GLOBUS MEDICAL INC Q2 2025 earnings call

Thank you, Haley, and thank you, everyone, for joining us today. Joining today's call from Globus Medical will be David Paul, Globus' founder and Executive Chairman; Keith Pfeil, President and Chief Executive Officer; and Kyle Kline, Chief Financial Officer. This review is being made available via webcast, accessible through the Investor Relations section of the Globus Medical website at www.globusmedical.com. Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2024 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our SEC filings, including the 10-K, are available on our website.

We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website. With that, I'll now turn the call over to David Paul, our founder and Executive Chairman.

Thank you, Brian, and good evening, everyone. I want to begin by congratulating Keith Pfeil on his promotion to the role as CEO of Globus Medical effective July 18, 2025. Keith will lead Globus on setting and executing our strategy to become the preeminent musculoskeletal technology company in the world. Before joining Globus Medical, Keith built nearly two decades of experience in corporate finance, operations, and strategic leadership. He began his career in public accounting with Arthur Andersen, later transitioning to KPMG, where he was primarily focused on financial audits and compliance. Keith later moved into the consumer products industry, where he advanced through a series of finance and operational leadership roles, including serving in a divisional CFO role for several years and ultimately serving as Executive Vice President and CFO.

His tenure included extensive experience leading financial planning, M&A due diligence, investor relations, manufacturing, and sourcing initiatives, as well as large-scale restructuring initiatives that improved liquidity and operational efficiencies. Beginning in 2019, when Keith started at Globus as our CFO, it was obvious to me and our board that he was destined to one day be in this CEO role. We quickly began exposing him to all aspects of our business over the last six years. In addition to finance, Keith was given responsibility within the company in IT, operations, pricing, regulatory, quality, and commercial. Finally, Keith led the financial due diligence and the entire integration planning effort for NuVasive and Nevro and has made amazing progress in a short period of time with both.

Keith has become an integral part of the Globus executive team, providing steady, positive, and committed leadership that will now extend to the entire organization to drive our strategic goals. I also want to take this opportunity to thank Dan Scavilla for his many contributions to Globus over the last 10 years. He has been a great partner to Globus and me and has served with distinction for the last 10 years, beginning with his role as CFO and his last three years as CEO. We wish Dan well in his new position at Dentsply. I will now turn the call over to Keith and Kyle for their comments on our quarter, and we'll have a few words to say in closing at the end.

Thank you, David. Good afternoon to everyone, and thank you for joining us on today's call. As this is my first earnings call as CEO following our July 21st announcement regarding a leadership transition, I'd like to take a moment to thank David Paul and the Board for their confidence in me. I also want to take a moment to thank Dan Scavilla for his contributions to Globus, as well as his guidance and mentorship to me over the past several years. I sit here today excited for the opportunity and ready to begin a new chapter of the Globus story. Before I jump into a discussion on the Q2 company performance, I'd like to take a few minutes to step back and talk about who Globus is and where our strategy lies.

Our strategy remains grounded in the same principles that have driven our success for many years. Our mission remains unchanged. Globus Medical is a global musculoskeletal technology company dedicated to improving clinical outcomes and solving unmet clinical needs to improve the lives of our patients. We innovate with passion, provide world-class dedication and clinical support, and advance care through our comprehensive product portfolio. We will continue to support and advance care and focus on the patient with the goal of improving musculoskeletal care, doing so in a manner that exhibits financial discipline. Our leadership team is aligned towards this pursuit. Globus has seen tremendous growth and change, starting with eclipsing $1 billion in annual revenue in 2022, followed by the transformative merger with NuVasive in 2023, and then most recently, the closing of the Nevro acquisition.

