• Full Year Revenue: $2.519 billion, a 61% increase versus the prior year.
• Q4 Revenue: $657 million, a 7% increase versus prior year.
• Non-GAAP EPS (Full Year): $3.04, a 31% increase despite a 20% increase in diluted shares.
• Non-GAAP EPS (Q4): $0.84, a 40% increase versus prior year.
• Free Cash Flow (Full Year): $405 million, a 145% increase versus prior year.
• Free Cash Flow (Q4): $193 million, a 136% increase versus Q4 last year.
• Adjusted EBITDA (Full Year): 29.2%.
• Adjusted EBITDA (Q4): 30%.
• Enabling Technology Sales (Q4): $47 million, a 44% increase versus prior year.
• U.S. Revenue (Q4): $521.9 million, a 6.3% increase versus prior year.
• International Revenue (Q4): $135.4 million, a 7.7% increase as reported.
• Gross Profit (Q4): 57.2% GAAP, 67.1% adjusted.
• R&D Expenses (Full Year): $163.8 million, 6.5% of sales.
• SG&A Expenses (Full Year): $981 million, 38.9% of sales.
• Cash and Equivalents (Year-End): $956.2 million.
• 2025 Revenue Guidance: $2.66 billion to $2.69 billion.
• 2025 Non-GAAP EPS Guidance: $3.40 to $3.50.

• Warning! GuruFocus has detected 7 Warning Signs with GMED.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Globus Medical Inc (NYSE:GMED) achieved record sales in 2024 with revenue reaching $2.519 billion, marking a 61% increase compared to the previous year.
• The company reported a significant increase in non-GAAP EPS, reaching $3.04, which is a 31% rise despite a 20% increase in diluted shares.
• Free cash flow reached an all-time high of $405 million, a 145% increase from the prior year, enabling the company to return to a debt-free status by Q1 2025.
• Globus Medical Inc (NYSE:GMED) launched 18 new products in 2024, showcasing its commitment to innovation and market leadership.
• The company reported strong growth in its enabling technology sales, with a 44% increase in Q4 and a 47% growth in unit placements compared to the prior year.

Negative Points

• The company faced a temporary supply chain disruption in its trauma and NSO business, which is expected to be resolved in Q1 2025.
• There was a $0.10 headwind to non-GAAP EPS and a 0.72% unfavorable impact to adjusted EBITDA due to foreign currency loss.
• Gross profit for the full year 2024 declined to 55.6% from 64.1% in the prior year, primarily due to higher product costs and inventory step-up amortization.
• The acquisition of Nevro Corporation, while expanding market reach, is subject to shareholder and regulatory approval, introducing potential uncertainty.
• The company anticipates a modest improvement in gross margin for 2025, with significant expansion expected only in 2026 as in-sourcing efforts take shape.

Q & A Highlights

Q: Why was the acquisition of Nevro Corporation considered timely, and why was Nevro the right target for Globus Medical? A: Daniel Scavilla, President and CEO, explained that the rapid integration of NuVasive in 2024 provided the depth needed to capitalize on the opportunity with Nevro. The acquisition is seen as a well-rounded asset for Globus, not only for neuromodulation but also for potential applications in their development portfolio, making it a strategic fit for expansion.

Q: How does Globus Medical plan to benefit from a competitor's sale of their U.S. spinal implants business? A: Daniel Scavilla noted that while market activity is high, Globus focuses on long-term goals, emphasizing patient care and innovation. The company remains committed to its strategic plan and execution, regardless of market disruptions, and will capitalize on opportunities as they arise.

Q: What is the investment level for the Nevro acquisition compared to other programs, and how will it impact Globus Medical's financials? A: Daniel Scavilla stated that the Nevro acquisition will not significantly shift investment levels or impact the P&L. The company aims to maintain its investment range of 6% to 7% and sees the acquisition as a strategic addition without derailing existing financial goals.

Q: Can you elaborate on the potential benefits of Nevro's technology for Globus Medical's next-generation spinal implants? A: Daniel Scavilla mentioned that while specific details are not disclosed, the high-frequency technology from Nevro has potential applications beyond neuromodulation, including data mining and spinal implants. The focus is on long-term strategy rather than immediate product launches.

Q: How does Globus Medical plan to achieve profitability with the Nevro acquisition, and what are the expectations for SG&A expenses? A: Keith Pfeil, CFO and COO, indicated that achieving profitability will involve scaling the business and managing costs effectively. The approach taken with the NuVasive merger, focusing on sales growth and cost management, will be applied to Nevro as well.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.