What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-21 compared with 2022-02-17 · 155 added, 154 removed, 834 unchanged (27% of the section changed)

40 unchanged sentences

• We evaluated management’s ability to accurately forecast product demand by comparing actual results to management’s historical estimates.

• We tested the mathematical accuracy of management’s calculations.

• We selected a sample of products and verified that the product demand forecasts were supported by historical sales data and other current information.

• We performed corroborative inquiries with the personnel responsible for product development and sales forecasting to evaluate the reasonableness of the product demand forecasts.

• We tested the mathematical accuracy of management’s calculations.

/s/ DELOITTE & TOUCHE LLP

33 unchanged sentences

Current assets:

Cash, cash equivalents, and restricted cash

Cash and cash equivalents

Short-term marketable securities

30 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income/(loss)

Retained earnings

22 unchanged sentences

Net income/(loss)

Other comprehensive income/(loss):

Unrealized gain/(loss) on marketable securities, net of tax

Other comprehensive income/(loss), net of tax:

Unrealized gain/(loss) on marketable securities

Foreign currency translation gain/(loss)

Total other comprehensive income/(loss)

Total other comprehensive income/(loss), net of tax

Comprehensive income/(loss)

21 unchanged sentences

Comprehensive income/(loss)

Repurchase and retirement of common stock

Balance at June 30, 2022

9 unchanged sentences

Balance at December 31, 2022

See accompanying notes to consolidated financial statements.

‎ Common Stock

5 unchanged sentences

Balance at December 31, 2020

Cumulative effects of adoption of accounting standards

Stock-based compensation

Grant of restricted stock units

Exercise of stock options

Comprehensive income/(loss)

Repurchase and retirement of common stock

Balance at March 31, 2021

Stock-based compensation

Grant of restricted stock units

Exercise of stock options

Comprehensive income/(loss)

Repurchase and retirement of common stock

Balance at June 30, 2021

Stock-based compensation

Grant of restricted stock units

Exercise of stock options

17 unchanged sentences

Balance at December 31, 2019

Cumulative effects of adoption of accounting standards

Stock-based compensation

1 unchanged sentence

Comprehensive income/(loss)

Repurchase and retirement of common stock

Balance at March 31, 2020

2 unchanged sentences

Comprehensive income/(loss)

Repurchase and retirement of common stock

Balance at June 30, 2020

4 unchanged sentences

Stock-based compensation

Grant of restricted stock units

Exercise of stock options

38 unchanged sentences

Net cash provided by/(used in) financing activities

Effect of foreign exchange rate on cash

Net increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

Effect of foreign exchange rates on cash

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosures of cash flow information:

6 unchanged sentences

(a) The Company

Globus Medical, Inc., together with its subsidiaries, is a medical device company that develops and commercializes healthcare solutions in a mission to improve the quality of life of patients with musculoskeletal disorders.

Globus Medical, Inc., together with its subsidiaries, is a medical device company that develops and commercializes healthcare solutions with a mission to improve the quality of life of patients with musculoskeletal disorders.

We are primarily focused on implants that promote healing in patients with musculoskeletal disorders, including the use of a robotic guidance and navigation system and products to treat patients who have experienced orthopedic traumas.

46 unchanged sentences

Revenue from the sale of Enabling Technologies products is generally recognized when control transfers to the customer which occurs at the time the product is shipped or delivered.

Depending on the terms of the arrangement, we may also defer the recognition of a portion of the consideration as we satisfy future performance obligations related to the provision of maintenance and support.

Any revenue related to the provision of maintenance and support is recognized as we satisfy the performance obligation.

We use an observable price to determine the stand-alone selling price for each separate performance obligation.

3 unchanged sentences

Deferred revenue is comprised mainly of unearned revenue related to the sales of certain Enabling Technologies products, which includes maintenance and support services.

Deferred revenue is generally invoiced annually at the beginning of each contract period and recognized ratably over the coverage period.

Maintenance and support services are generally invoiced annually, at the beginning of each contract period, and revenue is recognized ratably over the maintenance period.

For the years ended December 31, 2022, 2021, and 2020, there was an immaterial amount of revenue recognized from previously deferred revenue.

7 unchanged sentences

Cash equivalents, which consist of money market accounts, commercial paper and corporate debt securities are stated at fair value.

(g) Marketable Securities

Our marketable securities include municipal bonds, corporate debt securities, commercial paper, asset-backed securities, and securities of government, federal agency, and other sovereign obligations, and are classified as available-for-sale as of December 31, 2022 and 2021.