All of this coming from a company that was founded just 22 years ago in 2003. The growth and evolution of the company remains second to none and highlights the strategic focus of living its mission. The change over the past several years has helped further position us within the musculoskeletal market, and we are at a point where we want to finalize and fully integrate the merged and acquired entities. Our team is intently focused on accelerating our product development engine to launch new and exciting products. These exciting products will add to our best-in-class bag, which will further propel our ability to retain and grow our sales force through competitive rep conversions. We will continue to do this in a manner in which Globus maintains financial prudence with strong earnings, cash and cash flow, and overall balance sheet strength, all of which is consistent with our history.

In short, I want everyone joining us today to know that Globus has many opportunities in the pipeline to fuel future organic growth and remain confident in our position within the market. Knowing that our business has undergone dramatic change in the past few years, we have invested heavily in our leadership team to ensure focus and strategy development occur at the right level within the organization, such that M&A activities don't distract from the existing businesses. Those leaders are specifically focused on our core categories of spine, ortho trauma, and interventional pain, and are responsible to execute commercial strategy while maintaining responsibility for product development timelines. Now, let's move into our update on the second quarter. I will start by touching briefly on top-level financial performance, then provide more qualitative updates on our business and Q2 performance.

I'll then turn things over to Kyle, where he will go into greater details on our Q2 financial results. At a top level, Globus delivered Q2 sales of $745 million and non-GAAP EPS of $0.86 per share, growing 18.4% and 14.1% respectively over the prior year quarter. Free cash flow was $31.3 million, growing 18% despite the impact of the Nevro acquisition, as well as higher CapEx spending. Our base business delivered $651 million in revenue during Q2, growing 3.3% as reported and 4.9% day adjusted versus the prior year quarter, with one less selling day in the U.S. and two fewer days in Japan. Nevro contributed $95 million in revenue during the quarter. Operational challenges noted in our first quarter comments have largely subsided as the supply of product has dramatically improved across our business.

Delivery of U.S. spine sets in inventory returned to a normal cadence, while a supply of international spine and growing rods increased gradually throughout the quarter. Overall, we exited Q2 in a strong position with product and sets. We will continue to ramp up our supply as we enter the back half of our year to accommodate for anticipated growth, including the normal Q4 seasonal bump. Our U.S. spine business led the way commercially, growing 5.7% as reported or 7.4% on a day-adjusted basis.

The key procedures or categories leading growth included expandable TLIF with our SABLE implants, posterior cervical with Reline C, ALIF procedures with HEDRON and Modulus implants, as well as continued increasing contribution from MIS pedicle screws, namely Reline MAS and CREO, biologics, as well as our DuraPro oscillating drills. Growth in U.S. spine has been consistent and sustaining, driven by increasing focus on key areas of the business.

Every week in Q2 had shown growth versus the same week in the prior year, and we are now at 19 consecutive weeks of U.S. spine implant growth, which includes a strong July and a great start to August. Growth in our core business is being driven by several factors, including increasing set and inventory availability, driving targeted product conversions, competitive rep hiring, as well as a key focus with increasing our surgeon engagement. All of these factors are key to growth as we continue on the basics of launching new products, growing our sales force, and driving robotic pull-through. To highlight the importance of new products, I'd like to take a minute to talk about our DuraPro oscillating drill system. As a refresher, this product was launched in 2024 and features an oscillating technology designed to be soft tissue sparing, allowing surgeons to treat anatomy adjacent to delicate tissue.

Thanks, Keith, and good afternoon, everyone. I'd like to start today by thanking David Paul, the Board of Directors, and Keith for this opportunity. I am thrilled to be taking on this role and partnering with Keith and the talented Globus leadership team. In my 8+ years with Globus, we've seen remarkable growth and change in our business, and it's been a career highlight for me to be part of what we're building here alongside the best and brightest professionals in the industry.

As Keith mentioned in his prior comments, on April 3rd, 2025, we closed our acquisition of Nevro Inc. after Nevro shareholder and regulatory approval. The purchase price of $252.5 million was paid using existing cash reserves. The resulting impact of the April 3rd acquisition of Nevro is such that my discussion on our results will seek to identify the underlying legacy Globus Medical results, as well as the contributions from the inclusion of Nevro financial information. Our Q2 2025 results include three months of legacy Globus financial information and three months of Nevro, reflective of the April 3rd acquisition closing date.

