoon, everyone. Momentum's team coming out of our second quarter continued and accelerated as we've progressed through 2025, resulting in a record Q4 performance. Our team delivered, showing great poise and determination during a period of growth and change. I'm proud of our team and I'm thrilled to be here today discussing these results as well as provide insights into the future. Focusing first on our top level financial performance for the full year 2025, Globus delivered $2.939 billion of revenue and $3.98 of fully diluted non-GAAP earnings per share, growing 16.7% and 30.8% as reported respectively. Full year 2025 base business revenue excluding the contributions from Nevro, grew 5% as reported, with Nevro adding $293.6 million in revenue for the full year. Shifting into Q4, revenue totaled $826.4 million, growing 25.7% versus the prior year quarter, while non-GAAP EPS finished at $1.28, growing 52.1% versus Q4 2024. Digging into this further, our base business revenue of $726.7 million was grew 10.6% versus the prior year quarter and included double-digit U.S. fine growth, as well as record-enabling technologies revenue for the quarter. This performance serves to underscore my opening comments on the growing momentum in our business. Looking at the second half of 2025 versus the second half of 2024, our consolidated base business grew organically at 8.8%. This, coupled with continued back-end execution, helps propel us to our sixth consecutive quarter of adjusted gross margin rate expansion, as well as returning the base business to a mid-30s adjusted EBITDA, finishing at 35.7% in Q425 and 33.4% for the full year. When we announced an evasive merger, we emphasized its compelling financial profile for shareholders and specifically cited our focus on delivering mid- to high-single-digit sales growth, as well as a mid-30s adjusted EBITDA profile by the end of the third year. Our Q4 and full-year 2025 results demonstrates our performance against those objectives. Our U.S. fine business grew 10% in Q4 as compared to the prior year quarter, coming off a third quarter where U.S. fine also grew 10% versus a prior year third quarter. We've seen this trend continue and now sit at 48 weeks of consecutive growth with this momentum continuing thus far into our first quarter of 2026. We remain encouraged by this early look into the new year. Top to bottom, our Spine business is executing. Commercially, we are meeting the needs of our customers while remaining aggressive on the recruiting front. Operationally, we've leaned into inventory and set production to feed this growth and instilling confidence in the sales force while ensuring we can meet the needs of our customers and the patients they serve. Looking across our US Spine product portfolio, Growth was seen in the quarter across substantially all of our product categories, demonstrating the broad nature of this momentum. However, I do want to highlight the continued success for our expandable T-lift products, including products such as Sable, Rise, Altera, TLX, Modulus, and Caliber. Our MIS pedicle screws, including Creo MIS, Reline MAS, Creo 1, Reline O, and Revolve, and our line of power tools, including Durapro. Surgeons continue to provide positive feedback on Durapro, specifically highlighting the ability to cut and remove bone around the neural elements, allowing them to feel more confident in the safety for their patients. Features such as proprietary brushes are helping to facilitate the removal of degenerative discs in a safer, more controlled fashion compared to the traditional methods, and allowing them to perform these removals in less time. Overall, our investment in sets and inventory around these key products has fostered their continued growth and positions us well to use these products to springboard additional growth in 2026. We launched a total of six products in spine during 2026, with four of those launches occurring in Q4, which are Creo Traction, Reline 3D Towers, AMS Freehand Instruments, and Hedron C MIS. Creo Traction is a reduction instrument system used with Creo screws in deformity correction, Reline 3D towers are part of the Reline 3D pedicle screw system and are used for deformity and MIS fixation cases and enable MIS rod placement. AMS Freehand is a software and instrumentation systems to use all of our AMS spacer portfolio with the eGPS and eHub systems. This completes the core NUVA products to be used with our eGPS, eHub, and e3D ecosystem. Hedron C-MIS is a 3D-printed cervical fusion spacer designed to stabilize cervical vertebra and promote bone growth and fusion, which uses a biomimetic lattice designed to promote bone growth onto and through the implant. Spine product development remains a focal point moving forward as we step up our investment to bring new and exciting products to market, aligning with our reputation of leading with innovation. Q4 enabling technology sales were $55.6 million, growing 18.5% versus the prior year quarter, driven by increased sales of eGPS systems. We saw pipeline deals close during the quarter, which had been part of the elongation that we had experienced during the year. Examining further, the deal composition of capital sales during the quarter were primarily cash deals with immediate revenue recognition. Consistent with my comments last quarter, we remain nimble in how capital deals are structured and are quoting new pipeline deals with greater flexibility. We are positioned well and remain positive on this business as we enter 2026. The Excelsis platform, which delivers a single vendor spine ecosystem across capital, implants, and software, provides for consistent workflow, data continuity, and training