GLOBUS MEDICAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(g) Marketable Securities

Short-term and long-term marketable securities are recorded at fair value on our consolidated balance sheets.

31 unchanged sentences

The majority of our inventory is finished goods and we utilize both in-house manufacturing and third-party suppliers to produce our products.

We periodically evaluate the carrying value of our inventories in relation to estimated forecasts of product demand, which takes into consideration the life cycle

We periodically evaluate the carrying value of our inventories in relation to estimated forecasts of product demand, which takes into consideration the life cycle of product releases.

When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories.

Once inventory has been written down, it creates a new cost basis for inventory that is not subsequently written up.

GLOBUS MEDICAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

of product releases.

When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories.

Once inventory has been written down, it creates a new cost basis for inventory that is not subsequently written up.

(j) Property and Equipment

5 unchanged sentences

Goodwill represents the excess of purchase price over the fair values of the identifiable assets acquired less the liabilities assumed in the acquisition of a business.

Goodwill is tested for impairment at least annually.

Goodwill is tested for impairment at least annually or whenever events or circumstances indicate that a carrying amount may not be recoverable.

Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount to the fair value of the reporting unit.

4 unchanged sentences

Intangible assets consist of purchased in-process research and development (“IPR&D”), developed technology, supplier network, patents, customer relationships, re-acquired rights, and non-compete agreements.

Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to sixteen years.

Intangible assets are tested for impairment annually or whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable.

Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to twenty-one years .

Intangible assets with finite useful lives are tested whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable.

If an impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset.

2 unchanged sentences

IPR&D has an indefinite life and is not amortized until completion of the project at which time the IPR&D becomes an amortizable asset.

Intangible assets with indefinite useful lives are tested for impairment annually or whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable.

If the related project is not completed in a timely manner, we may have an impairment related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value.

62 unchanged sentences

2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

The ASU is effective for all entities as of March 12, 2020, and will apply through December 31, 2022.

The ASU is effective for all entities as of March 12, 2020, and will apply, as later extended by ASU No.

2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , through December 31, 2024.

To date, we have had no impacts on our investment portfolio or our credit agreement with Citizens Bank, N.A.

8 unchanged sentences

This standard did not have a material impact on our financial position, results of operations and disclosures.

In February 2016, the FASB released ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”).

Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases with terms greater than 12 months, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases.

ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and permits modified retrospective method or cumulative-effect adjustment method.

We adopted the standard on January 1, 2019, using the cumulative-effect adjustment transition method.

As part of the adoption, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carry forward of historical lease classifications.

The adoption of this standard did not have a material impact on our financial position and results of operations.

See “Note 15.

Leases” for more detail regarding our disclosures.

In February 2018, the FASB released ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) , Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”).

Prior to ASU 2018-02, GAAP required the remeasurement of deferred tax assets and liabilities as a result of a change in tax laws or rates to be presented in net income from continuing operations, even in situations in which the related income tax effects of items in accumulated other comprehensive income were originally recognized in other comprehensive income.

As a result, such items, referred to as stranded tax effects, did not reflect the appropriate tax rate.

Under ASU 2018-02, entities are permitted, but not required, to reclassify from accumulated other comprehensive income to retained earnings those stranded tax effects resulting from the Tax Act.

ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

Early adoption is permitted.

We adopted ASU 2018-02 on January 1, 2019.

Adoption of the standard did not have a material impact on our financial position, results of operations and disclosures.

In June 2018, the FASB released ASU 2018-07, Compensation—Stock Compensation (Topic 718) , (“ASU 2018-07”), which expanded the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards.

This update is effective for public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

Early adoption is permitted.

We adopted ASU 2018-07 on January 1, 2019.

Adoption of the standard did not have a material impact on our financial position, results of operations, and disclosures.

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326):

4 unchanged sentences

Adoption of the standard did not have a material impact on our financial position, results of operations, and disclosures.

In January 2017, the FASB released ASU 2017-04, Intangibles - Goodwill and Other (Topic 805):

Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates the Step 2 calculation for the implied fair value of goodwill to measure a goodwill impairment charge.

Under the updated standard, an entity will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value.

ASU 2017-04 does not change the guidance on completing Step 1 of the goodwill impairment test and still allows an entity to

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

perform the optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1.

This update is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted for any impairment test performed on testing dates after January 1, 2017.

