GLOBUS MEDICAL INC 10-K

Item 8. Financial Statements and Supplementary Data GLOBUS MEDICAL, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm ( Deloitte & Touche LLP , Philadelphia, Pennsylvania , PCAOB ID No. 34 ) 62 Consolidated Balance Sheets 65 Consolidated Statements of Operations and Comprehensive Income 66 Consolidated Statements of Equity 67 Consolidated Statements of Cash Flows 68 Notes to Consolidated Financial Statements 69 ‎ 62 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Globus Medical, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Globus Medical, Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventories Valuation – Refer to Notes 2 and 7 to the financial statements Critical Audit Matter Description Inventories are recorded at the lower of cost or net realizable value. Management periodically evaluates the carrying value of inventories in relation to the forecasts of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed sales forecasts, a write-down is recorded for such excess inventories. Changes in assumptions of product demand could have a significant impact on the amount of write-down recorded. Given the inherent uncertainty in forecasting product demand, including the impact of product releases, auditing the reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased extent of effort. How the Critical Audit Matter Was Addressed in the Audit Our procedures related to management’s forecasts of product demand used to record a write-down for excess and obsolete inventories included the following, among others: 63 Table of Contents • We tested the effectiveness of controls over management’s inventory valuation model, including those over management’s development and approval of product demand forecasts. • We evaluated management’s ability to accurately forecast product demand by comparing actual results to management’s historical estimates. • We selected a sample of products and verified that the product demand forecasts were supported by historical sales data and other current information. • We performed corroborative inquiries with the personnel responsible for product development and sales forecasting to evaluate the reasonableness of the product demand forecasts. • We tested the mathematical accuracy of management’s calculations. /s/ DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania February 20, 2025 We have served as the Company’s auditor since 2017. ‎ 64 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Globus Medical, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Globus Medical, Inc. and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 20, 2025, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania February 20, 2025 65 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, (In thousands, except share and per share values) 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 784,438 $ 467,292 Short-term marketable securities 105,619 50,497 Accounts receivable, net of allowances of $ 15,505 and $ 8,934 , respectively 557,697 503,235 Inventories 659,233 848,135 Prepaid expenses and other current assets 49,640 44,580 Income taxes receivable 20,633 1,635 Total current assets 2,177,260 1,915,374 Property and equipment, net of accumulated depreciation of $ 545,786 and $ 425,695 , respectively 561,909 586,932 Operating lease right of use assets 49,647 59,931 Long-term marketable securities 66,134 75,428 Intangible assets, net 795,117 924,603 Goodwill 1,432,387 1,434,540 Other assets 75,096 78,590 Deferred income taxes 94,200 10,685 Total assets $ 5,251,750 $ 5,086,083 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 75,118 $ 56,671 Accrued expenses 260,591 240,460 Operating lease liabilities 10,249 11,967 Income taxes payable 10,725 3,845 Senior convertible notes 443,351 — Business acquisition liabilities 33,739 61,035 Deferred revenue 22,140 18,369 Total current liabilities 855,913 392,347 Business acquisition liabilities, net of current portion 89,496 78,323 Operating lease liabilities 83,588 91,037 Senior convertible notes — 417,400 Deferred income taxes and other tax liabilities 23,889 84,421 Other liabilities 21,531 24,596 Total liabilities 1,074,417 1,088,124 Commitments and contingencies (Note 15) Equity: Class A common stock; $ 0.001 par value. Authorized 500,000,000 shares; issued and outstanding 114,990,219 and 113,905,565 shares at December 31, 2024 and December 31, 2023, respectively 115 114 Class B common stock; $ 0.001 par value. Authorized 