What changed in this filing

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Item 1. Business

2022-02-17 compared with 2021-02-17 · 43 added, 32 removed, 284 unchanged (21% of the section changed)

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Globus is an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures to address treatment challenges.

With 220 product launches across 51 countries worldwide, we offer a comprehensive portfolio of innovative and differentiated technologies that are used to treat a variety of musculoskeletal conditions.

With over 220 product launches across 50 countries worldwide, we offer a comprehensive portfolio of innovative and differentiated technologies that are used to treat a variety of musculoskeletal conditions.

Although we manage our business globally within one operating segment, we separate our products into two major categories:

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In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.

Although the Company cannot reasonably estimate the length or severity of the impact that the pandemic will have on its financial results, the Company has experienced, and may continue to experience, a material adverse impact on its sales, results of operations, and cash flows in fiscal 2021.

To date, COVID-19 has not materially affected our supply chain or production schedule, although delays may be possible in the future due to the dynamic nature of the situation.

We are focused on navigating the challenges presented by COVID-19 and believe we are in a strong position to continue to sustain and grow our business once the restrictions are lifted and elective surgeries fully resume.

As such, given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

However, if a resurgence occurs and governments mandate restrictions, including restrictions on elective surgeries, we do expect that it could have a material adverse impact on our revenue growth, operating profit and cash flow, revised payment terms with certain of our customers, and a change in effective tax rate driven by changes in the mix of earnings across the Company’s jurisdictions.

We are focused on navigating the challenges presented by COVID-19 and believe we are in a strong position to continue to sustain and grow our business.

Overall Business

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We expect to increase the number of our direct and distributor sales representatives in the U.S., to expand into new geographic territories and to deepen our penetration in existing territories.

We will also continue to provide our sales representatives with specialized development programs designed to improve their productivity.

will also continue to provide our sales representatives with specialized development programs designed to improve their productivity.

 Continue to expand into international markets .

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 Pursue strategic acquisitions and alliances .

In 2016, we acquired the international operations and distribution channel of Alphatec Holdings, Inc.

to increase our worldwide footprint.

In 2017, we acquired KB Medical SA, developer of a computer-assisted robotic guidance system, and in 2018 we acquired Nemaris Inc., a privately held company that markets and develops Surgimap ® , a leading surgical planning software platform, to further bolster our efforts to advance surgical procedures through Enabling Technologies.

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During the second quarter of 2020, the Company acquired Synoste Oy (“Synoste”), a Finnish engineering company that specializes in the research and development of a limb lengthening system.

During the fourth quarter of 2021, the Company acquired Capstone Surgical Technologies, LLC.

(“Capstone”), a privately held company that engages in the business of creating advanced drill and robotic surgery platforms.

We intend to selectively pursue acquisitions and alliances that complement our strategic plan and provide innovative technologies, personnel with significant relevant experience, or increased market penetration.

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We believe that our focus on actively listening and responding to the needs of our customers with high quality solutions separates us from our industry peers.

Since 2003 we have introduced 220 products designed for the treatment of musculoskeletal disorders.

Since 2003 we have introduced over 220 products designed for the treatment of musculoskeletal disorders.

Given our robust product portfolio of unique and differentiated products, as well as the numerous disruptive products in various stages of development, we believe we are well positioned for growth in the musculoskeletal markets we operate in.

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Our broad spectrum of spine products addresses the vast majority of conditions affecting the spine including degenerative conditions, deformity, tumors, and trauma.

With more than fifteen years in this competitive market, we provide comprehensive solutions that facilitate both open and minimally invasive surgery (“MIS”) techniques.

With almost 20 years in this competitive market, we provide comprehensive solutions that facilitate both open and minimally invasive surgery (“MIS”) techniques.

This includes traditional fusion implants such as pedicle screw and rod systems, plating systems, intervertebral spacers and corpectomy devices.

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We have also developed treatment options for motion preservation technologies, such as dynamic stabilization, total disc replacement and interspinous distraction devices;

as well as interventional pain management solutions to treat vertebral compression fractures.

as well as interventional solutions to treat vertebral compression fractures.

Our biologic solutions include regenerative biologic products such as allografts and synthetic alternatives that are adjunctive treatments typically used in combination with stabilizing implant hardware.

Our orthopedic trauma solutions are designed to treat a wide variety of orthopedic fracture patterns and patient anatomies in the upper and lower extremities as well as the hip.

Our orthopedic trauma and extremity products, covering four major segments of the orthopedic trauma market:

Our orthopedic trauma and extremity products, covering four major segments of the

orthopedic trauma market:

fracture plates, compression screws, intramedullary nails, and external fixation.

We began marketing these products in 2018 and intend to grow our presence in this field.

Fracture plating includes proximal humerus, distal radius, proximal tibia,

distal tibia, distal fibula, small fragment, mini-fragment and clavicle plates.

Fracture plating includes proximal humerus, distal radius, proximal tibia, distal tibia, distal fibula, small fragment, mini-fragment and clavicle plates.

