Welcome to the Globus Medical’s First Quarter 2025 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, Brianna, and thank you everyone for being with us today. Joining today’s call from Globus Medical will be Dan Scavilla, President and CEO, and Keith Pfeil, Chief Operating Officer and Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical website at 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 2024 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’ll now turn the call over to Dan Scavilla, our President and CEO.

Thanks, Brian, and good afternoon, everyone. Globus had a flat quarter in Q1, finishing slightly down in sales with negative 0.8% growth versus prior year on a constant currency basis. Drivers were softer enabling tech sales against difficult comp, temporary integration related supply chain disruption and timing of international distributor orders, partially offset by continued strengthening momentum of The U.S Spine business. Revenue for the quarter was $598 million non-GAAP EPS was $0.68 increasing 9% versus prior year against higher diluted shares and a $0.06 one time 2024 EPS gain not repeated in 2025. Free cash flow was $141 million increasing $117 million or 493% versus prior year. We returned to debt free status in Q1, paying off the remainder of the nearly $900 million debt inherited from the NuVasive merger and generating enough cash to pay for the Q2 Nevro acquisition while investing in the ongoing business without interruption. In addition, we launched two new products in Q1 that will aid in driving market penetration. Since the NuVasive deal closed in September of 2023, we’ve cumulatively added over $1 billion in incremental sales, generated $650 million in free cash flow and executed over $500 million of share repurchases, reducing deal dilution more than 20%. While Q1 sales were flat, we’re already seeing stronger results in Q2 throughout the business as we remediate supply chain disruptions, fill open distributor orders and close robot deals. We will continue to focus on the long game, investing in sustained profitable growth and using our financial strength and discipline to accelerate the top line results, while continuing to deliver strong EPS and free cash flow. Moving into the performance of our business areas, U. S. Spine grew 2% in Q1 with gains across our product portfolio expandables, MIS screws, lateral and ACDF platforms. The…

Thanks, Dan, and good afternoon, everyone. Reflecting on Q1, our quarter delivered a mixed set of results. While revenue was down slightly to the prior year quarter, we saw a meaningful expansion in profitability and cash flow. We continue to make disciplined progress across our strategic and operational pillars, which will fuel our long term growth. This afternoon, my comments will focus on Q1 performance, operational updates and impacts, discuss the Nevro acquisition, highlight tariffs and potential impacts, and comment on insights as to our performance for the remainder of 2025. We view many of the Q1 impacts as short term and are encouraged by the good start we’ve seen across our business in Q2. Now, let’s turn our discussion to the first quarter. First quarter revenue was $598.1 million declining 1.4% as reported and down 0.8% on a constant currency basis over the prior year quarter. As Dan mentioned earlier, the main driver was softer enabling technology sales as well as temporary integration related supply chain disruption and the timing of international distributor orders, which were partially offset by growth in U. S. Spine. Our Q1 GAAP net income was $75.5 million translating into fully diluted GAAP earnings of $0.54 per share growing $0.59 versus the prior year quarter due mainly to lower merger related costs. Q1 non-GAAP net income was $94.8 million resulting in $0.68 of fully diluted earnings per share or an 8.5% as reported improvement versus the prior year quarter. In the prior year quarter, I highlighted a onetime $0.06 favorable noncash adjustment related to the useful lives of assets acquired from the NuVasive merger. Excluding this one-time favorable adjustment in the prior year quarter, operationally, our Q1 2025 non-GAAP EPS improved $0.11 or 19.5% percent versus Q1 2024. The earnings improvement is driven by synergy…

[Operator Instructions]. Our first question comes from Matt Miksic of Barclays

So, it goes without saying, think this isn’t the quarter anyone was expecting. Maybe if you could talk a little bit about your confidence here coming into April. I think you mentioned operating on or above your metrics, but how much of what happened in Q1 maybe spilled into Q2? What amount of what happened in Q1 do you think could recover somewhat in Q2 in rapid fashion? What’s going take a little more heavy lifting? And then I have one follow-up, if I could.

Yeah. So Matt, I’ll go first. At the end of the day, there’s a couple of things. As we transition facilities into new ones and validate them, whereas we continue to scale up our in house manufacturing, right? There are some things that took longer than planned that created some back orders. Think that coupled with timing of distributor orders, again, heavy in Q4, light in Q1, probably coming back. And then ultimately, the real thing here is the elongated selling process that we experienced in Q1 with all of the market uncertainty that really is the impact there. What I think is without getting deep into Q2, we’ve seen positive effects in our U. S. Spine business that really is solid. We are remedying and supplying the products from the back orders. I see that as a temporary issue that will recover in second quarter. And that will have an impact throughout international and trauma as well as U. S. And we are seeing deals occur at a decent pace within the robot. So it’s going well in all of those aspects. So if you ask me, I have confidence that this feels like a blip and we’re moving back to who we need to be. And look, we own a bad quarter. We’re going to go fix it and drive it forward and come out with the right results here.

