GLOBUS MEDICAL INC Q2 2026 earnings call

Thank you, Sarah, and thank you everyone for being with us today. Joining today's call from Globus Medical will be Keith Pfeil, President and Chief Executive Officer, Kyle Kline, Chief Financial Officer. This review is being made available via webcast, accessible through the investor relations section of the globusmedical.com website. 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 2025 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. 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 will now turn the call over to Keith Pfeil, our President and CEO.

Thanks, Brian, good afternoon, everyone. Thank you for joining us on today's call. We completed an exceptional Q2, positioning us for a strong 2026 as we move into the second half of the year. At a top level, Q2 revenue was $789.6 million, growing 6% as reported. Excluding Nevro, Q2 revenue growth was 9%, led by 7% U.S. spine growth and 14% growth in international spine. Fully diluted non-GAAP earnings per share was $1.34, growing 56% compared to the prior year quarter, while Q2 adjusted EBITDA was 35.4%, growing 34% in dollars and 740 basis points over the prior year quarter. During the quarter, we also deployed $136 million to repurchase 1.6 million shares. Looking back, since 2022, Globus has more than tripled our top line and earnings while developing a scalable working model to deliver these results over the long term.

Our focus on organic growth, combined with the scale from the NuVasive merger and the Nevro acquisition, underscores our commitment to delivering value creation for our shareholders. We've successfully demonstrated our ability to bring together the two best-in-class spine portfolios while expanding our commercial distribution and operating with a sense of urgency in a manner that exhibits financial discipline through earnings accretion and increasing returns on capital. Our team has launched over 25 products over the past 36 months, demonstrating our unwavering focus on organic product development. The combination of new products and our significantly expanded worldwide sales force has allowed us to continue taking market share. The acquisition of Nevro, with a clinically superior pain product, opens the door for us expanding our addressable market into many exciting areas while bringing that franchise into our business model.

With all the changes occurred the past three years, it's easy to look past what has been accomplished while still maintaining the ethos of what Globus was founded upon. Now let's move into sales. Musculoskeletal sales were $763.5 million, growing 8% versus the prior year quarter and 4% sequentially. The growth drivers are spine, both U.S. and international, as well as trauma. U.S. spine continues to take significant market share, growing 7% as reported on strong procedural volumes. Competitive recruiting, pull-through from robotics, and product launches continue to fuel growth. Our competitive hires in the Q2 were double the amount hired in Q1. It represents the second highest onboarding in the past eight quarters. Strategically, competitive recruiting has and will remain at the forefront of our growth strategy.

Growth remains broad across U.S. spine, with double-digit growth seen in many products such as SABLE, ELSA, HEDRON C, Reline-C, and Reline Open. Power tools continues to drive uptake, with DuraPro growing over 250% in the Q2. International spine grew 14% as reported and 12% on a constant currency basis, led by mid-teens growth across key EMEA markets, namely Italy, Spain, and Poland. APAC growth was broad-based across the region, while LATAM generated its growth mainly from Brazil and Colombia. Overall, Q2 international spine performance reflects our strategy of going deeper in the territories in which we operate. The focus and infrastructure are such that we can position ourselves to see continued above-market growth moving ahead.

Trauma revenue grew 31% versus the prior year quarter and 18% sequentially as we continue to drive share growth in our core trauma line while returning to normal with supply in our PRECICE product line, allowing us to fully satisfy U.S. demand while also turning on numerous OUS markets. We are actively capturing market share and attracting top sales talent as our product portfolio has grown and has become differentiated. We are also beginning to see tremendous interest from surgeons, hospitals, and competitive sales reps in our product portfolio as a full portfolio trauma alternative. We see our trauma business as a long-term growth driver moving ahead. Enabling tech sales were $26.1 million, declining 26% in the Q2, driven by our continued shift towards greater flexibility in our capital acquisition model.

