Globus Medical (GMED) Q3 Earnings Miss Estimates, EPS View Cut
Globus Medical, Inc. GMED reported third-quarter 2022 adjusted earnings per share (EPS) of 50 cents, missing the Zacks Consensus Estimate by 3.9%. The metric, however, remained unchanged year over year.
The adjusted EPS excludes certain non-recurring expenses like amortization of intangibles, and acquisition-related costs among others.
Without the adjustments, the company registered GAAP EPS of 47 cents per share, reflecting a 4.4% rise year over year.
Revenues
Third-quarter 2022 worldwide sales totaled $254.1 million, up 10.6% year over year and 12.6% at a constant exchange rate or CER. The reported figure exceeded the Zacks Consensus Estimate by 0.5%.
Quarterly Details
Sales generated in the United States during the quarter under review improved 9.5% year over year to $217 million. Strong growth in U.S. Spine and notable gains across the product portfolio in expandables, 3D printed implants, cervical and lateral offerings, biologics and pedicle screws contributed to this growth.
Internationally, revenues were $37.1 million, up 17.7% on a reported basis and 31.8% at CER, with double-digit growth in most markets, including the U.K., Australia, Brazil, India and Poland, where growth rates continued to exceed 40%.
Globus Medical, Inc. Price, Consensus and EPS Surprise
Globus Medical, Inc. price-consensus-eps-surprise-chart | Globus Medical, Inc. Quote
By product category, Musculoskeletal Solutions products generated revenues of $230.1 million, up 9.8% year over year.
Enabling Technologies' product revenues of $24 million in the quarter reflected an 18.9% surge from the prior-year figure.
Margin
Gross profit in the reported quarter increased 10.2% year over year to $188.7 million. The gross margin contracted 28 basis points (bps) to 74.2% due to an 11.8% rise in the cost of goods sold to $65.5 million.
Selling, general and administrative expenses fell 10.5% in the reported quarter to $106.7 million. Research and development expenses rose 17.9% to $18.7 million.
Overall adjusted operating profit was $63.4 million, reflecting a 7.7% rise from the year-ago quarter. The adjusted operating margin contracted 69 bps in the quarter to 24.9%.
Cash Position
Globus Medical exited the third quarter of 2022 with cash and cash equivalents, and short-term marketable securities of $405.2 million compared with $407.9 million at the end of Q2.
Cumulative net cash provided by operating activities at the end of the third quarter of 2022 was $114.5 million compared with the year-ago figure of $200 million.
2022 Guidance
The company has reaffirmed its 2022 sales guidance but reduced the EPS expectation.
Full-year net sales are once again projected to be $1.025 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.03 billion.
The company’s 2022 adjusted EPS guidance is $2.03, down from the earlier projection of $2.10. The Zacks Consensus Estimate for the same is also pegged at $2.05 currently.
Our Take
Globus Medical exited the third quarter of 2022, with an earnings miss and a revenue beat. U.S. Spine reported robust growth along with notable gains across the product portfolio in expandables, 3D printed implants, cervical and lateral offerings, biologics and pedicle screws. The gains are driven by competitive rep conversions and robotic pull-through. The competitive rep recruiting is tracking ahead of the prior year.
On the flip side, escalating costs are building pressure on the gross margin. The reduced adjusted EPS guidance stemming from continued non-operating headwindsis a major downside.
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 AMN Healthcare Services, Inc. AMN, Medpace Holdings, Inc. MEDP and Merit Medical Systems, Inc. MMSI.
AMN Healthcare, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $2.57, which beat the Zacks Consensus Estimate by 10.3%. Revenues of $1.14 billion outpaced the consensus mark by 3.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average being 10.9%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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