Okay. That’s helpful color. And then maybe on the synergies side for Nevro, maybe talk a little bit about now that the deal is closed, any additional color or confidence you can express about the pace and the areas of opportunity for driving efficiencies or aligning the organization in a way that gets to you at or above your dilution expectations for this year? Thanks.

Hey, Matt, this is Keith. Thanks for the question. It’s a great question as you think about bringing Nevro online. The place we’re really going to focus on coming out of the gate is really operational expenses. If you walk down the P&L Nevro’s gross margins in the high 60s, We think that over time we can work to expand that. But I would say in the near term, near and medium term, the key focus is going to be figuring out their operational expenses and working to reduce those. Because as we look at the P&L, the SG&A expenses candidly are too high for that business to operate profitably long term. So those are the things that we’re going to focus on right out of the gate.

Our next question comes from Vik Chopra of Wells Fargo

Thanks for taking the questions. Two for me. You know, appreciate your comments on the elongated selling cycle for robots, but I’m just curious if you’ve seen any impact from recently launched spine robots via larger competitors. And whether, you know, people are asking for more alternative forms of financing or an increase in your rental program? And then a quick follow-up, please.

This is Keith. Thanks, Rick, for the question. In terms of the elongated selling cycle, I haven’t seen situations where other competitors are slowing down the process. In terms of looking at the mix of how we’re selling robots, rentals, leases, I would say still our mix this quarter is still heavily focused on outright sales. But options of what we’re quoting, I would say are increasing, whether it be third party financing or rentals. But I would say that, that may have slowed some things down. It really contributes to some of the elongated selling cycles. But I don’t see competitor robots thus far as driving a delay in us closing deals.

Okay. Thank you. That’s super helpful. And my follow-up question is, I know you don’t guide to EBITDA margins, but just maybe directionally help us think about EBITDA margins in 2025 as you fold in the Nevro deal? Thank you.

Yes, we don’t guide the EBITDA margins, but as I think about kind of where we’re going, I would say that our goal is to achieve the 30s, but adding on Nevro and the timing of bringing it on earlier will have a slight impact. So I would say that we should be in the high 20s this year.

Our next question comes from Matthew O'Brien of Piper Sandler.

Hey, this is Phil on for Matt. Thanks for taking our questions. Understood that there are a lot of moving parts between some of these headwinds, enabling tech purchases, supply chain, but wanted to hear maybe more specifically how your rep count has been holding up. Maybe just confirm that you aren’t seeing any uptick Nuva sales rep leaving at this point? And thanks for the color on the pipeline looking good, but just any further color on that. Thank you.

Yes, Philip, I’ll answer that. We’re not seeing any unusual or high volume departures occur from any of our sales reps regardless of where they used to work. We’re actually seeing them dig in and do well. The U. S. Is really a strength outside of the back orders and they’re doing well. The momentum is increasing there. And so not only are the teams staying together, but they have sequentially over four to five months significantly move the average daily sales up. And so they’re digging in doing well. They’re staying together as a team. We’ve not seen any interruption that would cause concern. And certainly there are no rep departures that would have impacted our results in the first quarter.

That’s helpful. And then shifting gears on the positive, one to focus on the cash flow that you consistently deliver. Thinking past the Nevro deal, what are your expectations for cash use? Might we see more M&A or maybe some more share repurchases, that sort of thing? Thank you.

That’s a great question. So as I think about cap structure moving forward, obviously, we want to continue to generate strong cash flow. We still view ourselves as a growth company. So the first priority is going to be internal investment. We’ve done several deals here over the last couple of years. M&A is still part of our cap structure. As I think about that moving forward, I would say that anything we do in the near term would be more of a tuck in nature. And then thirdly, share repurchases, they have been part of cap structure. We see them continuing as part of our cap structure, but it’s not the primary driver.

And I would just add, if we were to experience any overreactions in a market, we would take advantage of that and probably go back and buy stock opportunistically, apply towards future acquisitions. We know the strength of this business long term and so we’re going stay focused on delivering that.

Our next question comes from Richard Newitter of Truist Securities.

Thanks for taking the questions. I think I know the answer and I think it’s yes. But can you just confirm that all of Nevro is in the guidance dilution and revenue? And if it is, what’s the what’s your organic growth guidance?

