What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-08 · 126 added, 198 removed, 527 unchanged (38% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands, except share and per share values)

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Deferred revenue

Payable to broker

Total current liabilities

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Authorized 500,000,000 shares;

issued and outstanding 77,401,459 and 79,113,916 shares at September 30, 2022 and December 31, 2021, respectively

issued and outstanding 77,904,573 and 77,762,282 shares at March 31, 2023 and December 31, 2022, respectively

Class B common stock;

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Authorized 275,000,000 shares;

issued and outstanding 22,430,097 and 22,430,097 shares at September 30, 2022 and December 31, 2021, respectively

issued and outstanding 22,430,097 and 22,430,097 shares at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

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Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

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Balance at March 31, 2023

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, 2022

Stock-based compensation

Grant of restricted stock units

Exercise of stock options

Comprehensive income/(loss)

Balance at September 30, 2022

‎ Common Stock

Additional paid-in

8 unchanged sentences

Balance at March 31, 2022

Stock-based compensation

Grant of restricted stock units

Exercise of stock options

Comprehensive income/(loss)

Balance at June 30, 2021

Stock-based compensation

Grant of restricted stock units

Exercise of stock options

Comprehensive income/(loss)

Balance at September 30, 2021

See accompanying notes to unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

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Proceeds from exercise of stock options

Repurchase of common stock

Net cash provided by/(used in) financing activities

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With over 230 products launched, we offer a comprehensive portfolio of innovative and differentiated technologies that address a variety of musculoskeletal pathologies, anatomies, and surgical approaches.

We are headquartered in Audubon, Pennsylvania, and we market and sell our products through our exclusive sales force in the United States, as well as within North, Central & South America, Europe, Asia, Africa and Australia.

Our sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors.

We are headquartered in Audubon, Pennsylvania, and market and sell our products through our exclusive sales force in the United States, as well as within North, Central & South America, Europe, Asia, Africa and Australia.

The sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors.

The terms the “Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc.

and, where applicable, our consolidated subsidiaries.

(b) COVID-19 Pandemic Impact

(b) NuVasive Agreement and Plan of Merger

On February 8, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with NuVasive, Inc.

(“NuVasive”) and Zebra Merger Sub Inc.

(“Merger Sub”), a wholly owned subsidiary of the Company, pursuant to which Merger Sub will merge with and into NuVasive (the “Merger”), with NuVasive surviving as a wholly owned subsidiary of the Company.

Under the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $ 0.001 per share, of NuVasive 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, and the right to receive cash in lieu of fractional shares.

On April 27, 2023, the Merger and related transactions were approved by stockholders of the Company and NuVasive.

The Company expects that the Merger will close in the third quarter of 2023, subject to the expiration or termination of the waiting period under the HSR Act and the satisfaction or waiver of the other customary closing conditions.

As previously disclosed, in connection with the Merger, the Company and NuVasive filed notification and report forms (the “HSR Filing”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) with the U.S.

Federal Trade Commission (the “FTC”) and on March 31, 2023, the Company, in consultation with NuVasive, voluntarily withdrew its HSR Filing.

The Company refiled on April 3, 2023 in order to restart the initial waiting period under the HSR Act and to provide the FTC additional time to review the proposed transaction.

On May 3, 2023, the Company and NuVasive each received a request for additional information and documentary materials (the “Second Request”) from the FTC in connection with the FTC’s review of the Merger.

The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 30 days after the Company and NuVasive have substantially complied with the Second Request, unless that period is extended voluntarily by the parties or terminated sooner by the FTC.

Both parties intend to continue to work cooperatively with the FTC in its review.

Completion of the Merger remains subject to the expiration or termination of the waiting period under the HSR Act and the satisfaction or waiver of the other closing conditions specified in the Merger Agreement.

For more information about the Merger, please refer to our Current Reports on Form 8-K filed on February 9, 2023, April 3, 2023, April 17, 2023, April 28, 2023 and May 3, 2023.

In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide.

COVID-19 has significantly impacted the economic conditions in the U.S.

COVID-19 has significantly

GLOBUS MEDICAL, INC.