We adopted ASU 2017-04 on January 1, 2020.

This standard did not have a material impact on our financial position, results of operations, and disclosures .

In August 2018, the FASB released ASU 2018-13, Fair Value Measurement (Topic 820), which modifies the disclosure requirements on fair value measurements in Topic 820, including the consideration of costs and benefits.

This update is effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

We adopted ASU 2018-13 on January 1, 2020.

This standard did not have a material impact on our financial position, results of operations, and disclosures .

ASSET ACQUISITIONS AND BUSINESS COMBINATIONS

8 unchanged sentences

Contingent consideration is not recorded in an asset acquisition until the milestone is met.

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 second quarter of 2020, the Company acquired Synoste, a Finnish engineering company that specializes in the research and development of a limb lengthening system.

The fair value of the net assets acquired was $ 25.3 million, and the consideration consisted of approximately $ 22.8 million of cash paid at closing plus $ 2.5 million of a contractual holdback obligation payable eighteen months from the closing date of the transaction, subject to net working capital and other post-closing adjustments, if applicable.

During the fourth quarter of 2021, the contractual holdback and net working capital and other post-closing adjustments were settled for $ 2.7 million.

The transaction also provides for additional consideration contingent upon the developed product obtaining approval from the U.S.

Food and Drug Administration (the “FDA”) of $ 8.0 million within the third anniversary, or $ 4.0 million within the fourth anniversary of the acquisition closing date, respectively.

The transaction also provides for additional consideration of $ 8.0 million contingent upon the developed product obtaining approval from the FDA within the third anniversary, or $ 4.0 million within the fourth anniversary of the acquisition closing date, respectively.

Contingent consideration is not recorded in an asset acquisition until the milestone is met.

1 unchanged sentence

At the date of the acquisitions, the Company determined that the development of the projects underway had not yet reached technological feasibility and that the research in process had no alternative future use.

Accordingly, the acquired IPR&D of $ 34.3 million and $ 24.4 million was charged to research and development expense in the consolidated statements of operations and comprehensive income for years ended 2021 and 2020, respectively.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the acquired IPR&D of $ 34.3 million and $ 24.4 million was charged to research and development expense in the consolidated statements of operations and comprehensive income for years ended 2021 and 2020, respectively.

Business Combinations

During the fourth quarter of 2022, the Company acquired the membership interests of Harvest Biologics LLC (the “Harvest Acquisition”), which engages in the business of selling systems that produce autologous biologics.

The purchase price was a cash payment of $ 30 million, subject to post-closing adjustments, if applicable.

The Company has included the financial results from the Harvest Acquisition in our consolidated financial statements from the acquisition date.

At acquisition date, the preliminary fair value of the net assets acquired was $ 30.1 million.

The purchase price consisted of approximately $ 30.0 million of cash paid at closing, plus $ 0.1 million of preliminary post-closing adjustments.

The Company recorded identifiable net assets, based on their estimated fair values, for inventory of $ 3.0 million, goodwill of $ 14.2 million, customer relationships and other intangibles of $ 10.5 million with a weighted average useful life of 20 years, and developed technology of $ 2.4 million with a weighted average useful life of 8 years.

The Company will finalize the purchase price allocation of the assets and liabilities acquired within one year from the date of acquisition.

During the second quarter of 2022, the Company completed one acquisition that was not considered material to the consolidated financial statements during the periods presented.

This acquisition has been included in the condensed consolidated financial statements from the date of acquisition.

The purchase price consisted of approximately $ 0.2 million of cash paid at closing and $ 4.4 million of contingent consideration payments, resulting in goodwill of $ 4.6 million based on the estimated fair values.

The contingent payments for this acquisition are based upon achieving various performance milestones over a period of 10 years and are payable in a combination of cash and RSUs.

During 2021, the Company completed three acquisitions that were not considered material, individually or collectively, to the consolidated financial statements during the periods presented.

7 unchanged sentences

These acquisitions have been included in the consolidated financial statements from the date of acquisition.

The combined purchase price consisted of approximately $ 1.5 million of cash

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

paid at closing, plus $ 0.3 million of other liabilities and $ 33.2 million of contingent consideration payments.

The combined purchase price consisted of approximately $ 1.5 million of cash paid at closing, plus $ 0.3 million of other liabilities and $ 33.2 million of contingent consideration payments.

The contingent payments are based upon achieving various performance obligations over a period of 10 years, and are payable in a combination of cash and RSUs.

