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Globus Medical, Inc. (GMED) Q4 2022 Earnings Call Transcript

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Globus Medical, Inc. (NYSE:GMED) Q4 2022 Earnings Conference Call February 21, 2023 4:30 PM ET

Company Participants

Brian Kearns - Senior Vice President of Business Development and Investor Relations

Dan Scavilla - President and CEO

Keith Pfeil - Senior Vice President and Chief Financial Officer

Conference Call Participants

Shagun Singh - RBC Capital Markets

Matt Taylor - Jefferies

Matt Miksic - Barclays

Vik Chopra - Wells Fargo

David Saxon - Needham and Company

Steve Lichtman - Oppenheimer

Matthew O'Brien - Piper Sandler

Craig Bijou - Bank of America

Kyle Rose - Canaccord Genuity

Mathew Blackman - Stifel

Richard Newitter - Truist

Drew Ranieri - Morgan Stanley

Operator

Thank you for opinionated by and invited to Globus Medical’s Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, each participants are successful a listen-only mode. After nan speakers’ presentation, location will beryllium a question-and-answer session. [Operator Instructions]

I will now move nan telephone complete to Senior Vice President of Business Development and Investor Relations, Brian Kearns. Please spell ahead.

Brian Kearns

Thank you, Latif and convey you, everyone for being pinch america today. Joining today’s telephone from Globus Medical will beryllium Dan Scavilla, President and CEO; and Keith Pfeil, Chief Financial Officer. This reappraisal is being made disposable via webcast, accessible done nan Investor Relations conception of nan Globus Medical website astatine www.globusmedical.com.

Before we begin, fto maine punctual you that immoderate of nan statements made during this reappraisal are aliases whitethorn beryllium considered forward-looking statements. Our Form 10-K for nan 2021 fiscal year, and our consequent filings pinch nan Securities and Exchange Commission identifies definite factors that could origin our existent results to disagree materially from those projected successful immoderate forward-looking statements made today. Our SEC filings, including nan 10-K are disposable connected our website.

We do not undertake to update immoderate forward-looking statements arsenic a consequence of caller accusation aliases early events aliases developments. Our chat coming will besides see definite financial measures that are not calculated successful accordance pinch Generally Accepted Accounting Principles aliases GAAP. We judge these non-GAAP financial measures supply further accusation pertinent to our business performance.

These non-GAAP financial measures should not beryllium considered replacements for and should beryllium publication together pinch nan astir straight comparable GAAP financial measures. Reconciliations to nan astir straight comparable GAAP measures are disposable successful nan schedules accompanying nan property merchandise and connected nan Investor Relations conception of nan Globus Medical website.

With that, I will now move nan telephone complete to Dan Scavilla, our President and CEO.

Dan Scavilla

Thanks, Brian, and bully afternoon, everyone. Globus vanished 2022 pinch a beardown 4th quarter. Revenue for nan twelvemonth was a grounds $1.23 billion, crossing nan $1 cardinal period for nan first time. We delivered $65 cardinal aliases 7% arsenic reported and 8% changeless rate maturation for nan full-year. This is supra past year's difficult post-COVID comp, wherever we grew 21% for 2021.

We achieved grounds sales, while maintaining manufacture starring profitability generating a grounds $2.06 successful non-GAAP EPS and an adjusted EBITDA of 33% moreover arsenic we proceed to put heavy successful INR, trauma, competitory recruiting and sorb important rate headwinds. We besides launched 7 caller products successful 2022, 4 of nan launches occurred successful nan 4th quarter.

Revenue for nan 4th was $275 million, up 10% arsenic reported aliases 12% successful changeless currency. Non-GAAP EPS was $0.59, up 20% versus anterior twelvemonth Q4. And adjusted EBITDA was 33%. U.S. Spine grew 10% successful Q4 pinch notable gains crossed our merchandise portfolio successful expandables, biologics, MIS screws, 3D printed implants and cervical and lateral offerings. The gains were driven by competitory rep conversions and robotic propulsion through.

We had a beardown competitory recruiting twelvemonth surpassing nan hiring levels successful 2020 and 2021. This is usually a starring parameter of maturation successful nan coming years and we're excited astir nan imaginable of nan squad we've connected boarded successful 2022. In Q4, we launched our pro lateral diligent positioning strategy arsenic portion of our attraction connected nan continuum of care. It is an interactive adjustable furniture equine that enables a azygous position, azygous stage, lateral surgical attack for nonstop and indirect decompression. Designed to maximize operational efficiencies, summation easiness of implant placement and minimize surgeon fatigue.

It integrates seamlessly pinch our ExcelsiusGPS and E3D solutions and enables important capabilities successful non-robotic procedures. When mixed pinch our Excelsius level and our scope of expandable interbody offerings, we person unsocial and customizable lateral solutions disposable to our surgeons.

Enabling exertion income were $30 million, up 20% connected a changeless rate ground versus anterior year, driven by robotic and imaging strategy sales. This was our highest 4th since launching Enabling Tech surpassing past year's Q4 income that delivered 40% post-COVID growth.

We proceed to spot accrued liking successful placements pinch important world gains of ExcelsiusGPS successful EMEA and nan U.K. that we consciousness will lead to early implant propulsion done and beardown marketplace stock gains. Robotic procedures proceed to accelerate increasing 25% for nan full-year, and exceeding 43,000 robotic procedures performed to-date. We launched Excelsius3D imaging strategy successful Q2 of this twelvemonth and proceed to penetrate nan marketplace passim nan year. Surgeons person said this is simply a crippled changer. Excelsius3D is simply a 3 successful 1 imaging level offering 3 image modalities successful a azygous cart pinch precocious maneuverability, a ample section of view, a seamless integration pinch our ExcelsiusGPS robotic system. It is simply a cardinal constituent of nan Excelsius ecosystem successful nan operating room. An ecosystem that is designed and built from nan crushed up to pass together seamlessly.

