Thank you for standing by, and welcome to the Globus Medical Third Quarter 2023 Earnings Call. [Operator Instructions]. 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, Leeway, and thank you, everyone, for being with us today. Joining today's call for Globus Medical will be Dan Scavilla, President and CEO; and Keith Pfeil, Chief Financial Officer. This review is being made available via webcast accessible through Investor Relations section of the Globus Medical website at www.globusmedical.com. . Before we begin, let me remind that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2022 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 on the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website. With that, I'll turn the call over to Dan Scavilla, our President and CEO.

Thanks, Brian, and good afternoon, everyone. This quarter's earnings release will have a different format than our usual approach. On September 1, after clearing the FTC second request time frame, we executed the Globus NuVasive merger. With the timing of this event, we have a full third quarter revenue and financials for Globus, combined with the month of September only for NuVasive revenue and financials. For this quarter and possibly the next, we'll share total financial results and comment on stand-alone Globus and stand-alone NuVasive to show how these businesses are performing. However, as we move into 2024 as 1 company with 1 focus, we're not planning on providing stand-alone company information. For Q3, we delivered record sales of $384 million, a day adjusted growth of 53% or $130 million versus Q3 2022, reflecting 3 months of Globus and 1 month of NuVasive sales. Non-GAAP EPS was $0.57, up $0.15, and cash flow remains strong with $29 million or 38% increase from prior year. Adjusted EBITDA for the quarter was 29%. Globus stand-alone sales for Q3 were $281 million, increasing $27 million or 12% on a day adjusted growth versus prior year, delivering an adjusted EBITDA of 32%. Sales were driven by the continued above-market growth of 8% in the U.S. versus prior year and increasing momentum internationally with 25% growth include significant gains in Japan. Enabling Technologies sales remain strong with 10% growth and over 59,000 procedures performed to date. Trauma achieved its 15th consecutive quarterly record, adding 53% annual growth or 12% sequentially. The foundation remains strong, and I'm proud of the GM team delivering solid growth and profitability as we enter into our combined future with NuVa. NuVasive stand-alone sales for the month of September were $102 million, down 2% primarily driven by 1 less selling day…

Thanks, Dan, and good afternoon, everyone. As Dan alluded to in his prior comments, our discussion today will have a different feel as compared to our earlier calls. The resulting impact of the September 1 merger completion with NuVasive is such that my discussion on our results will seek to identify the underlying legacy Globus Medical results as well as the contributions from the inclusion of NuVasive financial information. . I ask everyone to remember that our Q3 2023 results include 3 months of legacy Globus financial information and 1 month of NuVasive, reflective of the September 1 merger closing date. My comments today will seek to provide insights into our quarterly business performance, insights into our capital allocation priorities, early insights into integration and synergy tracking as well as views on overall guidance for the remainder of the year. As I move through my discussion this afternoon, I will first comment on our as-reported results, providing insights into the legacy Globus business as well as high-level comments on the contributions from NuVasive on an as-reported basis. All information is done so based on Globus accounting policies and is consistently applied in the as-reported results from legacy Globus and legacy NuVasive. We are extremely pleased with our third quarter results, both with and without the impact of NuVasive. Our sales results clearly demonstrate that we are still driving market share growth. Third quarter revenue was $383.6 million, growing 51% on an as-reported basis and 50.3% on a constant currency basis as compared to the third quarter of 2022. The day adjusted sales growth was 52.9% with 1 less selling day in Q3 '23 versus Q3 '22. Net income in the third quarter of 2023 was $997,000 reflective of merger and acquisition-related costs due to the September 1 merger completion with…

[Operator Instructions]. Your first question comes from the line of Matt Miksic of Barclays.

Can you hear me okay?

Yes. .

Great. Well, congrats on a solid start here to the new company. Maybe first, I think we'd love to hear about what kinds of things were sort of positive surprises to you as you sort of like wrapped up this quarter and head into the end of the year in terms of momentum or dissynergies or lack thereof? And then maybe what are some of the areas where you feel you need to maybe work a little harder and focus areas maybe then I have 1 follow-up.