The Company recorded other intangible assets of $ 8.8 million, with a weighted average useful life of 4.2 years, and goodwill of $ 26.2 million based on their fair values.

During the second quarter of 2019, the Company acquired substantially all of the assets of StelKast, Inc.

(the “StelKast Acquisition”), a privately held company that designs, manufactures and distributes orthopedic implants for knee and hip replacement surgeries.

The Company has included the financial results from the StelKast Acquisition in our consolidated financial statements from the acquisition date.

At acquisition date, the fair value of the net assets acquired was $ 28.1 million.

The purchase price consisted of approximately $ 23.8 million of cash paid at closing, plus $ 4.3 million of contingent consideration payable based upon the achievement product sales milestones.

The Company recorded identifiable net assets, based on their estimated fair values, for inventory of $ 15.3 million, fixed assets of $ 4.2 million and customer relationships of $ 3.9 million and goodwill of $ 4.7 million.

The contingent consideration payable related to the StelKast Acquisition of $ 5.0 million was paid during the third quarter of 2020.

The following table represents net sales by product category:

28 unchanged sentences

Asset-backed securities

government and agency securities

Government, federal agency, and other sovereign obligations

Total short-term marketable securities

2 unchanged sentences

Asset-backed securities

Government, federal agency, and other sovereign obligations

Total long-term marketable securities

The short-term marketable securities have effective maturity dates of less than one year and the long-term marketable securities have effective maturity dates ranging from one to three years as of December 31, 2022 and 2021, respectively.

Purchases of marketable securities include amounts payable to brokers of $ 2.2 million and $ 9.3 million as of December 31, 2021 and 2020, respectively.

Purchases of marketable securities include amounts payable to brokers of $ 2.2 million as of December 31, 2021.

Purchases of marketable securities included no amounts payable to brokers as of December 31, 2022.

GLOBUS MEDICAL, INC.

97 unchanged sentences

‎ Amortization

Year ending December 31:

ACCRUED EXPENSES

7 unchanged sentences

In August 2020, we entered into a credit agreement with Citizens Bank, N.A.

(the “Credit Agreement”) that provides a revolving credit facility permitting borrowings up to $ 125.0 million (the “Revolving Credit Facility”), and has a termination date of August 3, 2022 .

(the “Credit Agreement”) that provides a revolving credit facility permitting borrowings up to $ 125.0 million (as amended, the “Revolving Credit Facility”), and has a termination date of August 2, 2023 .

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

Revolving loans under the Credit Agreement will bear interest, at the Company’s option, at either a base rate or the Adjusted LIBOR Rate (as defined in the Credit Agreement), plus, in each case, an applicable margin, as determined in accordance with the provisions of the Credit Agreement.

Revolving loans under the Credit Agreement will bear interest, at the Company’s option, at either a base rate or the Daily Bloomberg Short-Term Bank Yield (“BSBY”) (as defined in the Credit Agreement), plus, in each case, an applicable margin, as determined in accordance with the provisions of the Credit Agreement.

The base rate will be the highest of:

2 unchanged sentences

the federal funds effective rate plus 1/2 of 1 %;

and the Adjusted LIBOR Rate for a one-month period plus 1 %.

and the Daily BSBY Rate plus 1 %.

The applicable margin is subject to adjustment as provided in the Credit Agreement.

The Credit Agreement contains financial and other customary covenants, including a maximum leverage ratio.

As of December 31, 2021, we have no t borrowed under the Credit Agreement with Citizens Bank, N.A.

As of December 31, 2022, we have no t borrowed under the Revolving Credit Facility.

GLOBUS MEDICAL, INC.

2 unchanged sentences

Stock Repurchases

Under the stock repurchase plan, announced in March 2020, the Company is authorized to repurchase up to $ 200 million of the Company’s Class A common stock.

As of December 31, 2021, $ 95.3 million of this authorization was remaining.

On March 11, 2020, the Company announced a share repurchase program, which authorized the Company to repurchase up to $ 200 million of the Company’s Class A common stock.

On March 4, 2022, the share repurchase program was expanded by authorizing the Company to repurchase an additional $ 200 million of the Company’s Class A common stock.

The repurchase program has no time limit and may be suspended for periods or discontinued at any time.

As of December 31, 2022, the Company has remaining authorization to repurchase a total of $ 150.8 million of Class A common stock.

The timing and actual number of shares repurchased will depend on various factors including price, corporate and regulatory requirements, debt covenant requirements, alternative investment opportunities and other market conditions.