275,000,000 shares; issued and outstanding 22,430,097 and 22,430,097 shares at December 31, 2024 and December 31, 2023, respectively 22 22 Additional paid-in capital 3,031,244 2,870,749 Accumulated other comprehensive income/(loss) ( 6,861 ) ( 10,192 ) Retained earnings 1,152,813 1,137,266 Total equity 4,177,333 3,997,959 Total liabilities and equity $ 5,251,750 $ 5,086,083 See accompanying notes to consolidated financial statements. ‎ 66 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Year Ended December 31, (In thousands, except per share amounts) 2024 2023 2022 Net sales $ 2,519,355 $ 1,568,476 $ 1,022,843 Cost of Sales and Operating expenses: Cost of sales (exclusive of amortization of intangibles) 1,035,479 548,174 263,725 Research and development 163,754 124,010 73,015 Selling, general and administrative 981,048 643,410 432,117 Provision for litigation, net 314 434 2,341 Amortization of intangibles 119,373 51,032 17,735 Acquisition-related costs 29,623 68,274 5,959 Restructuring costs 23,773 — — Operating income/(loss) 165,991 133,142 227,951 Other income/(expense), net Interest income/(expense), net ( 4,189 ) 20,130 14,233 Foreign currency transaction gain/(loss) ( 43,285 ) 14,259 ( 1,020 ) Other income/(expense) 2,205 ( 2,138 ) 1,855 Total other income/(expense), net ( 45,269 ) 32,251 15,068 Income/(loss) before income taxes 120,722 165,393 243,019 Income tax provision/(benefit) 17,738 42,520 52,850 Net income/(loss) $ 102,984 $ 122,873 $ 190,169 Other comprehensive income/(loss), net of tax: Unrealized gain/(loss) on marketable securities 1,545 13,231 ( 14,040 ) Foreign currency translation gain/(loss) 1,786 1,207 ( 3,818 ) Total other comprehensive income/(loss), net of tax 3,331 14,438 ( 17,858 ) Comprehensive income/(loss) $ 106,315 $ 137,311 $ 172,311 Earnings per share: Basic $ 0.76 $ 1.09 $ 1.89 Diluted $ 0.75 $ 1.07 $ 1.85 Weighted average shares outstanding: Basic 135,726 113,087 100,469 Diluted 137,863 114,630 102,643 See accompanying notes to consolidated financial statements. ‎ 67 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY Class A ‎ Common Stock Class B ‎ Common Stock Additional paid-in Accumulated other comprehensive Retained (In thousands) Shares $ Shares $ capital income/(loss) earnings Total Balance at December 31, 2023 113,906 $ 114 22,430 $ 22 $ 2,870,749 $ ( 10,192 ) $ 1,137,266 $ 3,997,959 Stock-based compensation — — — — 54,287 — — 54,287 Grant of contingent restricted stock units — — — — 2,500 — — 2,500 Exercise of stock options 2,450 3 — — 110,437 — — 110,440 Issuance of Class A common stock under employee and director equity option plans, net 261 — — — ( 6,729 ) — — ( 6,729 ) Comprehensive income/(loss) — — — — — 3,331 102,984 106,315 Repurchase and retirement of common stock ( 1,627 ) ( 2 ) — — — — ( 87,437 ) ( 87,439 ) Balance at December 31, 2024 114,990 $ 115 22,430 $ 22 $ 3,031,244 $ ( 6,861 ) $ 1,152,813 $ 4,177,333 See accompanying notes to consolidated financial statements. Class A ‎ Common Stock Class B ‎ Common Stock Additional paid-in Accumulated other comprehensive Retained (In thousands) Shares $ Shares $ capital income/(loss) earnings Total Balance at December 31, 2022 77,762 $ 78 22,430 $ 22 $ 630,952 $ ( 24,630 ) $ 1,239,951 $ 1,846,373 Stock-based compensation — — — — 52,773 — — 52,773 Grant of contingent restricted stock units — — — — 1,925 — — 1,925 Exercise of stock options 387 — — — 12,396 — — 12,396 Issuance of Class A common stock under employee and director equity option plans, net 273 — — — ( 11,409 ) — — ( 11,409 ) Issuance of equity for NuVasive Merger 39,813 40 — — 2,184,112 — — 2,184,152 Comprehensive income/(loss) — — — — — 14,438 122,873 137,311 Repurchase and retirement of common stock ( 4,329 ) ( 4 ) — — — — ( 225,558 ) ( 225,562 ) Balance at December 31, 2023 113,906 $ 114 22,430 $ 22 $ 2,870,749 $ ( 10,192 ) $ 1,137,266 $ 3,997,959 See accompanying notes to consolidated financial statements 68 Table of Contents Class A ‎ Common Stock Class B ‎ Common Stock Additional paid-in Accumulated other comprehensive Retained (In thousands) Shares $ Shares $ capital income/(loss) earnings Total Balance at December 31, 2021 79,114 $ 79 22,430 $ 22 $ 553,787 $ ( 6,772 ) $ 1,194,272 $ 1,741,388 Stock-based compensation — — — — 33,466 — — 33,466 Grant of contingent restricted stock units — — — — 1,985 — — 1,985 Exercise of stock options 999 1 — — 41,714 — — 41,715 Comprehensive income/(loss) — — — — — ( 17,858 ) 190,169 172,311 Repurchase