So Rich, this is Keith. I will tell you that yes, it is included in business. We haven’t broken out the parts and pieces of it, though as we move forward when we report, we are going to show base business Globus versus prior year versus acquisitions.

Okay. So I’m just okay, got it. So can you maybe just tell us then because we had all been thinking of you standalone and we built for those that covered that covered never we had never a forecast or you could use the consensus, but are the components of your organic guide dramatically different on a standalone?

No, the components of our organic guide are not materially different on a standalone basis.

Okay. And then maybe just for my follow-up, on the capital outlook, it sounds like you’ve seen something get better in April, maybe even into early May. Just trying to get an understanding of what the elongating selling cycle looks like. And if that’s occurring, what gives you the confidence that that narrows again in short order? I guess, it sounds like you expect somewhat of a snapback or through some sort of uncertainty period on some level. What could you give us a sense as to kind of reconcile that dynamic with your comments that things are getting better?

Yes, Rich, and I want to make sure we clarify. We’re happy with the progress in Q2 and we’re seeing deals close. I don’t know if an elongation will snap back. You have market uncertainty, whether it be with tariffs or other things along the line with capital market disruption and different things that are going around. So at the end of the day, our job is to make sure we’ve got a potential portfolio and we actively work with them when we close that. And if that winds up shifting a month or two over the long term, that’s fine. We’ll neutralize and go. The market is really not penetrated and the potential is great. And as I rattled off, more and more of our former Nuva products are now available on a robot. So we’re positioned to really go back to the initial reason of that acquisition, which is double our TAM, and place our robots with our customers and provide them those products. All of that remains on course and that’s okay if it takes a month or two. We’re playing this game for the next five to ten years with each one of them, not for the quarter.

Our next question comes from Matthew Blackman of Stifel.

Thanks for taking my question. I have a couple. And my first one is, I think, along the similar lines as Rich’s and maybe come out of it in a different way. But wanted to just push a little bit on that reaffirmed top line guide and the assumptions backing it. This was a pretty substantial miss in the first quarter. And with the reaffirm guide, again, much of what Rich was asking, does that mean you expect to claw back this lost 1Q business throughout the year? Or again, I just want make sure, did you change something in how you were layering in contribution or even dissynergies from Nevro or NuVasive? And then one follow-up.

So I would say that there’s not a material change in the guide. Dan made a comment that when we talked about the biologics impact that that was contemplated in our guide going into the year. I would also call out that the neuromonitoring impact was also contemplated in our guide coming into the year. I talked about a $20 million impact on musculoskeletal. It’s fair to say that roughly $7 million to $10 million of that is the two things that I mentioned earlier the wound care as well as the neuromonitoring. When you look at Q1 and the thing that we remain positive and optimistic about is calling back the enabling tech sales and seeing an uptick in our spine business as we move forward. We commented on the impacts of supply chain issues. We see those as behind us. And as we move forward, we see people ordering again. We don’t view that as a loss sale. We see us getting that back as we move forward.

Okay. Appreciate that. And obviously, there are a lot of moving parts, I don’t know that you do this traditionally. But could you maybe give us a little bit of help, at least on the second quarter in terms of the cadence here with the downstep or the step down here in the first quarter, but then layering in Nevro, just any sort of sense of where we should be landing on the top or the bottom line relative to where consensus may be today or just some sort of help might be would be appreciated. Thank you.

No, I appreciate the question. So we don’t get down to that kind of granularity or even on the quarters. If there’s an after hour call and you have a few questions, we’ll be glad to entertain that. But we’re not in a position to break out the quarters or get into granularity within the sub businesses.

Our next question comes from Shagun Singh of RBC.

I guess, I just wanted to take a step back and just hoping you can address one of the questions I’ve been receiving from investors that is Nevro the right acquisition just given that the NuVasive acquisition integration is still ongoing and it could open you up to potential execution misses and we’ve seen a little bit of a choppy quarter in Q1. So can you maybe talk to us about Nevro, why it makes sense? And then NuVasive, where exactly are you in that integration? And how confident are you that all this is behind us and we won’t hit a snag down the road in 2025? Thank you.