Funding for share repurchases in the future is expected to come from operating cash flows and excess cash.

Funding of share repurchases is expected to come from operating cash flows and excess cash.

Shares repurchased by the Company are accounted for under the constructive retirement method, in which the shares repurchased, are immediately retired, as there is no plan to reissue the shares.

14 unchanged sentences

October 1, 2021 - December 31, 2021

January 1, 2022 - March 31, 2022

April 1, 2022 - June 30, 2022

July 1, 2022 - September 30, 2022

October 1, 2022 - December 31, 2022

January 1, 2020 - December 31, 2022

9 unchanged sentences

Except for voting rights, the Class A Common and Class B Common have the same rights and privileges.

Accumulated Other Comprehensive Income (Loss)

The tables below present the changes in each component of accumulated other comprehensive income/(loss), including current period other comprehensive income/(loss) and reclassifications out of accumulated other comprehensive income/(loss) for the years ended December 31, 2022 and 2021, respectively:

GLOBUS MEDICAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accumulated Other Comprehensive Income (Loss)

(In thousands)

2 unchanged sentences

Accumulated other comprehensive loss

Accumulated other comprehensive loss, net of tax, at December 31, 2020

Other comprehensive (loss)/income before reclassifications

Amounts reclassified from accumulated other comprehensive income, net of tax

Other comprehensive (loss)/income, net of tax

Accumulated other comprehensive loss, net of tax, at December 31, 2021

Accumulated other comprehensive income/(loss), net of tax, at December 31, 2021

Other comprehensive income/(loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income/(loss), net of tax

Other comprehensive income/(loss), net of tax

Accumulated other comprehensive income/(loss), net of tax, at December 31, 2022

(In thousands)

2 unchanged sentences

Accumulated other comprehensive loss

Accumulated other comprehensive loss, net of tax, at December 31, 2019

Other comprehensive (loss)/income before reclassifications

Amounts reclassified from accumulated other comprehensive income, net of tax

Other comprehensive (loss)/income, net of tax

Accumulated other comprehensive loss, net of tax, at December 31, 2020

Accumulated other comprehensive income/(loss), net of tax, at December 31, 2020

Other comprehensive income/(loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income/(loss), net of tax

Other comprehensive income/(loss), net of tax

Accumulated other comprehensive income/(loss), net of tax, at December 31, 2021

Amounts reclassified from accumulated other comprehensive loss, net of tax, related to unrealized gains/losses on marketable securities were released to other income, net in our consolidated statements of operations and comprehensive income.

9 unchanged sentences

Weighted average shares outstanding for basic

Dilutive stock options

Dilutive stock options and RSUs

Weighted average shares outstanding for diluted

2 unchanged sentences

STOCK-BASED AWARDS

We have three stock plans:

our 2008 Stock Plan, our 2012 Equity Incentive Plan (the “2012 Plan”), our 2021 Equity Incentive Plan (the “2021 Plan”).

We have two stock plans:

our 2012 Equity Incentive Plan (the “2012 Plan”) and our 2021 Equity Incentive Plan (the “2021 Plan”), together with the 2012 Plan, the “Plans”.

The 2021 Plan is the only active stock plan.

The purpose of the 2008 and 2012 stock plans was, and of the 2021 Plan is, to provide incentive to employees, directors, and consultants of Globus.

The purpose of the 2012 Plan was, and of the 2021 Plan is, to provide incentive to employees, directors, and consultants of Globus.

The Plans are administered by the Board of Directors of Globus (the “Board”) or its delegates.

The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in

The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans.

The options granted expire on a date specified by the Board, which is generally not more than ten years from the grant date.

Options granted to employees generally vest in varying installments over a four-year period.

GLOBUS MEDICAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

accordance with the terms of the Plans.

The options granted expire on a date specified by the Board, which is generally not more than ten years from the grant date.

Options granted to employees generally vest in varying installments over a four-year period.

The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012.

The 2012 Plan terminated as to new awards pursuant to its terms in 2022.

Following effectiveness of the 2021 Plan, we have not issued any additional awards under the 2012 Plan;

however, awards previously granted under the 2012 Plan remain outstanding and are administered by our Board under the terms and conditions of the 2012 Plan.

Under the 2012 Plan, the aggregate number of shares of Class A Common stock that were able to be issued subject to options and other awards is equal to the sum of (i) 3,076,923 shares, (ii) any shares available for issuance under the 2008 Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3 % of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board.