Thanks, Matt. It's Dan. I'll start with that. Truthfully, a lot of positive things. And you're right, like anything when you come in to the size things are working, some things are not. So it's not all sunshine. It's a lot of hard work. But with the positive things, it really is going to get back down to the people and the fit. I know that everyone goes to extremes to talk about different cultures, but I'm going to go back and say the more I work with everybody. The more I see how much we have in common versus a part. I really think that's big. The rates and the depth at which I see the teams working together, whether it be U.S. commercial or international, commercial, or even all the support teams, it really is amazing. I think that they're positive more than anything. Areas of harder focus. Look, we're creating a great deal of disruption and then that creates some uncertainty and there are some folks that are looking to get answers faster. So what I'd like to do is move at a faster pace. I know we're moving quickly. But the sooner we can move and create a steady state and get back into the stronger growth that we're poised to do all the better. So for me, it's about keep moving forward, make the tough decisions and get into the steady state at a faster pace.

That's great. So follow-up on the cost side. Maybe you reminded, I know there's a number of cost avoidance opportunities for you and a combined organization distribution, there's obviously, as you talked about, is leverage opportunity of existing facilities to do ramp up in sourcing and things like that. Just remind us maybe specifically what's included and what's excluded in that $170 million target? I have lots of follow-ups, but I'll just stop there and pass it back to you guys and the rest of the group.

Sure, Matt. Great question. This is Keith talking. As we think about the $170 million, it's going to touch on a couple of things. It's going to touch on manufacturing and product in-sourcing. I might say that we have the ability to positively impact gross margin on a combined basis going forward. That's really going to be achieved by bringing products from the outside in, getting more efficient with our spending. From a distribution perspective, we believe that there's efficiencies to be gained. NuVasive has a facility in Memphis. We think that we could further leverage that facility to drive distribution for both companies moving forward. So that's included in the $170 million. And then on top of that, is redundant costs that you primarily find in SG&A and focused approaches to taking a more discerning look at cash spending. That's what's contemplated in $170 million. As we've closed this merger and are looking forward, we feel confident about $170 million. And at this point, it ties back to Dan's earlier comments that we're finalizing org design. We're really going to be rolling things out as we get into 2024.

Your next question comes from the line Shagun Singh of RBC.

Congratulations on the combined entity. I'm sorry for any background noise here. I was just wondering if you can help us with the framework for 2024, how should we think about top line growth? What are you assuming initially for maybe this synergy? Is mid-single-digit growth the right target, I think, on a combined basis, you guys called out 6.9% for '23. And then for EBITDA, should we be in the high 20s, any comments on EPS accretion. I think last time, you had indicated plus 20% at year 1. Any puts and takes on 2024 even directionally would be really helpful.

Thanks, again. We're very limited on the information we're going to provide for 2024 at this time. I would reference folks back to the S-4 document. We still feel positive that this could be EPS accretive in year 1. So we feel good about that. But as time passes and we get closer to providing initial insights into '24 in early January, we'll have more color then.

I'll just add to that, too, that with Keith and the team and the projections they put out in the S-4, we're not anticipating making any material moves off of that at this point. We certainly have 1 month under our belt in a whole quarter to go, but feel positive that we're in the right direction and have shared that earlier with our recent -- with our submissions.

Got it. And then I was just wondering if you can elaborate a little bit more on sales force integration plan, how you're thinking about territories. Obviously, that has been kind of a sticking point for for a lot of previous mergers, but we do think this is different. So maybe you can elaborate on sales force integration and how you think about that.