Thanks, Shagun. I’ll try and address some of that. You can help me if I missed a few of the points you put out. But let’s start with your investors and let’s keep it fact based. Nevro wasn’t part of anything that we did in the first quarter. And so that question is more of a head scratcher there. Well, timing is never great with some of the acquisitions. It was an opportunistic buy that I did go through in my prepared script. So for $250 million we enter into the neuromod business and we’re able to get a clinically superior solution out there that we feel we can scale up to expand our continuum of care and really help treat patients. In addition, the patent portfolio strength is where we want to get to with future things we’re working on and their technology is applicable through multiple areas of our business that I laid out. So this is a buy that has great long term potential. We focus on the long term. And while we have people working on it there, they are separate from anyone else doing robotics and anyone else doing U. S. Spine. They’re not interfering with it. And there’s nothing related to supply chain manufacturing from Nevro that would come into our robots or our spine. So they’re very different that way. If you want, you can pick some of your other parts of the question, but I think that’s the major message out to the investors.

This is Keith. Just to add on, you had a follow-up in there that talked about how do you know that these things are behind you for what you experienced in the first quarter. When I think about Q1, ’2 big things that jump out to me are the soft enabling tech sales and really some of the insourcing supply chain disruptions that we saw. I commented that coming out of the quarter, production is coming online and we’re back to shipping. We’ve insourced a good bit of product, primarily on the NuVasive side. I view that as really as a one-time change bringing it in. I feel confident as we move forward that we have the worst of those issues behind us. Machinery is coming online. We have product flowing both from our manufacturing facilities as well as our third party facilities and we’re getting product in the hands of our sales reps. The enabling tech, I really fall back on the earlier comments. We see the lumpiness. We had lumpiness like this, I think, three years ago coming into Q1. In that time, we said that the pipeline wasn’t developing. The situation here is a little bit different. We have a robust pipeline. We’re just seeing a bit of an elongated selling cycle.

Got it. And just, I guess, a quick follow-up and sorry, I was I got disconnected earlier. But any update on the FDA warning letter? And then should we expect you to continue to focus on M&A like you had Thank you for taking the question.

We don’t really have anything as far as the FDA warning letter. We made a lot of progress with that. We’re really waiting for them to come back and inspect the facility and move this. We’re actually excited for them to come back and inspect this facility and remove this. We’re more than ready. We’re more than ready thirty days after that. So it’s not a concern of ours. It’s not an impact of ours. We just want to go get this cleaned up and put it behind us. And as it relates to your question on M&A, I would say that given we’re finalizing NuVasive and working to bring that in along with Nevro, I would say that we probably slowed down a little bit in the near term on M&A and focus on finalizing the integration activities before stepping forward.

Our next question comes from Caitlin Cronin of Canaccord Genuity.

Thanks for taking the questions. So, with the U.S. performance of 2%, what did you see in terms of the market growth and just anything from an overall procedural health and market perspective to point out?

Yes, Caitlin, I don’t really have a lot of good data for the market growth answer for you. So don’t be a guess on my side. Having talked to surgeons, one of the things that they had told us is they saw some slowdown occurring. They also felt like some of the approvals were taking longer from insurance companies as they’re going through it. But that was more conversational. I don’t really have a lot of data to say, I think it’s X. I think there were some things going on that may have impacted it. I think ours is more about just creating the cadence and feeding the product and clearing out back orders and launching new products and going. So to me, I think it’s just something we push through and get back on track to who we need to be.

Got it. And then just on the enabling tech funding, Reline now approved was has Modulus been approved for Excelsius and how much of an uptick are you already starting to see with kind of the cross selling with Nuva surgeons?

Yes, it’s a great question. So Modulus is not yet approved, but it’s in the works. We’ll get it there. You’re right with Reline, we’re seeing it and we are placing robots into Nuva accounts. We’re seeing that continue. So as thought with our plan, we’re doing that. Of course, we’d like it faster in going through. But all of instrumentation is done on Reliance. You said, all of the products are there, Modulus next, and then we’ll look to really make sure that we have everyone trained. We’ve been working on that and we’ll continue down the path, which is already to me a decent impact into Nuva accounts.

Our next question comes from David Saxon of Needham & Company.

Thanks for taking my questions. So I had a couple here this afternoon, one on Nevro and then one on ExcelsiusFlex. So on Nevro, just can you talk about kind of the pace of the integration you’re trying to kind of meet there and key milestones we should be aware of? And when in a previous answer, you talked about their SG&A being too high. So I guess the real question is like how quickly can you get that down to where you want it to be and where do you want it to be?

This is Keith. I’ll take that. So in terms of Nevro, I mean, OpEx, like I said, is going to be a key area of focus. We are in the early stages of integration focused and working on that. I’m not going to give a point number as to kind of what I say the future state is. The key takeaway is when you look at OpEx, it’s not sustainable for that level of sales. So it’s really unpacking where is the spending at. And we’ve identified those areas of third party spending we’ve got to control, those areas of internal spending we have to control. We’re going to aggressively go after that as we move through 2025. The key is to make sure that the business is driving profitable sales.

