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Globus Medical (GMED) Q4 Earnings Top Estimates, Gross Margin Up

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Globus Medical, Inc. GMED reported fourth-quarter 2021 adjusted earnings per share (EPS) of 49 cents, beating the Zacks Consensus Estimate by 2.1%. However, the metric lagged the year-ago adjusted EPS by 15.5%.

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

Without the adjustments, the company registered GAAP EPS of 14 cents per share, reflecting a decline of 73.1%.

For the full year, adjusted earnings were $2.04 per share, 41.7% up from the year-ago period. It also beat the Zacks Consensus Estimate by 0.9%.

Revenues

Fourth-quarter 2021 worldwide sales totaled $250 million, up 7.1% year over year. The reported figure surpassed the Zacks Consensus Estimate by a marginal 2.5%.

Full-year revenues were $958.1 million, reflecting a 21.4% increase from the year-ago period. Revenues also surpassed the Zacks Consensus Estimate by 0.6%.

Quarterly Details

Sales generated in the United States during the quarter under review improved 7.2% year over year at CER to $212.9 million. Internationally, revenues were $37.6 million, up 8.7% 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 and EPS Surprise

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

Musculoskeletal Solutions products generated revenues of $224.6 million, up 4.3% year over year. Enabling Technologies product revenues of $25.4 million in the quarter reflected a 40.4% surge from the prior-year figure.

Margin

Gross profit in the reported quarter rose 9.1% year over year to $188.2 million. Gross margin expanded 135 basis points (bps) to 75.3% despite a 1.5% rise in the cost of goods sold to $61.8 million.

Selling, general and administrative expenses in the reported quarter were $106.6 million, up 15.8% from the year-ago quarter. Research and development expenses surged 234.8% to $51 million.

Overall adjusted operating profit was $30.6 million, reflecting a 53.1% decline from the year-ago quarter. The operating margin contracted 1572 bps in the quarter to 12.3%.

Cash Position

Globus Medical exited 2021 with cash and cash equivalents, and short-term marketable securities of $443.4 million compared with $426.7 million at the end of 2020.

Cumulative net cash provided by operating activities at the end of 2021 was $276.3 million compared with the year-ago figure of $198.8 million.

2022 Guidance

The company has initiated its 2022 guidance.

Full-year net sales are projected at $1.03 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.05 billion.

The company’s adjusted EPS guidance for 2022 is pegged at $2.10. The Zacks Consensus Estimate for the same is pegged at $2.23 currently.

Our Take

Globus Medical exited the fourth quarter of 2021 with better-than-expected earnings and revenues. The clinical superiority of ExcelsiusGPS continues to be the primary factor driving the Enabling Technology business. Further, Musculoskeletal Solutions registered strong growth, led by the US Spine business. The company’s international business was strong, led by growth in spinal implants despite lingering COVID-19 impact and the effect of the strategic changes in Japan. However, escalating operating costs are building pressure on the bottom line.

Zacks Rank and Other Key Picks

Globus Medical currently carries a Zacks Rank #2 (Buy).

A few other similar-ranked stocks in the broader medical space that have announced their quarterly results are Envista Holdings Corporation NVST, McKesson Corporation MCK and Molina Healthcare, Inc. MOH, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Envista reported second-quarter 2021 adjusted EPS of 46 cents, which beat the Zacks Consensus Estimate by 9.5%. Revenues of $651.8 million outpaced the consensus mark by 2.9%.

Envista has a long-term earnings growth rate of 13.5%. NVST has gained 30% against the industry’s 16.4% drop over the past year.

McKesson reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 per share by 14.3%. Revenues of $68.61 billion surpassed the Zacks Consensus Estimate by 3.2%.

McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 55.2% compared with the industry’s 8.2% growth in the past year.

Molina Healthcare reported fourth-quarter 2021 adjusted EPS of $2.88, beating the Zacks Consensus Estimate of $2.82. Total revenues of $7,409 million beat the consensus mark of $7,126 million.

Molina Healthcare has a long-term earnings growth rate of 18.8%. MOH has gained 48% compared with the industry’s 44.5% increase over the past year.


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