You've got it, and I'll take that for you. So we'll go down into 2 areas, obviously, being U.S. and international with that. And remember what we've called out and have been calling out is we felt that there is a small amount of overlap. And what we're singling is with the actual data, that's proven correct and better than we anticipated. And remember, we're not a 20-share company and a 20-share company coming together and bumping in. Both of us were in that range of, say, 7% to 9% of market share in the U.S. So it did naturally leave a lot of room for us to move around and grow without redundancy. What I would tell you is throughout the world, we really did well with the existing management team with very small changes, and our intent is and to date has been to keep all reps. Like I said, we don't see any reason why we would have to shift or change from that. Even with our distributor partners, the message is clear. We want to go forward with you and work with you on that. And to date, we've been lucky with that. Unlike other acquisitions of the past, where we have less redundancy and the chance therefore, to grow and focus faster.

Your next question comes from the line of Vik Chopra of Wells Fargo.

Congrats on the deal flows. So two for me. I guess on the first one, maybe on the guidance, you provided the top line guidance, which you increased as a result of NuVasive, but you get EPS the same at $2.30. Maybe just talk about why the EPS guide is not being raised for deal close? And then I just have 1 follow-up, please.

Yes, sure. Thanks, Vic. This is Keith. Really, the primary driver of that is you have to remember the share count is increasing. So we had, give or take, 102 million shares coming into -- or coming out of the second quarter. That grew to about 115 million here in Q3, and that will grow to about 140 million in Q4. So your share count is really growing there, and that's really the driver of keeping up to 2.30.

Okay. Great. And then I was just wondering on the hiring trends, maybe talk about what the hiring trends were like in Q3 heading into Q4? And how you see your recruiting and retention efforts shaking out given the deal close?

Thanks, Vik. No, no problem. So admittedly, we obviously went a bit slower in the third quarter, even though we are getting a lot of activity with competitive reps, but just making sure that we fleshed out where our territories would be and what we're doing. We're on the tail end of that now, which is good news for us as we move forward. . And so we're going back as we enter into the fourth quarter, ramping up competitive recruiting, been very active with it. And like I said, now that we really know and define the seats, we're able to see where some of those opportunities are. And I think, like I said, it was an okay third quarter intentionally a bit slower, we'll accelerate in the fourth quarter now that we've got the road map in place.

And your next question comes from the line of Steve Lichtman from Obenheimer.

I appreciate the color on the surgeon overlap. Can you give us a sense of what the overlap is by account, which I assume would be higher than that?

Steve, probably not right off the top of my head. What I would tell you is it's not materially different where you would get into because keep in mind, if you've got a surgeon, which is what you're right, we were talking about and it's there. This is okay. We'll keep the reps in both of those places. We're capable of doing that if we can support the sales. So we're not parsing this out by account, we still keep a surgeon focus where that is. So I would certainly agree with you that, that would get up higher, but it's not going to get into the teens of an overlap or anything material that way when it really looks at it. Again, but we're more focused on the surgeon side of this than it is by a hospital or location.

Okay. Got it. And Keith, again, thanks for the color on the layout of the cost synergies. What is going to be a cash outlay to achieve those synergies? And will that be about the same percentages in terms of the timing of those costs?

That's a great question. Our assumption is that the cost to achieve the synergy will be $0.50 on the dollar. And I would lay that out over the trajectory of the 3 years equally as I stated in my prepared statements.

Your next question comes from the line of Matthew O'Brien of Piper Sandler. Matthew O’Brien: Starters on the enabling tech side of things, how are those early conversations going with placing a robot with Nuva. Like I appreciate the uncertainty to some weakness in sales on the Pulse side of things as well, but any color on that would be helpful.

Sure, I'll take that. So let's start with the Globus enabling tech. Like I said, we've actually been working with our former NuVasive counterparts to train them on the systems, get them familiar with what we offer, understand where these things are going and create that familiarity as we start getting out to the surgeons. We've not been pushing hard on surgeons. We have done several, but the real goal is to make sure that we have 1 team that can support this and do it in a way that's nondisruptive. So that's been representing a and it will accelerate into the fourth quarter as we get ready for next year that way. The Pulse system itself, I think there is a natural hesitancy of customers who thought we were going to pull it and get rid of it. We've been communicating that our intent is to support it not only as is and in the field, but actually enhance it and finish up some of the in-progress ways to expand its capabilities. And we'll make sure that we take that forward in a way that they can perform the functions they want with their systems. Matthew O’Brien: That's helpful. And just as a quick follow-up. Any color on upcoming pieces of the enabling tech ecosystem. How big of a deal is it to combine the legacy offering with neuromonitoring, the Nuva neuromonitoring down the road? Any idea in terms of Excelsius software updates for areas of target? And then any update to the extended reality headset?