My comments today will provide insights into our quarterly business performance, including the impacts of Nevro, our capital allocation priorities, as well as views on overall guidance for the remainder of the year. As I move through my discussion this afternoon, I will first comment on our as-reported results, providing insights into the legacy Globus business, as well as high-level comments on the contributions from Nevro on an as-reported basis. All information is presented based on Globus accounting policies and is consistently applied in the as-reported results from legacy Globus and legacy Nevro. We are extremely pleased with our second quarter results, both with and without the impact of Nevro. The headlines for the quarter include: one, above-market sales growth in our U.S. spine business; two, record non-GAAP earnings per share of $0.86; and three, a bounce back in enabling technology sales.

Adding to Keith's comments, our sales results clearly demonstrate that we are driving market share growth and are executing our strategies around product, sales force, and integration. Moving into the quarter, our second quarter revenue was $745.3 million, growing 18.4% on an as-reported basis and 17.6% on a constant currency basis as compared to the second quarter of 2024. GAAP net income in the second quarter of 2025 was $202.8 million, and GAAP fully diluted earnings per share was $1.49, reflective of the impact of both a bargain purchase gain of $110.6 million and partially offset by $28.8 million of merger and acquisition-related costs resulting from the April 3rd acquisition of Nevro.

The bargain purchase gain, which for accounting purposes is recognized in the period as a benefit to the P&L, is primarily driven by the value of certain deferred tax assets, specifically federal net operating loss carryforwards with indefinite lives that were acquired in the Nevro acquisition. As the legacy Nevro business did not historically generate profit, these tax benefits were not able to be utilized under its structure. However, upon acquisition, the combined Globus profit profile allows us to recognize and utilize $141.5 million of these deferred tax assets, which will generate cash tax savings over a prolonged period. In our acquisition of Nevro, Globus acquired net tangible assets from Nevro of $168 million, which consist primarily of inventory and accounts receivable, and another $141.5 million of the deferred tax assets described a moment ago.

Coupling this value with the intellectual property portfolio and the deal rationale that Keith discussed in his opening remarks highlights why we feel the Nevro acquisition was a strategic opportunity for us. Returning to results for the quarter, non-GAAP consolidated net income was $116.8 million compared to $102.7 million in the prior year quarter, growing 13.7%. Our fully diluted non-GAAP EPS were $0.86, growing 14.1% over the prior year quarter. Consolidated adjusted EBITDA was 28%, and we generated $77.9 million of operating cash flow and $31.3 million of free cash flow during the quarter. Our legacy Globus adjusted EBITDA was 32.3%, while legacy Globus operating cash flow was $104.2 million, and free cash flow was $60.3 million.

Our second quarter net sales of $745.3 million reflect legacy Globus sales totaling $650.8 million, growing 3.3% as reported and 4.9% on a day-adjusted basis, with one less selling day in the U.S. and two fewer days in Japan compared to the prior year. The growth in our legacy Globus sales was primarily driven by U.S. spine, which achieved 5.7% as reported and 7.4% day-adjusted growth. Nevro contributed $94.6 million of revenue during the quarter, inclusive of $82.1 million of domestic revenue and $12.5 million of international revenue. Musculoskeletal revenue was $710.2 million, growing 19.8% over Q2 2024. Legacy Globus musculoskeletal revenue was $615.6 million, growing 3.8% as reported.

Enabling technologies revenue was $35.2 million, declining 4.4% as reported, but growing sequentially 58.5% over Q1 2025. We saw a bounce back in enabling tech during Q2. However, we continue to be impacted by extended timelines to close deals in the quarter. Despite the headwinds created by these extended timelines, we remain confident in our enabling tech business, driven by our robust pipeline and the sequential improvement from Q1 to Q2. U.S. revenue during the quarter, the second quarter of 2025, was $600.8 million, growing 20.3% as reported.

