What changed in this filing

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Item 1. Financial Statements

2024-11-05 compared with 2024-08-06 · 198 added, 141 removed, 820 unchanged (29% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands, except share and per share values)

31 unchanged sentences

Authorized 500,000,000 shares;

issued and outstanding 112,928,331 and 113,905,565 shares at June 30, 2024 and December 31, 2023, respectively

issued and outstanding 113,474,233 and 113,905,565 shares at September 30, 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 June 30, 2024 and December 31, 2023, respectively

issued and outstanding 22,430,097 and 22,430,097 shares at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

Cost of sales

Operating expenses:

Cost of Sales and Operating expenses:

Cost of sales (exclusive of amortization of intangibles)

Research and development

4 unchanged sentences

Restructuring costs

Total operating expenses

Operating income/(loss)

39 unchanged sentences

Balance at June 30, 2024

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

Comprehensive income/(loss)

Balance at September 30, 2024

GLOBUS MEDICAL, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

‎ Common Stock

15 unchanged sentences

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

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

8 unchanged sentences

Stock-based compensation expense

Allowance for doubtful accounts

Allowance for expected credit losses

Change in fair value of business acquisition liabilities

31 unchanged sentences

Non-cash investing and financing activities:

Equity issued in conjunction with the NuVasive Merger

Accrued purchases of property and equipment

31 unchanged sentences

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 June 30, 2024, and results of operations for the three and six months ended June 30, 2024.

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, 2024, and results of operations for the three and nine months ended September 30, 2024.

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

(b) Prior Period Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

“Operating lease right of use assets” was reclassified out of “Other assets”, and “Operating lease liabilities” were reclassified out of “Accrued expenses” and “Other liabilities”, respectively, depending on the short-term and long-term nature, on our consolidated balance sheets.

(b) Principles of Consolidation

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

6 unchanged sentences

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

The preparation of the condensed consolidated financial statements in conformity with U.S.

3 unchanged sentences

Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the condensed consolidated financial statements in the period they are determined to be necessary.

Significant areas that require estimates include revenue recognition, intangible assets, business acquisition liabilities, allowance for doubtful accounts, stock-based compensation, reserves for excess and obsolete inventory, fair value measurements, useful lives of assets, the outcome of litigation, recoverability of intangible assets and income taxes.

Significant areas that require estimates include revenue recognition, intangible assets, business acquisition liabilities, allowance for expected credit losses, stock-based compensation, reserves for excess and obsolete inventory, fair value measurements, useful lives of assets, the outcome of litigation, recoverability of intangible assets and income taxes.

We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results.

(e) Revenue Recognition

(d) 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.

23 unchanged sentences

The changes to contract liabilities related to deferred revenue are as follows:

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

Beginning contract liabilities

Revenue recognized from beginning of year contract liabilities

Net advance consideration received during the period

Revenue recognized from contract liabilities

Advance consideration received during the period

Ending contract liabilities

(f) Cash and Cash Equivalents

(e) Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents.

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

(g) Marketable Securities

Our marketable securities include municipal bonds, corporate debt securities, commercial paper, asset-backed securities, and securities of government, federal agency, and other sovereign obligations and are classified as available-for-sale as of June 30, 2024.

(f) Marketable Securities

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

9 unchanged sentences

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

(h) Fair Value Measurements

(g) Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date.

13 unchanged sentences

We utilize Level 3 inputs in the determination of the initial fair value.

(i) Inventories

(h) Inventories

Inventories are stated at the lower of cost or net realizable value.

4 unchanged sentences

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

(j) Goodwill and Intangible Assets

(i) Goodwill and Intangible Assets

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

12 unchanged sentences

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 six months ended June 30, 2024, there were no impairments in goodwill, finite-lived intangible assets, or IPR&D.

(k) Stock -Based Compensation

During the three and nine months ended September 30, 2024, there were no impairments in goodwill, finite-lived intangible assets, or IPR&D.

(j) Stock -Based Compensation

The cost of employee and non-employee director awards is measured at the grant date fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the equity award.

6 unchanged sentences

Treasury securities appropriate for the expected terms of the stock options.

The dividend yield

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

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

The respective fair values of restricted stock units and performance restricted stock units are estimated on the day of grant based on the closing price of the Company’s common stock.

6 unchanged sentences

The fair value of RSUs including PRSUs with pre-defined performance criteria is based on the stock price on the date of grant whereas the expense for PRSUs with pre-defined performance criteria is adjusted with the probability of achievement of such performance criteria at each period end.