Sure. So well, you kind of hit a lot of those things. So one of the first things coming out is going to be our naphub and the instrumentation for that so that we've got the robotic navigation through GPS and now we'll come out and do the freehand navigation with our hub that we plan to put out. A key part of that can be, as you said, the augmented reality headset. The anticipation is an approval, obviously, in 2024. I'm hesitant to give you a date, but I would tell you in midyear, possibly into third quarter is what I'm looking at, depending on what we get or push back from FDA. So we're waiting for that through the thing. As far as one of your questions, which have I understood it correctly, we are evaluating the benefits of Pulse and neuromonitoring and seeing where it would make sense, if at all to build that capabilities into our existing enabling tech and then, in fact, blend them together. So that progress is occurring right now. We'll decide probably within next month or 2 what we think the future of that will be.

Your next question comes from the line of David Saxon of Needham.

Maybe I'll have a follow-up question on the integration of the sales force. I guess, how long does that take? I think you said you're doing territories in November, cross-selling in December. So what are the next steps after that? And then which, I guess, major milestones or steps in that process do you think carries the most risk?

It's a great question. So we're doing it in 2 phases. The U.S., we're just finishing up territory. So we've gone from the senior leadership into the field leadership to the territory level, and we're just communicating that out and getting them together. We're doing cross training in the fourth quarter for products and the availability for them as they form teams to obviously support each other, so that they would be active in doing that beginning in January. We're looking to do something similar internationally. We're probably say about a month behind with that, where we have the leadership defined, we're finishing up territories probably in November, start to cross training as well in December. And I think that will probably take us into January with a little more solidity internationally in the February time frame. Rate-limiting steps, I think, are just going to be the availability of the people to get together and train without disrupting surgeon support. We're going to make sure that, that's first and foremost. I would think one of the key milestones for us is the combination of our systems that will support the field and the replenishment and the ordering. We're working on that at a rapid pace as well. And I would think that there are the 2 items that are probably first and foremost on us to make sure we get right.

Okay. Super helpful. And then just on the knee robot, I feel like I ask about it every once in a while. So just what's the update there, especially around timing? Is that an early '24 launch? And then also, how are you from about the implant portfolio and the strategy with that on the back of the new robot launch?

You're welcome. I'll answer that one as well. The new robots really progressed far. I think we're in the process of fine-tuning what we want to do for filings. I would tell you the first half of 2024 is the target. Again, remember, we're at the FDA's disposal with that. But I would be surprised, honestly, if we didn't exit the first half of the year with that. With that, comes obviously the cementless knee, which I think will be the major player there and that is well progressing on a good pace with it. I think 2024 will start talking obviously more about the joints in total. While I don't know if given our current size with the merger, it will be a material lift. It will be nice to actually get out the door with us, start talking about it and then see it contribute in the years after that.

Your next question comes from the line of Nora Whatman of Stifel.

I appreciate you taking my questions. And I appreciate it's really early, but just curious if you're seeing any, call it, green shoots as we think about cross-selling and potential revenue synergies, for instance, any uptick in surgeon engagement or training from the NuVasive side? Just anything worth calling out? And I've got 1 quick follow-up.