Thank you, Kyle, and congratulations on your new role. I am looking forward to working with Keith in his new role as he leads Globus forward. I have never been more excited about our future prospects as we are reimagining the operating room and musculoskeletal surgery to drive better patient outcomes. Our Excelsius ecosystem will play a large role in this transformation with our suite of imaging, navigation, and robotic systems leading the way. Our unwavering commitment to improving surgical outcomes and solving unmet clinical needs continues to be the motivation for all of us to work toward. We remain committed to bringing exciting technologies to market with our R&D engine to achieve our goal of improving the lives of patients with musculoskeletal disorders. Thank you for joining our call today. We will now open the call for questions.

Hey, thanks so much for taking the questions. Congrats on the quarter and congrats to Keith and Kyle on the new role. I just want to say, David, it's nice to hear your voice on the call. The first question, or first part of the question, maybe just on the progress you've made so far with Nevro. I think last time we talked, you were just about to begin or beginning some of the sort of cost and efficiency programs and weren't really sure how that was potentially going to affect the organization, particularly on the sales side, and wanted to get a sense of how that's going, you know what your read is at this point. I had one follow-up if I could.

Sure. Thanks, Matt. This is Keith. I think that what we've got accomplished in the second quarter, we're cautiously optimistic. I think that as we've approached this, leadership has really surrounded the sales force, number one. They're really energized to be part of the Globus family now. They see the future. They understand kind of where we're going. I think that that's been a positive for us, going along with working on cost containment activities. As we started the quarter, we really overlaid the Globus approach to controlling third-party spending, and I think that that started to show a benefit early on in the quarter. The large cost actions that happened didn't really happen until the back end of the quarter. As I sit here today, I feel positive about where we're going.

Leadership is very focused on working with the sales force because the long-term goal, like I spoke about earlier, is we recast product development, but we want to grow this business long-term. I think that commitment is going to go a long way with the sales force.

Great. Just to follow up on robots, of course, and enabling technology, you've had time to get through the tail end of Q2. There was a lot of questions, I think, still after Q1 as to what exactly happened. Was it a shift towards financing? Was it something to do with the uncertainty in that moment? What have you learned or what can you tell us about the pipeline and how deals are closing and what factors, if any, are shifting or changing the way that business is running in terms of the placement side? Thanks.

Sure. Enabling tech had a bounce back here in Q2. Obviously, Q1 was soft. What I saw in the quarter was us being able to close deals from Q1. I still see that elongation pipeline. As I think about how robots are sold, we're still selling outright the majority of our robots. We have the ability to offer multiple ways of selling the robot, and we're taking advantage of that. As I look at our pipeline, I don't see us losing deals to competition. That's been a question from folks over the last couple of months, and I don't see that happening by and large. As I look at Globus and EGPS, I view our number one competitor as Medtronic. We go head-to-head with them, but we still think that the superiority of our technology puts us ahead of the class.

Okay. Thanks so much and congrats again.

Thank you.

Thank you.

Haley?

Oh, hey, good afternoon, and thanks so much for taking the questions. Congratulations to both Kyle and Keith. Two questions from me. Maybe the first one on a high level. Maybe just talk about how you plan to evolve your investor communication strategy, especially around Globus Medical's guidance methodology. I had a quick follow-up, please.

In terms of investor relations strategy, I think that in the near term, you'll see us out on the road a bit more. We've been fairly active with investor relations thus far here in 2025, coming off what I would call a fairly heavy second half in 2024. We'll continue to evolve as time passes. You know, in the future, we're going to have an investor day. We haven't announced the actual date yet, but there will be more investor outreach occurring as time passes.

Yeah. The only thing I'd add to that, Vic, is as we've been doing more of the investor relations activity over the back half of the year, I've started to come along on some of those. I expect to be out there as well, more front and center and working with you guys out in the field.