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impacted the economic conditions in the U.S.

and globally as federal, state and local governments react to the public health crisis, creating significant uncertainties in the economy.

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As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, these condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position as of September 30, 2022, and results of operations for the three and nine months ended September 30, 2022.

In the opinion of management, these condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position as of March 31, 2023, and results of operations for the three months ended March 31, 2023.

The results of operations for any interim period may not be indicative of results for the full year.

(b) Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Globus and its wholly-owned subsidiaries.

The accompanying unaudited condensed consolidated financial statements include the accounts of Globus and its majority-owned or controlled subsidiaries.

All intercompany balances and transactions are eliminated in consolidation.

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Our Musculoskeletal Solutions products consist primarily of the implantable devices, disposables, and unique instruments used in an expansive range of spine, orthopedic trauma, hip, knee and extremity procedures.

The majority of our Musculoskeletal Solutions contracts have a single performance obligation and revenue is recognized at a point in time.

The majority of our

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

Musculoskeletal Solutions contracts have a single performance obligation and revenue is recognized at a point in time.

Our Enabling Technologies products are advanced hardware and software systems, and related technologies that are designed to enhance a surgeon’s capabilities and streamline surgical procedures by making them less invasive, more accurate, and more reproducible to improve patient care.

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A significant portion of our Musculoskeletal Solutions product revenue is generated from consigned inventory maintained at hospitals or with sales representatives.

Revenue from the sale of consigned musculoskeletal products is recognized when we transfer control, which generally occurs at the time the product is used or implanted.

Revenue from the sale of consigned musculoskeletal products is recognized when we transfer control, which occurs at the time the product is used or implanted.

For all other Musculoskeletal Solutions product transactions, we recognize revenue when we transfer title to the goods, provided there are no remaining performance obligations that can affect the customer’s final acceptance of the sale.

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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 three and nine months ended September 30, 2022, there was an immaterial amount of revenue recognized from previously deferred revenue.

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For the three months ended March 31, 2023, there was an immaterial amount of revenue recognized from previously deferred revenue.

(e) Cash and Cash Equivalents

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(f) 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 September 30, 2022 .

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

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Realized gains or losses from the sale of marketable securities are determined on a specific identification basis.

Realized gains and losses, interest income and the amortization/accretion of premiums/discounts are included in other income/(expense), net, on our condensed consolidated statements of operations and comprehensive income.

Interest receivable is recorded in prepaid expenses and other current assets on our condensed consolidated balance sheets.

Realized gains and losses, interest income and the amortization/accretion of premiums/discounts are included as a component of other income/(expense), net, on our condensed consolidated statements of operations and comprehensive income.

Interest receivable is recorded as a component of prepaid expenses and other current assets on our condensed consolidated balance sheets.

We invest in securities that meet or exceed standards as defined in our investment policy.

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We review declines in the fair value of our securities to determine whether they are resulting from expected credit losses or other factors.

If the assessment indicates a credit loss exists, we recognize any measured impairment as an allowance for credit loss in our condensed consolidated statements of operations.

If the assessment indicates a credit loss exists, we recognize any measured impairment as an allowance for credit loss in our condensed

GLOBUS MEDICAL, INC.

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consolidated statements of operations.

Any other impairments not recorded through allowance for credit losses is recognized in our other comprehensive income.

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We assess these assumptions on an ongoing basis as additional data impacting the assumptions is obtained.

The fair value of contingent consideration recorded in business acquisition liabilities on our condensed consolidated balance sheets, and changes in the fair value of contingent consideration are recognized in acquisition related costs in the condensed consolidated statements of operations and comprehensive income.

The fair value of contingent consideration is recorded in business acquisition liabilities on our condensed consolidated balance sheets, and changes in the fair value of contingent consideration are recognized in acquisition related costs in the condensed consolidated statements of operations and comprehensive income.

The fair value of contingent restricted stock unit (“RSU”) grants are recorded as additional paid-in capital in the consolidated balance sheet on the day of the grant due to the remote likelihood of forfeiture.

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(h) Inventories

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We consider qualitative indicators of the fair value of a reporting unit when it is unlikely that a reporting unit has impaired goodwill.

During the nine months ended September 30, 2022 and 2021, we did no t record any impairment charges related to goodwill.

