08.04.23
Rank: #8 (Last year: #8)
$1.02 Billion
Prior Fiscal: $958.1 Million
Percentage Change: +6.67%
R&D Expenditure: $73M
Best FY22 Quarter: Q4 $274.5M
Latest Quarter: Q1 $276.7M
No. of Employees: 2,600
Global Headquarters: Audubon, Pa.
KEY EXECUTIVES:
David C. Paul, Executive Chairman
Daniel Scavilla, President and CEO
Keith Pfeil, Sr. VP, CFO
Kelly G. Huller, Esq., Sr. VP, General Counsel, and Corporate Secretary
So the rumor was true, after all.
Nearly two years ago, Reuters reported that Globus Medical Inc. and NuVasive Inc. were surreptitiously exploring a merger deal. Citing “people familiar with the matter,” the worldwide news agency claimed Globus approached its rival with an “indicative cash-and-stock offer,” but noted the deal was far from certain.
“The discussions between the companies are preliminary and there is no certainty a deal will be reached,” Reuters reported.
Not surprisingly, neither company commented on the rumor—which in retrospect, should have been a tipoff about its possible veracity.
It should have, but without official verification, Reuters abandoned the story to cover more urgent global issues like runaway inflation, migrant emigration, COVID-19 vaccine boosters, and climate change-induced calamities.
The rumored merger was quickly forgotten.
Even though the “rumor” was true.
Indeed, Reuters was spot-on with its reporting—Globus had indeed propositioned its rival about merging, though the Reuters story was a bit fuzzy on the timing.
The first merger meeting between the two firms occurred in late September 2021—more than seven weeks before Reuters leaked word of it on Nov. 15, according to a proxy statement filed in March (2023) with the U.S. Securities and Exchange Commission (SEC). Only the board chairmen and CEOs of Globus and NuVasive attended that first meeting.
The two companies continued meeting over the next month and a half but abruptly ended discussions when Reuters publicly disclosed the negotiations. “On or about Nov. 15, 2021, there were reports in the media that NuVasive and Globus were considering a potential transaction,” the proxy statement reads. “These reports led to stock price volatility, as well as disruption impacting the companies’ respective employees and other stakeholders. Given the very early stages of discussions...and the fact that no diligence information had yet been shared, Globus and NuVasive agreed that engaging in more substantive interactions would lead to further unwanted disruption. Therefore, the parties decided to cease further discussions with respect to a potential transaction...”
Despite tabling the merger talks, however, the two companies maintained open communications over the next year, occasionally discussing industry trends, developments, and consolidation.
Merger dialogue resumed last fall, but negotiations stalled amid an exclusivity clause, the macroeconomic environment, and stock price volatility. The latter factor actually ended discussions (briefly), as the gap between the two companies’ common stock price widened considerably. The proxy statement indicates Globus’ share price rose 7.3% from Nov. 1 to Nov. 15, 2022, while NuVasive’s fell 16.6% during that same time.
The companies continued to work out details of the merger in late 2022 and early 2023 before announcing the $3.1 billion all-stock deal in February. The merger—unanimously approved by both companies’ boards (despite analyst and investor skepticism)—creates the second-largest spine market player behind Medtronic. The Federal Trade Commission (FTC), however, reputedly is mulling a potential lawsuit to challenge the deal, according to media reports.
The acquisition—if allowed by the FTC—is expected to deliver a mid-30% EBITDA profile to the combined entity over the next three years, including approximately $170 million in identified cost synergies. Strategically, the newly-blended firm will gain an advanced commercial scale and solutions portfolio, and be supported by strong commercial and clinical professional development teams, leading to better customer service.
Moreover, the complementary nature of Globus’ and NuVasive’s products, customers, and geographic footprint will thus serve more surgeons with varied solutions, creating more long-term growth opportunities, industry analysts observe.
“Looking at where we compete, and when we really dug, not even just at the customer level, at the surgeon level, what you see is it’s a very complementary geographic dispersion of where our portfolio plays,” NuVasive CEO/Director J. Christopher Barry said during a Feb. 9 investor conference call detailing the merger. “Spine is not made up of two companies. It’s several companies. We compete in several different fronts. And it’s just the natural evolution of these two companies [which] have produced technologies that naturally are complementary, and that’s played well on geographic dispersion. That’s not just a U.S. phenomenon. It’s actually a global phenomenon. So we’re excited about the very...minimal overlap and the complementary nature of the portfolio, and...those meaningful cross-selling opportunities as we look forward.”