Despite the decline in INR revenue, we are seeing early evidence of success with our new model as EGPS and EHub units deployed, whether sold, leased, or rented, grew 11% sequentially and 25% versus the prior year quarter, both data points validating the demand for Excelsius technology. Robotic utilization continues to expand with over 137,000 procedures performed. We remain steadfast and confident in the long-term strategy of our revised approach to capital deployment. Our overarching focus is to achieve above-market growth of our implant technology, disposables, and service by launching successful capital programs, creating the catalyst for pull-through revenue. Q2 Nevro sales were essentially flat to Q1, consistent with our comments made last quarter and in line with our expectations as we rapidly integrate Nevro into the Globus business model of sustained share growth gains driven by new product development, sales force expansion, and disciplined operational execution.

Recruiting has been the primary area of focus within the sales force, we've seen success in filling open roles with roughly 75% of those roles filled during the quarter. Looking ahead, we remain active on both the recruiting and training fronts. Our near-term goals are focused around driving trial volumes higher, where we expect to see improvement as we move through the back half of the year with the goal of returning to historical trial levels late in Q4. During the quarter, we launched three new products, two in trauma and one in spine, which I will touch on quickly. The trauma products include the AUTOBAHN Hip Fastener and the TENSOR Suture Button System. Spinal product is Reline 1. The AUTOBAHN Hip Fastener is engineered to offer robust fixation and resistance to enhance stability with minimal disruption to workflow.

This product is designed to allow surgeons to treat patients with poor bone quality with a greater level of confidence and uniquely positions our AUTOBAHN intramedullary nailing system. The TENSOR Suture Button System is engineered to redefine suture management in the OR. The system features a self-locking suture and an inserter with integrated tensioning handles, which provide a more streamlined approach for tensioning through a single incision. TENSOR is compatible with ANTHEM ankle and 1/3 tubular plates to offer surgeons a complete ankle solution. Reline 1 is designed to address the unmet need for true single-step screw placement in order to reduce procedural steps, increase efficiency, and minimize patient risk. The ratchet retraction handle, screw design, and stylet tip geometry work together to achieve these benefits through a differentiated procedural solution. Reline 1 is a premier solution for MAS TLIF and minimally invasive posterior fixation.

Last quarter I had mentioned receiving FDA 510 clearances for both our surgeon-designed, patient-specific SCRIPT spacer system comprising of seven patient-specific lumbar interbody systems, as well as our surgeon-designed, patient-specific SCRIPT rods. SCRIPT lumbar spacers are static integrated, and expandable thoracolumbar interbody fusion devices additively manufactured with patient-matched end plate topography for maximum stability. We're expecting to launch these systems later in Q3. The patient-specific SCRIPT spacers may be placed using ExcelsiusGPS instruments for navigation with ExcelsiusGPS, ExcelsiusHub, and ExcelsiusXR. SCRIPT patient rods are precision bent to the surgeon's pedicle screw placement plan and designed to reduce time spent on intraoperative rod bending. Rods are compatible with our CREO, Reline, and REVERE pedicle screw systems for both open and MIS procedures. Script Studio screw plans can be uploaded to our ExcelsiusGPS and ExcelsiusHub systems for robotically navigated screw placement intraoperatively.

Our platform keeps the physician at the center of the design and planning process with an intuitive interface, allowing the surgeon to efficiently design disc height restoration, spinal alignment, and pedicle screw placement, translating their precise clinical intent directly into the implant design. Our software is treated as an advanced tool rather than a replacement for clinical judgment, ensuring the implant perfectly executes to the surgeon's operative strategy. Our expandable offering incorporates our proven technology, allowing surgeons to insert the implant at a lower height designed to minimize nerve retraction and reduce the impaction forces required to implant the spacers. Once in the disc space, the spacer can be expanded to restore optimal disc height.

Our patient-matched spacers and rods are bundled with our high-quality implants and best-in-class disc prep and retractor systems while integrating with our Excelsius suite, thus ensuring final placement matches the digital pre-op plan to ensure proper navigated placement. With our SCRIPT clearances, we will be the only company positioned to offer a complete portfolio of patient-specific lumbar interbody spacers and rods integrated with our Enabling Technologies, truly establishing us as the one-stop shop for lumbar patient-specific implants. Looking ahead, specific focus is centered around organic product development with well over 60 projects in process. We're committed to leading with innovation and purpose. Our in-house development team is expanding to account for greater project complexity as we work to bring new and exciting products to market that address unmet clinical needs.