GLOBUS MEDICAL, INC.

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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 with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from 1 to 21 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.

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Fair value is generally determined using a discounted future cash flow analysis.

There were no impairments of finite-lived intangible assets during the nine months ended September 30, 2022 or 2021.

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.

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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.

There were no impairments of IPR&D during the nine months ended September 30, 2022 or 2021.

During the three months ended March 31, 2023, there were no impairments in goodwill, finite-lived intangible assets, and IPR&D.

(j) Stock -Based Compensation

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The dividend yield assumption is based on the history and expectation of no dividend payouts.

The fair value of restricted stock units is estimated on the date of the grant using the closing price of the Company’s common stock.

The fair value of restricted stock units is estimated on the day of grant based on the closing price of the Company’s common stock.

(k) Recently Issued Accounting Pronouncements

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(l) Recently Adopted Accounting Pronouncements

On March 12, 2020, the FASB issued ASU No.

On March 12, 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No.

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.

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

related to reference rate reform.

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will continue to evaluate the impact this guidance could have on our condensed consolidated financial statements and related disclosures.

The ASU became effective for all entities as of March 12, 2020, and applied through December 31, 2022.

On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024.

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

ASSET ACQUISITIONS AND BUSINESS COMBINATIONS

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

Food and Drug Administration (the “FDA”) of up to $ 15.0 million, and additional consideration of up to $ 10.0 million contingent upon the achievement of certain performance milestones.

Food and Drug Administration (the “FDA”) of up to $ 15.0 million, and additional consideration contingent upon the achievement of certain performance obligations of up to $ 10.0 million.

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

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Also during the fourth quarter of 2021, the Company acquired substantially all the assets of a company that engages in the development of technology for use in robotic surgery platforms which was not considered material to the consolidated financial statements during the periods presented.

The purchase price consisted of $ 10.0 million of cash paid at closing and also provides for additional consideration of $ 5.0 million contingent upon the achievement of certain performance milestones.

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, 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 of $ 8.0 million contingent upon the developed product obtaining approval from the FDA within the third anniversary, or $ 4.0 million if within the fourth anniversary of the acquisition closing date, respectively.

The purchase price consisted of $ 10.0 million of cash paid at closing and also provides for additional consideration contingent upon the achievement of certain performance obligations of $ 5.0 million.

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

The Company accounted for each of these transactions as asset acquisitions because substantially all of the fair value of the assets acquired in each transaction was concentrated in a single identified asset, in-process research and development (“IPR&D”) of the acquired technology, thus satisfying the requirements of the screen test in ASU 2017-1.

The Company accounted for both of these transactions as asset acquisitions as substantially all of the fair value of the assets acquired in each transaction was concentrated in a single identified asset, in-process research and development (“IPR&D”) of the acquired technology, thus satisfying the requirements of the screen test in ASU 2017-1.

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 condensed consolidated statements of operations and comprehensive income for years ended 2021 and 2020, respectively.

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

Business Combinations

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

During the first quarter of 2023, the Company completed one acquisition that was not considered material to the condensed consolidated financial statements and has been included in our financial statements from the date of acquisition.

The purchase price consisted of approximately $ 1.4 million of cash.

The Company recorded identifiable assets of $ 0.4 million of instruments and $ 1.0 million of inventory.

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

The purchase price consisted of approximately $ 30.0 million of cash paid at closing, plus $ 1.4 million of preliminary post-closing adjustments.

The Company recorded identifiable net assets, based on their estimated fair values, for inventory of $ 3.4 million, goodwill of $ 15.1 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 overall condensed consolidated financial statements during the periods presented.

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

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The Company recorded other intangible assets of $ 1.6 million, with a weighted average useful life of 3.8 years, and goodwill of $ 11.0 million based on their estimated fair values.

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

During the fourth quarter of 2020, the Company completed two acquisitions that were not considered material, individually or collectively, to the overall consolidated financial statements during the periods presented.

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

The combined purchase price consisted of approximately $ 1.5

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

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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 milestones 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.