Intramedullary nailing includes tibial, trochanteric, and femoral nail systems.

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We expect to continue to increase the number of our direct and distributor sales representatives in each of these areas, both in the U.S.

and internationally, to expand into new geographic territories and to deepen our penetration in existing territories.

and internationally, to

expand into new geographic territories and to deepen our penetration in existing territories.

We believe the expansion of our U.S.

international sales forces provides us with significant opportunities for future growth as we continue to penetrate existing geographic markets and enter new ones.

and international sales forces provides us with significant opportunities for future growth as we continue to penetrate existing geographic markets and enter new ones.

Our implant sales representatives are present in the operating room during most surgeries in the United States and in many, but not all, of the other countries in which our products are sold.

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We have greatly expanded our dedicated in-house manufacturing capabilities.

A significant portion of our implant products are manufactured in our facilities in Eagleville, Pennsylvania.

A significant portion of our implant products are manufactured in our facilities in Eagleville, Pennsylvania and Limerick, Pennsylvania.

Most of our regenerative biologics products are processed in our facilities in San Antonio, Texas, and in Audubon, Pennsylvania.

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We work closely with our suppliers to ensure that our inventory needs are met while maintaining high quality and reliability.

To date, we have not experienced significant difficulty in locating and obtaining the materials necessary to fulfill our production requirements, and we have not experienced a meaningful backlog of sales orders.

We believe our supplier relationships and facilities will support our potential capacity needs for the foreseeable future.

To date, we have experienced slight delays in locating and obtaining the materials necessary to fulfill our production requirements, but it has not caused a meaningful backlog of sales orders.

Despite the current delays, which we believe are temporary and are primarily driven by the dynamic nature of the COVID-19 impact on the global supply chain, we believe our supplier relationships and facilities will support our capacity needs for the foreseeable future.

However, it is possible that a prolonged COVID-19 disruption could cause a backlog of sales orders.

A majority of our product inventory is held primarily with our sales representatives and at hospitals throughout the United States.

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Third-Party Coverage and Reimbursement

We expect that sales volumes and prices of our Musculoskeletal Solutions products including spinal implant, orthopedic trauma, and hip and knee arthroplasty products may grow to be more dependent on the availability of coverage and reimbursement from third-party payors, such as state and federal programs including Medicare, Medicaid and Worker’s Compensation as well as private insurance plans including Blue Cross Blue Shield plans and commercial insurers.

We expect that sales volumes and prices of our Musculoskeletal Solutions products including spinal implant, orthopedic trauma, hip and knee arthroplasty, regenerative biologics, and advanced technology products may grow to be more dependent on the availability of coverage and reimbursement from third-party payors, such as state and federal programs including Medicare, Medicaid and Worker’s Compensation as well as private insurance plans including Blue Cross Blue Shield plans and commercial insurers.

Reimbursement is dynamic and is contingent on coding for given services or procedures, coverage by third-party payors, and adequate payment for the services or procedures.

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The availability of existing codes to bill for services and procedures may impact the adoption of technology.

The CPT codes, depending on the situation and payor rules, are sometimes billed with billing modifiers that can affect coverage and reimbursement.

The Centers for Medicare and Medicaid Services (“CMS”) and the National Center for Health Statistics are jointly responsible for overseeing changes and modifications to International Classification of Diseases, Clinical Modification/Procedure Coding System (“ICD-10-CM/PCS”) procedure codes used by all providers including physicians and facilities for reporting patient diagnosis(es) (ICD-10-CM codes) and hospitals for reporting inpatient procedures (ICD-10-PCS codes).

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Additionally, more musculoskeletal procedures are being performed in the hospital outpatient and ASC settings, in part due to innovation.

Further, beginning January 1, 2021 and over the course of a three-year period, CMS will eliminate the inpatient only list for Medicare which will result in all spine procedures being payable in the outpatient setting.

Reimbursement levels in the hospital outpatient and ASC settings are typically lower than for the hospital inpatient setting and may not be adequate to cover the cost of innovative and novel medical devices.

In international markets, reimbursement and healthcare payment systems vary significantly by country and some countries have instituted price ceilings on specific product lines.

There can be no assurance that our products will be accepted by third-party payors, that coverage and reimbursement will be available or, if available, that the third-party payors’ coverage and reimbursement policies will not adversely affect our ability to sell our products profitably.

There can be no assurance that our products will be accepted by third-party

payors, that coverage and reimbursement will be available or, if available, that the third-party payors’ coverage and reimbursement policies will not adversely affect our ability to sell our products profitably.

We believe that the overall escalating cost of medical products and services has led to, and will continue to lead to, increased pressures on the healthcare industry to reduce the costs of products and services.

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We believe that we have structured our business operations and relationships with our customers to comply with all applicable legal requirements.

However, it is possible that governmental entities or other third parties, including Relators (whistleblowers) under the federal civil False Claims Act (“FCA”), could interpret these laws differently and assert otherwise.

However, it is possible that governmental entities or other third parties, including Relators (whistleblowers) who can file complaints on behalf of the government and on their own behalf under the federal civil False Claims Act (“FCA”), could interpret these laws differently and assert otherwise.

