08.04.14
$434.5 Million
KEY EXECUTIVES:
David C. Paul, Chairman & CEO
David M. Demski, President & Chief Operating Officer
Richard A. Baron, Sr. VP & Chief Financial Officer
A. Brett Murphy, Exec. VP, U.S. Sales
David D. Davidar, Sr. VP, Operations
Anthony L. Williams, Sr. VP, Business Development
Andrew Iott, Sr. VP, Global Product Development
NO. OF EMPLOYEES: 850
HEADQUARTERS: Audubon, Pa.
Fiscal 2013 was a strong year for Globus Medical Inc. Besides a period of solid financial performance and new product launches, the year also marked the 10-year anniversary for the maker of musculoskeletal implants—primarily for the spine.
“2013 was an outstanding year for Globus Medical. Sales grew by 12.6 percent, reaching $434.5 million; our full year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was 34.7 percent of sales; we launched 16 new products; and we completed the acquisition of Excelsius Surgical,” said David Paul, chairman and CEO, following the release of annual performance data.
According to Paul, the strong performance was the result of “consistent, sustained execution” of the company’s strategy of “combining robust product innovation and continued sales force expansion with disciplined expense control.”
Net income for the year was $68.6 million or 73 cents per diluted share, as compared to $73.8 million, or 80 cents per diluted share, for 2012. The company’s reported cash, cash equivalents and marketable securities ended the year at $275.5 million, increasing by $63.1 million during the year.
The company also is debt free, Globus officials reported.
For FY13, research and development accounted for $26.9 million, down slightly from $27.9 million in 2012.
Sales from the Innovative Fusion products sector—which are used in cervical, thoracolumbar, sacral, and interbody/corpectomy fusion procedures to treat degenerative, deformity, tumor, and trauma conditions—were $254 million. Spinal fusion corrects problems with the individual vertebrae, the interlocking bones making up the spine, by preventing movement of the affected bones. Sales of Innovative Fusion-category products increased by $15.3 million (a 6.4-percent bump) due to strong sales of legacy and new pedicle screw systems.
Sales from the company’s Disruptive Technologies category were $180.5 million. Globus defines its Disruptive Technologies unit as products that “represent a significant shift in the treatment of spine disorders by allowing for novel surgical procedures, improvements to existing surgical procedures, the treatment of spine disorders by new physician specialties, and surgical intervention earlier in the continuum of care.” The firm’s current portfolio of approved and pipeline products includes motion-preservation technologies, such as dynamic stabilization, total disc replacement and interspinous process spacer products, and advanced biomaterials technologies, as well as interventional pain-management solutions, including treatments for vertebral compression fractures. The growth in Disruptive Technologies of $33.2 million (representing 22.5 percent growth), according to the firm, primarily was the result of minimally invasive, biologic, artificial disc and interventional pain management products launched during the past three years.
Despite a company name that evokes worldwide reach, Globus primarily focused sales on the U.S. market. For fiscal 2013, sales outside the United States were just $37.8 million (8.7 percent of total sales), but a 24.5 percent increase from 2012.
Company brass, according to its recent annual report, plans to increase international sales by launching more products abroad and expanding the company’s direct and distributor sales force.
Regulatory & Legal Challenges
Globus received a warning letter from the U.S. Food and Drug Administration (FDA) on Sept. 26. The letter flagged “deficiencies” in the company's response to a Form 483 warning the agency issued after inspecting the medical device company’s Audubon facility in May and June.
The deficiencies related to the firm’s Microfuse putty, a synthetic bone void filter product that combines Globus’ Microfuse granules with a resorbable polymer carrier. The warning letter did not restrict the company’s ability to manufacture or seek 510(k) clearance of products, company officials said.
In July 2011, Synthes USA LLC—now part of Johnson & Johnson’s DePuy orthopedics division—accused Globus of infringing three intervertebral implant patents, asking the court to force the defendant to destroy its allegedly infringing products. Two years later, on June 17, the jury in the U.S. Court in Delaware found that prior versions of three products previously sold by Globus Medical indeed did infringe on Synthes’ patents and awarded monetary damages in the amount of $16 million. There was no finding of willful infringement in this lawsuit.
The three products in question were no longer sold by Globus Medical at the time of the verdict, so the jury’s decision did not affect the company’s sales, neither did it require any royalty payments to Synthes based on current or future sales. The decision is being appealed.
It was not the first lawsuit Globus Medical has faced from Synthes. In 2007, Globus paid $13.5 million to settle a series of patent infringement allegations.