The following table represents net sales by product category:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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The composition of our short-term and long-term marketable securities was as follows:

September 30, 2022

March 31, 2023

(In thousands)

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Corporate debt securities

Commercial paper

Asset-backed securities

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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 September 30, 2022 and December 31, 2021, 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 September 30, 2022.

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 March 31, 2023 and December 31, 2022, respectively.

FAIR VALUE MEASUREMENTS

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(In thousands)

September 30,

Cash equivalents

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Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis

Fair value of the revenue-based business acquisition liabilities was determined using a discounted cash flow model and an option pricing model.

Fair value of the revenue-based business acquisition liabilities was determined using a discounted cash flow model and an option pricing methodology.

The significant inputs of such models are not observable in the market, such as certain financial metric growth rates, volatility and discount rates, market price risk adjustment, projections associated with the applicable milestone, the interest rate, and the related probabilities and payment structure in the contingent consideration arrangement.

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* The weighted average rates were calculated based on the relative fair value of each business acquisition liability.

The change in the carrying value of the business acquisition liabilities during the three and nine months ended September 30, 2022 and 2021, respectively included the following:

The change in the carrying value of the business acquisition liabilities during the three months ended March 31, 2023 and 2022, respectively included the following:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Beginning balance

Purchase price contingent consideration

Contingent cash payments

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Inventories included the following:

September 30,

(In thousands)

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Total inventories

During the three months ended September 30, 2022 and 2021, net adjustments to cost of sales related to excess and obsolete inventory were $ 1.8 million and $ 0.6 million, respectively.

The net adjustments for the three months ended September 30, 2022 and 2021 reflect a combination of additional expense for excess and obsolete related provisions ($ 10.4 million and $ 3.8 million, respectively) offset by sales and disposals ($ 8.6 million and $ 3.2 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods.

During the nine months ended September 30, 2022 and 2021, net adjustments to cost of sales related to excess and obsolete inventory were $ 5.9 million and $ 5.6 million, respectively.

The net adjustments for the nine months ended September 30, 2022 and 2021 reflect a combination of additional expense for excess and obsolete related provisions ($ 19.0 million and $ 15.2 million, respectively) offset by sales and disposals ($ 13.1 million and $ 9.6 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods.

During the three months ended March 31, 2023 and 2022, net adjustments to cost of sales related to excess and obsolete inventory were $ 2.1 million and $ 1.8 million, respectively.

The net adjustments for the three months ended March 31, 2023 and 2022 reflect a combination of additional expense for excess and obsolete related provisions ($ 3.5 million and $ 3.4 million, respectively) offset by sales and disposals ($ 1.4 million and $ 1.6 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods.

GLOBUS MEDICAL, INC.

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Property and equipment included the following:

September 30,

(In thousands)

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Three Months Ended

Nine Months Ended

September 30,

(In thousands)

GOODWILL AND INTANGIBLE ASSETS

The change in the carrying amount of goodwill during the twelve months ended December 31, 2021 and the nine months ended September 30 , 2022, respectively included the following:

The change in the carrying amount of goodwill during the twelve months ended December 31, 2022 and the three months ended March 31 , 2023, respectively included the following:

(In thousands)

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Foreign exchange

September 30, 2022

The composition of intangible assets was as follows:

September 30, 2022

March 31, 2023

Intangible assets as of March 31, 2023 included the following:

March 31, 2023

(In thousands)

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AND SUBSIDIARIES

Intangible assets as of December 31, 2022 included the following:

December 31, 2022

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Total intangible assets

The following table summarizes amortization of intangible assets for future periods as of September 30, 2022:

The following table summarizes amortization of intangible assets for future periods as of March 31, 2023:

(In thousands)

‎ Amortization

Remaining 2022

ACCRUED EXPENSES

Accrued expense included the following:

September 30,

Accrued expenses as of March 31, 2023 and December 31, 2022, respectively included the following:

(In thousands)

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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 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.

Revolving loans under the Credit Agreement will bear interest, at the Company’s option, at either a base rate or the Bloomberg Short-Term Bank Yield Index Rate (the “Daily BSBY Rate”) (as defined in the Revolving Credit Facility), 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:

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

As of September 30 , 2022, we have no t borrowed under the Credit Agreement.