Market liking remains precocious for nan state-of-the-art exertion and customer orders proceed to grow. Excelsius3D is positioned to beryllium a awesome maturation driver arsenic we participate 2023. Our world spinal implant business, excluding Japan, delivered grounds income successful Q4 increasing 20% connected a changeless rate ground compared to anterior year. We delivered double-digit maturation successful astir markets, and proceed to spot beardown maturation successful cardinal markets ranging betwixt 25% and 50% for nan 4th pinch U.K., and Australia being awesome contributors.

Our trauma business delivered its 12th consecutive 4th of sequential growth, delivering 70% maturation for Q4 and 71% for full-year. Trauma capacity is driven by income unit description and beardown uptake successful each 14 merchandise lines, delivering precocious double-digit maturation successful each merchandise offering.

In Q4, we launched nan AUTOBAHN EVO femoral nail systems, nan integrated nail is designed to beryllium a standalone and nan retrograde nails designed for either standalone aliases sheet now combo procedures pinch our Anthem Distal Femur system. Initial surgeon feedback is beardown and we expect nan adjacent procreation of antheral to beryllium a cardinal maturation driver successful 2023. Our merchandise improvement motor continues to make advancement focusing connected procedural solutions, designing implants, instrumentation and procedures that will attraction together wrong our Globus ecosystem for a seamless and broad attack successful spine, trauma and joints.

At nan aforesaid time, we're expanding our solutions passim diligent full continuum of care, supporting surgeons successful preoperative planning, intraoperative execution and postoperative diligent attraction to seizure result information for early surgical planning. While this analyzable attack has extended improvement clip lines beyond our humanities accelerated pace, I judge nan upcoming launches will person greater value and shaping procedures of nan future.

Moving into 2023. Globus Medical and NuVasive are readying to harvester successful an all-stock transaction to create a world musculoskeletal institution focused connected accelerated innovation, addressing unmet objective needs and improving offerings to our surgeons and patients. The all-stock building preserves rate to deleverage nan institution and accelerate finance successful assets to substance growth. The operation capitalizes connected our complementary commercialized organization, wherever we spot small territory overlap, and should let america to accelerate our globalization strategies to summation customer scope and fortify our surgeon relationships.

We scheme to bring together nan best-in-class technologies from our portfolios to create a differentiated and broad procedural solution offering arsenic portion of our attack to reside unmet objective needs and support our surgeons and patients.

Our merchandise improvement engines will harvester and summation our attraction connected quickly processing innovative solutions passim nan continuum of attraction from preoperative readying done to purse surgical monitoring. Our operational footprints are highly complementary, allowing america to amended leverage each other's manufacturing and proviso concatenation resources to summation soul production, while reducing nan magnitude of superior finance required arsenic stand-alone, truthful we tin redirect finance and amended rate flow.

Over nan past respective months, it has go clear to maine that some organizations person much successful communal than they are different. The complementary strengths of Globus engineering pinch NuVasive definite relations, acquisition and training will harvester for a genuinely potent invention company. We will proceed to outpace nan marketplace maturation wherever we compete and summation stock while maintaining financial subject to thrust income growth, proceed mid-30s EBITDA, accelerate EPS maturation and accrued rate flows for our investors.

As an update connected nan merger status, we are presently preparing our HSR submission and nan associated proxy statement. Cross-functional integration readying has ramped up, truthful we tin pivot to integration implementation erstwhile nan merger is approved erstwhile we clear HSR, unafraid shareholder approvals and meet closing requirements. We expect to adjacent nan woody successful mid-2023.

In closing, we stay focused connected halfway elements for semipermanent growth, innovative caller merchandise introductions, robot imaging strategy sales, competitory rep recruiting and merger integration planning. 2023 is each astir attraction and execution to present worth to our customers and thrust growth. I cognize we are good positioned to execute our ngo of becoming nan preeminent musculoskeletal institution successful nan world.

I will now move nan telephone complete to Keith.

Keith Pfeil

Thank you, Dan, and convey you to everyone for joining america connected today's call. Globus achieved a milestone successful 2022, increasing to complete $1 cardinal successful sales, contempt beardown rate headwinds and lingering COVID impacts earlier successful nan year. Full-year 2022 gross was $1.023 billion, increasing 6.8% arsenic reported and 8.2% connected a changeless rate ground pinch nan aforesaid number of trading days successful 2022 and 2021.

Currency impacts were unfavorable to gross by $14 cardinal successful 2022. Net income was $190.2 million, resulting successful afloat diluted net per stock of $1.85. Non-GAAP nett income was $211.6 million, generating $2.06 of afloat diluted non-GAAP net per share. 2022 adjusted EBITDA was 33.2%, and we generated $104.4 cardinal of free rate travel for nan afloat year.

Q4 2022 gross was $274.5 million, increasing 9.8% arsenic reported and 11.7% connected a changeless rate basis. Net income was $50.1 cardinal and non-GAAP nett income was $60.1 million. Q4 2022 afloat diluted net per stock was $0.49, while our afloat diluted non-GAAP net per stock was $0.59. Adjusted EBITDA was 32.8%, and we generated $45.6 cardinal of free rate travel for nan quarter.

U.S. gross successful nan 4th fourth of 2022 was $233.2 million, increasing 9.5% arsenic reported compared to nan anterior twelvemonth quarter, led by maturation successful U.S. spine, biologics and trauma. International gross for nan 4th fourth was $41.3 million, increasing 11.4% arsenic reported and 24.2% connected a changeless rate basis, driven by accrued INR and implant sales.

Gross profit successful nan 4th fourth was 74.3% versus 75.3% successful nan anterior twelvemonth 4th and is accordant pinch expectations. The 100-basis constituent diminution was driven chiefly by merchandise operation and higher freight costs partially offset by little inventory reserves and depreciation expenses. Full-year 2022 gross profit was 74.2% compared to 75% successful 2021. The 80-basis constituent alteration was driven by merchandise mix, chiefly higher superior income and higher freight expenses.