The number of shares that were able to be issued or transferred pursuant to incentive stock options under the 2012 Plan was limited to 10,769,230 shares.

The shares of Class A Common stock covered by the 2012 Plan included authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.

The shares of Class A Common covered by the 2012 Plan included authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.

The 2021 Plan was approved by our Board in March 2021, and by our stockholders in June 2021.

Under the 2021 Plan, the aggregate number of shares of Class A Common stock that were able to be issued subject to options and other awards is equal to the sum of (i) 2,000,000 shares, (ii) any shares available for issuance under the 2012 Plan as of June 3, 2021 and (iii) any shares underlying awards outstanding under the 2012 Plan or 2021 Plan as of June 3, 2021 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares.

The number of shares that may be issued or transferred pursuant to incentive stock options under the 2021 Plan is limited to 2,000,000 shares.

The shares of Class A Common stock covered by the 2021 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.

Under the 2021 Plan, as amended to date, the aggregate number of shares of Class A Common that were able to be issued subject to options and other awards is equal to the sum of (i) 4,000,000 shares, (ii) any shares available for issuance under the 2012 Plan as of June 3, 2021 and (iii) any shares underlying awards outstanding under the 2012 Plan or 2021 Plan as of June 3, 2021 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares.

The number of shares that could be issued or transferred pursuant to incentive stock options under the 2021 Plan is limited to 4,000,000 shares.

The shares of Class A Common covered by the 2021 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.

As of December 31, 2022, pursuant to the 2021 Plan, there were 5,687,725 shares of Class A Common stock reserved and 2,634,899 shares of Class A Common stock available for future grants.

60 unchanged sentences

Stock-based compensation

Capitalized R&E

Net operating loss carryforwards

10 unchanged sentences

The Company has established valuation allowances of $ 5.5 million and $ 6.6 million at December 31, 2022 and 2021, respectively, primarily related to the uncertainty of the utilization of certain deferred tax assets comprised of tax loss carryforwards in various jurisdictions.

The increase in the valuation allowance during fiscal year 2021 is primarily driven by foreign deferred tax assets that are not expected to be realized.

The decrease in the valuation allowance during fiscal year 2022 is primarily driven by foreign deferred tax assets that are expected to be realized.

The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

As of December 31, 2022 and 2021, we have NOL carryforwards of $ 20.2 million and $ 19.9 million, respectively, which, if unused, will expire in years 2023 through 2039.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

4 unchanged sentences

Unrecognized tax benefits at the end of the year

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The reduction s related to prior year tax positions for the year ended December 31, 2021 of $ 0.7 million are primarily related to resolution of certain tax positions confirmed from refunds on amended tax returns.

The reduction s related to prior year tax positions for the year ended December 31, 2022 of $ 0.1 million are primarily related to the resolution of certain foreign tax positions.

The impact of our unrecognized tax benefits to the effective income tax rate is as follows:

9 unchanged sentences

With few exceptions, we are no longer subject to income tax examination by tax authorities in major jurisdictions for years prior to 2016 as of December 31, 2022.

The Company leases certain equipment, vehicles, and facilities under operating leases.

Our leases have initial lease terms ranging from one year to 14 years.

Certain leases contain options to extend terms beyond the lease termination date.

We use judgment to determine whether it is reasonably possible that we will extend the lease beyond the initial term and the length of the possible extension.

Leases that have a term of less than 12 months are treated as short-term and are not recognized as right of use assets or lease liabilities.

As most leases do not provide an implicit rate, we use an estimate of our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

As of December 31, 2021, the Company’s short-term lease commitments and sublease income are immaterial.

The Company classifies right-of-use assets as other assets, short-term lease liabilities as accrued expenses, and long-term lease liabilities as other liabilities on the consolidated balance sheets.

Lease expense is recognized, on a straight-line basis over the term of the lease, as a component of operating income on the consolidated statements of operations and comprehensive income.

Amounts reported in the consolidated balance sheet as of the years ended December 31, 2021 and 2020, respectively are as follows:

(In thousands, except weighted average lease term and discount rate)

Operating lease right of use asset

Lease liability - current

Lease liability - long-term

Total operating lease liability

Supplemental non-cash information:

Weighted-average remaining lease term (years) - operating leases

Weighted-average discount rate - operating leases

Operating Lease expense recognized in the consolidated statement of operations and comprehensive income was as follows:

(In thousands)

Operating Lease Expense

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future minimum lease payments under non-cancellable leases as of December 31, 2021 are as follows:

(In thousands)

Operating Leases

Total undiscounted operating lease payments

imputed interest

Total operating lease liability

COMMITMENTS AND CONTINGENCIES

10 unchanged sentences

District Court for the Western District of Texas for patent infringement.