New Product Launches
Out of the 16 new products launched during FY13, notable market introductions included the following:
CREO pedicle screws are available in modular and pre-assembled versions with top-loading, side-loading and closed-head options. Rod diameters range from 4.75 to 5.5 millimeters and are available in titanium.
Globus started its 2014 fiscal year with an important purchase.
In January the company reported that it had acquired Excelsius Surgical, which is developing a next-generation surgical robotic positioning platform for the spine, brain and therapeutic markets. The Excelsius Surgical system is a robotic surgical aid for navigating and facilitating surgical access, implant sizing, positioning and placement, and is designed to enable surgeons to perform procedures more quickly and with greater accuracy, safety and reproducibility than is currently available in the marketplace today, according to Globus officials.
Financial terms of the transaction were not disclosed.
“We are very excited by the strategic fit and potential of Excelsius Surgical. Our product development efforts focus on products designed to minimize tissue disruption, blood loss and surgical complications, and we believe that the use of advanced technology solutions, such as the Excelsius Surgical system, will enable surgeons to consistently achieve better surgical outcomes,” said Paul.
“Recent trends in the adoption of navigation technology as well as advancements in imaging only serve to reinforce our belief that technology will play an increasingly greater role in surgery in the future. We believe that this acquisition positions Globus to be a leader in this important area.”
The Excelsius Surgical robotic positioning system is being designed to integrate intra-operative digital imaging with a sophisticated robotic surgical assistant that maintains anatomical positioning during the surgery with sub-millimeter accuracy. The technology was developed in conjunction with Dignity Health’s Barrow Neurological Institute at St. Joseph’s Hospital and Medical Center in Phoenix, Ariz. Co-founders Neil R. Crawford, Ph.D., associate professor of spinal biomechanics at Barrow, and Nicholas Theodore, M.D., neurosurgeon and chief of spine surgery at Barrow, led the development of the technology.
Globus expects to obtain FDA clearance for the system in 2015, with commercial sales expected in 2016.
“We started Excelsius Surgical to develop a surgical technology that would improve clinical outcomes,” said Nicholas Theodore, M.D., co-founder of Excelsius Surgical. “We combined robotics and imaging with the goal of enabling surgeons to reproducibly and cost effectively perform robotically assisted, minimally invasive surgery with fewer complications and less trauma, as well as reducing radiation exposure for patients, surgeons and operating room personnel. We are proud of our development progress to date and believe that Globus will be a great partner to bring this technology to the market.”
The robotic surgery market apparently agrees with Globus.
The company experienced a strong first quarter, during which the company notched the acquisition of Excelsius Surgical. Profits jumped 6.3 percent to $21.1 million, or 22 cents per diluted share, on sales of $114.2 million during the three months ended March 31. That compared with profits of $19.9 million, or 21 cents per share on sales of $105 million during the same time last year. U.S. sales grew 5.6 percent over the first quarter of 2013 while international sales, representing 10.9 percent of total proceeds, skyrocketed 43 percent.
KEY EXECUTIVES:
David C. Paul, Chairman & CEO
David M. Demski, President & Chief Operating Officer
Richard A. Baron, Sr. VP & Chief Financial Officer
A. Brett Murphy, Exec. VP, U.S. Sales
David D. Davidar, Sr. VP, Operations
Anthony L. Williams, Sr. VP, Business Development
Andrew Iott, Sr. VP, Global Product Development
NO. OF EMPLOYEES: 850
HEADQUARTERS: Audubon, Pa.
Fiscal 2013 was a strong year for Globus Medical Inc. Besides a period of solid financial performance and new product launches, the year also marked the 10-year anniversary for the maker of musculoskeletal implants—primarily for the spine.
“2013 was an outstanding year for Globus Medical. Sales grew by 12.6 percent, reaching $434.5 million; our full year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was 34.7 percent of sales; we launched 16 new products; and we completed the acquisition of Excelsius Surgical,” said David Paul, chairman and CEO, following the release of annual performance data.
According to Paul, the strong performance was the result of “consistent, sustained execution” of the company’s strategy of “combining robust product innovation and continued sales force expansion with disciplined expense control.”
Net income for the year was $68.6 million or 73 cents per diluted share, as compared to $73.8 million, or 80 cents per diluted share, for 2012. The company’s reported cash, cash equivalents and marketable securities ended the year at $275.5 million, increasing by $63.1 million during the year.
The company also is debt free, Globus officials reported.
For FY13, research and development accounted for $26.9 million, down slightly from $27.9 million in 2012.
