AUDUBON, Pa., Aug. 01, 2018 (GLOBE NEWSWIRE) -- Globus Medical, Inc. (NYSE:GMED), a leading musculoskeletal solutions company, today announced its financial results for the second quarter ended June 30, 2018.

-- Worldwide sales were $173.4 million, an increase of 13.8% as reported -- Second quarter net income was $45.0 million, an increase of 56.9% -- Diluted earnings per share (EPS) and non-GAAP EPS were $0.44 -- Non-GAAP EPS increased 38.0% compared to second quarter of 2017 -- Non-GAAP adjusted EBITDA was 34.3% of sales

"The second quarter marks the third consecutive quarter of double-digit organic growth for Globus Medical, as our U.S. Spine business continues to take market share, growing by 4.2%; our international revenue increased by 7.2%; and Emerging Technologies contributed $13.8 million," said Dave Demski, CEO. "We are very pleased with the strong sales of our ExcelsiusGPS™ robotic system, and more importantly, the level of adoption we are seeing by surgeons in accounts that have purchased the technology. The synergy of this transformational technology, combined with the most innovative suite of spinal implants in the industry, is expected to provide a powerful platform for our future growth."

Worldwide sales for the second quarter were $173.4 million, an increase of 13.8% over the second quarter of 2017. Non-GAAP diluted EPS was $0.44, an increase of 38.0%. Revenue from Emerging Technologies was primarily due to continued demand for our ExcelsiusGPS™ robotics and navigation system.

Second quarter sales in the U.S., including robotics, increased by 15.1% compared to the second quarter of 2017. International sales increased by 7.2% over the second quarter of 2017 on an as-reported basis and 4.3% on a constant currency basis.

Second quarter GAAP net income was $45.0 million, an increase of 56.9% over the same period last year. Diluted EPS for the second quarter was $0.44, as compared to $0.29 for the second quarter 2017. Non-GAAP diluted EPS for the second quarter was $0.44, compared to $0.32 in the second quarter of 2017.

The company generated net cash provided by operating activities of $33.3 million and non-GAAP free cash flow of $18.5 million in the second quarter, and ended the quarter with cash, cash equivalents and marketable securities of $516.8 million. The company remains debt free.

2018 Annual GuidanceThe company today issued new guidance for full year 2018 sales of $700 million and non-GAAP fully diluted earnings per share of $1.55. 2018 guidance was previously sales of $695 million and non-GAAP fully diluted earnings per share of $1.52.

Executive AppointmentThe company also announced the promotion of Dan Scavilla to the position of Executive Vice President, Chief Commercial Officer. In his new role, Mr. Scavilla will be responsible for all contracting and pricing; supply chain and logistics; and manufacturing operations; as well as continued oversight of all finance-related functions. Mr. Scavilla will continue in the role of Chief Financial Officer until the company completes its search for a new CFO.

Conference Call InformationGlobus Medical will hold a teleconference to discuss its 2018 second quarter results with the investment community at 4:30 p.m. Eastern Time today. Globus invites all interested parties to join the call by dialing:

1-855-533-7141 United States Participants1-720-545-0060 International ParticipantsThere is no pass code for the teleconference.

For interested parties who do not wish to ask questions, the teleconference will be webcast live and may be accessed through a link on the Globus Medical website at investors.globusmedical.com.

The call will be archived until Wednesday, August 8, 2018. The audio archive can be accessed by calling 1-855-859-2056 in the U.S. or 1-404-537-3406 from outside the U.S. The passcode for the audio replay is 1012-6350.

About Globus Medical, Inc.Based in Audubon, Pennsylvania, Globus Medical, Inc. was founded in 2003 by an experienced team of professionals with a shared vision to create products that enable surgeons to promote healing in patients with musculoskeletal disorders. Additional information can be accessed at www.globusmedical.com.