As of March 31 , 2023, we have no t borrowed under the Revolving Credit Facility.

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Share Repurchases

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.

On March 11, 2020, the Company announced a share repurchase program, which authorized the Company to repurchase up to $ 200.0 million of the Company’s Class A common stock (“Class A Common”).

On March 4, 2022, the share repurchase program was expanded by authorizing the Company to repurchase an additional $ 200.0 million of the Company’s Class A Common.

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

As of September 30, 2022, the Company is authorized to repurchase a total of $ 150.8 million of Class A common stock.

The Company did no t repurchase any Class A Common during the three months ended March 31, 2023.

As of March 31, 2023, 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.

F unding 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.

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.

The Company made an accounting policy election to charge the excess of repurchase price over par value entirely to retained earnings.

The following table summarizes the activity related to share repurchases :

(In thousands except for per share prices)

Total number of shares repurchased

Average price paid per share

Dollar amount of shares repurchased (1)

Approximate dollar value of shares that may yet be purchased under the plan

January 1, 2020 - March 31, 2020

April 1, 2020 - June 30, 2020

July 1, 2020 - September 30,2020

October 1, 2020 - December 31, 2020

January 1, 2021 - March 31, 2021

April 1, 2021 - June 30, 2021

July 1, 2021 - September 30, 2021

October 1, 2021 - December 31, 2021

January 1, 2022 - March 31, 2022

April 1, 2022 - June 30, 2022

July 1, 2022 - September 30, 2022

January 1, 2020 - September 30, 2022

(1) Inclusive of an immaterial amount of commission fees

Our amended and restated Certificate of Incorporation provides for a total of 775,000,000 authorized shares of common stock.

Of the authorized number of shares of common stock, 500,000,000 shares are designated as Class A common stock (“Class A Common”), and 275,000,000 shares are designated as Class B common stock (“Class B Common”).

Of the authorized number of shares of common stock, 500,000,000 shares are designated as Class A Common, and 275,000,000 shares are designated as Class B common stock (“Class B Common”).

The holders of Class A Common are entitled to one vote for each share of Class A Common held.

The holders of Class B Common are entitled to 10 votes for each share of Class B Common held.

The holders of Class A Common and Class B Common vote together as one class of common stock on all matters submitted to a vote of stockholders, except as required by law or our amended and restated Certificate of Incorporation.

Each share of our Class B Common is convertible at any time at the option of the holder into one share of our Class A Common.

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For more details relating to the conversion of our Class B Common please see “Exhibit 4.2, Description of Securities of the Registrant” filed with our Annual Report on Form 10-K on February 21, 2023.

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The holders of Class B Common are entitled to 10 votes for each share of Class B Common held.

The holders of Class A Common and Class B Common vote together as one class of common stock.

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 nine months ended September 30 , 2022 and 2021, respectively:

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 three months ended March 31 , 2023 and 2022, respectively:

(In thousands)

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Other comprehensive income/(loss), net of tax

Accumulated other comprehensive income/(loss), net of tax, at September 30, 2022

Accumulated other comprehensive income/(loss), net of tax, at March 31, 2023

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(In thousands)

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Other comprehensive income/(loss), net of tax

Accumulated other comprehensive income/(loss), net of tax, at September 30, 2021

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

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 condensed consolidated statements of operations and comprehensive income.

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The contingently issuable shares are included in basic net income per share as of the date that all necessary conditions have been satisfied and are included in the denominator for dilutive calculation for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

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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.

The options granted expire on a date specified by the Board, which is ten years from the grant date.

Options granted to employees 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 pursuant to its terms in 2022.

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

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 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 Equity Incentive 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.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

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.

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

Under the 2021 Plan, as originally approved, the aggregate number of shares of Class A Common that were able to be issued subject to options and other awards was 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, were forfeited, terminated, expired or lapse for any reason, or were 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 was limited to 2,000,000 shares.

Under the 2021 Plan, 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.

On June 2, 2022, the Company’s stockholders approved an amendment to the 2021 Plan (the “2021 Plan Amendment”).

The 2021 Plan Amendment increased the number of shares of Class A Common that may be issued or transferred pursuant to awards under the 2021 Plan by 2,000,000 shares to 4,000,000 shares.