(l) Derivative Financial Instruments

(k) Derivative Financial Instruments

The Company recognizes all derivative instruments as assets or liabilities in its unaudited condensed Consolidated Balance Sheets and measures these instruments at fair value by revaluing these assets and liabilities at the end of each reporting period.

1 unchanged sentence

The effects of these derivative instruments are immaterial to the Company’s financial statements.

(m) Other Comprehensive Income (Loss)

(l) Other Comprehensive Income (Loss)

Other comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.

Other comprehensive income (loss) includes net of tax, unrealized gains or losses on the Company’s marketable debt securities and foreign currency translation adjustments.

(n) Acquisition-Related Costs

(m) Acquisition-Related Costs

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

(n) Restructuring Costs

Restructuring costs represent costs associated with the 2024 Synergy Plan.

2 unchanged sentences

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

(p) Accounts Receivable and Related Valuation Accounts

(o) 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.

4 unchanged sentences

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

(p) Recently Issued Accounting Pronouncements

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

2 unchanged sentences

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

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

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.

6 unchanged sentences

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

(r) Recently Adopted Accounting Pronouncements

(q) Recently Adopted Accounting Pronouncements

In June 2022, the FASB issued ASU No.

17 unchanged sentences

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 ASC 805, Business Combinations .

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.

At the date of the acquisition, 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 $ 12.6 million was charged to research and development expense in the condensed consolidated statements of operations and comprehensive income.

4 unchanged sentences

Business Combinations

During the third 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 $ 0.1 million of cash paid at closing and $ 1.6 million in contingent consideration payments, resulting in goodwill of $ 1.7 million based on the estimated fair values.

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

During the second quarter of 2024, the Company completed one acquisition that was not material to the overall condensed consolidated financial statements during the periods presented.

1 unchanged sentence

The purchase price consisted of approximately $ 0.1 million of cash paid at closing and $ 1.9 million in contingent consideration payments, resulting in goodwill of $ 2.0 million based on the estimated fair values.

The contingent payments for this acquisition are based upon achieving various performance milestones over a period of 5 years and are payable in cash.

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

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.

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.

6 unchanged sentences

The Company recorded identifiable net assets, based on their estimated fair values, for inventory of $ 3.3 million, goodwill of $ 15.2 million, customer relationships and other intangibles of $ 10.5 million with a weighted average useful life of 20 years, and developed technology of $ 2.4 million with a weighted average useful life of 8 years.

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

The Company finalized 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 material to the overall condensed consolidated financial statements during the periods presented.

14 unchanged sentences

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 $ 29.4 million related to future services, $ 13.6 million of expense has been recognized as of June 30, 2024.

Of the $ 29.4 million related to future services, $ 15.4 million of expense has been recognized as of September 30, 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”).

12 unchanged sentences

We accounted for the Merger using the acquisition method of accounting, which requires the NuVasive assets and liabilities to be recorded on our balance sheet at fair value as of the acquisition date.

We will complete a final determination of the fair value of certain assets and liabilities within the one-year measurement period from the date of the acquisition as required by FASB ASC Topic 805, “Business Combinations”.

The preliminary fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations, valuations, and assumptions that are subject to change as the Company obtains additional information during the measurement period .

The following table summarizes the preliminary purchase price allocation for the Merger as of September 30, 2023:

The following table summarizes the final purchase price allocation for the Merger as of September 30, 2024:

(In thousands)

1 unchanged sentence

Measurement Period and Other Adjustments

Purchase Price Allocation as of June 30, 2024 (as adjusted)

Preliminary Purchase Price Allocation as of December 31, 2023 (as adjusted)

Measurement Period and Other Adjustments

Final Purchase Price Allocation

Current assets (excluding accounts receivable and inventories)

17 unchanged sentences

( 1,369,361 )

( 1,393,896 )

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.

2 unchanged sentences

The fair value measurements for property, plant and equipment and intangible assets are based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements.

The preliminary fair value of work-in-process and finished goods inventory utilizes a sales comparison approach which estimates the selling price of the inventory in completed condition less costs of disposal and a reasonable profit allowance for the selling effort.

The preliminary fair value of property and equipment utilizes a combination of the cost approach, income approach, and sales comparison approach less amounts for capitalized research and development costs existing on NuVasive’s closing balance sheet.

The preliminary fair value of the identifiable intangible assets was determined using variations of the income approach, namely the multi-period excess earnings and relief from royalty methodologies.