Great. Congratulations on your approval for the augmented reality headset. Maybe just talk about the latest on the timelines for launch and how this will integrate into the broader Excelsius ecosystem. Thank you.

Sure. We're in the process of beginning quoting XR. Finished good supply is ready, and really now it's about rolling out the launch plan. As I think about XR, the team spent a ton of time doing extended viability testing with surgeons, and everyone that's been part of it has come away very excited. As we think about XR, the value proposition is line of sight for the surgeon, surgeon control, allowing them to keep their eyes on the patient, and the surgeon will be able to have hand tracking that will keep sterility. They're not going to have to touch a screen or do anything like that. As we think about XR, really what we're looking to do is pair that with our ExcelsiusHub in E3D or pairing it with EGPS. For now, we're focused on Hub with XR in E3D.

We think that will be the best navigation package out there in the market, and we're excited to move it forward.

Hi, great. Thank you so much. Thank you. I wanted to touch on the CEO transition and the leadership transition. Maybe this question is for Dave since you're on the call. We've seen two within a matter of a few years, both around acquisitions. I was just wondering if there was any commentary you can share for investors who may be wondering about this and the company's internal leadership. I'm very aware of the established internal leadership succession plans that you have, so really no surprise there. Dave, maybe you can also comment on how your involvement may have or is evolving here with the company. I have a quick second.

Thank you, Shagun, for your question. Our leadership bench has always been broad and deep, and we're always developing leaders. The 40 leaders we have within the company at the senior level have on average 20 years of experience in med tech. The board has always been very deliberate about succession planning. Dan found an opportunity he wanted to take, and Keith was ready to step into his role. We found this was the right timing for this. We're 100% confident in Keith and in Kyle. We feel that this is an inflection point in Globus' growth rate. As far as changes, we've always cherished continuity in leadership, and we've had that over the years. We've had four CEOs over the last 22 years, and two are still within the company. I feel like our continuity in leadership is second to none in our industry.

As far as my involvement, Shagun, I keep the same involvement that I've had. I work heavily in R&D and product development and strategy. I've been working with the CEO and the CFO and the presidents and the heads of product development. That's where I see my biggest benefit for Globus is to focus on R&D.

Great. That's really helpful. Thank you for the color. As my second question, I wanted to touch on Nevro. Can you maybe elaborate a little bit more on your strategy to get Nevro back to growth? Obviously, you've talked about the sales force, them being part of Globus Medical, having a new sense of energy there. What are you hearing from the field? What are the key issues at Nevro when it was a standalone company that you can address with your leadership? Thank you for taking the question.

Thanks, Shagun. I think there's a couple of parts to that. I think first and foremost, one of the things that we want to bring to Nevro is stability and approach. I commented on really taking and recasting our product development approach. That's really looking at what's in the pipeline from the standpoint of true new product development versus sustaining projects. We've really worked to hone that and get them on a path to move forward. Number two is just the strategic approach from a commercial perspective. We want to be consistent in our application. As we talk to people, it seemed like there was maybe some moving around of what the strategy was at Nevro historically prior to acquisition. Really, we want to get them on a stable course forward.

The third thing I would say is really bringing them into the Globus umbrella really allowed the customer and the hospital and surgeon community to know that this business is going to be around long term. I think given some of the financial challenges that Nevro had previously, there was a question as to whether or not they would be around. I think bringing that all together here positions us well to take this business and grow. It really ties back to what I had said earlier regarding an earlier question that the sales team is really galvanized and pumped up about that because they see a path forward with Globus.

One thing I'll add to that is Nevro has the only differentiated technology within neuromodulation. Also, the only technology that has level one clinical data showing superiority using high frequency for pain. I think it's very exciting to have a clearly differentiated product and now having the certainty of Globus behind them. The sales force is pumped up, as Keith said, to continue growing.

Thank you so much.