We are continually working to improve the efficient flow of organic product development from concept to production such that we can speed up the launch of new products moving forward. The last few years were spent largely building a broader platform within musculoskeletal care across spine, trauma, Enabling Tech, and neuromodulation. We've assembled a stronger Globus bag that is the platform for the future, allowing us to expand our research into various new areas of unmet clinical needs. We're leaning into data, analytics, and AI. It's not just about treating one patient, it's how we treat that patient and learn so we can help others more effectively and faster. It's how we become smarter to further assist our surgeon partners and clinicians in patient selection and surgical execution.

Thanks, Keith, and good afternoon, everyone. Our Q2 results delivered above-market top-line growth, including share-taking domestic and international spine sales growth, our seventh consecutive quarter of adjusted gross profit margin expansion, and a quarterly record for fully diluted non-GAAP earnings per share. Sales grew 6% as reported, compared to the Q2 of the prior year, with 9% growth in the base business excluding Nevro. U.S. Spine, again, led the way in growth for the organization, up over 7% compared to the Q2 of the prior year, marking our fifth straight quarter of above-market growth. Adjusted gross profit margin took another step forward, notching 69.4% in the Q2, a 200-basis point improvement over the prior year quarter as we continue to execute our supply chain initiatives. On the bottom line, we achieved record Q2 fully diluted non-GAAP earnings per share of $1.34.

In today's prepared remarks, I will provide insights into our quarterly business performance, comment on share repurchases and capital allocation priorities, and provide an update on guidance for 2026. Q2 2026 results were highlighted by revenue of $789.6 million, growing 5.9% on an as-reported basis and 5.6% on a constant currency basis. GAAP net income was $151.6 million, resulting in $1.10 of fully diluted GAAP earnings per share. Non-GAAP net income was $184.3 million, delivering $1.34 of fully diluted non-GAAP earnings per share or 55.8% of non-GAAP EPS growth over the prior year quarter. Total company adjusted EBITDA margin was 35.4% in the Q2 of 2026, compared to 28% in the prior year quarter.

Our Q2 2026 base business Globus adjusted EBITDA margin of 36.9%, compared to 32.3% in the prior year quarter, and stand-alone Nevro adjusted EBITDA margin was 22.4% for the quarter, compared to negative 1.4% in the prior year quarter. Our Q2 net sales of $789.6 million reflects base business Globus sales totaling $708.6 million, growing 8.9% as reported and 9% on a day adjusted basis, with the same number of selling days in the U.S. and international, and one less selling day in Japan compared to the prior year. Base business Globus sales grew 8.5% on a constant currency basis. Sales growth was led by U.S. Spine, which achieved 7.3% as reported growth, and International Spine, which grew 13.8% on an as-reported basis and 12.2% on a constant currency basis.

Our trauma and neuromonitoring businesses each grew over 30% and have now had four straight quarters of double-digit sales growth. Sales growth across these underlying businesses were offset by a 14.3% decline in Nevro and a $9 million decline in Enabling Technologies. Nevro saw a $1.7 million sequential sales decline from the Q1 to the Q2 of 2026. As mentioned previously, we enacted significant structural changes within the product development, sales and marketing, and general and administrative functions of the Nevro business in 2025. We remain on track with our integration of the Nevro business and expect trial volume recovery by the end of this year. Despite the expected decline on the top-line, we feel confident in the trajectory of the Nevro business and our ability to improve top-line by the end of 2026.

Additionally, we continue to see the lasting and sustainable impact of cost control actions taken in 2025 on profitability, highlighted by sequential quarterly EBITDA margin expansion from 11.8% in the Q1 to 22.4% in the Q2 of this year. Pivoting back to overall results, musculoskeletal revenue achieved $763.5 million, growing 7.5% over Q2 2025, despite the decline in Nevro. Base business Globus musculoskeletal revenue grew 10.9%. Enabling Technologies revenue was $26.1 million, declining 25.8% as reported. The Enabling Technologies business saw a softer quarter in sales dollars when compared to Q2 2025. However, we have continued down the path laid out in the back half of 2025 of being flexible in the way we quote alternative ways of acquiring our capital. To that end, we have executed more alternative offerings in this quarter than ever before.