Okay, great. And then on eFlex, I guess, level of interest in the system, number of placements, how’s that order book building today? And what are you seeing in terms of StelKast implant pull through? Thanks so much.

Yes. So we’re still building out the book of capital placement and it’s actually going well. It’s getting heavier, meaning it’s getting fuller with where we’re going. We have not placed any yet out into the market. And what I would tell you is no pull through as of yet. But if you ask me, my thought would be, we’re probably going to enter the market within the second quarter based on what we’re looking at now and push through. And then to your point, we’ll start seeing that ramp up as we get into the future quarters from there.

Our next question comes from Steve Lichtman of Oppenheimer.

This is Amir on for Steve. Thanks for taking the question. I just had a question regarding tariffs. Can you guys talk about what impact that denounced tariffs may have on your margins? Thank you.

Yes, great question. We don’t see any real material impact here on margins. Like I said, we predominantly vertically integrated. When I think about the countries where we do source from, the impacts to us are minimal because there’s lots of other actions we’ve taken, whether it’s vendor cost renegotiation or offsets such as targeted price increases. I do not to be clear, I do not see that having an impact on our earnings or margins this year or going into next year.

Yes. And I would say, Keith says vertically integrated, 95% of our production is U. S. Based and our sourcing of materials to produce is actually U. S. based. We’ve been on that. That actually plays to our favor in this case. And so with what we’ve calculated, we don’t see any need to pivot or change our strategy as we work through these tariff challenges.

Our next question comes from Craig Bijou of Bank of America Merrill Lynch.

Thanks for taking the questions. Dan, I wanted to ask on U. S. Spine growth, the 2%. You guys have been talking about how The U. S. Core spine has kind of held in there and that was a strength. But was there an impact from any of these supply disruptions on that number? And if so, what was the growth ex-the one time?

Yes, it’s a good question, Craig. And the answer is yes. We’re not going to split it out. Some of that is kind of estimates. Did you get the surgery? Did you not? Would it go? And so I’m not really feeling comfortable enough to put something out there. But the answer is yes with that. There was an impact that occurred within the back orders that we know are behind us and we’re improving on a daily basis here with that type of move. Also, listen, robotic sales and prolonged sales, they also tend to have an impact in your pull through and different things that will play into those numbers as well. So both of those are a factor that would impact U. S. Spine.

Got it. And I’m going to try another quantification question. I’m not sure if you’re going to give me an answer or not. So on the enabling tech, maybe, I guess, would you be willing to quantify what the impact was in Q1? And then maybe just what those deals were that closed in early Q2?

Well, and I apologize, I’m not sure I’m fully following, right? Because I said it was down 31%. It was a $22 million sale. So are you asking what carried forward in Q2 as deals? Is that what--

Yes I guess if you would quantify what the impact was from the delayed sales that may have been pushed into Q2.

And again, I’m not being funny with this, but why don’t we talk that in August when we get into Q2 just because it’s in play now and you’re the May. And so while we’re seeing some lifts occurring, you’re right, the things that we’re talking about, some of those rollover, but some of them are new. I’d have to sort through it. But one out of the three months is tough for me to make a call right now and just tell you that the sales are really related to both carryovers and new ones that we had in our portfolio.

Our final question comes from the line of Matt Taylor of Jefferies.

Thank you for taking the question, guys. Apologies. This is really just a clarification. I am a little confused on the top line guide still because previously it was with the close of Nevro at the end of Q2. Now you got the same number, but you closed it kind of a quarter early. So it implies something changed. And I was just wondering, you know, if you could, at a high level, talk about whether it’s a different Nevro expectation or a different base expectation or FX, like what’s different about those two scenarios?

Hey, Matt, that’s a great question. This is Keith. I really would fall back on what I said earlier is that we’re focused on driving profitable growth as it relates to Nevro. Even though the deal closed earlier, we’re being conservative on the revenue view as we move the business forward because we want to get the spending right.

Okay. And then maybe just one follow-up. In terms of your, enabling tech, the delays that you saw in Q1 of the closing, is there some factor in terms of the type of customer or the type of deal or the environment that you would attribute that to? I just wanted to get more texture as to why you thought that that was happening.

I’ll take that. No, it wasn’t a particular thing or a particular customer or anything like that. I think it was really just a lot of interest and most of it was red lines back and forth to seeming to take longer than normal as I think hospitals or other caregivers work through some of the more macro challenges. But again, it was really kind of across the board, not specific to one group or one customer.

Thank you. With no further questions, that concludes the Globus Medical’s earning call. Thank you for participating. You may now disconnect.