Hi, thank you for taking the question. I wanted to follow up on some Nevro stuff. One comment you made in the prepared remarks was that the business finished near EBITDA breakeven, even without all the cost measures. I guess you're still targeting accretion in the second full year, but those two things seem like you could get to accretion more quickly. Help me understand better, I guess, the pathway from where you finished to that accretion goal.

Yes, thanks, Matt, for the question. This is Kyle. Where I'd start is pointing it back to what we talked about last quarter. As we go in and take some of these cost actions and change some of the business, we're not targeting changing and impacting sales, but there is some risk as we go through and make some changes inside the business that we could have a bleed over into sales. Profitability, we do feel good about, but there's a lot we don't know about the business. Three months in, we've been able to, at the end of the quarter, come out with some synergy actions related to headcount and OpEx, et cetera. We want to be able to have a little bit more time in that business before we truly see what that's going to look like by the time we get to the end of the year.

The only thing I'd add to that is just looking where we're at right now, given some of the other comments, we're cautiously optimistic, but there's still six more months of this year to go before we get to 2026.

Great. Could I ask a follow-up on enabling tech? A nice bounce back sequentially. I think before you had made some comments that you might still be able to get back to double-digit growth this year. I wondered if that was still in play or could you help us think about how strong the back half could be?

I guess the way I would answer that, If you look at the back half of last year, our enabling tech business grew, give or take, 25%, which was about, I want to say, it was about $25 million.

$25 million.

$25 million. If I was going to finish double-digit this year, I have to grow 27. It's possible, and we feel like we have the pipeline to move the business forward.

I think it really goes back to how we feel about, A, the momentum into Q2, as well as what's in the pipeline, the amount of quotes that are out there that says, right, we do feel good. It's in the realm of possibility that we can get to double digits in sales.

Great. Thanks, guys, and congrats.

Thank you.

Thank you.

Hi, thanks for taking the questions and congrats to both of you on the new roles. I wanted to maybe just start. Could you just run through the components and what's changed in the guidance to get to your updated outlook with just the moving parts from 1Q to 2Q, especially since you saw a really nice snapback in the U.S. corresponding business? It sounds like international is maybe we should be dialing in a little bit lower there. Specifically, what should we dial in for Nevro for 2Q-4Q?

Yeah, thanks for the question. Thanks for the question, Rich. Just to kind of step back and think about guidance, right, we set out initial guidance back in Q4, both as a standalone and then with Nevro. In Q1, when we finished our results and announced that we were acquiring Nevro, we restated what our guidance would be, right? We said it would be $2.8 billion-$2.9 billion in revenue and $3-$3.30 from an EPS standpoint. We had Q1, which was obviously lighter and a little bit disappointing, both in top and bottom line. Now we have a solid Q2B from a sales perspective, as well as on the EPS front. We feel comfortable in the range of our guidance and where we sit today.

We don't think anything that we've seen tells us we should necessarily increase it or decrease it based on where we're at six months into the year.

I guess, can you just run through the components? You know, what went up, what went down? I know currency got a little bit better. How much does that kind of help and where the offsets are? Should we be dialing down international in light of some of your comments? It sounds like capital. You're still confident in growth at a minimum, possibly double digits. Can you just help us think through the pushes and the pulls since your initial outlook? Because you are reiterated. Thanks.

Yeah, Rich. We don't get into those parts and pieces of the guidance, but I agree with you. We do feel confident on U.S. spine that you've heard. We do feel confident with enabling tech. You've heard about some of the headwinds, but ultimately, we feel good about a range of our guidance.

Thank you.

Oh, great. Good afternoon. Thanks for taking my questions and Keith and Kyle. Congrats on the new roles. In the script, you were talking about the manufacturing progress to drive to mid-70% gross margin over time. I guess, how should we think about the next milestones and the cadence to get there? I mean, is this like a 12-18 month journey or would it be any shorter or longer?

