Globus Medical, Inc. Class A

Welcome to Globus Medical's first quarter 2026 earnings call. At this time, all lines will be on mute, and a Q&A session will be held after the prepared remarks. 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, Kathy, 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 gap measures are available in 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 Keith Feil, our president and CEO.

Thanks, Brian. Good afternoon, everyone, and thank you for joining us on today's call. Our first quarter results demonstrate our ongoing focus as we continue to scale and capture share while maintaining operational discipline driving margin expansion, favorably impacting Q1, and our full year results looking ahead. Overall, we are moving with purpose and in the right direction. As we progress through 2026, look for market share taking top line growth, coupled with exciting product launches, while increasing gross margins and driving meaningful earnings expansion. Stepping back for a minute, I want to give a little perspective and highlight what we've accomplished by looking at our trailing 12-month performance and the activity that's occurred since the close of fiscal 2022. Since then, revenue has more than tripled. We've generated six times the amount of free cash flow, all while closing two significant deals, extinguishing almost $1 billion in debt, while deploying over $600 million to repurchase over 10 million shares at an average price of under $60 a share. That represented greater than 25% of the dilution that was created from the NuVasive merger. We sit here today debt-free, generating significant free cash and have launched over 30 new products during this timeframe. Simply stated, we've leaned in and meaningfully scaled our business while maintaining the DNA of Globus of innovation, execution, and financial prudence. I'm thrilled with our results in Q1 and look forward to what 2026 and beyond has in store for our business. Turning attention to our top level performance, Q1 revenue totaled $759.9 million growing 27% as reported and 25.5% on a constant currency basis. Fully diluted non-GAAP earnings per share was $1.12, growing 64.7% over the prior year quarter. Our Q1 base business revenue totaled $677.2 million, growing 13.2% as reported versus the prior year quarter, led by continued strength in U.S. spine, while also seeing improved performance across enabling tech and international spine. Digging further into US Spine, this business continues to show strength and resilience, as it grew 10% in Q1 versus the prior quarter, marking the third consecutive quarter of 10% growth. Our US Spine sales team remains resolute and focused, operating against a backdrop of driving achievement against key objectives. We've seen this momentum continue and are now sitting at 58 weeks of consecutive growth. Cross-selling, competitive recruiting, and robotics pull-through are key to this strategy, as we continue to capture volume and drive meaningful share growth across the category. Consistent with prior quarters, our growth remains broad as we continue to see double digit growth across many categories, including standard fixation and MIS pedicle screws, expandable T-lift, A-lift, posterior cervical, as well as cervical plating. Categories such as power tools and products such as Durapro continue to capture new share and drive incremental cross-selling opportunities as we seek to gain a greater share of each spine procedure. Competitive recruiting remains a strategic priority and the spine leadership team is aligned from the top down to aggressively perform against this objective. The process of doing so remains a competitive moat for Globus and our execution around rep onboarding with sets and inventories continues to differentiate us as our supply chain meets the needs of the field by providing high return capital investments, which is a testament to our philosophy of having the right products at the right price and being on time. Robotics pull-through remains a key driver, and as we demonstrate greater flexibility in how customers acquire capital, we seek to more aggressively drive the recurring revenue, whether through implants, disposables, service, or case coverage. Strategically, we are slightly altering our approach to capturing more accounts and expand upon surgeon and rep training, thus driving success at accounts with Enabling Technologies. Our first quarter saw Enabling Technologies post-revenue of $26.9 million, growing 21% over the prior year quarter. We saw a sequential step down in Q1, consistent with history. However, we maintained momentum in closing deals while also seeing greater penetration of international markets. Our pipeline of deals remains robust, However, the mix of pipeline deals is shifting with a greater focus on leases and rentals compared to the historical mix of outright sales, which historically resulted in higher upfront revenue recognition. This aligns with my earlier comments and the strategy of refocusing our capital approach to drive implant and other recurrent revenue product pull-through, all of which has been implied in our revenue guidance for 2026. Despite new and enhanced robotic competitors in our space, Excelsius GPS remains the standard for ease and simplicity with our floor-mounted, navigation-based robotic approach. The ground-up design with its native platform gives surgeons the access and control they need to facilitate a spine procedure while seamlessly navigating through our workflow. To date, we've seen almost 130,000 robotic procedures and will continue to penetrate the market to launch new, successful programs that foster utilization. No other competitive systems including recently introduced products, have enabled to replicate the reliability, ease, or accurate workflow attributes of our robot. Our international supply business grew 16.4% as reported, and 9.8% on a constant currency basis, as we did not repeat the supply chain disruptions which occurred in the first quarter of the prior year. Strength was seen mainly in the EMEA and LATAM regions, and our growth was broad-based, including both direct and distributor businesses across our international markets. On the product front, I'm pleased to announce that early in our second quarter, we received two FDA 510 clearances for both our patient-specific script spacer system, comprising of seven patient-specific lumbar interbody systems, as well as patient-specific script rods. Both the script spacers and rods are designed