What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-08 compared with 2022-08-04 · 62 added, 41 removed, 213 unchanged (33% of the section changed)

40 unchanged sentences

sales force and we intend to add additional direct and distributor sales representatives in the future.

During the six months ended June 30, 2022, international net sales accounted for approximately 14.7% of our total net sales.

During the nine months ended September 30, 2022, international net sales accounted for approximately 14.7% of our total net sales.

We have sold our products in approximately 50 countries other than the United States through a combination of sales representatives employed by us and exclusive international distributors.

7 unchanged sentences

Results of Operations

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

The following table sets forth, for the periods indicated, our net sales by geography expressed as dollar amounts and the changes in net sales between the specified periods expressed in dollar amounts and as percentages:

Three Months Ended

September 30,

(In thousands, except percentages)

2 unchanged sentences

Total net sales

In the United States, the increase in net sales of $10.2 million for the three month period ended June 30, 2022 was due to an increase in sales volume of enabling technologies and spine product sales, including robotic instruments, resulting from penetration in existing territories.

International net sales increased by $2.5 million for the three month period ended June 30, 2022 due to an increase in sales volume of enabling technologies and spine product sales, including robotic instruments, resulting from penetration in existing territories, partially offset by lower sales in Japan due to the transition of our sales force composition.

In the United States, the increase in net sales of $18.9 million for the three month period ended September 30, 2022 was due to an increase in spine product sales, including robotic instruments, resulting from penetration in existing territories and sales volume of enabling technologies.

International net sales increased by $5.6 million for the three month period ended September 30, 2022 due to an increase in spine product sales, including robotic instruments, resulting from penetration in existing territories, and sales volume of enabling technologies, partially offset by lower sales in Japan due to the transition of our sales force composition.

GLOBUS MEDICAL, INC.

2 unchanged sentences

Three Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The $4.6 million increase in cost of goods sold was primarily due to increased volume, unfavorable freight trends, and unfavorable production variances, partially offset by lower depreciation and inventory reserves and write-offs .

The $6.9 million increase in cost of goods sold was primarily due to increased volume, higher inventory reserves and unfavorable freight trends, partially offset by lower inventory write-offs .

Research and Development Expenses

Three Months Ended

September 30,

(In thousands, except percentages)

4 unchanged sentences

Three Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The balances for selling, general and administrative expenses are consistent for the three month period ended June 30, 2022 compared to the three month period ended June 30, 2021.

The $10.1 million increase in selling, general and administrative expenses was primarily due to an increase in commission expenses resulting from higher product sales and travel and meeting expenses for the three month period ended September 30, 2022 compared to the three month period ended September 30, 2021.

Provision for Litigation

Three Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The provision for litigation was immaterial for the three month periods ended June 30, 2022 and 2021.

The provision for litigation was immaterial for the three month periods ended September 30, 2022 and 2021.

Amortization of Intangibles

Three Months Ended

September 30,

(In thousands, except percentages)

6 unchanged sentences

Three Months Ended

September 30,

(In thousands, except percentages)

4 unchanged sentences

Three Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The decrease in other income/(expense) is due to an unfavorable change in foreign exchange rates partially offset by a reimbursement for damaged inventory and instrumentation.

The increase in other income/(expense) is due to an increase in interest income partially offset by change in foreign exchange rates.

Income Tax Provision

Three Months Ended

September 30,

(In thousands, except percentages)

2 unchanged sentences

The increase in the effective income tax rate was primarily due to the lower impact of stock option exercises.

A discussion of our Results of Operations for the three months ended June 30, 2021 can be found in “ Part I, Item 2.

A discussion of our Results of Operations for the three months ended September 30, 2021 can be found in “ Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations;

Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020.

” on our Form 10-Q filed on August 4, 2021 .

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020.

” on our Form 10-Q filed on November 4, 2021 .

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

4 unchanged sentences

International net sales increased by $8.2 million, which was due primarily to increased spine product sales, including robotic spine instruments, resulting from penetration in existing territories and an increase in sales volume of enabling technologies, partially offset by lower sales in Japan due to the transition of our sales force composition.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

Cost of Goods Sold

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The $8.8 million increase in cost of goods sold was primarily due to increased volume, unfavorable production variances, and unfavorable freight trends, partially offset by lower depreciation .