Moskowitz, a non-practicing entity, alleges that Globus willfully infringes one or more claims of eight patents by making, using, offering for sale or selling the Coalition ® , Coalition MIS ® , Coalition AGX ® , CORBEL ® , Monument ® , MAGNIFY ® -S, HEDRON IA TM , HEDRON IC TM , Independence ® , Independence MIS ® , Independence MIS AGX ®, Fortify ® and XPand ® families , SABLE TM , Rise ® , Rise ® Intralif, Rise ® -L, ELSA ® , ELSA ® ATP, RASS, Altera ® , Ariel ® , Latis ® , Caliber ® and Caliber ® -L products.

Moskowitz seeks an unspecified amount in damages and injunctive relief.

Moskowitz, a non-practicing entity, alleges that Globus willfully infringes one or more claims of six patents by making, using, offering for sale or selling the COALITION®, COALITION MIS®, COALITION AGX®, CORBEL®, MONUMENT®, MAGNIFY®-S, HEDRON IATM, HEDRON IC®, INDEPENDENCE®, INDEPENDENCE MIS®, INDEPENDENCE MIS AGX®, FORTIFY® and XPAND® families, SABLE®, RISE®, RISE® INTRALIF, RISE®-L, ELSA®, ELSA® ATP, ALTERA®, ARIEL®, CALIBER® and CALIBER®-L products.

Moskowitz seeks monetary damages and injunctive relief.

On July 2, 2020, this suit was transferred from the U.S.

1 unchanged sentence

District Court for the Eastern District of Pennsylvania.

The outcome of this litigation cannot be determined, nor can we estimate a range of potential loss, therefore, we have not recorded a liability related to this litigation as of December 31, 2021.

The outcome of this litigation cannot be determined, nor can we estimate a range of potential loss, therefore, we have no t recorded a liability related to this litigation as of December 31, 2022.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RETIREMENT BENEFIT PLANS

6 unchanged sentences

401(k) and other retirement plan contributions

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SEGMENT AND GEOGRAPHIC INFORMATION

7 unchanged sentences

Total net sales

SUBSEQUENT EVENT

On February 8, 2023, the Company and its wholly-owned subsidiary, Zebra Merger Sub, Inc.

(“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with NuVasive, Inc., a Delaware corporation (“NuVasive”).

The Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into NuVasive (the “Merger”), with NuVasive surviving the Merger as a wholly owned subsidiary of the Company.

The transaction brings together these two technology companies in the musculoskeletal industry, which have a shared vision focused on innovation in a relentless pursuit of unmet clinical needs to improve patient care.

Under the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $ 0.001 per share, of NuVasive (“NuVasive Common Stock”) issued and outstanding immediately prior to the effective time (other than certain excluded shares as described in the Merger Agreement) will be cancelled and converted into the right to receive 0.75 fully paid and non-assessable shares of Class A common stock of Globus Medical, $ 0.001 par value per share (the “Globus Medical Class A Common Stock”), and the right to receive cash in lieu of fractional shares.

Following the close of the transaction, NuVasive shareholders will own approximately 28 % of the combined company, and Globus Medical shareholders will own approximately 72 %, on a fully diluted basis.

Either NuVasive or Globus Medical may terminate the Merger Agreement under certain circumstances described in the Merger Agreement, resulting in a termination fee payable to the other equal to $ 120 million or $ 75 million, depending on such circumstances.

NuVasive will also be required to make a payment to Globus Medical equal to $ 60 million if the Merger Agreement is terminated because NuVasive’s stockholders fail to adopt the Merger Agreement and at the time of such failure, NuVasive’s board of directors has not changed its recommendation to its stockholders in favor of the Merger.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The transaction is expected to close in the middle of 2023, subject to approval by both companies’ shareholders, regulatory approval, and other customary closing conditions.

For additional information about the Merger Agreement, please refer to our Form 8-K filed on February 9, 2023 .

No Offer or Solicitation

This filing is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Important Information About the Transaction and Where To Find It

In connection with the proposed transaction, Globus Medical will file with the U.S.

Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will include a joint proxy statement of Globus Medical and NuVasive and that will also constitute a prospectus of Globus Medical for shares of its class A common stock to be offered in the proposed transaction.