Research and improvement expenses successful Q4 were $19.5 cardinal aliases 7.1% of sales, compared to $51 cardinal aliases 20.4% of income successful nan anterior twelvemonth quarter. The little spending is driven by decreased IP R&D spending successful Q4 ‘22 versus Q4 ’21. On a normalized basis, Q4 ‘21 R&D spending was $16.7 cardinal aliases 6.7% of sales. The resulting quarter-over-quarter summation is driven chiefly by higher continued investments successful R&D, chiefly driven by accrued headcount crossed our spine, INR and trauma portfolios.

Our full-year 2022 investigation and improvement expenses were $73 cardinal aliases 7.1% of sales, compared to $97.3 cardinal aliases 10.2% of income successful nan anterior year. Adjusting for acquisitions made successful some periods, R&D expenses successful 2022 were $72.9 cardinal aliases 7.1% of sales, compared to $63 cardinal aliases 6.6% of income successful nan anterior year.

The accrued spending is accordant pinch my comments connected Q4 2022, namely headcount investments crossed our portfolio. SG&A expenses successful nan 4th fourth were $118.1 cardinal aliases 43% of sales, compared to $106.6 cardinal aliases 42.6% of income successful nan anterior twelvemonth quarter. The summation is chiefly higher trading costs arsenic a consequence of higher compensation costs from competitory recruiting, arsenic good arsenic higher recreation expenses.

Full-year SG&A expenses were $432.1 cardinal aliases 42.2% of sales, compared to $408.1 cardinal aliases 42.6% of sales. The accrued dollar spending is chiefly driven by measurement impacts from higher income growth, arsenic good arsenic higher income compensation expenses and higher travel.

SG&A spending decreased 40 ground points versus 2021, driven by leverage connected fixed spending, partially offset by higher income costs and training expenses. The income taxation complaint for nan 4th was 19.4%, compared to 23.8% successful Q4 of 2021, driven chiefly by little world taxation expenses. Our full-year 2022 income taxation complaint was 21.7%, compared to 17.3% successful nan anterior year, pinch nan resulting summation driven by little benefits associated pinch banal action exercises.

Fourth 4th nett income was $50.1 cardinal and non-GAAP nett income was $60.1 million. Q4 diluted net per stock was $0.49 and non-GAAP diluted net per stock was $0.59, compared to $0.49 successful nan anterior twelvemonth quarter. The $0.10 summation successful Q4 2022 non-GAAP EPS includes a nett $0.04 of non-operating favorability driven by a little taxation complaint and higher liking income, partially offset by rate translator impacts.

On a normalized basis, non-GAAP EPS successful nan 4th fourth was $0.55, compared to $0.49 successful nan anterior twelvemonth quarter, increasing 12.2%, driven chiefly by income measurement growth, arsenic mentioned earlier. Full-year 2022 diluted net per stock was $1.85 and non-GAAP diluted net per stock was $2.06, compared to $2.04 of non-GAAP EPS successful 2021.

Our full-year 2022 non-GAAP EPS is inclusive of $0.14 of non-operating items, which includes unfavorable rate impacts worthy $0.11, a higher taxation complaint worthy $0.10, partially offset by higher liking and different income worthy $0.05 and a little stock count worthy $0.02. Full-year 2022 adjusted EBITDA of 33.2% includes 90 ground points of unfavorable rate impacts, resulting successful a normalized 34.1% adjusted EBITDA for nan year.

Net rate provided by operating activities were $64 cardinal successful nan 4th fourth of 2022 and $178.5 cardinal for nan full-year. Free rate travel was $45.6 cardinal successful nan 4th fourth and $104.4 cardinal for nan full-year 2022. Our 2022 free rate travel was impacted by higher superior expenditures, arsenic good arsenic investments successful moving capital, namely inventory and accounts receivable. The institution remains indebtedness free.

At this time, nan institution is establishing its full-year stand-alone 2023 guidance. We are projecting afloat twelvemonth 2023 income guidance of $1.1 billion, representing 7.5% maturation versus 2022. We are guiding to a full-year afloat diluted non-GAAP net per stock of $2.30, representing 11.7% maturation versus 2022.

Our 2022 results are reflective of continued finance crossed our business. R&D spending accrued arsenic we activity to bring much caller and guiding products to market. Our income and trading spending accrued arsenic we proceed to turn our income unit and our CapEx spending accrued to meet accrued demands for merchandise output and group deployment.

In closing, I'll concisely adhd a fewer comments successful summation to Dan's earlier comments arsenic it relates to our February 9 announcement that we've entered into a definitive statement to harvester successful an all-stock transaction pinch NuVasive.

Once shareholder and regulatory approvals are obtained and nan transaction closes, we expect to present 20-plus percent non-GAAP EPS accretion by nan completion of nan first full-year. This assumes apt near-term income dissynergies from rep and relationship disruptions, partially offset by gross synergies astir complementary implant income and further INR income of Globus Capital and NuVasive accounts.

In addition, this includes delivering connected $170 cardinal of costs synergies, of which we expect to execute 50% by extremity of twelvemonth 1, 75% by nan extremity of twelvemonth 2 and 100% by nan extremity of nan 3rd year.

Operator, we will now unfastened nan telephone for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first mobility comes from nan statement of Shagun Singh of RBC Capital Markets. Your statement is open.

Shagun Singh

Great, convey you truthful overmuch and congratulations connected exceeding $1 cardinal successful sales. So I conjecture my first mobility is, I guess, we've each had immoderate clip to digest nan deal, but conscionable fixed nan banal reaction, I'm wondering if you could remark connected wherever you spot nan disconnect successful your reasoning versus investors connected woody rationale financials and/or strategy? And 1 of nan different things that's travel up is, if you may, sweeten nan deal, could you conscionable talk astir nan elasticity and willingness to adjacent nan woody here? Any comments would beryllium helpful. Thank you truthful much.