by surgeons using the script studio design and surgical planning software application. Script lumbar spacers are static, static integrated, and expandable thoracolumbar inner body fusion devices additively manufactured with patient-matched end plate topography for maximum stability. The patient-specific script spacers may be placed using Excelsius GPS instruments for navigation with Excelsius GPS, Excelsius Hub, and Excelsius XR. Script patient-specific rods are precision bent to the surgeon's pedicle screw placement plan and designed to reduce time spent on intraoperative rod bending. Rods are compatible with our Creo, Reline, and Revere pedicle screw systems for both open and MIS procedures. Scripps Studio screw plans can be uploaded to our Excelsis GPS and Excelsis Hub systems for robotically navigated screw placement intraoperatively. Our platform keeps the physician at the center of the planning process with an intuitive interface, allowing the surgeon to efficiently fine tune disc height restoration, spinal alignment, and pedicle screw placement translating their precise clinical intent directly into the implant design. Our software is treated as an advanced tool rather than a replacement for clinical judgment, ensuring the implant perfectly executes to the surgeon's operative strategy. Our expandable offering incorporates our proven technology, allowing surgeons to insert the implant at a lower height, designed to minimize nerve retraction and reduce the impaction forces required to implant the spacers. Once in the disc space, the spacer can be expanded to restore optimal disc height. Finally, our patient-matched spacers and rods are bundled with our high-quality implants and best-in-class disc prep and retractor systems while integrating with our Excelsior suite, thus ensuring final placement matches the digital pre-op plan to ensure proper navigated placement. With our script approvals, we will be the only company positioned to offer a complete portfolio of patient-specific lumbar interbody spacers and rods integrate it with our enabling technology truly establishing us as the one-stop shop for lumbar patient specific implants the team is working tirelessly to finalize the launch plan to bring these new exciting products to market shortly we remain excited for the future as the team embarks on an enhanced focus of development and investment to bring new products to market in 2026 and beyond i sit here today truly excited for what we have in store for 2026. our trauma business posted a 30.4% increase over the prior year quarter with growth coming from both our core trauma line through share taking as well as our precise limb lengthening portfolio. Our Anthem Elbow Plating System continues to be a standout product exceeding our expectations as surgeons have responded to this product based on the anatomic fit of this plating system. Consistent with comments last quarter, demand on this product has continued to surpass initial expectations such that we will be delivering additional sets to the field in the second quarter. Growth in Precise was driven by our ability to now fully satisfy the market after we transitioned manufacturing from the former Nuvasa facilities to Globus in early 2025. Manufacturing output has now surpassed the historical output at the former facility, such that we are now able to fully supply the market. Our commercial focus will remain on Level 1 and Level 2 trauma centers as we seek to drive share growth with a smart approach to investment that balances inventory and set availability in a manner that drives high ROI. We will remain diligent in sticking to this plan as we move ahead. First quarter NEVRO revenue finished at $82.7 million as we've adopted the Globus approach to driving profitable sales growth. Although the strategy rollout led to sales declines, we had expected lumpiness to occur with this business as we worked through bringing it under the Globus umbrella in its first 24 months. The team is actively recruiting new sales personnel and mapping new product introduction plans while transitioning to our revised selling model. We are and will remain active on the recruiting front as we move through 2026 and expect to return to a more historical run rate revenue late in the second half of the year as new associates are fully trained to enter the market. We are focused on enhanced trading protocols moving forward and we'll stress this for all new and existing Nevro sales associates given the substantial clinical data pointing to our high frequency technology offering a clinically superior solution for patients suffering from chronic pain. We are committed to this business and bringing technologies to market while ensuring the business is positioned in a manner that will drive profitable sales growth over the long term as we seek to grow the existing business through improved go-to-market strategies and new product development while devising products to expand the use of Nevro's patent portfolio outside of the direct markets in which they operate today. Longer term, this continuum of care is complementary to our overall product portfolio and will help drive our strategy moving forward. Operationally, we continue to execute on manufacturing and supply chain initiatives across our business to drive gradual and meaningful improvements to core product profitability. We reiterate our commitment to achieving a mid-70s adjusted gross margin profile over the long term, leading to expanded levels of profitability, helping drive overall returns above our cost of capital. As we move further into 2026, our key areas of focus will remain on driving organic sales growth while continuing to internally invest and launch new products. Our modes 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. Our approach to product development will remain focused on a ground-up mindset that is procedure enabling, integrating imaging, navigation, robotics, surgical intelligence, and implants in a more thoughtful way to improve 10-year surgical outcomes to 95% or better. Surgical intelligence will focus on bringing together patient selection, surgical techniques, and complementary implants with technology to drive the proceduralization while creating a closed-loop intelligent ecosystem to help surgeons continuously drive outcomes higher. Thank you to all of our Globus team members from all around the world. Your teamwork Dedication and focus are how we continually work to solve unmet clinical needs. I will now turn the call over to Kyle.