While the majority of our units this quarter remain cash sales, we've continued to see the shift quarter after quarter towards alternative acquisition models. We expect this trend to continue as we execute our revised approach to capital deployment. U.S. revenue during the Q2 of 2026 was $619.1 million, growing 3% as reported. Growth in our domestic business was led by our U.S. spine, neuro monitoring, and trauma businesses, and partially offset by declines in Nevro and Enabling Technologies. Q2 2026 international revenue was $170.5 million, growing 18% as reported, and 16.2% on a constant currency basis. International growth was seen across the board as we focus on deeper penetration within our existing markets. The international spine business led the way with 13.8% as reported and 12.2% constant currency growth and double-digit gains across EMEA, Latin America, and APAC regions.

In the first half of 2026, we have grown the international spine business by 14.5% as reported and 10.6% on a constant currency basis. We are targeting sustained double-digit growth in the back half of the year. Transitioning to the rest of the P&L, GAAP gross profit margin in the quarter was 66.8%, compared to 63.3% in the prior year quarter. Adjusted gross profit margin was 69.4%, compared to 67.4% in the prior year quarter, primarily driven by increased sales resulting in fixed cost leverage, favorable sales mix, and the impacts of synergy execution through our manufacturing and supply chain initiatives, and partially offset by increased freight costs. Manufacturing and supply chain initiatives continue to be a focal point of our operations team as we target a return to a mid-seventies adjusted gross profit margin.

Quarter-after-quarter, we are seeing consistent progress as we work towards this goal with a 200 basis point improvement over the prior year Q2 and a 20 basis point sequential improvement over the Q1 of this year. We reiterate our expectation of adjusted gross profit margin falling in the range of 69%-70% in 2026, representing a 90-190 basis point improvement over 2025. Research and development expenses in Q2 2026 were $36.3 million or 4.6% of sales, compared to $40 million or 5.4% of sales in the prior year quarter. The resulting decline in R&D, both in dollars and as a percentage sales, is attributable to synergy capture resulting in lower employee-related costs, timing of incremental investment in product development, and leverage from higher sales volume.

As Keith mentioned in his prepared remarks, we are expanding investment in our in-house product development capabilities as we work to bring new and exciting products to market. To that end, we are ramping investment and product development in the back half of 2026. We reiterate our expectation of 2026 R&D expense to be in the range of 5%-6% of net sales. SG&A expenses in the Q2 of 2026 were $286.8 million or 36.3% of sales, compared to $303.6 million or 40.7% of sales in the prior year quarter. The decrease in spend is primarily attributable to decreased employee-related costs from synergy actions and lower employee benefit costs from the timing of claims, partially offset by increased sales compensation costs from higher volume. Q2 2026 net interest income was $7.1 million compared to $0.7 million in the prior year quarter.

The $6.4 million favorable change is being driven by an increase in interest income from cash reserves. The GAAP tax rate for the Q2 of 2026 was 20.1%, compared to negative 7.8% in the prior year quarter. The prior year quarter GAAP tax rate was impacted by a $34.8 million one-time tax benefit, which was primarily driven by the discrete nature of the release of a valuation allowance against previously reserved R&D credits acquired in the NuVasive merger. Our non-GAAP tax rate for the quarter was 20.9%, compared to 25% in the prior year quarter. Our GAAP and non-GAAP tax rate in the current period were favorably impacted by stock option exercise benefits.

Given the favorability seen in tax rate in the first half of 2026, we are revising our expectation of non-GAAP tax rate to be in the range of 23%-24%, down from our previous guide of 24%-25%. Cash, cash equivalents, and marketable securities were $840.5 million at June 30th, 2026 compared to $629.1 million at December 31st, 2025. The increase in cash is driven by operating cash flow of $412.1 million, primarily from higher net income and partially offset by $136.1 million of share repurchases and cash spend on capital expenditures of $72.8 million or 4.7% of sales. In Q2 2025, we announced a new share repurchase program of $500 million, under which we have purchased $110 million worth of shares in 2025.