Dan Scavilla

Thanks, Shagun. So conscionable support successful mind arsenic we did this and arsenic we've talked astir during our announcement, you're really looking astatine what we judge is simply a complementary world scale, nan expertise to grow customer scope pinch minimal overlap. We've talked astir being capable to create a broad and innovative portfolio successful spine and orthopedics erstwhile we harvester these out. And we stay committed to innovative merchandise improvement and surgeon education. We're saying that nan operational capabilities fresh nicely together successful this and really tin use america arsenic a combined.

And erstwhile you look astatine that and you harvester america retired nan compelling upside of gross and what moreover Keith mentioned pinch nan EPS and accretion that's each retired location for worth opportunity, that's what we see. The disconnect, I can't say, I can't speak for Wall Street, they'll constituent to respective unrelated deals and look astatine that, but that's okay. It's surely they're proguative to do it.

As for what we would do successful a marketplace and alteration successful banal is thing we wouldn't beryllium successful a position to really remark connected and pinch thing we'll person to measure and spot erstwhile that clip comes.

Shagun Singh

Got it. And conscionable arsenic a follow-up question. Can you conscionable talk astir nan comparative publication from rep recruitment versus NPIs versus pull-through from Enabling Tech to U.S. implant sales? And past are you parsing retired last implant and imaging income for Q4? And convey you for taking nan questions.

Dan Scavilla

Thanks, Shagun, to beryllium honorable pinch you, I wouldn't person nan expertise to propulsion each those things isolated and really show you what they were. Again, since we're moving nan business arsenic a whole. I deliberation nan truth that we've importantly outpaced nan marketplace pinch continued maturation is astir apt much important arsenic to nan sum of nan parts.

Shagun Singh

Got it.

Operator

Thank you. Our adjacent mobility comes from nan statement of Matt Taylor of Jefferies. Your questions please, Matt.

Matt Taylor

Great. Hi, acknowledgment for taking nan question. So I wanted to spot if you could reside much specifically, I deliberation nan main interest a batch of investors person is astir nan dissynergies, nan turnover that you talked about. Can you talk a small spot astir really you tin mitigate that? And past besides really you whitethorn beryllium capable to offset that pinch immoderate of nan gross synergies that you discussed present and possibly nan timing of this?

Dan Scavilla

Thanks, Matt. So we won't spell into excessively overmuch detail. We're going to put together filings and different things successful our proxy wherever you would surely person entree to that successful nan adjacent future. What we're signaling, of course, is that for illustration successful immoderate deal, we would expect to person immoderate reasonable magnitude of dissynergies. And I deliberation that anybody would want that successful location arsenic a prudent statement. So we've built that successful that way, whether that beryllium reps going to a competitor, relationship switching to conscionable earthy things that would occur.

What Keith said and what I would guidelines by is, however, erstwhile we're capable to get our hands connected a cervical disc that's multilevel that they have, their lateral procedures, we tin manus to them are expandables. We tin unfastened up a marketplace for our enabling technology. All of those things will person really offsets that we judge would hap complete a mates of years. And I deliberation we each powerfully judge successful this. So by combining nan portfolios, combining nan markets will travel retired stronger. And we'll spot immoderate short-term pain, but some pains are doing this for nan long-term, not nan existent 12 months, but we're really looking to say, for multiyear, we're building a beardown company.

Matt Taylor

Maybe I could conscionable inquire 1 follow-up connected nan synergies. You look very assured successful that target that you laid out. Maybe conscionable talk astir really overmuch of that worldly is you'd telephone it good identified aliases little hanging fruit? And really overmuch of it is harder to benignant of propulsion isolated and synergize successful your plan?

Keith Pfeil

Thanks for nan question. Yes, we do consciousness bully astir achieving nan $170 cardinal successful synergies. I would opportunity that we're successful nan early stages of moving pinch nan teams to amended understand nan business. But arsenic we look astatine our costs structure, versus their costs structure, we consciousness assured that we're capable to execute these savings erstwhile you look astatine nan mixed spending of some companies together.

Matt Taylor

Great. Thank you, guys.

Keith Pfeil

Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of Matt Miksic of Barclays. Your statement is open, Matt.

Matt Miksic

Hui, it’s Matt Miksic. I wasn't rather referring to maine aft I look little name, but if you tin perceive maine -- tin you perceive maine okay?

Keith Pfeil

Yes, we sewage you, Matt.

Matt Miksic

Yes, a batch of Matt connected these calls. So 1 conscionable follow-up, if I could, connected nan synergies connected Matt Taylor's comment, and past I person 1 connected margins, if I could, truthful connected nan synergies -- tin you talk astir possibly what is not included successful those? I mean there's a adjacent magnitude of complemenary products, robots and cervical disc replacement and nan cervical portfolio astatine GMED that are perchance complementary successful nan consciousness of driving further sales. Are those included if they are, I guess, what things person you and person you not included successful that number? And past I person 1 follow-up.

Dan Scavilla

Yes. Matt, truthful for clarity, I judge you're talking astir income synergies and dis-synergies. Is that right?

Matt Miksic

Yes. Correct.

Dan Scavilla

Okay. So abstracted from nan wide costs savings pinch that. Again, we're not going to spell into a batch of granular detail. I deliberation what we're conscionable saying is return a look astatine what NuVasive has is simply a spot wherever we tin benefit, and we're saying, look, it's an other measurement for us, too. It's really that combination.

We person immoderate placeholders and immoderate ideas that we're moving through, but this is early stages, right? We really conscionable announced a fewer days ago. And we've gone from being unsighted into expertise to look astatine this pinch a small spot much clarity. We'll attraction done it. I deliberation what we're signaling is assurance that we person capable devices successful our offering to offset income dis-synergies? And past conscionable benignant of backmost to nan mobility Matt had asked connected really costs synergies.

Again, we person respective areas to look at. We haven't fine-tuned those down by accounts surely aliases thing for illustration that aliases moreover department. We conscionable realized that nan abilities are there, and we're successful nan early stages of moving done those.