I would say that that's probably a great question. And the answer is yes. So what you're seeing is there's some great products that come together, whether it be the pedicle screw system with a different retractor are expandables with the lateral, different items like that. So as we've talked about, when we begin coming out with 1 combined portfolio, the surgeons are excited about that. They see the ability to do that. Obviously, we need surgeons to help us cross train our reps and to help spread those around. So you're right, we're looking to increase surgeon engagement through different paths like that. We're also being mindful as to what products are in development for the NUVA team and the GM team and looking to make sure that they come out as a complementary approach and not conflicting -- and again, working with surgeons and those development teams to do that as well.

Okay. I appreciate that. And then a specific question, do you need 510(k) approvals to get the NuVasive implants on the robot? Or any help on how to think about potential time lines for when that might be available?

All right. Well, listen, I would tell you that we're in the process of designing instrumentation. The implants are there. We're putting the software in place. I think we have to evaluate what that would warrant, what we're obviously going to do what's required. Some may and some may not depending on the extent of where we're going with that. So we're in the evaluation of it. Your real question, what I'm going to answer is we're actively modifying software and making sure that there's instrumentation that allow our systems to use the NuVasive products, and that is first and foremost with the Enabling Tech, doing it in a compliant way that makes sense is what we'll do as the next step. .

And your next question comes from the line of Jason Wittes of ROTH.

I'm just curious on sales force to synergies, things like that. I know there's been quite a few questions on this for obvious reasons. But when do you guys think you have a handle on sort of where things fall? Is that after you've kind of just made our final decisions on management territories? Or is it 6 months out after that? Or is it kind of something lingers for 2 years?

Yes. Jason, it's a good question. Look, like anything, you've got to tease out natural moves and attrition with maybe something that is a bit more because of the disruption created. Things will always be ongoing, but I wouldn't say that because of the coming together of the merger that we would be experiencing this 2 years from now. We've already defined the U.S. sales force in particular, and that's where most of you guys have your focus on all the way down and just finishing up rep levels. And so I think as we untease that and make sure that people understand where they sit and how beneficial this is to them. I would think that as we get through the third quarter and the fourth quarter through this call and into it, that we should see things settle down more. And then as we get into a stabilizing of this in the first quarter, that's where I'm going now. I think folks will decide and move as always. But I don't think there's a big holding the breadth and all of a sudden, this will happen. I don't anticipate that at this point.

Okay. That's very helpful. And maybe just a very quick follow-up. I don't know what this has been asked in the past, but I assume for the knee products, it's going to be completely focused on robotics. There's not going to be manual tools to put them in as well. I just want to clarify that for the new launch.

Yes, there's definitely the ability to do it, freehand, do it robotically, do it through navigated procedures. We're going to give all of the options needed, so the surgeon's choice to do that, not just a pure robotic move for our implants.

[Operator Instructions]. Your next question comes from the line of Richard Newitter of Truist Securities.

This is Sam on for Rich. Can you hear me okay? .

Yes.

Yes.

Just I know we're not talking about 2024, but I just wanted to see if we could put a finer point on the EPS side of things. Pretty wide range of consensus right now, looks like about a $0.40 range in 2024 for EPS. I mean is the midpoint of, call it, like $2.60 to $3 directionally a good place to start? And could you just walk us through the puts and takes to bridge sort of the consensus to a net range maybe?

Yes, Sam, I'm not going to give a point of guidance here as it relates to 2024. What I will tell you is we're excited about where the business is going. There's lots of products coming. Dan talked about the number of product launches that we had this year. Next year, there's a lot of capital coming out, cross-selling is going to take effect. Obviously, that's going to be offset by some sales synergies, but that, to me, points positive and really ties back to the earlier comment that I made that for now, I would focus on our S-4 estimate for revenue. As it relates to cost synergies and achieving synergies, a couple of things that are going to happen. Obviously, you're going to be looking to eliminate redundant costs. But one of the things that I talked about was manufacturing and manufacturing efficiencies and supply chain efficiencies. You have to remember that some of those costs will get captured on the balance sheet and roll through the P&L in future periods. The thing you pay attention to is the cash and the cash flow generation of the business as we move forward. That's about all I would say right now as it relates to 2024. If I think about consensus and consensus estimates, I know there is a wide range out there. I also recall that not all of the models were updated for '24. So that's how I'd leave it.