The minimal overlap and complementary portfolio ultimately will help minimize disruption to surgeons, Globus President, CEO, and Director Daniel T. Scavilla noted.
“We have a highly complementary commercial footprint in the U.S. and international markets with minor overlaps. This will allow us to focus on our surgeons without disruption,” he declared on the conference call. “Combining our product portfolios will create the best-in-class offering to our surgeons in spine and trauma. Bringing together two highly innovative product development teams will create focus and impact on future offerings. The operational footprint fits perfectly with our expansion needs. The Globus financial discipline and NuVasive drive for growth will create strong results in sales, EPS, and cash flow to benefit our shareholders.”
“Importantly, this transaction will position Globus to capitalize on multiple high-growth levers in the $50 billion musculoskeletal market,” Scavilla continued. “This includes joint arthroplasty, trauma, enabling technologies, and power tools. With expanded commercial reach as a combined company, we see significant opportunities to further penetrate existing and future markets and continue each company’s track record of above-market net sales growth.”
That above-market growth enabled Globus to cross the $1 billion net sales threshold in 2022, its 20th anniversary year. The company marked the occasion with a flawless fiscal performance, posting gains in all product reporting categories and geographic areas, and throughout its consolidated financial statement.
U.S. sales, for example, climbed 6.4% to $871.9 million in fiscal 2022, while international proceeds swelled 8.9% to $150.9 million, Globus’ latest annual report indicates. Musculoskeletal Solutions revenue, meanwhile, rose 5.7% to $926.7 million, and Enabling Technologies ballooned 18.2% to $96.1 million.
Total company sales expanded 6.8% to $1.02 billion, fueled by a 5.6% boost in gross profit (from $718.8 million to $759.1 million), a 32.6% spike in operating income (from $171.9 million to $227.9 million), 27.5% growth in net income (from $149.1 million to $190.1 million), and a 27.7% jump in basic earnings per share (from $1.48 to $1.89).
“Globus Medical was founded 20 years ago with a small group of talented engineers who had a vision of improving care for patients with musculoskeletal disease,” said Scavilla, who replaced Dave Demski in the corner office in April 2022. Scavilla began working for Globus in 2015 as chief financial officer (CFO) after having spent 28 years with Johnson & Johnson, holding various positions in Finance, including CFO of Vision Care. In 2019, he was promoted at Globus to executive vice president, Chief Commercial Officer, and in 2020 became president of Trauma.
“The journey from startup to $1 billion in sales is certainly worthy of note and particularly so at this milestone anniversary of the company’s founding,” Scavilla noted. “Our future continues to look bright as we improve the lives of patients, surgeons, employees, and shareholders by working to further achieve our vision.”
Indeed, Globus’ future looks bright, thanks in part to its blockbuster NuVasive purchase and solid demand for its spinal products, the latter of which helped the company hit the $1 billion sales mark. Globus also is securing its future through autologous biologics capabilities—gained from the Q4 2022 membership interest purchase of Harvest Biologics LLC ($30.1 million)—and the firm’s Excelsius technology, used to improve spinal surgery accuracy.
The latest update to this platform made its clinical debut last spring at Northwest Specialty Hospital in Post Falls, Idaho; MedStar Union Memorial Hospital in Baltimore; and NYU Langone Health in New York, N.Y. Surgeons at each facility performed the first procedures with Excelsius3D, an advanced intraoperative three-in-one imaging platform designed for 2D fluoroscopy, 2D digital radiography, and 3D imaging of adult and pediatric patients.
Excelsius3D combined with ExcelsiusGPS offers an intraoperative, image-guided robotic navigation solution for improving implant placement accuracy, lowering radiation exposure, and reducing procedure times.
“With these two technologies, we are able to efficiently perform surgery with minimally invasive techniques,” Paul C. McAfee, M.D., an orthopedic spine surgeon at MedStar Union Memorial, said after using Excelsius3D for the first time. “The seamless interface between the two platforms allows us to provide leading-edge technology to patients.
“The addition of Excelsius3D to our operating room has helped to streamline our navigation workflow with ExcelsiusGPS,” Jeffrey A. Goldstein, M.D., (NYU Langone), stated in a news release. “The intraoperative imaging technology enables us to efficiently visualize anatomy, offers three imaging modes in a single comprehensive system, and is easy for our radiology technicians to maneuver and position. We’re excited about this new tool to help us provide patients with the best possible care."
