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Globus Medical (GMED) Q1 Earnings Top Estimates, Margins Fall
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Globus Medical, Inc. (GMED - Free Report) reported adjusted earnings per share (EPS) of 72 cents in the first quarter of 2024, which beat the Zacks Consensus Estimate by 30.9%. The metric increased 35.8% year over year.
The adjusted EPS excludes certain non-recurring expenses and benefits like the amortization of intangibles, acquisition-related costs/licensing and provision for litigation, among others.
Without adjustments, the company registered a GAAP diluted loss of 5 cents compared with the year-ago EPS of 48 cents.
Revenues
Worldwide sales in the quarter under review registered a staggering improvement of 119.3% year over year to $606.7 million. The reported figure exceeded the Zacks Consensus Estimate by 3.4%.
Net sales increases were driven by the addition of NuVasive, as well as increased volumes of spine product sales and enabling technology products and services.
Geographic Details
During the quarter under review, net sales generated in the United States increased 106.3% year over year (same at CER) to $482.9 million. Our model projected a 110.6% improvement in sales from this region.
Globus Medical, Inc. Price, Consensus and EPS Surprise
Across international markets, revenues surged 190.7% (up 194.1%% at CER) to $123.7 million. This surpassed our model’s forecasted improvement of 110.7%.
Product Category
Musculoskeletal Solutions generated revenues of $574.7 million, up 128.4% year over year, mainly driven by the contributions from the NuVasive merger. Our model projected a year-over-year increase of 120.8% from this segment.
Enabling Technologies generated revenues of $32 million in the first quarter of 2024, an improvement of 27.5% from the prior-year figure. The growth was driven by increased sales of Excelsius GPS and the E3D system. The reported figure also surpassed our model’s projected year-over-year increase of 8.7%.
Margins
The gross profit in the reported quarter rose 77.4% year over year to $365.2 million. However, the gross margin contracted 1,421 basis points (bps) to 60.2% on a 241% surge in the cost of sales.
SG&A expenses in the reported quarter totaled $248.7 million, up 103.2% from the year-ago quarter’s levels. Research and development expenses increased 171.6% to $57.3 million.
The quarter’s adjusted operating profit fell 5.1% from the year-ago quarter’s figure to $59.2 million. The adjusted operating margin contracted 1,278 bps in the quarter to 9.8%.
Cash Position
Globus Medical exited the first quarter of 2024 with combined cash and cash equivalents and short-term marketable securities of $434.5 million compared with $517.8 million at the end of 2023.
Cumulative net cash provided by operating activities at the end of the first quarter was $52.4 million compared with the year-ago figure of $53.3 million.
2024 Guidance
GMED provided an updated outlook for 2024.
The full-year net sales are projected in the band of $2.460 billion-$2.485 billion (earlier $2.450 billion-$2.475 billion). The Zacks Consensus Estimate is currently pegged at $2.46 billion.
The company’s adjusted EPS guidance for 2024 is in the range of $2.75-$2.85 (previously $2.68-$2.70). The Zacks Consensus Estimate is pegged at $2.69.
Our Take
Globus Medical exceeded both earnings and revenue estimates in the first quarter of 2024. The integrated Globus-NuvaSive team is working together to develop and launch new products via meaningful collaborations, with the pace expected to accelerate in the coming months due to improved internal development processes.
U.S Spine outpaced market growth owing to the strength of the combined product offering, competitive rep recruiting from prior quarters and increased implant usage through robotic pull-through. Enabling Technologies benefited from higher robotic and imaging system sales. The revised outlook for the full year buoys optimism.
However, the contraction of both the margins during the quarter is discouraging.
Zacks Rank and Other Key Picks
Globus Medical currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Medpace (MEDP - Free Report) , ResMed (RMD - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported a first-quarter 2024 EPS of $3.20, which beat the Zacks Consensus Estimate by 30.6%. Revenues of $511 million improved 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, sporting a Zacks Rank #1, reported a first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared to the industry’s 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2, reported a first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.