Non-GAAP Financial Measures

To supplement our financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), management uses certain non-GAAP financial measures. For example, non-GAAP adjusted EBITDA, which represents net income before interest income, net and other non-operating expenses, provision for income taxes, depreciation and amortization, stock-based compensation, provisions for litigation, technology in-licensing fee, and acquisition related costs, and net gain from the sale of assets, is useful as an additional measure of operating performance, and particularly as a measure of comparative operating performance from period to period, as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our capital structure, asset base, income taxes and interest income and expense. Our management also uses non-GAAP adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. Provision for litigation represents costs incurred for litigation settlements or unfavorable verdicts when the loss is known or considered probable and the amount can be reasonably estimated, or in the case of a favorable settlement, when income is realized. Acquisition related costs/licensing represents the change in fair value of business acquisition related contingent consideration; costs related to integrating recently acquired businesses including but not limited to costs to exit or convert contractual obligations, severance, and information system conversion; and specific costs related to the consummation of the acquisition process such as banker fees, legal fees, and other acquisition related professional fees, as well as one time licensing fees. Net gain from sale of assets represents the gain on sale of assets and the offsetting impact of costs incurred through the sale.

In addition, for the period ended June 30, 2018 and for other comparative periods, we are presenting non-GAAP net income and non-GAAP diluted earnings per share, which represents net income and diluted earnings per share excluding the provision for litigation, amortization of intangibles, acquisition related costs/licensing, net gain from the sale of assets and the tax effects of such adjustments. We believe these non-GAAP measures are also useful indicators of our operating performance, and particularly as additional measures of comparative operating performance from period to period as they remove the effects of litigation, amortization of intangibles, acquisition related costs/licensing, net gain from the sale of assets and the tax effects of such adjustments, which we believe are not reflective of underlying business trends. Additionally, for the periods ended June 30, 2018 and for other comparative periods, we also define the non-GAAP measure of free cash flow as the net cash provided by operating activities, adjusted for the impact of restricted cash, less the cash impact of purchases of property and equipment. We believe that this financial measure provides meaningful information for evaluating our overall financial performance for comparative periods as it facilitates an assessment of funds available to satisfy current and future obligations and fund acquisitions. Furthermore, the non-GAAP measure of constant currency sales growth is calculated by translating current year sales at the same average exchange rates in effect during the applicable prior year period. We believe constant currency sales growth provides insight to the comparative increase or decrease in period sales, in dollar and percentage terms, excluding the effects of fluctuations in foreign currency exchange rates.

Non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, free cash flow and constant currency sales growth are not calculated in conformity with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP. These measures do not include certain expenses that may be necessary to evaluate our liquidity or operating results. Our definitions of non-GAAP adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, free cash flow and constant currency sales growth may differ from that of other companies and therefore may not be comparable. Additionally, we have recast prior periods for non-GAAP net income and non-GAAP diluted earnings per share.

Safe Harbor Statements

All statements included in this press release other than statements of historical fact are forward-looking statements and may be identified by their use of words such as “believe,” “may,” “might,” “could,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and other similar terms. These forward-looking statements are based on our current assumptions, expectations and estimates of future events and trends. Forward-looking statements are only predictions and are subject to many risks, uncertainties and other factors that may affect our businesses and operations and could cause actual results to differ materially from those predicted. These risks and uncertainties include, but are not limited to, factors affecting our quarterly results, our ability to manage our growth, our ability to sustain our profitability, demand for our products, our ability to compete successfully (including without limitation our ability to convince surgeons to use our products and our ability to attract and retain sales and other personnel), our ability to rapidly develop and introduce new products, our ability to develop and execute on successful business strategies, our ability to successfully integrate the international operations acquired from Alphatec, both in general and on our anticipated timeline, our ability to transition Alphatec’s international customers to Globus products, our ability to realize the expected benefits to our results from the Alphatec acquisition, our ability to comply with laws and regulations that are or may become applicable to our businesses, our ability to safeguard our intellectual property, our success in defending legal proceedings brought against us, trends in the medical device industry, general economic conditions, and other risks. For a discussion of these and other risks, uncertainties and other factors that could affect our results, you should refer to the disclosure contained in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, including the sections labeled “Risk Factors” and “Cautionary Note Concerning Forward-Looking Statements,” and in our Forms 10-Q, Forms 8-K and other filings with the Securities and Exchange Commission. These documents are available at www.sec.gov. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements contained in this press release speak only as of the date of this press release. We undertake no obligation to update any forward-looking statements as a result of new information, events or circumstances or other factors arising or coming to our attention after the date hereof.

GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Six Months Ended (In thousands, except per share amounts) June 30, June 30, June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ---------- ---------- Sales $ 173,384 $ 152,390 $ 347,795 $ 308,199 Cost of goods sold 37,637 37,199 75,607 72,799 --------- --------- --------- --------- Gross profit 135,747 115,191 272,188 235,400 --------- --------- --------- --------- Operating expenses: Research and development 13,523 10,713 26,210 21,379 Selling, general and administrative 77,125 64,438 152,819 131,497 Provision for litigation — 243 — 243 Amortization of intangibles 2,178 1,809 4,365 3,591 Acquisition related costs 782 617 1,021 1,005 --------- --------- --------- --------- Total operating expenses 93,608 77,820 184,415 157,715 --------- --------- --------- --------- Operating income 42,139 37,371 87,773 77,685 Other income/(expense), net 8,165 2,186 10,609 4,286 --------- --------- --------- --------- Income before income taxes 50,304 39,557 98,382 81,971 Income tax provision 5,327 10,890 13,866 24,590 --------- --------- --------- --------- Net income $ 44,977 $ 28,667 $ 84,516 $ 57,381 - ------- - ------- - ------- - ------- Earnings per share: Basic $ 0.46 $ 0.30 $ 0.87 $ 0.60 - ------- - ------- - ------- - ------- Diluted $ 0.44 $ 0.29 $ 0.84 $ 0.59 - ------- - ------- - ------- - ------- Weighted average shares outstanding: Basic 97,830 96,161 97,337 96,079 --------- --------- --------- --------- Diluted 101,510 97,818 101,005 97,483 --------- --------- --------- ---------

GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) June 30, December 31, 2018 2017 ------------- ------------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 119,944 $ 118,817 Short-term marketable securities 240,976 254,890 Accounts receivable, net of allowances of $3,924 and $3,963, 118,561 116,676 respectively Inventories 114,758 108,409 Prepaid expenses and other current assets 16,943 11,166 Current portion of note receivable 3,333 1,667 Income taxes receivable 18,709 8,717 Total current assets 633,224 620,342 ----------- - ----------- - Property and equipment, net of accumulated depreciation of $204,760 154,342 143,167 and $191,760, respectively Long-term marketable securities 155,859 56,133 Note receivable 26,667 28,333 Intangible assets, net 74,973 78,659 Goodwill 123,750 123,890 Other assets 7,202 7,947 Deferred income taxes 17,816 20,031 ----------- - Total assets $ 1,193,833 $ 1,078,502 - --------- - - --------- - LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 20,727 $ 25,039 Accrued expenses 47,978 52,594 Income taxes payable 2,979 3,274 Business acquisition liabilities 6,507 11,411 Deferred revenue 2,089 755 Total current liabilities 80,280 93,073 ----------- - ----------- - Business acquisition liabilities, net of current portion 3,815 4,508 Deferred income taxes 9,991 10,669 Other liabilities 2,561 2,474 ----------- - ----------- - Total liabilities 96,647 110,724 ----------- - ----------- - Commitments and contingencies Equity: Common stock; $0.001 par value. Authorized 785,000 shares; issued and outstanding 98,248 and 96,658 shares at June 30, 2018 and 98 97 December 31, 2017, respectively Additional paid-in capital 283,132 238,341 Accumulated other comprehensive loss (6,807 ) (6,907 ) Retained earnings 820,763 736,247 ----------- - ----------- - Total equity 1,097,186 967,778 Total liabilities and equity $ 1,193,833 $ 1,078,502 - --------- - - --------- -

GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended (In thousands) June 30, June 30, 2018 2017 ----------- ---------- Cash flows from operating activities: Net income $ 84,516 $ 57,381 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,233 22,935 Amortization of premium on marketable securities 1,477 1,855 Write-down for excess and obsolete inventories 5,406 4,962 Stock-based compensation expense 11,533 7,062 Allowance for doubtful accounts 312 958 Change in fair value of business acquisition liabilities 416 811 Change in deferred income taxes 1,429 (4,238 ) (Gain)/loss on disposal of assets, net (3,947 ) — (Increase)/decrease in: Accounts receivable (2,257 ) (3,172 ) Inventories (11,120 ) (4,652 ) Prepaid expenses and other assets (3,303 ) 8,506 Increase/(decrease) in: Accounts payable (5,751 ) (1,660 ) Accrued expenses and other liabilities (2,104 ) (4,497 ) Income taxes payable/receivable (10,276 ) (6,825 ) --------- - -------- - Net cash provided by operating activities 85,564 79,426 --------- - -------- - Cash flows from investing activities: Purchases of marketable securities (309,223 ) (138,286 ) Maturities of marketable securities 158,102 103,398 Sales of marketable securities 63,741 32,688 Purchases of property and equipment (27,167 ) (25,061 ) Proceeds from sale of assets 3,000 — Acquisition of businesses, net of cash acquired — (31,501 ) --------- - -------- - Net cash used in investing activities (111,547 ) (58,762 ) --------- - -------- - Cash flows from financing activities: Payment of business acquisition liabilities (5,950 ) (5,234 ) Proceeds from exercise of stock options 33,131 5,911 Net cash (used in)/provided by financing activities 27,181 677 --------- - -------- - Effect of foreign exchange rate on cash (71 ) 450 --------- - -------- - Net increase in cash, cash equivalents, and restricted cash 1,127 21,791 Cash, cash equivalents, and restricted cash, beginning of period 118,817 67,431 --------- - -------- - Cash, cash equivalents, and restricted cash, end of period $ 119,944 $ 89,222 - ------- - - ------ - Supplemental disclosures of cash flow information: Interest paid — 21 Income taxes paid $ 22,667 $ 35,475

Supplemental Financial Information Sales by Geographic Area: (Unaudited) Three Months Ended Six Months Ended (In thousands) June 30, June 30, June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ---------- ---------- United States $ 145,381 $ 126,271 $ 290,997 $ 255,934 International 28,003 26,119 56,798 52,265 --------- --------- --------- --------- Total sales $ 173,384 $ 152,390 $ 347,795 $ 308,199 - ------- - ------- - ------- - -------

Sales by Revenue Stream: (Unaudited) Three Months Ended Six Months Ended (In thousands) June 30, June 30, June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ---------- ---------- Spine products $ 159,569 $ 152,390 $ 321,197 $ 308,199 Emerging Technology products 13,815 — 26,598 — --------- --------- --------- --------- Total sales $ 173,384 $ 152,390 $ 347,795 $ 308,199 - ------- - ------- - ------- - -------

Liquidity and Capital Resources: (Unaudited) June 30, December 31, 2018 2017 ---------- ------------ (In thousands) Cash and cash equivalents $ 119,944 $ 118,817 Short-term marketable securities 240,976 254,890 Long-term marketable securities 155,859 56,133 --------- --------- -- Total cash, cash equivalents and marketable securities $ 516,779 $ 429,840 - ------- - ------- --

The following tables reconcile GAAP to Non-GAAP financial measures.

Non-GAAP Adjusted EBITDA Reconciliation Table: (Unaudited) Three Months Ended Six Months Ended (In thousands, except percentages) June 30, June 30, June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ----------- ----------- Net income $ 44,977 $ 28,667 $ 84,516 $ 57,381 Interest income, net (2,971 ) (1,590 ) (5,262 ) (3,008 ) Provision for income taxes 5,327 10,890 13,866 24,590 Depreciation and amortization 9,757 10,695 19,233 22,935 -------- - -------- - --------- - --------- - EBITDA 57,090 48,662 112,353 101,898 Stock-based compensation expense 5,480 3,571 11,533 7,062 Provision for litigation — 243 — 243 Acquisition related costs 1,285 968 1,677 2,054 Net gain from sale of assets (4,357 ) — (4,357 ) — Adjusted EBITDA $ 59,498 $ 53,444 $ 121,206 $ 111,257 - ------ - - ------ - - ------- - - ------- - Net income as a percentage of sales 25.9 % 18.8 % 24.3 % 18.6 % Adjusted EBITDA as a percentage of sales 34.3 % 35.1 % 34.8 % 36.1 %