Matt Miksic

Got it. Okay. That's helpful. And past connected margins going forward, obviously, you're looking for immoderate EBITDA separator leverage this year. Can you talk astir possibly immoderate of nan headwinds that you're facing to benignant of support you present successful benignant of nan debased extremity of nan mid-30s scope arsenic acold arsenic we tin show america benignant of wherever you're your $2.30 EPS number benignant of puts you for this coming twelvemonth based connected nan apical statement and really those benignant of play retired passim nan year, that would beryllium helpful. Thanks.

Keith Pfeil

Sure. Thanks for nan question. So arsenic you deliberation astir going into adjacent twelvemonth connected a standalone basis, nan EBITDA separator does travel retired connected nan little extremity of nan range. But erstwhile you deliberation astir immoderate of nan things we've done recently, we've really stepped up our finance successful R&D spending, that's jumped out. We've invested a small spot much successful Salesforce. That will show -- that should show fruits arsenic we move forward.

But I talked a small spot astir merchandise operation successful nan 4th and nan full-year. Capital income person a small spot of a headwind connected wide profitability. But stepping backmost to that, we still consciousness that we're a mid-70s business. I mean if you look astatine this year, specifically 2022, nan rate effect of $14 cardinal was worthy astir 90 ground points to EBITDA.

So erstwhile I look astatine that, I look astatine nan business and I still spot that we're patient and we're driving nan business forward. Places that we spot inflation. Obviously, I've talked a batch astir freight this year. I deliberation successful each quarter, we've seen freight tick up conscionable from substance prices crossed nan remainder of nan P&L. I deliberation it's adjacent to presume that you're seeing immoderate ostentation successful travel. Last twelvemonth successful 2021, nan recreation grew sequentially arsenic COVID starts to dissipate.

But I deliberation arsenic you sewage to nan -- really nan Q4 and into this year, you saw ostentation return clasp arsenic well, while group proceed to travel. So it's perfectly immoderate of nan drivers that you're seeing successful nan increases there, which offset immoderate of nan leverage maturation -- aliases nan leverage use you mightiness spot successful SG&A.

Matt Miksic

Thanks, truthful much.

Keith Pfeil

Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of Vik Chopra of Wells Fargo. Your question, please, Vik.

Vik Chopra

Hey bully day and acknowledgment for taking nan questions. So 2 for me. First, related to nan deal, I cognize you've said there's constricted customer overlap, but tin you talk astir wherever immoderate of nan merchandise overlap is and which assets aliases categories you deliberation you whitethorn person to divest? My 2nd mobility is 1 of nan ample orthopedic competitors has talked astir coming retired pinch a spine robot exertion successful 2024. Can you possibly talk astir nan marketplace and competitory scenery and whether you expect immoderate effect successful 2023 to your expertise to proceed to waste Excelsius systems?

Dan Scavilla

Thanks, Vik. So I would conscionable get done nan 2nd portion of nan question. We've ever expected -- we've ever talked astir really we're 1 of nan first to move connected this and nan marketplace will really turn complete clip and go people competitive. So you benignant of asked nan question, what do you do to enactment relevant. We've been talking continuously astir our improvement of nan ecosystem of aggregate things that each fresh together. We've talked astir our procedural applications from pre-op readying done to post-op information and feedback loops.

All of those items were good up of nan curve. We're pushing out. We're driving. That will not only support america applicable but really support america arsenic a leader here. And truthful listen, title will travel arsenic natural. They're coming because of our success, and we're going to spell proceed to innovate spend. We've talked continuously astir our finance successful R&D and really that's a propulsion down because we're investing decently to build nan spot for semipermanent gains here. That was nan first part. And I apologize, tin you bring up your first portion of nan mobility again connected nan woody itself?

Vik Chopra

Yes, sure. Just connected nan divestiture, tin you talk astir wherever immoderate of nan merchandise overlap is and which assets aliases categories you deliberation you whitethorn person to perchance divest?

Dan Scavilla

No, it's a awesome question. I would show you that fixed our size, we're not anticipating immoderate important divestitures astatine this time. We're successful nan mediate of each of this filing. So again, we've sewage nan places successful nan hands of nan authorities and wait. But we're not going successful pinch immoderate thought aliases interest that we're seeing correct now that would trigger thing of significance.

Vik Chopra

Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of David Saxon of Needham & Company. Please spell ahead, David.

Unidentified Participant

Hi, guys. This is Joseph connected for David. Maybe conscionable looking towards nan upcoming caller robot launch. Could you -- possibly talk astir immoderate of nan strategy down that? What are nan first accounts you're going to beryllium targeting. You did talk astir nan description of nan income force, but possibly could you besides talk astir possibly pricing and characteristic group possibly comparative to presently disposable robots? And then, if possible, could you quantify those commercialized investments associated pinch nan launch.

Dan Scavilla

Thanks, Joseph. I wish I could, but we don't person each of that information conscionable yet. So fto maine break your mobility into those chunks and spell astatine them. I deliberation accounts, certainly, we would person our eyes connected ASCs and surely hospitals. So I wouldn't opportunity we're going to specialize successful 1 aliases nan other. We'll look to spell astatine some pinch that type of approach. You are correct that our first thought was superior reps and obviously, implant reps will require america to return steps successful investments things that we've built into our projections.

But again, if you cognize us, we don't spell retired and person a large bang. We usage concentric circles wherever prosecute a group stabilize and get it going, moving, we'll salary for them and spell connected and on, conscionable arsenic we've done successful nan past. So I wouldn't awesome that there's a awesome driblet aliases an anticipated finance that takes america disconnected of our curve that way. And finally, pinch pricing, I would conscionable show you, we'll value astatine nan marketplace appropriately. We admit there's title retired there. We consciousness for illustration we've sewage a viable solution that will adhd worth to doctors. And for illustration I said, depending connected what nan marketplace bears, we're successful a position to really do that.

