Globus Medical (NYSE: GMED) reported second-quarter results that beat analyst expectations, upping its full-year sales guidance as it prepares to merge with NuVasive.
The news yesterday evening came a day after NuVasive reported mixed results heading into the merger, which would create the world’s second-largest spine tech company after Medtronic. The CEOs of both Globus Medical and NuVasive, in their respective earnings calls, stuck by their plans to complete the merger in the present quarter.
Globus Medical CEO Dan Scavilla told analysts that the only step that the companies still needed to complete involved responding to the second request for information that they received from the U.S. Federal Trade Commission in May. Under the Biden administration, the FTC has taken a more aggressive stance in enforcing U.S. antitrust regulations, including in the medical device industry.
“We remain fully committed to the merger, and our expected Q3 ’23 closure date remains unchanged,” Scavilla said.
BTIG analysts Ryan Zimmerman, Sam Durno, and Iseult McMahon kept their Neutral rating on GMED shares, taking a wait-and-see approach on the integration that would follow a merger closing: “Both [management] teams remain committed to the transaction, and GMED’s business is holding in well, less so on the NuVasive (NUVA, Neutral) side, but overall we don’t think investors will be acutely concerned if the timing of the closure remains intact. Once closed, the focus shifts to integration risk and why we continue to remain on the sidelines.”
A positive Q2 for Globus Medical
Globus Q2 sales were up 10.6% year-over-year to $291.6 million, easily beating analysts’ estimates of $279.72 million. Net income was up 5.7% to $57.7 million, or 57¢ per share.
Adjusted net income was 63¢, 4¢ above the Wall Street consensus of 59¢.
Scavilla noted in Globus Medical’s earnings release that the company’s U.S. Spine business launched three important products in the quarter, two of which were focused on the scoliosis market.
“The Reflect scoliosis correction system was designed to correct progressive scoliosis in young patients while preserving motion and allowing for future modulated growth. Reflect is the company’s first FDA Humanitarian Device Exemption (HDE) product launch. We also launched the Marvel growing rod system, which is designed for pediatric patients with early onset scoliosis to obtain and maintain correction while allowing for growth through minimally invasive distraction,” Scavilla said.
On the heels of the strong Q2 results, Globus Medical raised its full-year 2023 sales guidance to $1.125 billion from the previous $1.100 billion, and reaffirmed its adjusted EPS forecast at $2.30.
Following the earnings announcement, GMED shares rose by over 1% to $58.58 apiece in after-hours trading.