Got it. And then I guess on the synergy side, I think one of the areas a little bit less focused on is potential for Trauma or overlap and potential cross-selling there. Could you just sort of tell us how you think about those portfolios getting integrated and where that growth rate can go going forward?

Thanks, Sam. I'll take that. So there's a couple of things. Really, the NSO specialty orthopedics part, is a fantastic add to our bag. That now will allow us to do many things for long bones, its ability with ankle fusion will be amazing with hindfoot. And so that in itself, we see bringing in and bringing to our existing Trauma team that will further accelerate growth and create pathways into accounts. The majority, if not all, of the NuVasive activity is really done through third parties. And so we're evaluating those distributorships and understanding where they are and making the determination if we want to do anything with our Globus Trauma business that way or not. But really, the goal here and what was a great add was those nails from NuVasive coming into our bag and actually pulling us forward several years in our innovation and ability to address the market.

And your next question comes from the line of Drew Ranieri of Morgan Stanley.

Sorry about the background noise here. But could you speak to maybe some of the enabling technology trends that you saw in the quarter? And just as we do think about the merger looking at you've had a history of really kind of placing systems via capital versus lease. So you have a significant cross-selling opportunity ahead of you with the NuVasive accounts. So expect a dramatic change in the mix of capital versus leasing looking ahead? And then I have a follow-up.

This is Keith. I'll take the question. So as I think about Enabling Tech, the market is still -- the market still has a lot of appetite for Enabling Tech. I will say that I think capital dollars are perhaps a little bit tighter. So there are more options available to customers in terms of how they acquire the capital. . You commented on leasing. I want to remind everyone that, yes, the majority of our capital purchases are outright sales, net 30 terms. But we have the ability to offer other ways to acquire the capital including rental programs, leases, you name it. So as the market shifts, we have the ability to respond to the market. We're taking into consideration the point of, obviously, all these NuVasive territories opening up to ourselves to sell the capital. Dan commented earlier that from a manufacturing perspective, we've been building that capital take have it ready because we want to be able to strike as we really roll out the cross-selling plan. But to answer your question, we will be able to address the market to sell the capital in any way that the customer needs to acquire it.

And Keith, maybe also for you, with breaking out kind of 3 segments now for revenue. Can you just give us a little better sense of maybe how you expect growth to play out in the fourth quarter now that you are breaking out this revenue a little bit of a different way?

The revenue is broken out. So historically, we reported on musculoskeletal and Enabling Technologies. That obviously remains. We added the neuromonitoring services. As I think about Q4, you would expect to see the same seasonality in capital, as you always do Q2 and Q4 are the 2 highest quarters. We don't expect that to change. And obviously, you would expect to see the seasonal bump that you would experience in spine as we get towards the end of the year and the harvest season.

Yes. Drew, one thing I would add to from my earlier comment, we are breaking that out more for visibility right now. We may decide that it fits better and consolidate that over time. But right now, we're just kind of following through what our Nuva guys did as we got into the year for our first time announcing some of this.

Got it. Maybe one last question. But as you are looking at the the businesses today that you're now combined, do you see any incremental opportunities to divest anything noncore or slower growth just to refine the portfolio and really get to more accretive growth out of the merger?

Yes. I would say no, not at this time. We're evaluating everything. We've not seen anything that would be a good candidate at this point. We'll always do what's best, but right now, there's nothing that comes to mind.

And your next question comes from the line of Ryan Zimmerman of BTIG.

Glad I could get squeezed in here. Just on the quarter itself, if I look at kind of newest revenue, we look at kind of next quarter, I think -- the Street was estimated around $445 million or so for consensus for Nuva, we're kind of hone in on maybe $415 million. And just wondering if you can kind of comment on that delta. Is that in line with kind of where you're tracking from a synergy standpoint, kind of how to think about that difference there? And then I'll ask another question afterwards.