The fair value of work-in-process and finished goods inventory utilizes a sales comparison approach which estimates the selling price of the inventory in completed condition less costs of disposal and a reasonable profit allowance for the selling effort.

The fair value of property and equipment utilizes a combination of the cost approach, income approach, and sales comparison approach less amounts for capitalized research and development costs existing on NuVasive’s closing balance sheet.

The fair value of the identifiable intangible assets was determined using variations of the income approach, namely the multi-period excess earnings and relief from royalty methodologies.

The most significant assumptions applied in the development of the intangible asset fair values include:

4 unchanged sentences

(In thousands)

June 30, 2024

September 30, 2024

Developed Technology

Customer Relationships

Preliminary fair value of the 2025 Notes was determined using the publicly traded price.

Fair value of the 2025 Notes was determined using the publicly traded price.

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.

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 unaudited pro forma information for the Company presents combined net sales and net income, as if the merger had been completed on January 1, 2022, and is presented for informational purposes only :

Three Months Ended

Nine Months Ended

(In thousands)

September 30, 2023

Pro forma net sales

Pro forma net income

The following table represents net sales by product category:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

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

June 30, 2024

September 30, 2024

(In thousands)

2 unchanged sentences

Corporate debt securities

Asset-backed securities

Government, federal agency, and other sovereign obligations

Total short-term marketable securities

Municipal bonds

Corporate debt securities

13 unchanged sentences

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 June 30, 2024 and December 31, 2023, respectively.

FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis included the following:

The following table represents the fair value of assets and liabilities, as of September 30, 2024 and December 31, 2023, respectively, including the following:

(In thousands)

‎ September 30,

Cash equivalents

18 unchanged sentences

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 June 30, 2024 was $ 432.6 million.

The estimated fair value of the 2025 Notes, inclusive of the embedded conversion option, at September 30, 2024 was $ 439.7 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 six months ended June 30, 2024 and 2023, respectively included the following:

The change in the carrying value of the business acquisition liabilities during the three and nine months ended September 30, 2024 and 2023, respectively included the following:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

7 unchanged sentences

Ending balance

Purchase price contingent consideration includes obligations acquired in the NuVasive Merger.

Purchase price contingent consideration includes obligations acquired in the NuVasive Merger in addition to other immaterial acquisitions.

Changes in the fair value of business acquisition liabilities are driven by changes in market conditions and the achievement of certain performance conditions.

Inventories included the following:

September 30,

(In thousands)

3 unchanged sentences

Total inventories

As part of the NuVasive Merger, a step up in the value of inventory of $ 202.6 million was recorded, which was composed of $ 3.0 million for work in process and $ 199.6 million for finished goods.

The amortization of the inventory step up recorded in product cost of sales was $ 53.7 million and $ 107.3 million for the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, the total remaining balance of inventory step up was $ 23.7 million.

During the three months ended June 30, 2024 and 2023, net adjustments to cost of sales related to excess and obsolete inventory were $ 6.6 million and $ 1.9 million, respectively.

The net adjustments for the three months ended June 30, 2024 and 2023 reflect a combination of additional expense for excess and obsolete related provisions ($ 8.6 million and $ 3.4 million, respectively) offset by sales and disposals ($ 2.0 million and $ 1.5 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods.

During the six months ended June 30, 2024 and 2023, net adjustments to cost of sales related to excess and obsolete inventory were $ 10.5 million and $ 4.0 million, respectively.

The net adjustments for the six months ended June 30, 2024 and 2023 reflect a combination of additional expense for excess and obsolete related provisions ($ 13.8 million and $ 6.9 million, respectively) offset by sales and disposals ($ 3.3 million and $ 2.9 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods.

As part of the NuVasive Merger, a net step up in the value of inventory of $ 219.6 million was recorded, with certain acquired inventory receiving a step up of $ 286.7 million, and certain acquired inventory receiving a step down of $ 67.1 million.

The net step up was composed of $ 3.1 million for work in process and $ 216.5 million for finished goods.

The amortization of the inventory step up recorded in product cost of sales was $ 60.7 million and $ 167.9 million for the three and nine months ended September 30, 2024, respectively.

Of the $ 60.7 million amortization in the three months ended September 30, 2024, $ 5.5 million related to a prior period catchup of amortization associated with the final measurement period valuation adjustment recorded to the inventory balance.

As of September 30, 2024, the total remaining balance of inventory fair value adjustment was a step down of $ 19.8 million.