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Globus Medical (GMED) Q1 Earnings Top Estimates, Margins Fall
Globus Medical, Inc. (GMED - Free Report) reported adjusted earnings per share (EPS) of 72 cents in the first quarter of 2024, which beat the Zacks Consensus Estimate by 30.9%. The metric increased 35.8% year over year.
The adjusted EPS excludes certain non-recurring expenses and benefits like the amortization of intangibles, acquisition-related costs/licensing and provision for litigation, among others.
Without adjustments, the company registered a GAAP diluted loss of 5 cents compared with the year-ago EPS of 48 cents.
Revenues
Worldwide sales in the quarter under review registered a staggering improvement of 119.3% year over year to $606.7 million. The reported figure exceeded the Zacks Consensus Estimate by 3.4%.
Net sales increases were driven by the addition of NuVasive, as well as increased volumes of spine product sales and enabling technology products and services.
Geographic Details
During the quarter under review, net sales generated in the United States increased 106.3% year over year (same at CER) to $482.9 million. Our model projected a 110.6% improvement in sales from this region.
Globus Medical, Inc. Price, Consensus and EPS Surprise
Globus Medical, Inc. price-consensus-eps-surprise-chart | Globus Medical, Inc. Quote
Across international markets, revenues surged 190.7% (up 194.1%% at CER) to $123.7 million. This surpassed our model’s forecasted improvement of 110.7%.
Product Category
Musculoskeletal Solutions generated revenues of $574.7 million, up 128.4% year over year, mainly driven by the contributions from the NuVasive merger. Our model projected a year-over-year increase of 120.8% from this segment.
Enabling Technologies generated revenues of $32 million in the first quarter of 2024, an improvement of 27.5% from the prior-year figure. The growth was driven by increased sales of Excelsius GPS and the E3D system. The reported figure also surpassed our model’s projected year-over-year increase of 8.7%.
Margins
The gross profit in the reported quarter rose 77.4% year over year to $365.2 million. However, the gross margin contracted 1,421 basis points (bps) to 60.2% on a 241% surge in the cost of sales.
SG&A expenses in the reported quarter totaled $248.7 million, up 103.2% from the year-ago quarter’s levels. Research and development expenses increased 171.6% to $57.3 million.
The quarter’s adjusted operating profit fell 5.1% from the year-ago quarter’s figure to $59.2 million. The adjusted operating margin contracted 1,278 bps in the quarter to 9.8%.
Cash Position
Globus Medical exited the first quarter of 2024 with combined cash and cash equivalents and short-term marketable securities of $434.5 million compared with $517.8 million at the end of 2023.
Cumulative net cash provided by operating activities at the end of the first quarter was $52.4 million compared with the year-ago figure of $53.3 million.
2024 Guidance
GMED provided an updated outlook for 2024.
The full-year net sales are projected in the band of $2.460 billion-$2.485 billion (earlier $2.450 billion-$2.475 billion). The Zacks Consensus Estimate is currently pegged at $2.46 billion.
The company’s adjusted EPS guidance for 2024 is in the range of $2.75-$2.85 (previously $2.68-$2.70). The Zacks Consensus Estimate is pegged at $2.69.
Our Take
Globus Medical exceeded both earnings and revenue estimates in the first quarter of 2024. The integrated Globus-NuvaSive team is working together to develop and launch new products via meaningful collaborations, with the pace expected to accelerate in the coming months due to improved internal development processes.
U.S Spine outpaced market growth owing to the strength of the combined product offering, competitive rep recruiting from prior quarters and increased implant usage through robotic pull-through. Enabling Technologies benefited from higher robotic and imaging system sales. The revised outlook for the full year buoys optimism.
However, the contraction of both the margins during the quarter is discouraging.
Zacks Rank and Other Key Picks
Globus Medical currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Medpace (MEDP - Free Report) , ResMed (RMD - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported a first-quarter 2024 EPS of $3.20, which beat the Zacks Consensus Estimate by 30.6%. Revenues of $511 million improved 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, sporting a Zacks Rank #1, reported a first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared to the industry’s 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2, reported a first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.