$1.02 Billion
Prior Fiscal: $958.1 Million
Percentage Change: +6.67%
R&D Expenditure: $73M
Best FY22 Quarter: Q4 $274.5M
Latest Quarter: Q1 $276.7M
No. of Employees: 2,600
Global Headquarters: Audubon, Pa.
KEY EXECUTIVES:
David C. Paul, Executive Chairman
Daniel Scavilla, President and CEO
Keith Pfeil, Sr. VP, CFO
Kelly G. Huller, Esq., Sr. VP, General Counsel, and Corporate Secretary
So the rumor was true, after all.
Nearly two years ago, Reuters reported that Globus Medical Inc. and NuVasive Inc. were surreptitiously exploring a merger deal. Citing “people familiar with the matter,” the worldwide news agency claimed Globus approached its rival with an “indicative cash-and-stock offer,” but noted the deal was far from certain.
“The discussions between the companies are preliminary and there is no certainty a deal will be reached,” Reuters reported.
Not surprisingly, neither company commented on the rumor—which in retrospect, should have been a tipoff about its possible veracity.
It should have, but without official verification, Reuters abandoned the story to cover more urgent global issues like runaway inflation, migrant emigration, COVID-19 vaccine boosters, and climate change-induced calamities.
The rumored merger was quickly forgotten.
Even though the “rumor” was true.
Indeed, Reuters was spot-on with its reporting—Globus had indeed propositioned its rival about merging, though the Reuters story was a bit fuzzy on the timing.
The first merger meeting between the two firms occurred in late September 2021—more than seven weeks before Reuters leaked word of it on Nov. 15, according to a proxy statement filed in March (2023) with the U.S. Securities and Exchange Commission (SEC). Only the board chairmen and CEOs of Globus and NuVasive attended that first meeting.
The two companies continued meeting over the next month and a half but abruptly ended discussions when Reuters publicly disclosed the negotiations. “On or about Nov. 15, 2021, there were reports in the media that NuVasive and Globus were considering a potential transaction,” the proxy statement reads. “These reports led to stock price volatility, as well as disruption impacting the companies’ respective employees and other stakeholders. Given the very early stages of discussions...and the fact that no diligence information had yet been shared, Globus and NuVasive agreed that engaging in more substantive interactions would lead to further unwanted disruption. Therefore, the parties decided to cease further discussions with respect to a potential transaction...”
Despite tabling the merger talks, however, the two companies maintained open communications over the next year, occasionally discussing industry trends, developments, and consolidation.
Merger dialogue resumed last fall, but negotiations stalled amid an exclusivity clause, the macroeconomic environment, and stock price volatility. The latter factor actually ended discussions (briefly), as the gap between the two companies’ common stock price widened considerably. The proxy statement indicates Globus’ share price rose 7.3% from Nov. 1 to Nov. 15, 2022, while NuVasive’s fell 16.6% during that same time.
The companies continued to work out details of the merger in late 2022 and early 2023 before announcing the $3.1 billion all-stock deal in February. The merger—unanimously approved by both companies’ boards (despite analyst and investor skepticism)—creates the second-largest spine market player behind Medtronic. The Federal Trade Commission (FTC), however, reputedly is mulling a potential lawsuit to challenge the deal, according to media reports.
The acquisition—if allowed by the FTC—is expected to deliver a mid-30% EBITDA profile to the combined entity over the next three years, including approximately $170 million in identified cost synergies. Strategically, the newly-blended firm will gain an advanced commercial scale and solutions portfolio, and be supported by strong commercial and clinical professional development teams, leading to better customer service.
Moreover, the complementary nature of Globus’ and NuVasive’s products, customers, and geographic footprint will thus serve more surgeons with varied solutions, creating more long-term growth opportunities, industry analysts observe.
“Looking at where we compete, and when we really dug, not even just at the customer level, at the surgeon level, what you see is it’s a very complementary geographic dispersion of where our portfolio plays,” NuVasive CEO/Director J. Christopher Barry said during a Feb. 9 investor conference call detailing the merger. “Spine is not made up of two companies. It’s several companies. We compete in several different fronts. And it’s just the natural evolution of these two companies [which] have produced technologies that naturally are complementary, and that’s played well on geographic dispersion. That’s not just a U.S. phenomenon. It’s actually a global phenomenon. So we’re excited about the very...minimal overlap and the complementary nature of the portfolio, and...those meaningful cross-selling opportunities as we look forward.”