The 2021 Plan Amendment also increased the aggregate number of shares of Class A Common that may be issued or transferred under the 2021 Plan pursuant to incentive stock options under Section 422 of the Code from 2,000,000 to 4,000,000 .

As of September 30, 2022, pursuant to the 2021 Plan, there were 5,649,132 shares of Class A Common reserved and 2,858,843 shares of Class A Common available for future grants.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

As of March 31, 2023, pursuant to the 2021 Plan, there were 5,716,708 shares of Class A Common reserved and 1,526,833 shares of Class A Common available for future grants.

Stock Options

Stock option activity during the nine months ended September 30 , 2022 is summarized as follows:

Stock option activity during the three months ended March 31, 2023 is summarized as follows:

‎ Shares (thousands)

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Outstanding at December 31, 2022

Outstanding at September 30, 2022

Exercisable at September 30, 2022

Expected to vest at September 30, 2022

The total intrinsic value of stock options exercised was $ 7.9 million and $ 33.8 million during the three months ended September 30, 2022, and 2021, respectively.

The total intrinsic value of stock options exercised was $ 15.3 million and $ 68.9 million during the nine months ended September 30, 2022, and 2021, respectively.

Outstanding at March 31, 2023

Exercisable at March 31, 2023

Expected to vest at March 31, 2023

The total intrinsic value of stock options exercised was $ 5.3 million and $ 4.7 million during the three months ended March 31, 2023, and 2022, respectively.

The fair value of the options was estimated on the date of the grant using a Black-Scholes option pricing model with the following assumptions:

Nine Months Ended

September 30,

Three Months Ended

Risk-free interest rate

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Expected dividend yield

The weighted average grant date fair value of stock options granted during the three months ended September 30, 2022, and 2021 was $ 23.16 and $ 24.11 per share, respectively.

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2022, and 2021 was $ 21.78 and $ 20.19 per share, respectively.

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2023, and 2022 was $ 22.31 and $ 20.48 per share, respectively.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

Restricted Stock Units

Restricted stock unit activity during the nine months ended September 30, 2022 is summarized as follows:

Restricted stock unit activity during the three months ended March 31, 2023 is summarized as follows:

Restricted Stock

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Outstanding at December 31, 2022

Outstanding at September 30, 2022

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

Outstanding at March 31, 2023

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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Total stock-based compensation cost

As of September 30, 2022, there was $ 78.8 million of unrecognized compensation expense related to unvested employee stock options that are expected to vest over a weighted average period of approximately three years .

As of March 31, 2023, there was $ 91.9 million of unrecognized compensation expense related to unvested employee stock options that vest over a weighted average period of three years .

In computing our income tax provision, we make certain estimates and judgments, such as estimated annual taxable income or loss, annual effective tax rate, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets.

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Should facts and circumstances change during a quarter causing a material change to the estimated effective income tax rate, a cumulative adjustment is recorded.

The following table provides a summary of our effective tax rate for the three and nine months ended September 30, 2022 and 2021, respectively:

The following table provides a summary of our effective tax rate for the three months ended March 31, 2023 and 2022, respectively:

Three Months Ended

Nine Months Ended

September 30,

Effective income tax rate

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If the reasonable estimate of a probable loss is a range, and no amount in the range is a better estimate than any other, the minimum amount of the range is accrued.

If a loss is reasonably possible, but not probable, and the amount can be reasonably estimated, the estimated loss or range of loss is disclosed.

In most cases, significant judgment is required to estimate the amount and timing of a loss.

While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows.

If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed.

In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded.

While it is not possible to predict the outcome for most of the

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows.

Moskowitz Family LLC Litigation

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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 no t recorded a liability related to this litigation as of September 30, 2022.

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

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 March 31, 2023.

SEGMENT AND GEOGRAPHIC INFORMATION

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

Total net sales

SUBSEQUENT EVENT

On October 11, 2022, the Company acquired the membership interests of Harvest Biologics, LLC, which engages in the business of selling systems that produce autologous biologics.

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

GLOBUS MEDICAL, INC.

1 unchanged sentence

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 1. Financial Statements