We discuss below the statutes and regulations that are most relevant to our business.

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Compliance with these requirements entitles us to affix the CE conformity mark to our medical devices, without which they cannot be commercialized in the EEA.

To demonstrate compliance with the essential requirements and obtain the right to affix the CE conformity mark we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.

and its classification.

Following the expiration of the existing Directive 93/42 CE mark (May 2024), all medical device companies manufacturing and/or marketing products in the EEA, including Globus, will be required to comply with requirements of the Medical Devices Regulation EU 2017/745, which are generally stricter and include increasing technical documentation requirements and altering the classification of some products.

Most devices that are CE marked under Directive 93/42 may continue to be marketed in the EU under certain conditions until May 2024, at which point these products must comply with the new regulation.

Products placed on the market under the Medical Device Directive may continue to be sold for one year after May 2024.

Additionally, in the EEA the procurement, testing, processing, preservation, storage and distribution of human tissues and cells is subject to the requirements of the laws of individual EEA Member States implementing Directive 2004/23/EC, Directive 2006/17/EC and Directive 2006/86/EC.

Further, the advertising and promotion of our products in the EEA is subject to the laws of individual EEA Member States implementing the EU Medical Device Directive, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other EEA Member State laws governing the advertising and promotion of medical devices.

These laws may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals.

In May of 2021, the EEA Member States will implement the EU Medical Device Regulation (MDR 2017/745), which will replace the current EU Medical Device Directive that governs medical devices in the EEA.

All medical device companies manufacturing and/or marketing products in the EEA, including Globus, will be required to comply with the new regulation, which increases technical documentation requirements and may alter the classification of some products.

Most devices that are CE marked under the EU Medical Device Directive prior to 2020 will continue to be marketed in the EU under certain conditions until 2024, at which point these products must comply with the new regulation.

Further, the advertising and promotion of our products in the EEA is subject to limited provisions under Regulation 2017/745 and the laws of individual EEA Member States implementing Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other EEA Member State laws and industry codes governing the advertising and promotion of medical devices.

These laws and codes may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals.

With the departure of the UK from the EU in January 2021, while CE marking will continue to be accepted by the UK until July 2023, a separate UKCA mark will be thereafter required to market a device in the UK.

We are subject to unannounced device inspections by the Notified Body (an organization accredited by a Member State of the EEA to conduct conformity assessments), as well as other regulatory agencies overseeing the implementation and adherence of applicable regulations.

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Federal anti-kickback laws and regulations prohibit, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for, or to induce either the referral of an individual, or the purchase, order or recommendation of, any good or service paid for under federal healthcare programs such as the Medicare and Medicaid programs.

State anti-kickback laws have similar prohibitions.

In addition, federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid.

Violations of the federal Anti-Kickback Statute and off-label promotion have been pursued by the Department of Justice (“DOJ”) and the Department of Health and Human Services (“HHS”) as violations of the FCA.

Lawsuits under the FCA often are initiated by Relators on behalf of the government.

Relators are incentivized to pursue claims against manufacturers by the potential to share in any monetary penalties recovered by the government, which can be significant.

Relators are incentivized to pursue claims against manufacturers and providers by the potential to share in any monetary recoveries by the government in litigation or as part of a settlement, which can be significant.

Pursuant to FDA regulations, we can only market our products for cleared or approved uses.

Although surgeons are permitted to use medical devices for indications other than those cleared or approved by the FDA based on their medical judgment, we are prohibited from promoting products for such off-label uses.

Additionally, the majority of states in which we market our products have similar anti-kickback, false claims, anti-fee splitting and self-referral laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and violations may result in substantial civil and criminal penalties.

A bill pending before the Senate of the United States, the False Claims Amendments Act of 2021 (SB 2428), which was reported favorably out of the Committee on the Judiciary, would broaden the applicability of the FCA and implement other changes that would not be favorable to defendants in FCA cases.

If enacted, the False Claims Amendment Act would apply to any case filed under the FCA on or after the date of enactment.

Additionally, the majority of states in which we market our products have similar anti-kickback, false claims, anti-fee splitting and physician self-referral laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and violations may result in substantial civil and criminal penalties.

Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws in non-U.S.

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Additionally, we must comply with a variety of other laws that protect the privacy of individually identifiable healthcare information and impose extensive tracking and reporting related to transfers of value provided to certain healthcare professionals.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, and various state laws impose reporting and disclosure requirements on device manufacturers for any “transfer of value” made or distributed to prescribers and other healthcare providers.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, imposes

reporting and disclosure requirements on device manufacturers with respect to ownership and investment interests by physicians and members of their immediate family as well as certain payments or other “transfers of value” made to physicians and other healthcare providers licensed in the U.S.

and to teaching hospitals.

Several states in which we market our products also have imposed healthcare provider payment reporting, gift ban and compliance program requirements on device manufacturers.

The shifting compliance environment and the need to build and maintain robust and expandable systems to comply in multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business