The minimal overlap and complementary portfolio ultimately will help minimize disruption to surgeons, Globus President, CEO, and Director Daniel T. Scavilla noted.
“We have a highly complementary commercial footprint in the U.S. and international markets with minor overlaps. This will allow us to focus on our surgeons without disruption,” he declared on the conference call. “Combining our product portfolios will create the best-in-class offering to our surgeons in spine and trauma. Bringing together two highly innovative product development teams will create focus and impact on future offerings. The operational footprint fits perfectly with our expansion needs. The Globus financial discipline and NuVasive drive for growth will create strong results in sales, EPS, and cash flow to benefit our shareholders.”
“Importantly, this transaction will position Globus to capitalize on multiple high-growth levers in the $50 billion musculoskeletal market,” Scavilla continued. “This includes joint arthroplasty, trauma, enabling technologies, and power tools. With expanded commercial reach as a combined company, we see significant opportunities to further penetrate existing and future markets and continue each company’s track record of above-market net sales growth.”
That above-market growth enabled Globus to cross the $1 billion net sales threshold in 2022, its 20th anniversary year. The company marked the occasion with a flawless fiscal performance, posting gains in all product reporting categories and geographic areas, and throughout its consolidated financial statement.
U.S. sales, for example, climbed 6.4% to $871.9 million in fiscal 2022, while international proceeds swelled 8.9% to $150.9 million, Globus’ latest annual report indicates. Musculoskeletal Solutions revenue, meanwhile, rose 5.7% to $926.7 million, and Enabling Technologies ballooned 18.2% to $96.1 million.
Total company sales expanded 6.8% to $1.02 billion, fueled by a 5.6% boost in gross profit (from $718.8 million to $759.1 million), a 32.6% spike in operating income (from $171.9 million to $227.9 million), 27.5% growth in net income (from $149.1 million to $190.1 million), and a 27.7% jump in basic earnings per share (from $1.48 to $1.89).
“Globus Medical was founded 20 years ago with a small group of talented engineers who had a vision of improving care for patients with musculoskeletal disease,” said Scavilla, who replaced Dave Demski in the corner office in April 2022. Scavilla began working for Globus in 2015 as chief financial officer (CFO) after having spent 28 years with Johnson & Johnson, holding various positions in Finance, including CFO of Vision Care. In 2019, he was promoted at Globus to executive vice president, Chief Commercial Officer, and in 2020 became president of Trauma.
“The journey from startup to $1 billion in sales is certainly worthy of note and particularly so at this milestone anniversary of the company’s founding,” Scavilla noted. “Our future continues to look bright as we improve the lives of patients, surgeons, employees, and shareholders by working to further achieve our vision.”
Indeed, Globus’ future looks bright, thanks in part to its blockbuster NuVasive purchase and solid demand for its spinal products, the latter of which helped the company hit the $1 billion sales mark. Globus also is securing its future through autologous biologics capabilities—gained from the Q4 2022 membership interest purchase of Harvest Biologics LLC ($30.1 million)—and the firm’s Excelsius technology, used to improve spinal surgery accuracy.
The latest update to this platform made its clinical debut last spring at Northwest Specialty Hospital in Post Falls, Idaho; MedStar Union Memorial Hospital in Baltimore; and NYU Langone Health in New York, N.Y. Surgeons at each facility performed the first procedures with Excelsius3D, an advanced intraoperative three-in-one imaging platform designed for 2D fluoroscopy, 2D digital radiography, and 3D imaging of adult and pediatric patients.
Excelsius3D combined with ExcelsiusGPS offers an intraoperative, image-guided robotic navigation solution for improving implant placement accuracy, lowering radiation exposure, and reducing procedure times.
“With these two technologies, we are able to efficiently perform surgery with minimally invasive techniques,” Paul C. McAfee, M.D., an orthopedic spine surgeon at MedStar Union Memorial, said after using Excelsius3D for the first time. “The seamless interface between the two platforms allows us to provide leading-edge technology to patients.
“The addition of Excelsius3D to our operating room has helped to streamline our navigation workflow with ExcelsiusGPS,” Jeffrey A. Goldstein, M.D., (NYU Langone), stated in a news release. “The intraoperative imaging technology enables us to efficiently visualize anatomy, offers three imaging modes in a single comprehensive system, and is easy for our radiology technicians to maneuver and position. We’re excited about this new tool to help us provide patients with the best possible care."