Non-GAAP Net Income Reconciliation Table: (Unaudited) Three Months Ended Six Months Ended (In thousands) June 30, June 30, June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ---------- ---------- Net income $ 44,977 $ 28,667 $ 84,516 $ 57,381 Provision for litigation — 243 — 243 Amortization of intangibles 2,178 1,809 4,365 3,591 Acquisition related costs 1,285 968 1,677 2,054 Net gain from sale of assets (4,357 ) — (4,357 ) — Tax effect of adjusting items 95 (840 ) (238 ) (1,766 ) -------- - -------- - -------- - -------- - Non-GAAP net income $ 44,178 $ 30,847 $ 85,963 $ 61,503 - ------ - - ------ - - ------ - - ------ -

Non-GAAP Diluted Earnings Per Share Reconciliation Table: (Unaudited) Three Months Ended Six Months Ended (Per share amounts) June 30, June 30, June 30, June 30, 2018 2017 2018 2017 -------- -------- -------- -------- Diluted earnings per share, as reported $ 0.44 $ 0.29 $ 0.84 $ 0.59 Provision for litigation — — — — Amortization of intangibles 0.02 0.02 0.04 0.04 Acquisition related costs 0.01 0.01 0.02 0.02 Net gain from sale of assets (0.04 ) — (0.04 ) — Tax effect of adjusting items — (0.01 ) — (0.02 ) Non-GAAP diluted earnings per share $ 0.44 $ 0.32 $ 0.85 $ 0.63 - ---- - - ---- - - ---- - - ---- - * amounts might not add due to rounding

Non-GAAP Free Cash Flow Reconciliation Table: (Unaudited) Three Months Ended Six Months Ended (In thousands) June 30, June 30, June 30, June 30, 2018 2017 2018 2017 ---------- ---------- ---------- ---------- Net cash provided by operating activities $ 33,269 $ 25,976 $ 85,564 $ 79,425 Adjustment for impact of restricted cash — 1 — 1 Purchases of property and equipment (14,793 ) (13,528 ) (27,167 ) (25,061 ) -------- - -------- - -------- - -------- - Non-GAAP free cash flow $ 18,476 $ 12,449 $ 58,397 $ 54,365 - ------ - - ------ - - ------ - - ------ -

Non-GAAP Sales on a Constant Currency Basis Comparative Table: (Unaudited) Three Months Ended Constan Reporte Currency t June 30, June 30, d Impact on Currenc (In thousands, except percentages) 2018 2017 Growth Current Period y Growth ---------- ---------- ------ -------------- ------ United States $ 145,381 $ 126,271 15.1 % — 15.1 % International 28,003 26,119 7.2 % $ 771 4.3 % --------- --------- - --- -------- Total sales $ 173,384 $ 152,390 13.8 % $ 771 13.3 % - ------- - ------- - --- --------

(Unaudited) Six Months Ended Constan Reporte Currency t June 30, June 30, d Impact on Currenc (In thousands, except percentages) 2018 2017 Growth Current Period y Growth ---------- ---------- ------ -------------- ------ United States $ 290,997 $ 255,934 13.7 % — 13.7 % International 56,798 52,265 8.7 % $ 2,497 3.9 % --------- --------- - ----- ------ Total sales $ 347,795 $ 308,199 12.8 % $ 2,497 12.0 % - ------- - ------- - ----- ------

Contact:Brian KearnsVice President, Business Development and Investor RelationsPhone: (610) 930-1800Email: investors@globusmedical.comwww.globusmedical.com