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Globus Medical (GMED) Q4 Earnings Beat, U.S. Business Strong
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Globus Medical, Inc. (GMED - Free Report) reported fourth-quarter 2020 adjusted earnings per share (“EPS”) of 58 cents, beating the Zacks Consensus Estimate by 13.7%. The metric also improved 18.4% from the year-ago figure.
Adjusted EPS excludes certain non-recurring expenses like amortization of intangibles and acquisition-related costs.
Without the adjustments, the company registered GAAP EPS of 52 cents per share, reflecting a 18.2% rise from the year-ago quarter’s EPS.
Full-year adjusted EPS was $1.44, reflecting a 14.3% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 6.7%.
Full-year GAAP EPS was $1.01, reflecting a plunge of 33.6% from the year-ago period.
Revenues
Fourth-quarter 2020 worldwide sales totaled $233.4 million, up 10.3% year over year (up 9.9% at constant exchange rate or CER). However, the reported figure lagged the Zacks Consensus Estimate marginally by 0.3%. The year-over-year top-line growth was led by strength in Enabling Technologies and U.S. Spine.
Full-year revenues were $789 million, reflecting a 0.5% uptick from the year-ago period (up 0.4% at CER). Again, the metric lagged the Zacks Consensus Estimate marginally by 0.1%.
Globus Medical, Inc. Price, Consensus and EPS Surprise
Sales generated in the United States during the quarter under review improved 12% year over year to $198.7 million driven by strong recovery of U.S. spine despite pandemic-related cancellations.
International sales of $34.7 million improved 1.4% from the year-earlier quarter (down 0.9% at CER). According to the company, despite most markets registering growth in the quarter, the overall international performance was impacted by countries experiencing upticks in COVID-19 cases, namely India and the United Kingdom. Japan was also adversely impacted in the quarter, partly due to the pandemic and partly due to issues specific to that market. Also, the international Spinal Implant business was down by 4% during the quarter.
Musculoskeletal Solutions products generated revenues of $215.4 million, up 8.9% year over year. Enabling Technologies product revenues of $18.1 million in the quarter reflected a 30% surge from the prior-year figure.
Margin
Gross profit in the reported quarter rose 5.9% year over year to $172.6 million. Gross margin contracted a huge 303 basis points (bps) to 73.9% on a 24.8% rise in cost of goods sold to $60.9 million.
Selling, general and administrative expenses in the reported quarter were $92 million, down 0.1% from the year-ago quarter. Research and development expenses also declined 1.6% to $15.2 million.
Overall adjusted operating profit was $65.3 million, up 18.1% year over year. Adjusted operating margin in the reported quarter was 27.9%, a 186 basis-point expansion from the year-ago period.
Cash Position
Globus Medical exited 2020 with cash and cash equivalents, and short-term marketable securities of $426.7 million compared with $311.5 million at the end of 2019.
Notably, the company remains debt free.
Cumulative net cash provided by operating activities at the end of 2020 was $198.8 million compared with the year-ago $171.9 million.
2021 Guidance
Globus Medical has issued the guidance for the year 2021. Considering the year 2019 as a better comparative metric unlike COVID-19 variability-driven 2020, the company is providing 2021 guidance with reference to 2019.
The company expects the full-year net sales to be $880 million, representing 12% growth from the comparable figure in 2019. The Zacks Consensus Estimate for the same is currently pegged at $923.2 million.
The company’s adjusted EPS in 2021 is likely to be $1.83, reflecting 9% growth from 2019. The Zacks Consensus Estimate for the same is currently pegged at $2.04.
Our Take
Globus Medical exited the fourth quarter of 2020 with better-than-expected earnings despite pandemic-led business disruptions. A robust top-line growth, along with improvements in the company’s U.S. revenues led by the U.S. spine and Enabling Technologies businesses, looks encouraging. Competitive recruiting and onboarding, product launches, and implant pull-through from robotics continued to be strong contributors to growth. Expansion of adjusted operating margin looks encouraging.
However, lower-than-expected revenues in the reported quarter is concerning. International performance was comparatively sluggish, based on mixed performances across all nations. Contraction of gross margin was discouraging too.
Zacks Rank and Key Picks
Globus Medical currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Abbott Laboratories (ABT - Free Report) , Hologic, Inc. (HOLX - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, beating the Zacks Consensus Estimate by 33.6%. The company currently carries a Zacks Rank #2.
IDEXX reported fourth-quarter 2020 adjusted EPS of $2.01 which surpassed the Zacks Consensus Estimate by 40.6%. Revenues of $720.9 million beat the consensus mark by 5.8%. The company currently carries a Zacks Rank #2.