Unidentified Participant

Okay. Great. Yes, that makes sense. And past possibly could you possibly conscionable springiness a speedy update connected nan commercialized squad retired successful Japan if things person possibly stabilized there, there's still much wood to chop?

Dan Scavilla

Yes. I would show you that it's successful nan stabilization phase, it's astir apt astir a 4th down wherever I would person wanted it to be. But what we're seeing correct now is that is settling down into wherever I deliberation it's really astatine nan constituent wherever we should expect to spot immoderate building up of it successful nan first half of this year.

Unidentified Participant

Okay, great. Thank you for taking our questions and congrats connected nan quarter.

Dan Scavilla

Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of Steven Lichtman of Oppenheimer. Please spell ahead, Steve.

Steve Lichtman

Thank you. Good evening, guys. Looking astatine it to nan 2023 income guidance, wondering if you tin supply immoderate colour connected components of growth, U.S. versus U.S. Spine, Emerging Tech, incremental Trauma. Any colour there?

Keith Pfeil

Great question. Thanks for it. We typically don't break retired nan parts and pieces. But erstwhile I measurement backmost and look astatine nan twelvemonth that we're going into, I deliberation we still consciousness very bullish astir our U.S. Spine business and its expertise to grow. I deliberation we came disconnected a beardown 4th betwixt that Biologics and Trauma successful nan U.S., Enabling Tech. I spot that continuing to grow, cognizant that we're entering into a recession. However, 1 of nan things that we spot happening is greater income of those units internationally. So that's thing that we consciousness bully astir going into adjacent year. But that's astir arsenic overmuch item arsenic springiness successful position of bringing retired nan guidance.

Dan Scavilla

Steve, 1 point I'd adhd to that, which I'm pleased pinch is we're not limited upon 1 aliases 2 of these. It really seems for illustration we're projecting guardant arsenic we've performed successful nan past. And while we'll ne'er get each 1 of these precisely right, we person capable levers present that I consciousness powerfully that we tin get into this and execute it.

Steve Lichtman

Got it. Okay. And past conscionable secondly, arsenic you look up present adjacent term, is location thing you consciousness you request to do to thief clasp reps and forestall immoderate coaching up of nan woody closing? Or conscionable wide benignant of what you deliberation nan benignant of nan tenor of nan group successful nan past mates of 3 weeks here?

Dan Scavilla

It's a awesome question. And look, it's quality quality successful nan authorities of alteration to person immoderate discomfort. So nan champion point to do is pass because we don't request to request present pinch this. Keep successful mind that we, arsenic Globus and what we intend to do is nan bigger company, is salary powerfully for our reps, and we've been doing that historically without alteration dissimilar different companies.

So we're going to support that. At nan aforesaid time, we person discussed successful personification pinch nan section squad our portfolio to understand nan strengths that we're astir to springiness them connected nan NuVasive side, and they've really are successful nan process of doing nan aforesaid for america connected nan Globus broadside pinch that.

So we're talking astir beardown compensation, arguably nan strongest offering for products successful nan spine marketplace pinch that. And past our Enabling Technology, on pinch nan Pulse strategy tin really go a powerful tool, and I deliberation everybody tin spot that. And then, of course, we're ever looking astatine what adjacent term, yet early invention tin beryllium to importantly necktie these together done that ecosystem. When we connection that up pinch people, it's a reliable point to compete against and a rep that is semipermanent focused and wise tin admit that wrong 12 months, they're going to person astatine their fingertips nan astir powerful offering successful nan industry.

Steve Lichtman

Got it. Thanks, Dan.

Operator

Thank you. Our adjacent mobility comes from nan statement of Matthew O'Brien of Piper Sandler. Please spell ahead, Matthew.

Matthew O'Brien

Hey, I benignant of collapsed up, you opportunity Matthew O'Brien?

Dan Scavilla

He did.

Matthew O'Brien

Okay. Fantastic. Thanks for taking my questions. So I guess, Dan, tin you aliases Keith really conscionable talked astir nan timing of nan NuVa ballot from nan shareholders. And past it is simply a return nether astatine this point. It's astir 5% little banal prices versus wherever it was traded earlier nan announcement. So really are you going to talk those investors into voting for this transaction betwixt you and Chris? And are you truthful committed to this woody that you would connection up a sweetener, beryllium it much banal aliases moreover cash, if request be, to make judge this gets done? And I do person 1 much follow-up.

Dan Scavilla

Thanks, Matt. So a batch of questions there. I would show you that we're not going to beryllium successful a position yet to remark connected what it is we're going to do. Certainly, we're going to talk to investors show them why this woody makes sense, show them nan mathematics to get them lined up pinch this and understand that this is simply a semipermanent summation that will create a important acceleration versus if we enactment arsenic stand-alone. So I deliberation it's astir apt nan biggest point pinch it. But to talk astir immoderate different steps astatine this constituent would beryllium premature. So I'll refrain from that.

Matthew O'Brien

Okay. But Dan, nan -- erstwhile we perceive mediate of nan twelvemonth closing, you think, each right, June 30, truthful nan ballot would beryllium sometime earlier then. I mean, is nan adjacent fewer months wherever we could spot nan vote?

Dan Scavilla

Sorry, I did time off that off. I wasn't avoiding that pinch that. Really, what we request to do correct now is create nan associated proxy first and past get nan vote. We're successful nan process of compiling that, arsenic I said successful my statements, look, I don't person an nonstop day wherever we'll opportunity that's done, but it's evidently nan privilege correct now is to get nan HSR filing in, get that working, get to associated proxy going truthful we tin get this successful motion.

Matthew O'Brien

Okay. And past nan follow-up, Dan, is again much of a strategical mobility because I deliberation portion of nan guidance successful nan banal was benignant of nan accommodation to nan strategical guidance of nan business that I deliberation astir were anticipating, because you are benignant of much diversifying distant from spine now you are doubling down more. Is this portion of a bigger push for nan institution longer term, double down connected spine, get large there, get a batch of rate travel and past put successful different areas of Ortho to go a overmuch bigger entity successful this space? Thanks.