Globus Medical and NuVasive may also file other documents with the SEC regarding the proposed transaction.

This document is not a substitute for the joint proxy statement statement/prospectus or registration statement or any other document which Globus Medical or NuVasive may file with the SEC.

INVESTORS AND SECURITY HOLDERS OF GLOBUS MEDICAL AND NUVASIVE ARE URGED TO READ THE REGISTRATION STATEMENT, WHICH WILL INCLUDE THE JOINT PROXY STATEMENT/PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS.

The registration statement, definitive joint proxy statement/ prospectus and other documents filed by Globus Medical and NuVasive with the SEC will be available free of charge at the SEC’s website (www.sec.gov) and from Globus Medical and NuVasive.

Requests for copies of the joint proxy statement/ prospectus and other documents filed by Globus Medical with the SEC may be made by contacting Keith Pfeil, Chief Financial Officer by phone at (610) 930-1800 or by email at kpfeil@globusmedical.com, and request for copies of the joint proxy statement/prospectus and other documents filed by NuVasive may be made by contacting Matt Harbaugh, Chief Financial Officer, by phone at (858) 210-2129 or by email at investorrelations@nuvasive.com.

Participants in the Solicitation

Globus Medical, NuVasive, their respective directors and certain of their executive officers and other employees may be deemed to be participants in the solicitation of proxies from Globus Medical’s and NuVasive’s shareholders in connection with the proposed transaction.

Information about the directors and executive officers of Globus Medical and their ownership of Globus Medical stock is set forth in Globus Medical’s annual report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on February 17, 2022 and its proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on April 21, 2022.

Information regarding NuVasive’s directors and executive officers is contained in NuVasive’s annual report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on February 23, 2022, and its proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on March 30, 2022.

Certain directors and executive officers of Globus Medical and NuVasive may have a direct or indirect interest in the transaction due to securities holdings, vesting of equity awards and rights to severance payments.

Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of Globus Medical’s and NuVasive’s shareholders in connection with the proposed transaction will be included in the joint proxy statement/prospectus.

These documents can be obtained free of charge from the sources indicated above.

Cautionary Notes on Forward-Looking Statements

This Form 10-K contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,” “target,” and similar expressions and variations or negatives of these words.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof.

These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements, including the failure to consummate the proposed transaction or to make any filing or take other action required to consummate such transaction in a timely matter or at all.

Important risk factors that may cause such a difference include, but are not limited to:

(i) the proposed transaction may not be completed on anticipated terms and timing, (ii) a condition to closing of the transaction may not be satisfied, including obtaining shareholder and regulatory approvals, (iii) the anticipated tax treatment of the transaction may not be

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

obtained, (iv) the potential impact of unforeseen liabilities, future capital expenditures, revenues, costs, expenses, earnings, synergies, economic performance, indebtedness, financial condition and losses on the future prospects, business and management strategies for the management, expansion and growth of the combined business after the consummation of the transactions, (v) potential litigation relating to the proposed transaction that could be instituted against Globus Medical, NuVasive or their respective directors, (vi) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transactions, (vii) any negative effects of the announcement, pendency or consummation of the transactions on the market price of Globus Medical’s or NuVasive’s common stock and on Globus Medical’s or NuVasive’s businesses or operating results, (viii) risks associated with third party contracts containing consent and/or other provisions that may be triggered by the proposed transaction, (ix) the risks and costs associated with the integration of, and the ability of Globus Medical and NuVasive to integrate, their businesses successfully and to achieve anticipated synergies, (x) the risk that disruptions from the proposed transaction will harm Globus Medical’s or NuVasive’s business, including current plans and operations, (xi) the ability of Globus Medical or NuVasive to retain and hire key personnel and uncertainties arising from leadership changes, (xii) legislative, regulatory and economic developments, and (xiii) the other risks described in Globus Medical’s and NuVasive’s most recent annual reports on Form 10-K and quarterly reports on Form 10-Q.

These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in the joint proxy statement/prospectus that will be included in the registration statement on Form S-4 that will be filed with the SEC in connection with the proposed transaction.

While the list of factors presented here is, and the list of factors to be presented in the registration statement on Form S-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties.

Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on Globus Medical’s or NuVasive’s consolidated financial condition, results of operations, credit rating or liquidity.

Neither Globus Medical nor NuVasive assumes any obligation to publicly provide revisions or updates to any forward looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data