Thanks, Ryan. This is Keith. Your question, you said the Street was modeling 4 15 for NuVasive.

No, I think -- well, if you take the 100 and you assume that, coupled with, I think, next quarter, which was maybe about $300-or-so million, you kind of come out to 4 15. And I think the is around 4 45 for the -- if my numbers are correct.

Yes. I think that it's a great question. As I think about the numbers we put out, the implied guidance represents $2.377 billion coming into the year, Globus projected guidance of $1.1 billion in NuVasive. They were a range of 6% to 8%. If I take the low end of the range in our number, that's $2.374 billion. We're projecting $2.377 billion on a combined basis. We think that, that relative to what we've previously stated in our S-4, we feel that the business is lined up as to where it should be.

Yes. And Ryan, 1 thing I'd add in there because I'm not sure if I'm reading this between the lines, so forgive me. But we're not saying we're bleeding out because of dissynergies. We've not seen anything that would have materially moved us off of any of our estimates related to that.

Yes. I appreciate, Dan and recognizing right now, consensus is kind of messy but with the integration on the merger. Just want to ask. And then the second question I want to ask is just around your margins, particularly your gross margins, Keith. I recognize there's the step-up in inventory that you're accounting for. Just maybe help us because I'm not entirely clear where your gross margins can go on a combined basis and how to think about those not just for the fourth quarter, but really into 2024?

Longer term. Yes. No, that's a great question. It's always our intent to be extremely clear be in mid-70s gross profit business. That is the goal of Globus it has been and it will be going forward. As we work through bringing the businesses together, I commented on earlier about some of the manufacturing efficiencies that we see, some of the warehousing efficiencies that we see. Those to me will all contribute to us showing an increasing consolidated gross profit from where we are versus the initial combination of the business. It's our belief that we can still drive mid-70s GP going forward. Obviously, there's going to be some step change as we get there as we bring the companies together. But the goal of mid-70s hasn't changed.

Yes. And Ryan, I'll build on that, too. So we talk a lot about insourcing and investing in manufacturing, in addition to what Keith said, because that will be a key driver. We can drive our product cost down. That will allow us to not only improve gross margin, but instead to turn around and invest deeper into the sales force. So is a major focus of us to do in-house manufacturing, line up with our contracts and come out with the best pricing with our vendors. And that in itself will help lift us back to our targets that Keith mentioned.

And your next question comes from the line of Matt Taylor of Jefferies.

I wanted to ask a similar question in a slightly different way. I guess I'll start with some of your competitors have made noise about taking reps from the combined entity, big for them, kind of small for you. And everything I heard on this call from you today in terms of lower surgeon overlap and being within your target and seeing competitive activity coming your way, sounds positive for the integration. So question is really, is that right? Are you on track? And is there any thought or potential for you to actually outperform the synergy or the synergy estimates that you put out there? Or is it right to think about being straight down the fairway or the base case is most likely?

Yes. Matt, we're early on on that. So I'm going to let you know in about 3 years. No. But I think what we'll do right now is, we've not seen surprises. And I think we're standing behind our numbers is what we're saying. And again, there's 1 month of actual and everything you've said is legitimate. What we've got to do is focus on getting the commercial team stabilized, make sure we train, get our products delivered, accelerate how we have common systems, bring in-house manufacturing for more flexibility, and they go back and flex all of that strength to become who we need to be. But at this point, we're going to shy away from saying we can outperform or fall short. We're going to stick to the synergies that we've thrown out. We've got a pathway to go get there as more data and experience under our belt, maybe that's a different conversation.

And the only comment that I would add there is, obviously, change creates disruption in the market. But as I think about Globus Globus needs to be Globus and focus on our plan. We obviously need to be aware of the competitive landscape, but we have to stick to our plan and work our plan. And if we do that, we believe we'll be successful.

And with no further questions, that concludes the Globus Medical earnings call. Thank you for participating, and you may now disconnect. Have a great day.