Dan Scavilla

Thanks, Matt. Again, a really bully question. So it's ever -- it's evidently absorbing from nan spot for years. For 8 years, investors person asked what are you going to do? How are you going to make an acquisition? What are you going to do? We've made an acquisition and folks are benignant of stepping backmost by it. But nan truth is we've been patient, we've looked, we've analyzed, we decided this is nan correct clip to do it. We've looked done aggregate scenarios passim our portfolio and really came backmost to this being nan strongest opportunity now to spell do this.

And what you touched connected is precisely right, nan mixed institution will beryllium stronger than nan individuals, and our rate travel itself, erstwhile we combine, will beryllium significant, which will let america past to move connected to different larger acquisitions complete time. Doesn't mean that we've conscionable shifted and won't create invention and motorboat organically. We're conscionable saying we want to usage nan financial spot to our use arsenic good arsenic our engineering prowess.

Matthew O'Brien

Got it. Makes a batch of sense. Thanks truthful much.

Operator

Thank you. Our adjacent mobility comes from nan statement of Craig Bijou of Bank of America. Please spell ahead, Craig.

Craig Bijou

Thanks, guys. Thanks for taking nan questions. I wanted to attraction connected Enabling Tech here. And -- it did travel successful a small spot little than nan Street was expecting. I cognize you guys had a grounds quarter. And you guys person talked astir nan spot internationally -- truthful possibly benignant of wanted to parse retired U.S. versus OUS trends successful pinch Enabling Tech. And past you really spot benignant of what you spot successful your funnel? And has thing changed complete nan past 3 months aliases truthful since nan past 4th pinch nan funnel, either U.S. aliases OUS.

Dan Scavilla

Yes. Thanks, Craig. I will usage my first -- I'm not judge I would apologize for delivering 20% maturation successful a recession and a challenging market. I deliberation that's a very beardown capacity that was done by nan team. And truthful I'll enactment by that one. Certainly, past twelvemonth 2021, you had a batch of income robotically successful nan U.S., because of pent-up demand, a batch of activity on pinch COVID. And while I opportunity we came adjacent to that this year. The world has, I think, recovered economically a small spot amended than nan U.S. successful immoderate of these concerns.

So what we're signaling is we've seen immoderate awesome placements internationally that benignant of put america backmost into a beardown spot wide that measurement robotically. And arsenic we've said, we've besides put retired nan imaging system. Really U.S. correct now pinch wherever that is and what we're doing pinch that and conscionable continuing to return advantage of that market.

Craig Bijou

Got it. And conscionable pursuing up, I'll instrumentality connected Enabling Tech. But Keith made nan remark astir looking astatine into a recession successful consequence to 1 of nan erstwhile questions. But your position connected ’23, you still consciousness for illustration there's a beardown infirmary appetite for capital, and you don't spot immoderate concerns aliases immoderate changes successful either nan reasoning aliases nan actions of hospitals?

Dan Scavilla

I would opportunity it's a small excessively soon for america to call. I mean, certainly, moreover getting each done COVID and into past year, we've seen behavioral changes and concerns and shorting of unit that they person to divert costs otherwise, each things for illustration that, that person been a ripple done this. So I don't cognize if we had a chance to look for really nan past 2 to 3 years astatine a dependable authorities and understand what's normal and now, we're successful nan look of a recession.

So difficult to call. Again, what I would show you is we've placed retired stand-alone guidance. And successful that, we person reasonably beardown numbers that we consciousness we tin achieve, recognizing that location whitethorn beryllium immoderate unit connected nan Enabling Tech. But again, there's capable levers passim our wide portfolio, we consciousness assured we tin execute those numbers.

Keith Pfeil

And nan only remark I would adhd to Dan, to what Dan stated, if you measurement backmost and look astatine Enabling Tech, going backmost to 2018, that business delivered $47 cardinal successful income successful '18. It delivered $47 cardinal successful '19. We went done COVID, and we delivered $41 million. And past year, we delivered 81 to decorativeness this twelvemonth astatine 96. So nan business has really grown. Obviously, there's ever issues that we're going to beryllium faced with. But astatine nan extremity of nan day, we're going to really activity to get done them and really get our superior successful nan hands of our customers.

Craig Bijou

Got it. Thanks for taking nan questions, guys.

Keith Pfeil

Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of Kyle Rose of Canaccord Genuity. Please spell ahead, Kyle. Kyle Rose, your statement is open.

Kyle Rose

Sorry, I didn't perceive my sanction there. Thank you for taking nan questions. I want to talk a small spot astir apical statement guidance. You outlined immoderate expectations for nan accustomed income dis-synergies erstwhile nan woody closes. I'm conscionable wondering really you're reasoning astir nan first half of nan twelvemonth pre-deal close. Any benignant of group taking nan oculus disconnected nan ball, possibly guidance contemplate immoderate of that connected a stand-alone basis? And past there's imaginable upside location if that doesn't play out. Any insights you tin supply location would beryllium helpful.

And past secondarily, connected caller products, you're still talking astir nan full associated exertion from a robotics perspective. But successful nan past, you've elaborate possibly immoderate merchandise gaps aliases request to amended nan underlying implant systems successful full joints. Is it adjacent to expect that we should spot immoderate of those caller merchandise launches travel on up of nan robotics launch?

Keith Pfeil

Right. Thanks for nan question. I'll return nan first portion and manus nan 2nd portion complete to Dan. So arsenic it relates to guidance, stand-alone guidance and looking astatine 2023, I don't spot aliases we don't spot anybody taking their oculus disconnected nan ball. We're happy pinch what we've seen frankincense acold successful nan quarter. Sales are -- gathering expectations. So I don't spot anyone taking their oculus disconnected nan ball. It is -- we are moving a business, and we're moving nan business guardant arsenic we intended anterior to woody announcement.