Yeah, when we. This is Keith. I'll take that. As we talked about initially with the NuVasive deal of $170 million in synergies, we really talked about year two that focuses on your manufacturing insourcing is going to generate expanded gross profits in year three. As you think about that, Kyle had some comments that talked about looking at lower costs in inventory. If you think about cash flow statement, you're seeing lower investment in inventory, and really that's driven by some of the manufacturing initiatives. The way to think about that is that inventory is on our balance sheet, and that inventory will push through the P&L next year to drive that benefit. Those benefits of expanded gross profitability really are 2026. As you think about that, that is going to be a cadence as the year moves forward.

Yeah, the only thing I would add to that is remembering now that we have Nevro, right, and they're approximately the same in terms of our gross profit percentage. They were 66%, give or take, this quarter. We're obviously going to be focusing on the initiatives of manufacturing from our base implant business here, right? Then we'll focus on Nevro after that. That kind of gives you a little bit of a delay in that time period and how that will all play out.

Okay, that's helpful. I wanted to ask a follow-up on the NuVasive deal. You know, historically, you talked about cross-selling with enabling tech. I guess, where are we in that? Does the macro backdrop kind of delay that opportunity, or are you still seeing deals come through from the accounts that are loyal to NuVasive? Thanks so much.

Yeah, that's a great question. I would say yes, we are selling robots to legacy NuVasive accounts. You know, as we commented a quarter or two ago, Reline is available to be used on the robot. That was a big gating item. That availability has helped propel additional quoting of the legacy NuVasive customer. There's still more to do there, but from my perspective and from our perspective, we are active and cross-selling the robots to both legacy Globus and legacy NuVasive customers. Stepping back from that, we're also cross-selling the implants across the entire portfolio.

Great, thanks so much.

Thank you.

Good afternoon. Thanks for taking my question. Congrats to Keith and Kyle on the new roles. Kyle, I don't mean to be confrontational here with our first interaction on a call, but I did want to follow up on Rich's question just because you guys have mentioned specific numbers on Nevro for 2025. Specifically, when you bought it, it was a $400 million business. You were kind of leading everybody to about a $300 million business this year, pro forma, only owning the asset for three quarters, kind of Q 2025. Given the $95 million that you just did in Q2, that would equate to $130 million for the back half of this year, $65 million per quarter. Is that what we should be using, or is it a higher number than the $65 million per quarter?

Yeah. Thanks for the question, Matt. We're not going to break out specific guidance. We wanted to give that as a directional understanding last quarter based on what you knew about Nevro and what we knew about Nevro at the time. Ultimately, I think regardless of where we fall in the range for Nevro sales, we feel comfortable about our overall range of the $2.8 billion-$2.9 billion.

Matt, the only thing I would add to that is, you know, it goes back to what we said a little bit earlier. The big headcount actions just happened here in the second quarter. There's still a lot more of the year to happen, and as we get through the year, there's still additional actions that will be taken that could impact potentially sales. Sitting here six months in, we feel that our overall guide is appropriate for where we're at. Like I said earlier to an earlier question, we're cautiously optimistic with where the Nevro business is, but we think it's really still too early to make any broad-scale changes to what our views are from a guide perspective as we look further out.

Okay, fair enough. On the EBITDA side, it was really good to hear that the adjusted EBITDA for Nevro was breakeven, even though sales came in below what they did this time last year. I think you kind of touched on this earlier, but is this kind of the low watermark for EBITDA for Nevro, or could it be a little bit lower back half of this year? What are some other potential areas of cost synergies? The SG&A number and R&D numbers were well below what they were spending. How much more room do you have to go there before you're kind of cutting some of the muscle on the top line? Thanks.

The first part of that, I would say the EBITDA really depends on what happens with the sales. It's hard to say that that's a low watermark line because we don't know what's going to happen in sales in Q3 and Q4. Separately, on the improvement in terms of metrics over prior year Nevro standalone, I would agree we've made improvements, but still, if you look at that SG&A line, over 60% of their sales are spent through SG&A. That's really the place we need to focus our attention as we move through the back half of this year.