During the three months ended September 30, 2024 and 2023, net adjustments to cost of sales related to excess and obsolete inventory were $ 5.7 million and $ 2.7 million, respectively.

The net adjustments for the three months ended September 30, 2024 and 2023 reflect a combination of additional expense for excess and obsolete related provisions ($ 6.9 million and $ 4.7 million, respectively) offset by sales and disposals ($ 1.2 million and $ 2.0 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, 2024 and 2023, net adjustments to cost of sales related to excess and obsolete inventory were $ 16.2 million and $ 6.7 million, respectively.

The net adjustments for the nine months ended September 30, 2024 and 2023 reflect a combination of additional expense for excess and obsolete related provisions ($ 20.7 million and $ 11.6 million, respectively) offset by sales and disposals ($ 4.5 million and $ 4.9 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)

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Three Months Ended

Six 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, 2023 and the six months ended June 30, 2024, respectively included the following:

The change in the carrying amount of goodwill during the twelve months ended December 31, 2023 and the nine months ended September 30, 2024, respectively included the following:

(In thousands)

5 unchanged sentences

Foreign exchange

June 30, 2024

Intangible assets as of June 30, 2024 included the following:

June 30, 2024

September 30, 2024

Intangible assets as of September 30, 2024 included the following:

September 30, 2024

(In thousands)

12 unchanged sentences

Total intangible assets

The following table summarizes amortization of intangible assets for future periods as of June 30, 2024 :

The following table summarizes amortization of intangible assets for future periods as of September 30, 2024 :

(In thousands)

2 unchanged sentences

ACCRUED EXPENSES

Accrued expenses as of June 30, 2024 and December 31, 2023, respectively included the following:

Accrued expenses as of September 30, 2024 and December 31, 2023, respectively included the following:

September 30,

(In thousands)

3 unchanged sentences

Total accrued expenses

The carrying values of the Company’s 2025 Notes, acquired in the NuVasive merger, as of June 30, 2024, were as follows:

June 30, 2024

The carrying values of the Company’s 2025 Notes, acquired in the NuVasive merger, as of September 30, 2024, were as follows:

September 30, 2024

(In thousands)

4 unchanged sentences

Debt, net of unamortized fair value adjustments for acquisition accounting

Three Months June 30,

Six Months Ended June 30,

Three Months September 30,

Nine Months Ended September 30,

(In thousands)

15 unchanged sentences

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

As of June 30, 2024, we have no t borrowed under the September 2023 Credit Agreement and we were in compliance with all covenants.

As of September 30, 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

8 unchanged sentences

In the event of a Merger Event, the Company is required to execute a supplemental indenture providing for (i) each holder of 2025 Notes with the right to convert each $ 1,000 principal amount of 2025 Notes into the same type of consideration that holders would have been entitled to receive if such holders had held a number of shares of NuVasive Common Stock equal to the applicable conversion rate in effect immediately prior to such Merger Event, and (ii) subsequent adjustments to the conversion rate set forth in the Base Indenture.

Prior to September 15, 2024, holders may convert their 2025 Notes only under the following conditions:

(a) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(b) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price of the 2025 Notes per $ 1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day;

(c) if the Company calls any or all of the 2025 Notes for redemption, at any time prior to the close of business on the second scheduled trading day preceding the redemption date;

(d) upon the occurrence of specified corporate events, as defined in the 2025 Notes.

On or after September 15, 2024, until the close of business on the second scheduled trading day immediately preceding March 15, 2025, holders may convert their 2025 Notes at any time, regardless of the foregoing conditions.

Until the close of business on the second scheduled trading day immediately preceding March 15, 2025, holders may convert their 2025 Notes at any time.

In addition, following certain corporate events that occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its 2025 Notes in connection with such a corporate event or in connection with such redemption in certain circumstances.

The Company may redeem the 2025 Notes, at its option, in whole or in part, until the close of business on the business day immediately preceding September 15, 2024, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company delivers written notice of a redemption.

The redemption price will be equal to 100 % of the principal amount of such 2025 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

No principal payments are due on the 2025 Notes prior to maturity.

1 unchanged sentence

Upon the initial recognition of the 2025 Notes pursuant to the purchase accounting for the Merger, the embedded conversion feature does not meet the equity scope exception described in ASC 815-40, Contracts in Entity’s Own Equity.

The embedded conversion feature is bifurcated and presented as a liability on the consolidated balance sheet with subsequent measurement at fair value with changes in fair value recognized as “Other income/(expense)” .

The embedded conversion

feature is bifurcated and presented as a liability on the consolidated balance sheet with subsequent measurement at fair value with changes in fair value recognized as “Other income/(expense)” .

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 June 30, 2024, the fair value of the embedded conversion feature was $ 0.5 million.

As of the September 30, 2024, the fair value of the embedded conversion feature was $ 0.5 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 June 30, 2024, the fair value of the 2025 Hedge is $ 0.5 million recorded within the Other Assets with the consolidated balance sheet.

As of September 30, 2024, the fair value of the 2025 Hedge is $ 0.5 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.

5 unchanged sentences

In accordance with ASC 805, the Company recognized the 2025 Warrants at an acquisition date fair value of $ 0.6 million within additional paid-in capital.

The 2025 Warrants could have a dilutive effect on the Company’s earnings per share to the extent that the price of the Company’s common stock during a given measurement period exceeds the strike price of the 2025 Warrants, which is

$ 170.45 per share.

The Company uses the treasury share method for assumed exercise of its 2025 Warrants to compute the weighted average common shares outstanding for diluted earnings per share.

4 unchanged sentences

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

The Company repurchased 29.6 thousand and 1.6 million shares under this program at an average price of $ 49.67 and $ 52.14 , for a total dollar amount of $ 1.5 million and $ 84.8 million during the three and six months ended June 30, 2024.

As of June 30, 2024, the Company has remaining authorization to repurchase a total of $ 190.3 million of the Company’s Class A Common.

The Company repurchased no shares during the three months ended September 30, 2024.

The Company repurchased 1.6 million shares under this program at an average price of $ 52.14 , for a total dollar amount of $ 84.8 million during the nine months ended September 30, 2024.

As of September 30, 2024, the Company has remaining authorization to repurchase a total of $ 190.3 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.

13 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 three months ended June 30, 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 June 30, 2024

Accumulated other comprehensive income/(loss), net of tax, at September 30, 2024

(In thousands)

6 unchanged sentences

Other comprehensive income/(loss), net of tax

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

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

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

Net income/(loss) for basic

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

12 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, and Ellipse 2015 Plan are administered by the Board of Directors of Globus (the “Board”) or its delegates.

The 2012 Plan, 2021 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.

9 unchanged sentences

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

Under the 2021 Plan, as amended to date, the aggregate number of shares of Class A Common that are able to be issued subject to options and other awards is equal to the sum of (i) 9,000,000 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.

expired or lapse for any reason, or are settled for cash without delivery of shares.

The number of shares that may be issued or transferred pursuant to incentive stock options under the 2021 Plan is limited to 9,000,000 shares.

3 unchanged sentences

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

As of June 30, 2024, pursuant to the 2021 Plan, the NuVasive 2014 Plan, and the Ellipse 2015 Plan, there were 9,867,378 shares, 359,217 shares, and 377,489 shares, respectively, of Class A Common reserved and 3,097,512 shares, no shares, and 276,888 shares, respectively of Class A Common available for future grants.

As of September 30, 2024, pursuant to the 2021 Plan, the NuVasive 2014 Plan, and the Ellipse 2015 Plan, there were 9,887,190 shares, 297,607 shares, and 372,523 shares, respectively, of Class A Common reserved and 3,185,194 shares, no shares, and 285,757 shares, respectively of Class A Common available for future grants.

The NuVasive 2014 Plan terminated as to new awards pursuant to its terms in the second quarter of 2024.

Stock Options

Stock option activity during the six months ended June 30, 2024 is summarized as follows:

Stock option activity during the nine months ended September 30, 2024 is summarized as follows:

‎ Shares (thousands)

3 unchanged sentences

Outstanding at December 31, 2023

Outstanding at June 30, 2024

Exercisable at June 30, 2024

Expected to vest at June 30, 2024

The total intrinsic value of stock options exercised was $ 7.1 million and $ 2.8 million during the three months ended June 30, 2024, and 2023, respectively.

The total intrinsic value of stock options exercised was $ 9.9 million and $ 8.1 million during the six months ended June 30, 2024, and 2023, respectively.

Outstanding at September 30, 2024

Exercisable at September 30, 2024

Expected to vest at September 30, 2024

The total intrinsic value of stock options exercised was $ 14 million and $ 2.2 million during the three months ended September 30, 2024, and 2023, respectively.

The total intrinsic value of stock options exercised was $ 23.9 million and $ 10.3 million during the nine months ended September 30, 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:

Six Months Ended

Nine Months Ended

September 30,

Risk-free interest rate

2 unchanged sentences

Expected dividend yield

The weighted average grant date fair value of stock options granted during the three months ended June 30, 2024, and 2023 was $ 21.47 and $ 21.61 per share, respectively.