Sales from the Innovative Fusion products sector—which are used in cervical, thoracolumbar, sacral, and interbody/corpectomy fusion procedures to treat degenerative, deformity, tumor, and trauma conditions—were $254 million. Spinal fusion corrects problems with the individual vertebrae, the interlocking bones making up the spine, by preventing movement of the affected bones. Sales of Innovative Fusion-category products increased by $15.3 million (a 6.4-percent bump) due to strong sales of legacy and new pedicle screw systems.
Sales from the company’s Disruptive Technologies category were $180.5 million. Globus defines its Disruptive Technologies unit as products that “represent a significant shift in the treatment of spine disorders by allowing for novel surgical procedures, improvements to existing surgical procedures, the treatment of spine disorders by new physician specialties, and surgical intervention earlier in the continuum of care.” The firm’s current portfolio of approved and pipeline products includes motion-preservation technologies, such as dynamic stabilization, total disc replacement and interspinous process spacer products, and advanced biomaterials technologies, as well as interventional pain-management solutions, including treatments for vertebral compression fractures. The growth in Disruptive Technologies of $33.2 million (representing 22.5 percent growth), according to the firm, primarily was the result of minimally invasive, biologic, artificial disc and interventional pain management products launched during the past three years.
Despite a company name that evokes worldwide reach, Globus primarily focused sales on the U.S. market. For fiscal 2013, sales outside the United States were just $37.8 million (8.7 percent of total sales), but a 24.5 percent increase from 2012.
Company brass, according to its recent annual report, plans to increase international sales by launching more products abroad and expanding the company’s direct and distributor sales force.
Regulatory & Legal Challenges
Globus received a warning letter from the U.S. Food and Drug Administration (FDA) on Sept. 26. The letter flagged “deficiencies” in the company's response to a Form 483 warning the agency issued after inspecting the medical device company’s Audubon facility in May and June.
The deficiencies related to the firm’s Microfuse putty, a synthetic bone void filter product that combines Globus’ Microfuse granules with a resorbable polymer carrier. The warning letter did not restrict the company’s ability to manufacture or seek 510(k) clearance of products, company officials said.
In July 2011, Synthes USA LLC—now part of Johnson & Johnson’s DePuy orthopedics division—accused Globus of infringing three intervertebral implant patents, asking the court to force the defendant to destroy its allegedly infringing products. Two years later, on June 17, the jury in the U.S. Court in Delaware found that prior versions of three products previously sold by Globus Medical indeed did infringe on Synthes’ patents and awarded monetary damages in the amount of $16 million. There was no finding of willful infringement in this lawsuit.
The three products in question were no longer sold by Globus Medical at the time of the verdict, so the jury’s decision did not affect the company’s sales, neither did it require any royalty payments to Synthes based on current or future sales. The decision is being appealed.
It was not the first lawsuit Globus Medical has faced from Synthes. In 2007, Globus paid $13.5 million to settle a series of patent infringement allegations.
New Product Launches
Out of the 16 new products launched during FY13, notable market introductions included the following:
- During the annual meeting of the Chicago, Ill.-based North American Spine Society (NASS) in October, Globus launched CREO, the company’s next-generation pedicle screw platform.
CREO pedicle screws are available in modular and pre-assembled versions with top-loading, side-loading and closed-head options. Rod diameters range from 4.75 to 5.5 millimeters and are available in titanium.
- The company launched Latis, a minimally invasive lumbar interbody fusion spacer for patients suffering from degenerative disc disease. The implant is designed to be inserted through a minimally invasive surgery (MIS) transforaminal lumbar interbody fusion (TLIF) approach and expand laterally to provide a footprint and graft volume equivalent to an anterior lumbar interbody fusion (ALIF) spacer or lateral lumbar interbody fusion (LLIF) spacer. According to Globus, the Latis spacer provides a large stable footprint and a substantial graft window, benefits typical of an ALIF or LLIF spacer, without requiring anterior access or nerve monitoring, and allows for direct decompression of nerve roots via the MIS TLIF approach. The 10-millimeter-wide titanium implant can be inserted posteriorly and can expand in-situ up to 26-millimeter squared. Designed to reduce subsidence and migration, the spacer has a locking set screw designed to secure deployment at any position within the expansion range. The Latis system includes customized disc preparation and sizing instruments to simplify the procedure for an efficient minimally invasvie TLIF approach. The system includes a variety of footprints, heights, and lordotic configurations, for a customized fit for each patient. A single instrument is used for insertion, expansion, locking, and bone graft delivery. “This new addition to our MIS portfolio is the first expandable implant on the market to offer the benefits of a traditional anterior implant, without the two-part disruptive surgical procedure,” said Iott. “Combined with posterior stabilization using our Revolve MIS pedicle screw system, the entire procedure is designed and intended to maximize preservation of the stabilizing muscles of the lower back.”