The $15.7 million increase in cost of goods sold was primarily due to increased volume, unfavorable freight trends and production variances, partially offset by lower inventory write-offs and lower depreciation.

Research and Development Expenses

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

3 unchanged sentences

Selling, General and Administrative Expenses

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The increase in selling, general and administrative expenses was primarily due to an increase in travel and meeting expenses, partially offset by a decrease in employee benefit costs.

The $12.5 million increase in selling, general and administrative expenses was primarily due to an increase in travel and meeting expenses and an increase in commission expenses resulting from higher product sales, partially offset by a decrease in employee benefit costs.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

Provision for Litigation

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The provision for litigation for the six month period ended June 30, 2022 includes a legal settlement and for the period ended June 30, 2021 includes a receipt of a settlement.

The provision for litigation for the nine month period ended September 30, 2022 includes a legal settlement and for the period ended September 30, 2021 includes a receipt of a settlement.

Amortization of Intangibles

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

2 unchanged sentences

The decrease in the amortization of intangibles is primarily due to individual intangible assets reaching their full amortization.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

Acquisition Related Costs

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

Acquisition related costs increased due to changes in fair value of business acquisition liabilities.

Acquisition related costs decreased due to favorable changes in fair value of business acquisition liabilities during the nine months ended September 30, 2022 compared to unfavorable changes in fair value of business acquisition liabilities during the nine months ended September 30, 2021.

Other Income/(expense), Net

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

1 unchanged sentence

Percentage of net sales

The decrease in other income/(expense) is due to change in foreign exchange rates partially offset by a reimbursement for damaged inventory and instrumentation.

The increase in other income/(expense) is due to an increase in interest income and a reimbursement for damaged inventory and instrumentation, partially offset by change in foreign exchange rates.

Income Tax Provision

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except percentages)

2 unchanged sentences

The increase in the effective income tax rate was primarily due to the lower impact of stock option exercises.

A discussion of our Results of Operations for the six months ended June 30, 2021 can be found in “ Part I, Item 2.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

A discussion of our Results of Operations for the nine months ended September 30, 2021 can be found in “ Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations;

Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020.

” on our Form 10-Q filed on August 4, 2021 .

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020.

” on our Form 10-Q filed on November 4, 2021 .

Liquidity and Capital Resources

11 unchanged sentences

The Revolving Credit Facility includes up to a $25.0 million sub limit for letters of credit.

As of June 30, 2022, we have not borrowed under the Credit Agreement.

As of September 30, 2022, we have not borrowed under the Credit Agreement.

GLOBUS MEDICAL, INC.

1 unchanged sentence

The following table summarizes, for the periods indicated, cash flows from operating, investing and financing activities:

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

5 unchanged sentences

Cash Provided by Operating Activities

The net cash provided by operating activities for the six months ended June 30, 2022 was primarily cash flow from net income and favorable changes in accounts payable, partially offset by unfavorable changes in accounts receivables and outflows for inventories and accrued expenses and other liabilities.

The net cash provided by operating activities for the nine months ended September 30, 2022 was primarily cash flow from net income and favorable changes in accounts payable, partially offset by outflows for inventories and unfavorable changes in accounts receivables and prepaid expenses and other assets.

Cash Used in Investing Activities

The cash provided by investing activities for the six months ended June 30, 2022 was primarily from the net inflows of purchases, maturities and sales of marketable securities, partially offset by purchases of property and equipment.

The cash used in investing activities for the nine months ended September 30, 2022 was primarily from purchases of property and equipment partially offset by the net inflows of purchases, maturities and sales of marketable securities.

Cash Used in Financing Activities

The net cash used in financing activities for the six months ended June 30, 2022 was primarily the result of the repurchased Class A common stock.

A discussion of our Cash Flows for the six months ended June 30, 2021 can be found in “ Part I, Item 2.

The net cash used in financing activities for the nine months ended September 30, 2022 was primarily the result of the repurchased Class A common stock partially offset by inflows from proceeds from exercise of stock options.

A discussion of our Cash Flows for the nine months ended September 30, 2021 can be found in “ Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations;

” on our Form 10-Q filed on August 4, 2021 .

” on our Form 10-Q filed on November 4, 2021 .

Contractual Obligations and Commitments

There have been no material changes to our contractual obligations during the six months ended June 30, 2022.

There have been no material changes to our contractual obligations during the nine months ended September 30, 2022.

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

34 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis