What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-07 · 192 added, 225 removed, 719 unchanged (37% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands, except share and per share values)

17 unchanged sentences

Income taxes payable

Senior convertible notes

Business acquisition liabilities

Deferred revenue

Payable to broker

Total current liabilities

2 unchanged sentences

Senior convertible notes

Deferred income taxes

Deferred income taxes and other tax liabilities

Other liabilities

4 unchanged sentences

Authorized 500,000,000 shares;

issued and outstanding 118,169,712 and 77,762,282 shares at September 30, 2023 and December 31, 2022, respectively

issued and outstanding 112,626,136 and 113,905,565 shares at March 31, 2024 and December 31, 2023, respectively

Class B common stock;

1 unchanged sentence

Authorized 275,000,000 shares;

issued and outstanding 22,430,097 and 22,430,097 shares at September 30, 2023 and December 31, 2022, respectively

issued and outstanding 22,430,097 and 22,430,097 shares at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

6 unchanged sentences

Acquisition-related costs

Restructuring Costs

Total operating expenses

6 unchanged sentences

Income/(loss) before income taxes

Income tax provision

Income tax provision/(benefit)

Net income/(loss)

20 unchanged sentences

Exercise of stock options

Comprehensive income/(loss)

Balance at March 31, 2023

Stock-based compensation

Grant of contingent restricted stock units

Exercise of stock options

Comprehensive income/(loss)

Balance at June 30, 2023

Stock-based compensation

Grant of contingent restricted stock units

Exercise of stock options

Issuance of Class A common stock under employee and director equity option plans, net

Issuance of equity for NuVasive Merger

Comprehensive income/(loss)

Balance at September 30, 2023

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Repurchase and retirement of common stock

Balance at March 31, 2024

‎ Common Stock

10 unchanged sentences

Balance at March 31, 2023

Stock-based compensation

Grant of contingent 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 contingent restricted stock units

Exercise of stock options

Comprehensive income/(loss)

Balance at September 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Acquired in-process research and development

Depreciation and amortization

Amortization of premium (discount) on marketable securities

Write-down for excess and obsolete inventories, net

Amortization of premiums on marketable securities

Provision for excess and obsolete inventory

Amortization of inventory fair value step up

Amortization of 2025 Note fair value step up

Stock-based compensation expense

4 unchanged sentences

Payment of business acquisition-related liabilities

Net (gain)/loss from foreign currency adjustment

(Increase) decrease in:

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Cash flows from financing activities:

Payment of business acquisition liabilities

Proceeds from exercise of stock options

Payment of business acquisition-related liabilities

Net proceeds from exercise of stock options

Payments related to tax withholdings for share-based compensation

Repurchase of common stock

7 unchanged sentences

Non-cash investing and financing activities:

Equity issued in conjunction with the NuVasive merger

Accrued purchases of property and equipment

7 unchanged sentences

We are an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures to assist surgeons in effectively treating their patients and to address new treatment options.

We offer a comprehensive portfolio of innovative and differentiated technologies that address a variety of musculoskeletal pathologies, anatomies, and surgical approaches.

With numerous products launched since the founding of the Company, 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 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.

5 unchanged sentences

(b) NuVasive Merger

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

On September 1, 2023, the Company merged with NuVasive, Inc.

(“NuVasive”) and Zebra Merger Sub Inc., a wholly owned subsidiary of the Company (“Merger Sub”).

On September 1, 2023, pursuant to the terms of the Merger Agreement, Merger Sub merged with and into NuVasive (the “Merger”), with NuVasive surviving as a wholly owned subsidiary of the Company.

Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into NuVasive (the “Merger”), with NuVasive surviving as a wholly owned subsidiary of the Company.

Upon the consummation of the Merger, each issued and outstanding share of common stock of NuVasive, $ 0.001 par value per share, was converted into 0.75 fully paid and non-assessable shares of the Company’s Class A Common Stock, and the right to receive cash in lieu of fractional shares.

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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, 2023.

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, 2023, and results of operations for the three and nine months ended September 30, 2023.

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, 2024, and results of operations for the three months ended March 31, 2024.

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

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All intercompany balances and transactions are eliminated in consolidation.

Variable Interest Entities

We provide intraoperative neuromonitoring (“IONM”) services through various majority-owned or controlled subsidiaries, which collectively conduct business as NuVasive Clinical Services.

In providing IONM services to surgeons and healthcare facilities across the U.S., the Company maintains contractual relationships with several physician practices (“PCs”).

In accordance with authoritative guidance, the Company has determined that the PCs are variable interest entities and therefore, the accompanying consolidated financial statements include the accounts of the PCs from the date of acquisition.

During the periods presented, the results of the PCs were immaterial to the Company’s financial statements.

The creditors of the PCs have claims only to the assets of the PCs, which are not material, and the assets of the PCs are not available to the Company.

(d) Use of Estimates

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(e) Revenue Recognition

In accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue upon the transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services.

The principles in ASC 606 are applied using the following five steps:

(i) identify the contract with a customer;

(ii) identify the performance obligation(s) in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligation(s) in the contract;

and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s).

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

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

The majority of these revenue contracts have a single performance obligation and revenue is recognized at a point in time, which is either when consigned inventory, maintained at hospitals or with sales representatives, is used or implanted.

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

For purposes of disclosure, we disaggregate our revenue into two categories, Musculoskeletal Solutions and Enabling Technologies.

Our Musculoskeletal Solutions products consist primarily of the implantable devices, disposables, unique instruments, and neuromonitoring services, 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.

For our IONM services, revenue is recognized in the period the service is performed, which can be either at a point in time or over time, depending on how the performance obligation is defined for the amount of consideration expected to be received.

Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of sales.

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.

The majority of these product contracts contain multiple performance obligations, including maintenance and support, and revenue is recognized as we fulfill each performance obligation.

When contracts have multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using an observable price to determine the standalone selling price of each distinct good or service in the contract.

Our Neuromonitoring Services consists of products which use proprietary software-driven nerve detection and avoidance technology and include intraoperative neuromonitoring (“IONM”), services and disposables, biologics, and our capital equipment, all of which are used to aid spine surgery .

Revenue from IONM services is recognized in the period the service is performed for the amount of consideration expected to be received.

The majority of our Enabling Technologies product contracts contain multiple performance obligations, including maintenance and support, and revenue is recognized as we fulfill each performance obligation, generally at the point in time in which the obligation is fulfilled.

When contracts have multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.

Revenue associated with products holding rights of return or trade-in are recognized when the Company concludes there is not a risk of significant revenue reversal in future periods for the expected consideration in the transaction.

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

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, 2023, there was an immaterial amount of revenue recognized from previously deferred revenue.

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 months ended March 31, 2024, there was an immaterial amount of revenue recognized from previously deferred revenue.

(f) Cash and Cash Equivalents

2 unchanged sentences

(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 September 30, 2023.

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

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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.

During the three and nine months ended September 30, 2023, there were no impairments in goodwill, finite-lived intangible assets, or IPR&D.

During the three months ended March 31, 2024, there were no impairments in goodwill, finite-lived intangible assets, or IPR&D.

(k) Stock -Based Compensation

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(n) Acquisition-Related Costs

The Company incurs certain costs related to acquisition, integration and business transition activities, which include severance, relocation, duplicate headcount costs, consulting, leasehold exit costs, costs related to the Merger, third-party acquisition costs and contingent consideration fair value adjustments and other costs directly associated with such activities.

Contingent consideration is accrued based on the fair value of the expected payment, and such accruals are subject to increase or decrease based on the assessment of the likelihood that the contingent milestones will be achieved resulting in payment.

If an accrual for contingent consideration decreases based upon the assessment during a particular period, it results in a reduction of costs during such period, which the Company records as a benefit.

(o) Accounts Receivable and Related Valuation Accounts

Acquisition-related costs represents the change in fair value of business acquisition-related contingent consideration and specific costs related to the consummation of the acquisition process such as banker fees, legal fees and other acquisition-related professional fees .

(o) Restructuring Costs

Restructuring costs represent costs associated with the 2024 Synergy Plan.

This plan was designed to optimize the organizational structure, merge synergies and leverage the strength of both commercial organizations.

As a result of aligning the cost structure of the Company’s businesses and corporate functions with its financial objectives;

the Company also recorded employee separation charge and one-time termination benefits.

(p) Accounts Receivable and Related Valuation Accounts

Accounts receivable in the accompanying unaudited condensed consolidated balance sheets are presented net of allowances for expected credit losses.

The Company maintains an allowance for expected credit losses resulting from the inability of its customers, including hospitals, ambulatory surgery centers, and distributors, to make required payments.

The Company's exposure to credit losses may also increase if its customers are adversely affected by changes in healthcare laws, coverage and reimbursement, macroeconomic pressures or uncertainty associated with local or global economic recessions, disruption associated with pandemics, or other customer-specific factors.

The Company has a diverse customer base and no single customer represented greater than ten percent of net sales or accounts receivable.

Historically, the Company’s reserves have been adequate to cover credit losses.

(p) Recently Issued Accounting Pronouncements

In June 2022, the Financial Accounting Standards Board (the “FASB”), issued Accounting Standards Update (“ASU”), No.

We maintain an allowance for expected credit losses resulting from the inability of its customers, including hospitals, ambulatory surgery centers, and distributors, to make required payments.

The allowance for credit losses is calculated quarterly and is estimated on a region-by-region basis considering a number of factors including age of account balances, collection history, historical account write-offs, third-party credit reports, identified trends, current economic conditions, and supportable forecasted economic expectations.

The allowance is adjusted on a specific identification basis for certain accounts as well as pooling of accounts with similar characteristics.

An increase in the provision for credit losses may be required when the financial condition of our customers or their collection experience deteriorates.

Our exposure to credit losses may also increase if its customers are adversely affected by changes in healthcare laws, coverage and reimbursement, macroeconomic pressures or uncertainty associated with local or global economic recessions, disruption associated with pandemics, or other customer-specific factors.

(q) Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (the “FASB”), issued Accounting Standards Update (“ASU”) No.

2023-09 , Income Taxes (Topic 740), Improvements to Income Tax Disclosures, to enhance the transparency and decision-making utility of income tax disclosures.

The enhancement will provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid, to evaluate income tax risks and opportunities.

This update is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted.

The amendments should be applied prospectively with retrospective applications also permitted.

The Company is currently evaluating the impact the standard will have on its consolidated financial statements and related disclosures.

In November 2023, the FASB, issued ASU No.

2023-07 , Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements.

The amendment introduced new requirements to disclose significant segment expenses regularly provided to the chief operating decision maker (“CODM”), extend certain annual disclosures to interim periods, clarify that single reportable segment entities must apply ASC 280 in its entirety, permit more than one measure of segment profit or loss to be reported under certain conditions, and require disclosure of the title and position of the CODM.

This update is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years after December 15, 2024, early adoption is permitted.

The amendments should be applied retrospectively.

The Company is currently evaluating the impact the standard will have on its consolidated financial statements and related disclosures.

(r) Recently Adopted Accounting Pronouncements

In June 2022, the FASB issued ASU No.

2022-03 , Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions , which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

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The amendments should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption.

The Company is currently evaluating the impact the standard will have on its Condensed Consolidated Financial Statements.

(q) Recently Adopted Accounting Pronouncements

On March 12, 2020, the FASB” issued 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 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 adoption did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

The Company adopted ASU No.

2022-03 as of January 1, 2024.

The adoption did not have any material impact on the Company’s consolidated financial statements.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires an entity (acquirer) to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, or ASC 606.

2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires an entity (acquirer) to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers.

This update is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted.

The amendments should be applied prospectively to business

combinations occurring on or after the effective date of the amendments.

The Company adopted ASU 2021-08 as of January 1, 2023.

The adoption did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

The Company adopted ASU No.

2021-08 as of January 1, 2023.

The adoption did not have a material impact on the Company’s consolidated financial statements.

ASSET ACQUISITIONS AND BUSINESS COMBINATIONS

Asset Acquisitions

During the fourth quarter of 2021, the Company acquired substantially all the assets of Capstone Surgical Technologies, LLC, which engages in the business of advanced drill and robotic surgery platforms.

The purchase price consisted of $ 24.5 million of cash paid at closing, subject to net working capital and other post-closing adjustments, if applicable.

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 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.

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 condensed 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 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 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, IPR&D of the acquired technology, thus satisfying the requirements of the screen test in ASU 2017-1.

During the first quarter of 2024, the company completed a share acquisition of a biotech company focused on research and development for hemostasis solutions.

The fair value of the assets acquired are concentrated in a similar identified asset, 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 was charged to research and development expense in the condensed consolidated statements of operations and comprehensive income for the year ended 2021.

Accordingly, the acquired IPR&D of $ 12.6 million was charged to research and development expense in the condensed consolidated statements of operations and comprehensive income.

The purchase price consisted of $ 12.0 million of cash paid at closing.

The transaction also provides for $ 12.0 million contingent consideration which is payable upon meeting the Good Manufacturing Process milestones and consideration contingent upon the developed products obtaining approval from the U.S.

Food and Drug Administration for $ 10.0 million.

Contingent consideration will not be recorded in this asset acquisition until the milestone is met.

Business Combinations

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.

During the first quarter of 2024, the Company completed one acquisition that was not 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.

The purchase price consisted of approximately $ 0.5 million of cash paid at closing and $ 19.1 million of contingent consideration payments, resulting in goodwill of $ 17.9 million and reacquired rights of $ 1.8 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 the first quarter of 2023, the Company completed one acquisition that was not 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.

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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.

During the second quarter of 2022, the Company completed one acquisition that was not 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.

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 condensed consolidated financial statements during the periods presented.

Two acquisitions were completed in the third quarter, while the third acquisition was completed in the fourth quarter.

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

The purchase price of the acquisition in the fourth quarter consisted of approximately $ 0.3 million of cash paid at closing and $ 13.0 million of contingent consideration payments, resulting in goodwill of $ 13.3 million based on the estimated fair values.

The combined purchase price of the two acquisitions in the third quarter consisted of approximately $ 12.6 million of contingent consideration payments.

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 obligations over a period of 10 years and are payable in a combination of cash and RSUs.

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.

NuVasive Merger

As previously announced, on February 8, 2023, the Company entered into the Merger Agreement with NuVasive and Zebra Merger Sub Inc, a wholly owned subsidiary of the Company (“Merger Sub”).

On September 1, 2023, pursuant to the terms of the Merger Agreement, Merger Sub merged with and into NuVasive (the “Merger”), with NuVasive surviving as a wholly owned subsidiary of the Company.

At the consummation of the Merger, each issued and outstanding share of common stock of NuVasive, $ 0.001 par value per share, was converted into 0.75 fully paid and non-assessable shares of the Company’s Class A Common Stock, and the right to receive cash in lieu of fractional shares.

On September 1, 2023, the Company merged with NuVasive, Inc.

(“NuVasive”) and Zebra Merger Sub Inc., a wholly owned subsidiary of the Company (“Merger Sub”).

Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into NuVasive (the “Merger”), with NuVasive surviving as a wholly owned subsidiary of the Company.

As part of the Merger, the Company assumed equity awards for certain NuVasive RSUs and NuVasive PRSUs in accordance with the terms of the Merger Agreement.

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Of the $ 42.3 million of total compensation related to the assumed awards, $ 12.9 million was expensed on the acquisition date due to accelerated vesting of the awards, recognized as Merger related costs, and $ 29.4 million relates to future services and will be expensed over the remaining service periods of the unvested awards on a straight-line basis.

Of the $ 25.1 million related to future services, $ 1.2 million of expense was recognized for the three and nine months ended September 30, 2023.

Of the $ 29.4 million related to future services, $ 7.5 million of expense was recognized for the year ended March 31, 2024.

Concurrently with the Merger, the Company repaid the outstanding $ 420.8 million under NuVasive’s revolving senior credit facility in addition to assuming the 0.375 % Senior Convertible Notes due 2025 (“ 2025 Notes”), the privately negotiated call options (“2025 Hedge”) and the privately negotiated warrants (“2025 Warrants”).

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(In thousands)

Cash and cash equivalents

Preliminary Purchase Price Allocation as of September 1, 2023

Measurement Period and Other Adjustments

Purchase Price Allocation as of March 31, 2024 (as adjusted)

Current assets (excluding accounts receivable and inventories)

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Operating lease right-of-use assets

Property, plant, and equipment

Operating lease ROU asset

Intangible assets

Income tax receivable

Deferred income taxes

Accounts payable

Accrued expenses

Operating lease liabilities

Income taxes payable

Business acquisition liabilities

Deferred revenue

Senior Convertible Notes due 2025

Other long-term assets

Deferred income taxes

Operating lease liabilities, long-term

Current Liabilities

Operating lease liabilities, including current portion

Business acquisition liabilities, including current portion

Senior convertible notes

Deferred income taxes and other tax liabilities

Other liabilities

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( 1,679,681 )

( 1,369,361 )

The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies.

The majority of goodwill is non-deductible for tax purposes.

During the three and nine months ended September 30, 2023, total transaction costs incurred in connection with the Merger were $ 44.5 million and $ 48.3 million, respectively.

These transaction costs were recognized as acquisition related costs in the condensed consolidated statements of operations and comprehensive income.

Details of our valuation methodology and significant inputs for fair value measurements are included below.

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(In thousands)

September 30, 2023

March 31, 2024

Developed Technology

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NuVasive’s results have been included in the Company’s financial statements for the period subsequent to the date of the acquisition on September 1, 2023.

NuVasive contributed revenues and net loss of $ 102.4 million and $ 41.9 million, respectively, for the period from September 1, 2023, through September 30, 2023.

The following unaudited pro forma information for the Company presents net sales and net income as if the acquisition had occurred January 1, 2022 :

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Pro forma net sales

Pro forma net income

The unaudited pro forma net income for the three and nine months ended September 30, 2023 was adjusted to exclude $ 90.0 million and $ 108.8 million of acquisition related costs incurred in 2023, respectively.

The unaudited pro forma net income for the nine months ended September 30, 2022 was adjusted to include the aforementioned charges.

Due to the continuing integration of NuVasive’s operations into the Company, it is impractical to determine NuVasive’s net income/loss during the current period, which is included in the Company’s Net Income .

The following table represents net sales by product category:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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Enabling Technologies

Neuromonitoring Services

Total net sales

1 unchanged sentence

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

September 30, 2023

March 31, 2024

(In thousands)

2 unchanged sentences

Corporate debt securities

Asset-backed securities

Government, federal agency, and other sovereign obligations

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Corporate debt securities

Commercial paper

Asset-backed securities

Government, federal agency, and other sovereign obligations

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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, 2023 and December 31, 2022, respectively.

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, 2024 and December 31, 2023, respectively.

Purchases of marketable securities include amounts payable to brokers of $ 0.2 million as of March 31, 2024.

FAIR VALUE MEASUREMENTS

1 unchanged sentence

(In thousands)

‎ September 30,

Cash equivalents

3 unchanged sentences

Government, federal agency, and other sovereign obligations

Senior Convertible Notes due 2025

Bifurcated Conversion Option of the Senior Convertible Notes due 2025

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Corporate debt securities

Commercial paper

Asset-backed securities

Government, federal agency, and other sovereign obligations

Senior Convertible Notes due 2025

Bifurcated Conversion Option of the Senior Convertible Notes due 2025

Business acquisition liabilities

1 unchanged sentence

The bifurcated conversion option and 2025 Hedge are classified as Level 2 within the fair value hierarchy, based on implied equity volatility.

The estimated fair value of the 2025 Notes, inclusive of the embedded conversion option, at September 30, 2023 was $ 405.0 million.

The estimated fair value of the 2025 Notes, inclusive of the embedded conversion option, at March 31, 2024 was $ 428.6 million.

The fair value was determined based on the quoted price of the 2025 Notes in an active market on the last trading day of the reporting period and has been classified as Level 1 within the fair value hierarchy.

9 unchanged sentences

* 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, 2023 and 2022, respectively included the following:

The change in the carrying value of the business acquisition liabilities during the three months ended March 31, 2024 and 2023, respectively included the following:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

1 unchanged sentence

Purchase price contingent consideration

Changes resulting from foreign currency fluctuations

Contingent cash payments

6 unchanged sentences

Inventories included the following:

September 30,

(In thousands)

4 unchanged sentences

As part of the NuVasive Merger, a step up in the value of inventory of $ 284.3 million was recorded, which was composed of $ 3.0 million for work in process and $ 281.3 million for finished goods.

The amortization of the inventory step up recorded in product cost of sales was $ 19.0 million for the three months and nine months ended September 30, 2023, respectively.

As of September 30, 2023, the total remaining balance of inventory step up was $ 265.3 million.

During the three months ended September 30, 2023 and 2022, net adjustments to cost of sales related to excess and obsolete inventory were $ 2.7 million and $ 1.8 million, respectively.

The net adjustments for the three months ended September 30, 2023 and 2022 reflect a combination of additional expense for excess and obsolete related provisions ($ 4.7 million and $ 10.4 million, respectively) offset by sales and disposals ($ 2.0 million and $ 8.6 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, 2023 and 2022, net adjustments to cost of sales related to excess and obsolete inventory were $ 6.7 million and $ 5.9 million, respectively.

The net adjustments for the nine months ended September 30, 2023 and 2022 reflect a combination of additional expense for excess and obsolete related provisions ($ 11.6 million and $ 19.0 million, respectively) offset by sales and disposals ($ 4.9 million and $ 13.1 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods.

The amortization of the inventory step up recorded in product cost of sales was $ 53.7 million for the three months ended March 31, 2024, respectively.

As of March 31, 2024, the total remaining balance of inventory step up was $ 77.4 million.

During the three months ended March 31, 2024 and 2023, net adjustments to cost of sales related to excess and obsolete inventory were $ 3.9 million and $ 2.1 million, respectively.

The net adjustments for the three months ended March 31, 2024 and 2023 reflect a combination of additional expense for excess and obsolete related provisions ($ 5.2 million and $ 3.5 million, respectively) offset by sales and disposals ($ 1.3 million and $ 1.4 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods.

PROPERTY AND EQUIPMENT

Property and equipment included the following:

September 30,

(In thousands)

7 unchanged sentences

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, 2022 and the nine months ended September 30, 2023, respectively included the following:

The change in the carrying amount of goodwill during the twelve months ended December 31, 2023 and the three months ended March 31, 2024, respectively included the following:

(In thousands)

5 unchanged sentences

Foreign exchange

September 30, 2023

Intangible assets as of September 30, 2023 included the following:

September 30, 2023

March 31, 2024

Intangible assets as of March 31, 2024 included the following:

March 31, 2024

(In thousands)

12 unchanged sentences

Total intangible assets

The following table summarizes amortization of intangible assets for future periods as of September 30, 2023 :

The following table summarizes amortization of intangible assets for future periods as of March 31, 2024 :

(In thousands)

2 unchanged sentences

ACCRUED EXPENSES

Accrued expenses as of September 30, 2023 and December 31, 2022, respectively included the following:

September 30,

Accrued expenses as of March 31, 2024 and December 31, 2023, respectively included the following:

(In thousands)

3 unchanged sentences

Total accrued expenses

The carrying values of the Company’s 2025 Notes, acquired in the NuVasive merger, as of September 30, 2023, were as follows:

September 30,

The carrying values of the Company’s 2025 Notes, acquired in the NuVasive merger, as of March 31, 2024, were as follows:

(In thousands)

4 unchanged sentences

Debt, net of unamortized fair value adjustments for acquisition accounting

September 30,

Three Months Ended March 31,

(In thousands)

Interest expense:

14 unchanged sentences

The September 2023 Credit Agreement contains financial and other customary covenants, including a funded net indebtedness to adjusted EBITDA ratio.

As of September 30, 2023, we have no t borrowed under the September 2023 Credit Agreement and we were in compliance with all covenants.

As of March 31, 2024, we have no t borrowed under the September 2023 Credit Agreement and we were in compliance with all covenants.

0.375% Senior Convertible Notes due 2025

22 unchanged sentences

The Company recognized, at Merger closing, the embedded conversion feature at fair value of $ 0.7 million and allocated the residual $ 407.8 million of the 2025 Notes fair value to the host debt instrument.

As of the September 30, 2023, the fair value of the embedded conversion feature was $ 1.7 million.

As of the March 31, 2024, the fair value of the embedded conversion feature was $ 1.7 million.

As a result of the Merger and recognizing the fair value of the 2025 Notes, along with the embedded conversion feature, as of the acquisition date, the company recorded $ 42.2 million debt discount to be accreted as interest expense over the life of the notes.

5 unchanged sentences

The 2025 Hedge does not meet the equity scope exception described in ASC 815-40, Contract in Entity’s Own Equity, and will be presented as asset on the consolidated balance sheet with subsequent measurement at fair value with changes in fair value recognized as “Other income/(expense)”.

As of September 30, 2023, the fair value of the 2025 Hedge is $ 1.7 million recorded within the Other Assets with the consolidated balance sheet.

As of March 31, 2024, the fair value of the 2025 Hedge is $ 0.7 million recorded within the Other Assets with the consolidated balance sheet.

An assumed exercise of the 2025 Hedge by NuVasive is considered anti-dilutive since the effect of the inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share.

12 unchanged sentences

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

The Company did no t repurchase any Class A Common during the three and nine months ended September 30, 2023.

As of September 30, 2023, the Company has remaining authorization to repurchase a total of $ 500.8 million of Class A Common.

The Company repurchased 1.6 million shares under this program at an average price of $ 52.18 , for a total dollar amount of $ 83.3 million during the three months ended March 31, 2024.

As of March 31, 2024, the Company has remaining authorization to repurchase a total of $ 191.7 million of the Company’s Class A Common.

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.

12 unchanged sentences

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, 2023 and 2022, 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, 2024 and 2023, respectively:

(In thousands)

6 unchanged sentences

Other comprehensive income/(loss), net of tax

Accumulated other comprehensive income/(loss), net of tax, at September 30, 2023

Accumulated other comprehensive income/(loss), net of tax, at March 31, 2024

(In thousands)

6 unchanged sentences

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

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.

5 unchanged sentences

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)

1 unchanged sentence

Dilutive potential net income /(loss)

Interest and amortization of debt discount costs on the 0.375% Senior Convertible Notes due 2025, net of tax

Adjusted net income (loss) for diluted

2 unchanged sentences

Dilutive stock options, RSUs, and PRSUs

Senior Convertible Notes due 2025

Weighted average shares outstanding for diluted

4 unchanged sentences

In accordance with ASU No.

2020-06, Debt with Conversion and Other Options (Subtopic 470-20), the Company applies the if-converted method in computing the effect of the Company's 2025 Notes on diluted net income per share.

For periods in which the Company reports net income, the numerator of the diluted per share computation is adjusted for interest expense and amortization of debt issuance costs, net of tax, and the denominator is adjusted for the weighted average number of shares into which each of the Company’s 2025 Notes could be converted.

5 unchanged sentences

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

The 2012 Plan, 2021 Plan, NuVasive 2014 Plan, and Ellipse 2015 Plan are administered by the Board of Directors of Globus (the “Board”) or its delegates.

The 2012 Plan,

2021 Plan, NuVasive 2014 Plan, and Ellipse 2015 Plan 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 accordance with the terms of the 2012 Plan and 2021 Plan.

13 unchanged sentences

In connection with the Merger, the Company assumed outstanding awards for the RSUs and PRSUs under the NuVasive 2014 Plan and the Ellipse 2015 Plan in accordance with the terms in the Merger Agreement.

The PRSUs ultimate issuance amount is determined by the Company’s Compensation Committee.

The ultimate issuance amount of the PRSUs is determined by the Company’s Compensation Committee.

Share payout levels range from 0 % to 100 % depending on the respective terms of an award.

As of September 30, 2023, pursuant to the 2021 Plan, the NuVasive 2014 Plan, and the Ellipse 2015 Plan, there were 9,772,842 shares 1,587,150 , and 263,784 shares respectively of Class A Common reserved and 5,278,170 shares, 1,587,150 shares, 263,784 shares, respectively of Class A Common available for future grants.

As of March 31, 2024, pursuant to the 2021 Plan, the NuVasive 2014 Plan, and the Ellipse 2015 Plan, there were 9,836,808 shares, 2,111,938 shares, and 378,027 shares, respectively, of Class A Common reserved and 3,843,344 shares, 1,712,430 shares, 274,676 shares, respectively of Class A Common available for future grants.

No future issuances will be made from the NuVasive 2014 Plan.

Stock Options

Stock option activity during the nine months ended September 30, 2023 is summarized as follows:

Stock option activity during the three months ended March 31, 2024 is summarized as follows:

‎ Shares (thousands)

3 unchanged sentences

Outstanding at December 31, 2023

Outstanding at September 30, 2023

Exercisable at September 30, 2023

Expected to vest at September 30, 2023

The total intrinsic value of stock options exercised was $ 2.2 million and $ 7.9 million during the three months ended September 30, 2023, and 2022, respectively.

The total intrinsic value of stock options exercised was $ 10.3 million and $ 15.3 million during the nine months ended September 30, 2023, and 2022, respectively.

Outstanding at March 31, 2024

Exercisable at March 31, 2024

Expected to vest at March 31, 2024

The total intrinsic value of stock options exercised was $ 2.8 million and $ 5.3 million during the three months ended March 31, 2024, and 2023, 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

2 unchanged sentences

Expected dividend yield

The weighted average grant date fair value of stock options granted during the three ended September 30, 2023, and 2022 was $ 20.61 and $ 23.16 per share, respectively.

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2023, and 2022 was $ 21.95 and $ 21.78 per share, respectively.

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2024, and 2023 was $ 20.90 and $ 22.31 per share, respectively.

Restricted Stock Units

Restricted stock unit activity during the nine months ended September 30, 2023 is summarized as follows:

Restricted stock unit activity during the three months ended March 31, 2024 is summarized as follows:

Restricted Stock

4 unchanged sentences

Outstanding at December 31, 2023

Outstanding at September 30, 2023

Outstanding at March 31, 2024

Performance-Based Restricted Stock Units

Performance-based restricted stock unit activity during the nine months ended September 30, 2023 is summarized as follows:

Performance-based restricted stock unit activity during the three months ended March 31, 2024 is summarized as follows:

Performance-Based Restricted Stock

4 unchanged sentences

Outstanding at December 31, 2023

Outstanding at September 30, 2023

Outstanding at March 31, 2024

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Stock-based compensation expense

Stock-based compensation expense classified in Acquisition Related Costs

Net stock-based compensation capitalized into inventory

Total stock-based compensation cost

As of September 30, 2023, there was $ 106.3 million of unrecognized compensation expense related to unvested employee stock options, RSUs, and PRSUs that vest over a weighted average period of 2.6 years .

As of March 31, 2024, there was $ 106.0 million of unrecognized compensation expense related to unvested employee stock options, RSUs, and PRSUs that vest over a weighted average period of 2.93 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.

1 unchanged sentence

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, 2023 and 2022, respectively:

The following table provides a summary of our effective tax rate for the three months ended March 31, 2024 and 2023, respectively:

Three Months Ended

Nine Months Ended

September 30,

Effective income tax rate

RESTRUCTURING AND OTHER COSTS

For the three months ended March 31, 2024, the Company incurred restructuring and other costs primarily related to employee termination benefits as a part of the 2024 Synergy Plan.

The 2024 Synergy Plan was designed to optimize the organizational structure of Globus by reducing the size of our workforce.

Impacted employees were notified during January 2024.

Totals include stock based compensation expense, classified in accordance with ASC Topic 420, Exit or Disposal Cost Obligations , where applicable.

The following table provides a summary of recognized pre-tax costs for the three months ended March 31, 2024:

Three Months Ended

(In thousands)

March 31, 2024

Cost of Sales

Research and Development

Selling, General and Administrative

Restructuring Costs

Total restructuring and other costs

The following table provides a summary of activity related to the restructuring program for the three months ended March 31, 2024:

(In thousands)

December 31, 2023

Cash Payments

Settled non-cash

March 31, 2024

The Company leases certain equipment, vehicles, office and storage facilities via various operating and financing lease agreements.

8 unchanged sentences

Amounts reported in the condensed consolidated balance sheet were as follows:

September 30,

(In thousands)

9 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

5 unchanged sentences

Total lease expense

Future minimum lease payments under non-cancellable leases as of September 30, 2023 are as follows:

Future minimum lease payments under non-cancellable leases as of March 31, 2024 are as follows:

(In thousands)

6 unchanged sentences

The table below summarizes the Company’s supplemental cash flow information and assumptions used:

September 30,

Three Months Ended

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

31 unchanged sentences

District Court for the Eastern District of Pennsylvania.

Trial is scheduled to begin on December 4, 2023.

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, 2023 .

On December 14, 2023, a jury returned a defense verdict in favor of Globus.

As such, we have no t recorded a liability, outside of counsel fees, related to this litigation as of March 31, 2024 .

SEGMENT AND GEOGRAPHIC INFORMATION

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

We manage our business globally within one operating segment, and segment information is consistent with how the chief operating decision makers review the business, make investing and resource allocation decisions and assess operating performance.

Operating segments are defined as components of an organization for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

We have identified two operating segments, Musculoskeletal Solutions and Enabling Technologies, based on how management reviews the business, makes investing and resource allocation decisions and assesses operating performance.

We aggregate these operating segments into one reportable segment, based on conclusions reached after considering relevant factors such as economic similarity, customer base, regulatory environment, production processes, nature of services and products provided, and our comprehensive approach to product development and offerings targeting patient needs through procedural-based solutions.

The following table represents total net sales and property and equipment, net by geographic area, based on the location of the customer:

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements