Globus Medical’s IPO a Modest Success

Globus Medical initial public offering (IPO) on Friday, August 3, saw moderate success. Shares of the spinal device company ended their first day up 12 percent at $13.50 per share trading on NASDAQ under the symbol GMED. The initial goal of the company and its bankers was to set an offer price range of $16-$18 per share, but this was revised due to low demand.

As of Monday mid-morning August 6, Globus Medical is trading at $13.87.

Audubon, Pa.-based Globus Medical develops spinal implants and other products for the treatment of patients with a variety of spinal disorders. On Friday, the company sold 2.94 million shares while shareholders sold 8.82 million shares, brining the total to 11.76 million shares sold for $12 a piece. Globus raised $35.3 million in gross proceeds during the initial offering.

Globus’ banking partners that brought the company public were Goldman Sachs, Bank of America/Merrill Lynch, and Piper Jaffray. At Friday’s closing price of $13.50 a share, the company is now valued at $1.23 billion.

Globus Medical’s annual revenue for 2011 was $331.5 million, up 8 percent from the previous year. The company reported a net income of $60.8 million, or $0.67 per diluted share, compared to a net profit of $54.5 million in 2010.

Although Globus’ IPO may not have resulted in the original bang its investors expected due in part to the lowering of the initial price offering, the orthopedic device sector has been enjoying growth and is expected to continue to grow considerably in the next several years. This is mainly due to an aging population that typically means an increase in the need for orthopedic devices and surgeries such as joint replacement. Also, as dictated by the Patient Protection and Affordable Care Act signed into law in 2010, Medicaid will be expanded to cover more people beginning January 2014, allowing greater access to medical products including those of the type that Globus Medical provides.