The weighted average grant date fair value of stock options granted during the six months ended June 30, 2024, and 2023 was $ 21.15 and $ 22.21 per share, respectively.

The weighted average grant date fair value of stock options granted during the three months ended September 30, 2024, and 2023 was $ 28.63 and $ 20.61 per share, respectively.

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2024, and 2023 was $ 21.90 and $ 21.95 per share, respectively.

Restricted Stock Units

Restricted stock unit activity during the six months ended June 30, 2024 is summarized as follows:

Restricted stock unit activity during the nine months ended September 30, 2024 is summarized as follows:

Restricted Stock

4 unchanged sentences

Outstanding at December 31, 2023

Outstanding at June 30, 2024

Outstanding at September 30, 2024

Performance-Based Restricted Stock Units

Performance-based restricted stock unit activity during the six months ended June 30, 2024 is summarized as follows:

Performance-based restricted stock unit activity during the nine months ended September 30, 2024 is summarized as follows:

Performance-Based Restricted Stock

4 unchanged sentences

Outstanding at December 31, 2023

Outstanding at June 30, 2024

Outstanding at September 30, 2024

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six 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 June 30, 2024, there was $ 109.5 million of unrecognized compensation expense related to unvested employee stock options, RSUs, and PRSUs that vest over a weighted average period of 2.66 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.

As of September 30, 2024, there was $ 96.2 million of unrecognized compensation expense related to unvested employee stock options, RSUs, and PRSUs that vest over a weighted average period of 2.57 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, nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets.

Our estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes.

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 six months ended June 30, 2024 and 2023, respectively:

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 nature and timing of cumulative adjustment is recorded.

The following table provides a summary of our effective income tax rate for the three and nine months ended September 30, 2024 and 2023, respectively:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Effective income tax rate

For the three months ended September 30, 2024, the decrease in the effective tax rate was due primarily to a benefit from a release of tax reserves of $ 2.9 million in the current period and a higher stock compensation windfall benefit of $ 1.5 million, partially offset by higher income before income taxes of $ 54.5 million.

For the nine months ended September 30, 2024, the decrease in the effective tax rate was due primarily to a benefit from a release of tax reserves of $ 3.7 million in the current period, a higher stock compensation windfall benefit of $ 2.1 million, and lower income before income taxes of $ 44.3 million.

RESTRUCTURING AND OTHER COSTS

For the three months ended June 30, 2024, the Company incurred restructuring and other costs primarily related to employee termination benefits as a part of the 2024 Synergy Plan.

For the three months ended September 30, 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.

Impacted employees were notified during January 2024 and July 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 and six months ended June 30, 2024:

The following table provides a summary of recognized pre-tax costs for the three and nine months ended September 30, 2024:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2024

September 30, 2024

Cost of Sales

3 unchanged sentences

Total restructuring and other costs

The following table provides a summary of activity related to the restructuring program for the three and six months ended June 30, 2024:

The following table provides a summary of activity related to the restructuring program for the three and nine months ended September 30, 2024:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2024

September 30, 2024

Beginning Balance

1 unchanged sentence

Settled non-cash

June 30, 2024

September 30, 2024

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

1 unchanged sentence

Certain lease agreements require the Company to pay taxes, insurance, and maintenance, and provide for options to extend the term beyond the initial lease termination date.

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

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

possible extension.

Leases that have terms of less than 12 months are treated as short-term and we do not recognize right-of-use assets or lease liabilities for such leases.

1 unchanged sentence

The Company includes financing lease right-of-use assets in other assets, short-term financing lease liabilities in accrued expenses, and long-term financing lease liabilities in other liabilities on the condensed consolidated balance sheet.

Operating lease

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

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

Finance leases amortize the right-of-use assets and amortize the interest on the lease liability over the term of the lease.

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

September 30,

(In thousands)

9 unchanged sentences

Three Months Ended

Six 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 June 30, 2024 are as follows:

Future minimum lease payments under non-cancellable leases as of September 30, 2024 are as follows:

(In thousands)

6 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

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

32 unchanged sentences

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 June 30, 2024 .

On September 30, 2024, Moskowitz Family LLC filed an appeal to the verdict.

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, outside of counsel fees, related to this litigation as of September 30, 2024 .

SEGMENT AND GEOGRAPHIC INFORMATION

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Property and Equipment, Net

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