Globus Medical Reports Full Year and Fourth Quarter 2012 Results

  Globus Medical Reports Full Year and Fourth Quarter 2012 Results

                         Record Revenue and Earnings

Business Wire

AUDUBON, Pa. -- February 27, 2013

Globus Medical, Inc. (NYSE:GMED), a leading spinal implant manufacturer, today
announced its financial results for the year and fourth quarter ended
December31, 2012.

Full Year 2012:

  *Worldwide sales were $386.0 million, up 16.4% over 2011
  *Net income increased 21.5% to $73.8 million compared to $60.8 million in
    2011
  *2012 earnings per fully diluted share increased 19.4% to $0.80 compared to
    $0.67 in 2011
  *Non-GAAP Adjusted EBITDA was 35.4% of sales, compared to 35.8% in 2011

Fourth Quarter:

  *Worldwide sales were $100.5 million, a 14.3% increase from the fourth
    quarter of 2011
  *Fourth quarter net income increased by 53.0% to $20.8 million compared to
    $13.6 million in 2011
  *Earnings per fully diluted share increased 46.7% in the fourth quarter of
    2012 to $0.22 compared to $0.15 for the same quarter of 2011
  *Non-GAAP Adjusted EBITDA was 34.6% of sales, compared to 34.4% in the
    fourth quarter of 2011

David Paul, Chairman and CEO, commented, “2012 was a tremendous year for
Globus with industry leading revenue growth, continued strong profitability,
the completion of a successful IPO, and the launch of 14 new products,
including our first PMA approval with the SECURE^®-C device. Our product
development engine continues to perform at a high level creating the solutions
of tomorrow for patients with spinal disorders."

Dave Demski, President and COO, added, "We performed extremely well in the
fourth quarter with record sales of $100.5 million and an increase in diluted
EPS of 46.7% over fourth quarter 2011. We maintained the strong pace of our
U.S. sales force recruitment. Outside the United States, we added new
distribution territories, providing us with a sales presence in 24 countries.
Late in the quarter, we purchased a 112,000 square foot building adjacent to
our existing facility. With nearly 250,000 square feet of real estate, we have
adequate space to support our future growth. In the fourth quarter we
generated $17.2 million of cash flow and achieved 34.6% adjusted EBITDA
despite our continuing investment in Algea Therapies. Excluding investments
made in Algea Therapies, our adjusted EBITDA for the fourth quarter was
38.0%."

Cash and cash equivalents ended the year at $212.4 million, increasing by
$69.7 million during year, which was inclusive of proceeds from the company's
IPO, acquisitions, facility purchase, and product launch capital expenditures.
The company remains debt free.

Conference Call Information

Globus Medical will hold a teleconference to discuss its performance with the
investment community at 5:30 p.m. Eastern Time today. Globus invites all
interested parties to join the call by dialing:

       1-855-533-7141       United States Participants
             1-720-545-0060             International Participants
             There is no pass code for the teleconference.

For interested parties who do not wish to ask questions, the teleconference
will be webcast live and may be accessed through a link on the Globus Medical
website at investors.globusmedical.com.

If you are unable to participate during the live teleconference, the call will
be archived until Wednesday, March 13, 2013. The audio archive can be accessed
by calling 1-855-859-2056 in the U.S. or 1-404-537-3406 from outside the U.S.
The pass code for the audio replay is 1075-3353.

About Globus Medical, Inc.

Globus Medical, Inc. is a leading spinal implant manufacturer based in
Audubon, Pennsylvania. The company was founded in 2003 by an experienced team
of spine professionals with a shared vision to create products that enable
spine surgeons to promote healing in patients with spinal disorders.

Non-GAAP Financial Measures

Adjusted EBITDA represents net income before interest (income)/expense, net
and other non-operating expenses, provision for income taxes, depreciation and
amortization, stock-based compensation, changes in the fair value of
contingent consideration in connection with business acquisitions and
provision for litigation settlements. This financial measure is not calculated
in conformity with accounting principles generally accepted in the United
States of America (GAAP). We present Adjusted EBITDA because we believe it is
a useful indicator of our operating performance. Our management uses Adjusted
EBITDA principally as a measure of our operating performance and believes that
Adjusted EBITDA is useful to investors because it is frequently used by
securities analysts, investors and other interested parties in their
evaluation of the operating performance of companies in industries similar to
ours. We also believe Adjusted EBITDA is useful to our management and
investors as a measure of comparative operating performance from period to
period and among companies as it is reflective of changes in pricing
decisions, cost controls and other factors that affect operating performance,
and it removes the effect of our capital structure (primarily interest
expense), asset base (primarily depreciation and amortization) and items
outside the control of our management (primarily income taxes and interest
income and expense). Our management also uses Adjusted EBITDA for planning
purposes, including the preparation of our annual operating budget and
financial projections.

