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 email@example.com www.globusmedical.com
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Globus Medical Reports Full Year and Fourth Quarter 2012 Results
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