Dan Scavilla

What I would opportunity connected your 2nd mobility is we will motorboat retired our robot that will person a knee application. We're moving connected different applications now. I would not deliberation that you're going to spot them travel retired earlier nan knee exertion would beryllium my first thoughts. So I deliberation we'll commencement retired pinch nan existent migrate and hep arsenic we said, and past we person nan expertise to move into different applications complete clip that way.

Kyle Rose

Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of Mathew Blackman of Stifel. Your mobility please, Mathew.

Mathew Blackman

Hi, it’s Matt Blackman from Stifel. Thank you for taking my question. Just one, conscionable reasoning astir nan inputs you put into your woody exemplary gross dissynergies, synergies do you deliberation there's nan astir flex aliases possibly amended said, wherever is nan astir opportunity and possibly nan astir consequence arsenic you deliberation astir those different inputs?

Dan Scavilla

Yes, it's a awesome question, a small spot of a teasing question. We astir apt don't want to answer. But what I would show you is I consciousness for illustration we were fierce successful what we deliberation nan dissynergies would beryllium and ray successful what we deliberation nan synergies will be. We're blimpish group by nature, if you cognize us, and truthful I do deliberation that we mightiness beryllium capable to clasp amended than we've planned successful dissynergies. And I deliberation that we could astir apt hit if we person nan correct attraction connected our synergies wrong those income areas, but not merchandise specific, conscionable successful general.

Mathew Blackman

Alright, admit it. Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of Richard Newitter of Truist. Please spell ahead, Richard.

Richard Newitter

Hi, acknowledgment for taking nan questions. Two for me. Just connected nan deal, you mentioned minimal customer overlap. I was hoping you could elaborate connected what nan period was for defining minimal overlap per surgeon betwixt nan 2 companies. I'm fundamentally conscionable trying to gauge whether a surgeon that you see not to beryllium overlapped will that needfully construe into minimal disruption successful nan region, particularly successful nan measurement that territories are going to beryllium grown because you still request to divided those territories. So I was conscionable hoping you could possibly elaborate a small spot connected that.

Dan Scavilla

Yes, Rich, I'll do that successful a definite way. There's not a batch I tin uncover correct now pinch wherever we're going connected this, but I will springiness you what I deliberation we tin do on these lines. So during nan diligence, of course, each of this information was blinded and it was done by bankers, not us. And we traced it down to a surgeon level arsenic nan astir logical measurement to go.

And what we recovered is -- we had nan immense mostly arsenic complementary. And what nan meaning of nan complementary is that personification whitethorn either person 100%, 80%, 75% of a surgeon by themselves. And it was benignant of aft that, possibly if you're 50-50 aliases less, that would beryllium nan overlap. And truthful what we recovered is benignant of -- I can't really uncover this, but I would opportunity highly precocious successful nan 90s of nan expertise to lucifer up.

Now arsenic we unblind that, possibly we spot it differently. We adjust, we look and go. But moreover pinch a surgeon overlap, very good could beryllium that nan surgeon is utilizing NuVasive's pedicle screws successful our interbody aliases vice versa. So it whitethorn not beryllium a merchandise conflict. The thought being that moreover on those lines, wherever that is nan case, we tin determine betwixt those reps, what's best. Does 1 support nan surgeon? Do they some support it that way?

Our extremity is to support each of nan reps. We person capable space, capable growth, capable opportunity to do this. So it's not really astir a rep rationalization. And what we're signaling retired to nan marketplace is we judge that this is simply a very favorable point for nan woody that will minimize disruption.

Richard Newitter

Got it. And past conscionable -- I deliberation you had referenced a caller augmented reality headset merchandise motorboat successful 2023 connected your past convention call. Just funny if that's still connected way and what nan timing mightiness beryllium there.

Dan Scavilla

I'm speaking to you done it correct now, Rich. No, kidding. No, listen, it's connected track. I deliberation that, again, you tin ne'er opportunity for judge what's going connected pinch nan FDA successful nan filings. But I would show you that we signaled that pinch nan thought that it would beryllium retired towards nan second portion of this year. And by nary intends will we return our oculus disconnected that ball. It's going to beryllium a awesome subordinate for america to get retired and proceed to differentiate pinch this type of approach. So it's 1 of nan apical priorities.

Richard Newitter

Okay. And thing successful location from a guidance standpoint baked in?

Dan Scavilla

Well, you cognize really we ever reply that, right? So successful total, we consciousness good. It's 1 of nan levers that we'll look at, but it's thing that would not return america disconnected our expertise to execute our numbers, whether it came to marketplace aliases did not.

Richard Newitter

Great. Thanks a lot.

Operator

[Operator Instructions] Our adjacent mobility comes from nan statement of Drew Ranieri of Morgan Stanley. Your mobility please, Drew.

Drew Ranieri

Hi, acknowledgment for taking nan question. Just 1 connected international. I deliberation successful your prepared comments, you said world ex-Japan was up 20% year-over-year. Can you possibly springiness america a small spot much item astir nan all-in number pinch Japan. And past conscionable remark connected immoderate benignant of cardinal moving drivers location successful nan world market. It seemed for illustration from nan acquisition telephone you were putting a batch of accent connected nan world scope of nan 2 companies. So immoderate much item that you could stock location would beryllium great.

Keith Pfeil

Thanks for nan question. So arsenic we look astatine international, nan Japan income were down. There's evidently immoderate rate impacts successful location arsenic well. But what we really saw arsenic we sewage to nan backmost extremity of nan 4th is touches connected nan stabilization that Dan commented connected earlier. But arsenic we get into 2023, we expect to commencement to spot this business to move guardant and grow.

Operator

Thank you. With nary further questions, this concludes nan Globus Medical Fourth Quarter and Full-Year 2022 Analyst Call. Thank you for your participation. You whitethorn now disconnect.

Editor: Naga



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