across the OR. When stepping back and looking at the broadening competitive INR landscape, Globus continues to stand alone when it comes to effortlessly pairing imaging, navigation, and robotics together. Recent competitive offerings cleared only served to reinforce the workflow of Excelsis GPS, which was introduced in 2017 as a floor-mounted, navigation-based robotic approach. If a surgeon desires robotic navigation and imaging, they can pair an AGPS with an E3D, bringing together best-in-class robotic functionality and state-of-the-art intra-op imaging capabilities, working seamlessly together. If the surgeon desires free hand navigation, they can combine the Excelsis Hub and the XR augmented reality headset with the E3D imaging system. The features and benefits of these products working seamlessly together is second to none. In a continually evolving market, Excelsis GPS remains one of a kind. As a reminder, Excelsis GPS is one mobile unit with all of its technologies contained within a native, unified platform. In addition to spine, the eGPS robot has cranial applications and other orthopedic indications utilizing IP-protected advanced navigation features essential for safety, including surveillance markers, deflection and offset meters, as well as a tracked end effector. eGPS remains standalone in that it is a surgeon-controlled system via our Drapes touchscreen monitor, which is in the surgical field. All of this pairs with our industry-leading and continually refreshed implant portfolio. Pairing the features of the Excelsior suite of technologies along with pricing and deal flexibility, our team is unbridled to aggressively go after market share and drive adoption. A key focal point in 2026 is to penetrate and launch new programs and foster utilization and service excellence across the install base. To date, we've seen over 120,000 procedures and will continue to drive adoption as we move forward. Enabling technologies have and will remain a vital part of our ecosystem as we view it as the execution layer helping to achieve improved surgical outcomes. We will continue to innovate with focus, speed, and execution, leveraging our resources to efficiently deliver solutions to address unmet clinical needs. Our trauma business delivered approximately 27% growth in Q4 versus the prior year quarter, driven by continued uptake of our legacy trauma line as well as our precise limb lengthening products. Looking back on 2025, Our strategy of focusing on level one and level two trauma centers has shown results, coupled with meaningful product launches, including our Anthem Elbow Plating System, which was launched in the third quarter of 2025. This product has exceeded our expectations thus far in both revenue and sheer demand. While this helps to further fill our bag, increasing our ability to bid on primary or preferred vendor contracts, it is also a perfect example of Globus driving innovation in an established category. We will capitalize on this demand and continue to launch new products as we enter into 2026. The Nevro business delivered $99.7 million of revenue during the quarter and adjusted EBITDA of 21.2%. Looking ahead, we remain positive on this business as we finalize its integration to ultimately drive profitable sales growth. This path to growth may not be linear in the short term, but our expectations are high over the long term. We will focus on developing new SCS products, provide mechanical solutions, cross-sell with legacy Globus products, while researching other types of neuromodulation devices. This, coupled with a renewed focus on competitive recruiting, are steps that will be taken over the medium to long term. Overall, we are thrilled to have this technology in our portfolio as it provides us with the ability to enter a market adjacency while expanding our continuum of care. As I reflect on Globus, I looked at 2025 and its past as well as what I see ahead. What started as a small company focused on spine gradually morphed into a broader musculoskeletal company and now is leaning with deliberate intensity into a broadening technology platform with a leading spinal implant portfolio and adjacent orthopedic implant solutions. We're moving past the M&A digestion of the past several years and see a path to meaningful and expanded product development investment continued above-market sales growth, and sustainable operating leverage. Our adjacency expansion with the Nebro acquisition gives us a proof point into pain while continuing to drive differentiation in our legacy businesses. Our moats of innovation, vertical integration, a high-touch sales force, a scalable platform, and financial discipline allow us to move fast to address our long-term goals of improving outcomes and solving unmet clinical needs. We sit here today with the ability to focus and invest where we see fit, to expand our core spine business while growing others, and see ourselves as a procedure-enabling medtech platform that integrates imaging, navigation, robotics, and implants in a more thoughtful way to foster continuous learning and continuous improvement for ourselves as well as our surgeons. How do we get there, you ask? It's bringing together patient selection, surgical techniques, and complementary implants with technology to drive the proceduralization while creating a closed-loop system. Simply stated, it's an exciting time to be at Globus. We want to bring meaningful improvements to patient care and win in the marketplace, and we have the team to do it. Thank you to all the Globus team members for a successful 2025 and for our prospects looking into the new year. I will now turn the call over to Kyle for his prepared remarks.