Adjusted EBITDA should not be considered in isolation or as a substitute for a
measure of our liquidity or operating performance prepared in accordance with
GAAP, and is not indicative of net income (loss) from operations as determined
under GAAP. Adjusted EBITDA and other non-GAAP financial measures have
limitations that should be considered before using these measures to evaluate
our liquidity or financial performance. Adjusted EBITDA does not include
certain expenses that may be necessary to review our operating results and
liquidity requirements. Our definition and calculation of Adjusted EBITDA may
differ from that of other companies.

Safe Harbor Statements

All statements included in this press release other than statements of
historical fact are forward-looking statements and may be identified by their
use of words such as “believe,” “may,” “might,” “could,” “will,” “aim,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and other
similar terms. These forward-looking statements are based on our current
assumptions, expectations and estimates of future events and trends.
Forward-looking statements are only predictions and are subject to many risks,
uncertainties and other factors that may affect our businesses and operations
and could cause actual results to differ materially from those predicted.
These risks and uncertainties include, but are not limited to, factors
affecting our quarterly results, our ability to manage our growth, our ability
to sustain our profitability, demand for our products, our ability to compete
successfully (including without limitation our ability to convince surgeons to
use our products and our ability to attract and retain sales and other
personnel), our ability to rapidly develop and introduce new products, our
ability to develop and execute on successful business strategies, our ability
to comply with changing laws and regulations that are applicable to our
businesses, our ability to safeguard our intellectual property, our success in
defending legal proceedings brought against us, trends in the medical device
industry, general economic conditions, and other risks. For a discussion of
these and other risks, uncertainties and other factors that could affect our
results, you should refer to the disclosure contained in our prospectus filed
with the Securities and Exchange Commission on August 3, 2012, as amended,
including the sections labeled “Risk Factors,” “Cautionary Note Concerning
Forward-Looking Statements,” and “Management's Discussion and Analysis of
Financial Condition and Results of Operations,” and in our periodic reports on
file with the Securities and Exchange Commission. These documents are
available at www.sec.gov. Moreover, we operate in an evolving environment. New
risk factors and uncertainties emerge from time to time and it is not possible
for us to predict all risk factors and uncertainties, nor can we assess the
impact of all factors on its business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on any
forward-looking statements. Forward-looking statements contained in this press
release speak only as of the date of this press release. We undertake no
obligation to update any forward-looking statements as a result of new
information, events or circumstances or other factors arising or coming to our
attention after the date hereof.


GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
                                                
                       Three Months Ended           Year Ended
(In thousands,       December 31,   December 31,   December 31,   December 31,
except per share     2012          2011           2012          2011
amounts)
Sales                $  100,536     $  87,993      $  385,994     $  331,478
Cost of goods sold     19,557       19,487       75,199       68,796  
Gross profit           80,979       68,506       310,795      262,682 
                                                                     
Operating
expenses:
Research and            7,228          5,773          27,926         23,464
development
Selling, general        44,626         37,857         168,862        140,386
and administrative
Provision for
litigation             15           1,164        (786    )     1,470   
settlements
Total operating        51,869       44,794       196,002      165,320 
expenses
                                                                     
Operating income        29,110         23,712         114,793        97,362
Other expense, net     (16     )     (220    )     (140    )     (413    )
Income before           29,094         23,492         114,653        96,949
income taxes
Income tax             8,327        9,922        40,822       36,165  
provision
                                                                     
Net income           $  20,767     $  13,570     $  73,831     $  60,784  
                                                                     
Earnings per
share:
Basic                $  0.23       $  0.15       $  0.82       $  0.69    
Diluted              $  0.22       $  0.15       $  0.80       $  0.67    
Weighted average
shares
outstanding:
Basic                  91,177       88,093       89,608       88,112  
Diluted                93,456       90,337       92,208       90,420  
                                                                             


GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                        
(In thousands, except par value)      December 31, 2012    December 31, 2011
                                       (unaudited)
ASSETS
Current assets:
Cash and cash equivalents            $ 212,400             $ 142,668
Accounts receivable, net of
allowances of $961 and $602,           53,496                46,727
respectively
Inventories                            62,310                47,369
Prepaid expenses and other current     3,020                 2,515
assets
Income taxes receivable                5,105                 3,336
Deferred income taxes                 23,779              16,160      
Total current assets                  360,110             258,775     
Property and equipment, net            61,089                52,394
Intangible assets, net                 9,585                 7,433
Goodwill                               15,372                9,808
Other assets                          977                 980         
Total assets                         $ 447,133            $ 329,390     
                                                             
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                     $ 9,991               $ 5,323
Accounts payable to related party      2,556                 1,178
Accrued expenses                       25,003                21,268
Income taxes payable                   523                   302
Business acquisition liabilities,     1,435               1,200       
current
Total current liabilities             39,508              29,271      
Business acquisition liabilities,      9,909                 9,089
net of current portion
Deferred income taxes                  7,714                 5,755
Other liabilities                     3,500               2,799       
Total liabilities                     60,631              46,914      
Commitments and contingencies
Equity:
Convertible preferred stock;
$0.001 par value. Authorized
50,961 shares; issued and              —                     51
outstanding 0 and 50,961 shares at
December 31, 2012 and 2011,
respectively
Common stock; $0.001 par value.
Authorized 785,000 and 679,178
shares; issued and outstanding         91                    73
91,270 and 72,529 shares at
December 31, 2012 and 2011,
respectively
Additional paid-in capital             136,501               106,708
Accumulated other comprehensive        (767        )         (1,202      )
loss
Retained earnings                     250,677             176,846     
Total equity                          386,502             282,476     
Total liabilities and equity         $ 447,133            $ 329,390     
                                                                         


GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             
                                                Year Ended
(In thousands)                                  December 31,   December 31,
                                                 2012             2011
                                                 (unaudited)
Cash flows from operating activities:
Net income                                     $ 73,831         $ 60,784
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization                    18,108           16,949
Provision for excess and obsolete                6,119            10,487
inventories
Stock-based compensation                         4,635            3,286
Allowance for doubtful accounts                  363              105
Change in fair value of interest rate swap       —                113
Change in fair value of contingent               119              (79       )
consideration
Change in deferred income taxes                  (6,079    )      2,057
(Increase) decrease in:
Accounts receivable                              (6,886    )      (4,672    )
Inventories                                      (20,541   )      (15,280   )
Prepaid expenses and other assets                (117      )      460
Increase (decrease) in:
Accounts payable                                 3,048            (1,355    )
Accounts payable to related party                1,378            (696      )
Accrued expenses and other liabilities           4,089            1,541
Income taxes payable/receivable                 (1,548    )     2,710     
Net cash provided by operating activities       76,519         76,410    
                                                                  
Cash flows from investing activities:
Purchases of property and equipment              (24,684   )      (22,487   )
Acquisition of businesses                       (6,031    )     (7,500    )
Net cash used in investing activities           (30,715   )     (29,987   )
                                                                  
Cash flows from financing activities:
Repayments of long-term debt                     —                (5,253    )
Payment of business acquisition liabilities      (1,100    )      (400      )
Net proceeds from initial public offering        20,960           —
Net proceeds from issuance of common stock       1,504            886
Purchase of common stock                         —                (10,021   )
Excess tax benefit related to nonqualified      2,661          54        
stock options
Net cash provided by/(used in) financing        24,025         (14,734   )
activities
                                                                  
Effect of foreign exchange rate on cash         (97       )     (722      )
                                                                  
Net increase in cash and cash equivalents        69,732           30,967
Cash and cash equivalents, beginning of         142,668        111,701   
period
Cash and cash equivalents, end of period       $ 212,400       $ 142,668   
                                                                  
Supplemental disclosures of cash flow
information:
Interest paid                                    63               167
Income taxes paid                              $ 44,875         $ 35,721
                                                                            

The following is a reconciliation of Adjusted EBITDA (unaudited) to net income
for the periods presented:

                                                 
                      Three Months Ended            Year Ended
                      December 31,  December 31,   December 31,  December
                                                                   31,
(In thousands,        2012           2011           2012           2011
except percentages)
Net Income            $  20,767      $  13,570      $  73,831      $ 60,784
Interest
(income)/expense,     (5         )   (19        )   (80        )   33
net
Provision for         8,327          9,922          40,822         36,165
income taxes
Depreciation and      4,608         4,747         18,108        16,949    
amortization
EBITDA                33,697         28,220         132,681        113,931
Stock-based           953            1,135          4,635          3,286
compensation
Provision for legal   15             1,164          (786       )   1,470
settlements
Change in fair
value of contingent   96            (261       )   119           (79       )
consideration
Adjusted EBITDA       $  34,761      $  30,258      $  136,649     $ 118,608
Adjusted EBITDA as
a percentage of       34.6       %   34.4       %   35.4       %   35.8      %
sales
                                                                   

Contact:

Globus Medical, Inc.
Ed Joyce, 610-930-1800
Director, Investor Relations
investors@globusmedical.com
www.globusmedical.com
 
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