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Globus Medical (GMED) Q1 Earnings Miss Estimates, Margins Dip

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Globus Medical, Inc. (GMED - Free Report) reported first-quarter 2022 adjusted earnings per share (EPS) of 42 cents, missing the Zacks Consensus Estimate by 8.7%. The metric also fell short of the year-ago adjusted EPS by 13.1%.

The adjusted EPS excludes certain non-recurring expenses like amortization of intangibles, litigation and acquisition-related costs.

Without the adjustments, the company registered GAAP EPS of 37 cents per share, reflecting a decline of 15.9%.

Revenues

First-quarter 2022 worldwide sales totaled $230.5 million, up 1.4% year over year. The reported figure, however, missed the Zacks Consensus Estimate by 1.2%.

Quarterly Details

Sales generated in the United States during the quarter under review improved 1.6% year over year to $196.4 million. This was driven by growth within U.S. spine, partially offset by lower INR revenues related to robotic sales. Internationally, revenues were $34.1 million, unchanged year over year at CER.

Globus Medical, Inc. Price, Consensus and EPS Surprise

Globus Medical, Inc. Price, Consensus and EPS Surprise

Globus Medical, Inc. price-consensus-eps-surprise-chart | Globus Medical, Inc. Quote

Musculoskeletal Solutions products generated revenues of $217.4 million, up 2.4% year over year. Enabling Technologies product revenues of $14.9 million in the quarter reflected an 11.9% decline from the prior-year figure.

Margin

Gross profit in the reported quarter dropped 0.5% year over year to $171.4 million. The gross margin contracted 146 basis points (bps) to 74.3% due to a 7.5% rise in the cost of goods sold to $59.2 million.

Selling, general and administrative expenses in the reported quarter were $100.7 million, up 2.9% from the year-ago quarter. Research and development expenses rose 16.7% to $17.4 million.

Overall adjusted operating profit was $53.2 million, reflecting a 10.6% decline from the year-ago quarter. The adjusted operating margin contracted 309 bps in the quarter to 23.1%.

Cash Position

Globus Medical exited the first quarter of 2022 with cash and cash equivalents, and short-term marketable securities of $473.3 million compared with $443.4 million at the end of 2021.

Cumulative net cash provided by operating activities at the end of the first quarter of 2022 was $44.7 million compared with the year-ago figure of $63.6 million.

2022 Guidance

The company has reaffirmed its 2022 guidance.

Full-year net sales are projected to be $1.025 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.03 billion.

The company’s adjusted EPS guidance for 2022 is $2.10. The Zacks Consensus Estimate for the same is also pegged at $2.10 currently.

Our Take

Globus Medical exited the first quarter of 2022 with lower-than-expected earnings and revenues. According to the company, these results reflect modest revenue growth against a difficult prior-year comparison, coupled with COVID-related revenue impacts in key countries and a slower capital purchasing quarter. Escalating costs and operating expenses are building pressure on the bottom line.

Meanwhile, Musculoskeletal Solutions registered growth, led by the US Spine business.

Zacks Rank and Key Picks

Globus Medical currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Alkermes plc (ALKS - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) .

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. Alkermes currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.

Medpace reported first-quarter 2022 adjusted EPS of $1.69, which surpassed the Zacks Consensus Estimate by 34.1%. Revenues of $330.9 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2 (Buy).

Medpace has a historical growth rate of 27.3%. MEDP’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.