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Globus Medical (GMED) Q4 Earnings Beat, U.S. Business Strong
Globus Medical, Inc. (GMED - Free Report) reported fourth-quarter 2020 adjusted earnings per share (“EPS”) of 58 cents, beating the Zacks Consensus Estimate by 13.7%. The metric also improved 18.4% from the year-ago figure.
Adjusted EPS excludes certain non-recurring expenses like amortization of intangibles and acquisition-related costs.
Without the adjustments, the company registered GAAP EPS of 52 cents per share, reflecting a 18.2% rise from the year-ago quarter’s EPS.
Full-year adjusted EPS was $1.44, reflecting a 14.3% decrease from the year-ago period. However, the metric surpassed the Zacks Consensus Estimate by 6.7%.
Full-year GAAP EPS was $1.01, reflecting a plunge of 33.6% from the year-ago period.
Revenues
Fourth-quarter 2020 worldwide sales totaled $233.4 million, up 10.3% year over year (up 9.9% at constant exchange rate or CER). However, the reported figure lagged the Zacks Consensus Estimate marginally by 0.3%. The year-over-year top-line growth was led by strength in Enabling Technologies and U.S. Spine.
Full-year revenues were $789 million, reflecting a 0.5% uptick from the year-ago period (up 0.4% at CER). Again, the metric lagged the Zacks Consensus Estimate marginally by 0.1%.
Globus Medical, Inc. Price, Consensus and EPS Surprise
Globus Medical, Inc. price-consensus-eps-surprise-chart | Globus Medical, Inc. Quote
Quarterly Details
Sales generated in the United States during the quarter under review improved 12% year over year to $198.7 million driven by strong recovery of U.S. spine despite pandemic-related cancellations.
International sales of $34.7 million improved 1.4% from the year-earlier quarter (down 0.9% at CER). According to the company, despite most markets registering growth in the quarter, the overall international performance was impacted by countries experiencing upticks in COVID-19 cases, namely India and the United Kingdom. Japan was also adversely impacted in the quarter, partly due to the pandemic and partly due to issues specific to that market. Also, the international Spinal Implant business was down by 4% during the quarter.
Musculoskeletal Solutions products generated revenues of $215.4 million, up 8.9% year over year. Enabling Technologies product revenues of $18.1 million in the quarter reflected a 30% surge from the prior-year figure.
Margin
Gross profit in the reported quarter rose 5.9% year over year to $172.6 million. Gross margin contracted a huge 303 basis points (bps) to 73.9% on a 24.8% rise in cost of goods sold to $60.9 million.
Selling, general and administrative expenses in the reported quarter were $92 million, down 0.1% from the year-ago quarter. Research and development expenses also declined 1.6% to $15.2 million.
Overall adjusted operating profit was $65.3 million, up 18.1% year over year. Adjusted operating margin in the reported quarter was 27.9%, a 186 basis-point expansion from the year-ago period.
Cash Position
Globus Medical exited 2020 with cash and cash equivalents, and short-term marketable securities of $426.7 million compared with $311.5 million at the end of 2019.
Notably, the company remains debt free.
Cumulative net cash provided by operating activities at the end of 2020 was $198.8 million compared with the year-ago $171.9 million.
2021 Guidance
Globus Medical has issued the guidance for the year 2021. Considering the year 2019 as a better comparative metric unlike COVID-19 variability-driven 2020, the company is providing 2021 guidance with reference to 2019.
The company expects the full-year net sales to be $880 million, representing 12% growth from the comparable figure in 2019. The Zacks Consensus Estimate for the same is currently pegged at $923.2 million.
The company’s adjusted EPS in 2021 is likely to be $1.83, reflecting 9% growth from 2019. The Zacks Consensus Estimate for the same is currently pegged at $2.04.
Our Take
Globus Medical exited the fourth quarter of 2020 with better-than-expected earnings despite pandemic-led business disruptions. A robust top-line growth, along with improvements in the company’s U.S. revenues led by the U.S. spine and Enabling Technologies businesses, looks encouraging. Competitive recruiting and onboarding, product launches, and implant pull-through from robotics continued to be strong contributors to growth. Expansion of adjusted operating margin looks encouraging.
However, lower-than-expected revenues in the reported quarter is concerning. International performance was comparatively sluggish, based on mixed performances across all nations. Contraction of gross margin was discouraging too.
Zacks Rank and Key Picks
Globus Medical currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Abbott Laboratories (ABT - Free Report) , Hologic, Inc. (HOLX - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, beating the Zacks Consensus Estimate by 33.6%. The company currently carries a Zacks Rank #2.
IDEXX reported fourth-quarter 2020 adjusted EPS of $2.01 which surpassed the Zacks Consensus Estimate by 40.6%. Revenues of $720.9 million beat the consensus mark by 5.8%. The company currently carries a Zacks Rank #2.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>