- The company also launched its new Fortify I, an expandable corpectomy spacer with integrated screws for further stability in addition to supplemental fixation. A corpectomy is a surgical procedure that involves removing part of the vertebral body usually as a way to decompress the spinal cord and nerves. Fortify I adds to the Globus portfolio of expandable spacers. The system provides anterior column support for individual and multiple level corpectomy patients, and uses integrated screws, superior and inferior, that are designed to prevent dislodgement. The spacer is available in a variety of sagittal profiles and footprints for an optimized fit, and has integrated titanium plates and screws for additional stabilization between the vertebral bodies and spacer. The radiolucent PEEK (polyetheretherketone) implant option is meant to allow for postoperative visualization and provide a modulus of elasticity closer to bone. Fortify I integrated corpectomy spacers (Fortify I and Fortify I-R) are vertebral body replacement devices indicated by the FDA for use in the thoracolumbar spine to replace a collapsed, damaged, or unstable vertebral body due to tumor or trauma. These devices are intended to be used with supplemental spinal fixation systems that have been labeled for use in the thoracic and/or lumbar spine such as posterior pedicle screw and rod systems, anterior plate systems, and anterior screw and rod systems. The interior of the spacers can be packed with autogenous bone graft or allograft. These spacers are designed to provide anterior spinal column support even in the absence of fusion for a prolonged period. The system was granted 510(k) clearance from the FDA in June 2012.
Globus started its 2014 fiscal year with an important purchase.
In January the company reported that it had acquired Excelsius Surgical, which is developing a next-generation surgical robotic positioning platform for the spine, brain and therapeutic markets. The Excelsius Surgical system is a robotic surgical aid for navigating and facilitating surgical access, implant sizing, positioning and placement, and is designed to enable surgeons to perform procedures more quickly and with greater accuracy, safety and reproducibility than is currently available in the marketplace today, according to Globus officials.
Financial terms of the transaction were not disclosed.
“We are very excited by the strategic fit and potential of Excelsius Surgical. Our product development efforts focus on products designed to minimize tissue disruption, blood loss and surgical complications, and we believe that the use of advanced technology solutions, such as the Excelsius Surgical system, will enable surgeons to consistently achieve better surgical outcomes,” said Paul.
“Recent trends in the adoption of navigation technology as well as advancements in imaging only serve to reinforce our belief that technology will play an increasingly greater role in surgery in the future. We believe that this acquisition positions Globus to be a leader in this important area.”
The Excelsius Surgical robotic positioning system is being designed to integrate intra-operative digital imaging with a sophisticated robotic surgical assistant that maintains anatomical positioning during the surgery with sub-millimeter accuracy. The technology was developed in conjunction with Dignity Health’s Barrow Neurological Institute at St. Joseph’s Hospital and Medical Center in Phoenix, Ariz. Co-founders Neil R. Crawford, Ph.D., associate professor of spinal biomechanics at Barrow, and Nicholas Theodore, M.D., neurosurgeon and chief of spine surgery at Barrow, led the development of the technology.
Globus expects to obtain FDA clearance for the system in 2015, with commercial sales expected in 2016.
“We started Excelsius Surgical to develop a surgical technology that would improve clinical outcomes,” said Nicholas Theodore, M.D., co-founder of Excelsius Surgical. “We combined robotics and imaging with the goal of enabling surgeons to reproducibly and cost effectively perform robotically assisted, minimally invasive surgery with fewer complications and less trauma, as well as reducing radiation exposure for patients, surgeons and operating room personnel. We are proud of our development progress to date and believe that Globus will be a great partner to bring this technology to the market.”
The robotic surgery market apparently agrees with Globus.
The company experienced a strong first quarter, during which the company notched the acquisition of Excelsius Surgical. Profits jumped 6.3 percent to $21.1 million, or 22 cents per diluted share, on sales of $114.2 million during the three months ended March 31. That compared with profits of $19.9 million, or 21 cents per share on sales of $105 million during the same time last year. U.S. sales grew 5.6 percent over the first quarter of 2013 while international sales, representing 10.9 percent of total proceeds, skyrocketed 43 percent.