In the Q2 of 2026, we repurchased $136.1 million, or 1.6 million shares, and have $253.9 million of authorization remaining under this program as of June 30th, 2026. Share repurchases have been and continue to be an integral part of our capital allocation strategy, with repurchases in 2026 representing 40% of our year-to-date free cash flow. Since closing the NuVasive merger in September 2023, we have invested $747 million in share repurchases, representing over 50% of our free cash flow generation in that period and buying back 11.9 million shares, or 30% of the dilution from the NuVasive merger. We reiterate our capital allocation strategy, which prioritizes internal investment in innovative product development efforts above all else. We focus our capital spending efforts on building sets for our worldwide sales force and investing in facilities, machinery, and equipment to continue to increase our manufacturing footprint.

Hi, this is Ross Osborne on for Larry. Thanks for taking our questions. Maybe starting off with your international piece of the business. You guys obviously had a strong quarter. We are hearing from competitors of some softness in Europe due to transient headwinds such as strikes and heat waves. Have you guys seen this pick up as of Q2, and do you expect a more seasonally soft Q3?

This is Keith. Thanks for the question. Generally speaking, our performance across EMEA was pretty in line with expectations. Countries go up and down from quarter to quarter. When I look at EMEA, I look at it in the aggregate, and what I see is a business that's moving forward. As we look forward to the rest of the year, Kyle had mentioned earlier that we see the international business as a strong grower as we look ahead.

The only thing to add there is back to the prepared remarks. We had noted double-digit growth across our international space, including EMEA. They grew double digits in the Q2.

Good afternoon, thanks for taking the questions. Congrats on a nice quarter. Two for me. You reported, I think, U.S. spine growth of 7% in the Q2. I think that stepped down from the last couple of quarters. Can you just provide an update on what's going on there and if this is a more sustainable run rate going forward? I have a quick follow-up, please.

Hey, Vik. How you doing? This is Keith. We came off of a couple of strong quarters. Sure, we had basically 10% growth. As we get into the second half of the year, our comps get a little more difficult as we move through. That doesn't take away from our confidence in the business. We see our U.S. spine business as performing really well, and we're confident as we look into the rest of the year. Like I said, as we get further into the second half, our comps just get a little more difficult year-over-year.

Understood. A quick follow-up, if I could. You beat on the gross margin line. You've talked about a return to a mid-70s adjusted gross profit profile. Given the performance we've seen to date, over what time frame do you expect to achieve that? Thank you.

Thanks for the question, Vik. Yeah, to highlight what we talked about during the prepared remarks, this is the seventh straight quarter of gross profit margin expansion. We expect to finish the year somewhere in the 69%-70% range and see sequential uplift quarter-after-quarter as we've seen over the past seven quarters as well. We're likely into and touching 70s by the end of the year, probably very low in the 70s. I think we look back to getting into that mid-70s here in the year or two after that.

Yeah, I think that I agree with Kyle's point because as you think about what we've done over the last couple of years, we announced NuVasive. We said we want to get back to mid-70s gross margin profile and mid-30s EBITDA by the end of the third year. We've already achieved getting back to mid-30s before we got through three full years. To Kyle's point, we'll get into the low 70s this year. There's a lot of other actions that have occurred with acquiring Nevro and other steps that occur within our business that may have had that been a little bit slower. As I see the overall business and everything that's happening in manufacturing and operations from an initiatives perspective, we feel confident on getting back to that in 2027.

Hi, good afternoon. This is Ravi on for Rich. Thank you for taking the questions. I guess I have two questions. I'll ask them upfront, please. One, can you just maybe talk about the Nevro cadence and your guidance for the rest of the year and then the M&A strategy in that division? And then maybe second, this lumbar spacer launch coming into Q3. Can you maybe talk about how quickly can you get that from the doctor designing the case to production to in their hands? Just curious, what the lag looks like and are you able to kind of capitalize on some of these new DRGs that are going live in the fall? Thanks.