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Globus Medical (GMED) Q2 Earnings Beat Estimates, 2021 View Up

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Globus Medical, Inc. (GMED - Free Report) reported second-quarter 2021 adjusted earnings per share (EPS) of 56 cents, beating the Zacks Consensus Estimate by 24.4%. The metric also surged a stupendous 700% from the year-ago 7 cents.

Adjusted EPS excludes certain non-recurring expenses like amortization of intangibles and acquisition-related costs.

Without the adjustments, the company registered GAAP EPS of 40 cents per share, reflecting a 90.5% surge from the year-ago quarter level.

Revenues

Second-quarter 2021 worldwide sales totaled $251.1 million, up 68.6% year over year (up 67.9% at constant exchange rate or CER). The reported figure surpassed the Zacks Consensus Estimate by 10.6%.

Pull-through from robotics, contributions from new product introductions and resurgence in the company’s biologics business drove sales in the reported quarter.

Quarterly Details

Sales generated in the United States during the quarter under review improved 71.9% year over year to $215.1 million, driven by continued strength in the U.S. Spine business as well as higher INR revenues.

International sales of $35.9 million improved 51% from the year-earlier quarter (up 47.1% at CER). Growth in robotics was the key contributing factor in the year-over-year improvement. However, the growth was being partially offset by declines in Japan. The international Spinal Implant business grew 5% during the quarter.

Globus Medical, Inc. Price, Consensus and EPS Surprise

 

Musculoskeletal Solutions products generated revenues of $230.3 million, up 60.5% year over year. Enabling Technologies product revenues of $20.8 million in the quarter reflected a 281.3% surge from the prior-year figure.

Margin

Gross profit in the reported quarter rose 90.4% year over year to $187.2 million. Gross margin expanded 857 basis points (bps) to 74.6% despite a 26.1% rise in cost of goods sold to $63.8 million.

Selling, general and administrative expenses in the reported quarter were $107.3 million, up 34% from the year-ago quarter. Research and development expenses declined 60.6% to $15.5 million.

Overall adjusted operating profit was $64.4 million, reflecting an improvement from the year-ago loss of $21.2 million.

Cash Position

Globus Medical exited the second quarter of 2021 with cash and cash equivalents, and short-term marketable securities of $460.4 million compared with $403.6 million at the end of the first quarter of 2021.

Notably, the company has no debt on its balance sheet.

Cumulative net cash provided by operating activities at the end of second-quarter 2021 was $122.8 million compared with the year-ago $65.4 million.

2021 Guidance

The company has raised its full-year 2021 guidance.

The company now expects full-year net sales at $950 million, having moved up 2.7% from the previous guided figure of $925 million. The Zacks Consensus Estimate for the same is currently pegged at $931.4 million.

The company now expects adjusted EPS in 2021 of $2.00, having moved up 5.8% from the previous guided figure of $1.89. The Zacks Consensus Estimate for the same is currently pegged at $1.90.

Our Take

Globus Medical exited the second quarter of 2021 with better-than-expected earnings and revenues despite pandemic-related adversities. The robust top-line growth along with improvements in the company’s U.S. revenues led by the U.S. spine and Enabling Technologies businesses is impressive. Pull-through from robotics, contributions from product introductions and resurgence in biologics business drove second-quarter growth. Expansion in gross margin looks encouraging as well. Further, the company has raised its full-year 2021 guidance, which is indicative that this bullish trend will continue.

However, the international spinal implant business was partially affected by headwinds from Japan. Rise in costs and expenses are building pressure on the bottom line. Stiff competition and foreign-exchange impacts persist as well.

Zacks Rank and Other Key Picks

The company currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader medical space that have announced their quarterly results are Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .

West Pharmaceutical, carrying a Zacks Rank #1 (Strong Buy), reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encompass Health, carrying a Zacks Rank #2, reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Revenues of $1.3 billion outpaced the consensus mark by 1.5%.

Henry Schein, carrying a Zacks Rank #2, reported second-quarter 2021 adjusted EPS of $1.11, surpassing the Zacks Consensus Estimate by 16.8%. Revenues of $2.97 billion surpassed the Zacks Consensus Estimate by 2.7%.