Got it. Thank you.

Hi, thanks so much for taking the question. It sounds like you're through the supply challenges related to the NuVa insourcing, but are you through just the NuVa insourcing efforts generally? Are there any more product lines to vertically integrate, and what's left from an integration standpoint more generally for NuVa?

This is Keith. I'll take the call. Thank you for the question. Stepping back, the manufacturing initiatives are really multifaceted. As you're working on the NuVasive product, there's also additional Globus product that you're looking to further, I would say, manufacture internally. As you think about the year, the cadence of output from our manufacturing facilities will continue to increase as time passes, because as we commented on, or Kyle said something earlier, the machines are coming online and they're programmed. As everyone is learning that, learning how to operate those machines, you would naturally expect output to become higher and higher as they become more efficient with running the machines. That cadence will continue. As you think about the integration overall, really the big things that are left is the international businesses and bringing them in onto one system.

We've talked about some supply challenges, which to me are largely behind us from the flow of product, but now it's bringing together the sales forces internationally and bringing together where we're operating. If you recall what I said in my prepared remarks, the international business, our goal is to go deeper in the countries that we're operating in. We're not looking to go broader and have a bunch of countries. We see the ability to take share in our major countries, and that's a key focus. Might have some short-term impacts, but long-term, that's our approach.

That's great. You discussed earlier your ability to do flexible financing with enabling technology. With the elongated selling timeline, thoughts on any other initiatives to really speed up the timelines aside from that financing flexibility?

The financing flexibility, obviously we can offer terms, we can offer subsidized financing from an interest rate perspective, we can use third-party bank financing. Every kind of reasonable option that's out there, we absolutely look at and give our customers a variety of options to pick from. Really, at this point, like I said earlier, the pipeline is strong. We got to continue to close the deals. I don't think there's any shortage of offerings out there that we're not doing.

Thank you.

Hi, thanks for taking the questions, and congratulations on the promotions, Keith and Kyle. Just a real quick one. You mentioned the NOLs from Nevro. Was that part of the initial calculation you gave on sort of the profitability and synergy, and dilution, when you first announced the deal?

Yeah, the answer to that question is no. This is Kyle. The NOLs were not part of that calculation.

This would probably be upside towards just seeing, I guess, EPS accretiveness then, if I think about. Related to that, how long do you, what kind of timeline should we be looking at for those NOLs to flow through the P&L?

Yeah, it will not give us a creativeness to the P&L. Think about these as cash tax savings, right? They've essentially taken that credit in the past. They weren't able to utilize it. We are now able to utilize it to reduce the amount of cash tax that goes out the door. That $141.5 million, I'm going to give you a broad range because it's a very detailed calculation, but think in the range of 40-50 years. It'll be over an extended period of time.

Okay, that's helpful. Maybe just one strategic question. On the sales force, I think you had mentioned that you're pretty much done with the integration between Globus and Nevro, or excuse me, Globus and NuVasive, but there's still some dissynergies, I think, that are still kind of flowing through. How are those looking for this year, and how should we be thinking about those going forward?

This is Keith. As I think about the U.S. spine sales business, at this point, I'm thinking about how do we grow our territories and drive organic placement. I don't necessarily look at a dissynergy. I look at how many competitive recruits I'm bringing into the business and what I would call the relative scale of those competitive reps that we're bringing in. As I look at what we've done so far this year, we're really happy with our second quarter. What I see is, from a scale perspective, the reps we're going after could bring more dollars with them when I think about the average number of dollars per head. As we look at that and then look to the back half of the year, we remain very positive. If you go back to my prepared remarks, I commented on 19 weeks of growth.

We're seeing that growth across the business. It's not just one territory. We're seeing good, solid, sustainable growth.

Great. Thanks for the detail. I'll jump back in queue.

Thank you.