and retirement of common stock ( 2,351 ) ( 2 ) — — — — ( 144,491 ) ( 144,493 ) Balance at December 31, 2022 77,762 $ 78 22,430 $ 22 $ 630,952 $ ( 24,630 ) $ 1,239,951 $ 1,846,373 See accompanying notes to consolidated financial statements. ‎ 69 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (In thousands) 2024 2023 2022 Cash flows from operating activities: Net income $ 102,984 $ 122,873 $ 190,169 Adjustments to reconcile net income to net cash provided by operating activities: Acquired in-process research and development 12,613 — 150 Depreciation and amortization 254,024 144,733 68,252 Amortization of premiums on marketable securities ( 635 ) 793 5,389 Provision for excess and obsolete inventory 23,359 10,959 6,400 Amortization of inventory fair value step-up 215,420 71,656 — Amortization of 2025 Notes fair value step-up 26,630 8,176 — Stock-based compensation expense 54,191 52,742 32,810 Allowance for expected credit losses 16,986 3,658 ( 1 ) Change in fair value of business acquisition liabilities 26,521 17,434 5,132 Change in deferred income taxes ( 125,902 ) ( 57,789 ) ( 22,223 ) (Gain)/loss on disposal of assets, net 5,552 1,541 299 Payment of business acquisition-related liabilities ( 18,763 ) ( 3,005 ) ( 2,647 ) Net (gain)/loss from foreign currency adjustment 25,212 ( 13,674 ) — (Increase) decrease in: Accounts receivable ( 78,062 ) ( 49,914 ) ( 50,843 ) Inventories ( 29,860 ) ( 70,328 ) ( 61,745 ) Prepaid expenses and other assets 1,059 1,148 ( 10,292 ) Increase (decrease) in: Accounts payable 17,663 ( 14,223 ) 14,418 Accrued expenses and other liabilities 5,023 17,127 6,087 Income taxes payable/receivable ( 13,377 ) ( 408 ) ( 2,887 ) Net cash provided by/(used in) operating activities 520,638 243,499 178,468 Cash flows from investing activities: Purchases of marketable securities ( 113,504 ) ( 100,643 ) ( 419,534 ) Maturities of marketable securities 58,666 240,190 312,221 Sales of marketable securities 11,851 537,723 102,433 Purchases of property and equipment ( 115,429 ) ( 78,274 ) ( 74,047 ) Acquisition of businesses, net of cash acquired and purchases of intangible and other assets ( 17,635 ) ( 296,028 ) ( 31,435 ) Net cash provided by/(used in) investing activities ( 176,051 ) 302,968 ( 110,362 ) Cash flows from financing activities: Payment of business acquisition-related liabilities ( 45,619 ) ( 8,039 ) ( 7,185 ) Net proceeds from exercise of stock options 110,439 12,397 41,716 Payments related to tax withholdings for share-based compensation ( 6,729 ) ( 10,617 ) — Repurchase of common stock ( 85,787 ) ( 225,562 ) ( 144,493 ) Net cash provided by/(used in) financing activities ( 27,696 ) ( 231,821 ) ( 109,962 ) Effect of foreign exchange rates on cash 255 2,180 ( 747 ) Net increase/(decrease) in cash and cash equivalents 317,146 316,826 ( 42,603 ) Cash and cash equivalents at beginning of period 467,292 150,466 193,069 Cash and cash equivalents at end of period $ 784,438 $ 467,292 $ 150,466 Supplemental disclosures of cash flow information: Income taxes paid, net $ 158,508 $ 100,593 $ 77,823 Non-cash investing and financing activities: Equity issued in conjunction with the NuVasive Merger $ — $ 2,153,860 $ — Accrued purchases of property and equipment $ 9,281 $ 7,100 $ 7,423 See accompanying notes to consolidated financial statements. 70 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BACKGROUND (a) The Company Globus Medical, Inc., together with its majority-owned or controlled subsidiaries , is a medical device company that develops and commercializes healthcare solutions with a mission to improve the quality of life of patients with musculoskeletal disorders. We are primarily focused on implants that promote healing in patients with musculoskeletal disorders, including the use of a robotic guidance and navigation system and products to treat patients who have experienced orthopedic traumas. 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. 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 (“U.S.”), as well as within North, Central & South America, Europe, Asia, Africa and Australia. We sell our products in the U.S. through a sales force comprised primarily of directly-employed and independent sales representatives. Our international sales force is comprised of directly-employed sales personnel, independent sales representatives, as well as exclusive and non-exclusive independent third-party distributors. The terms the “Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc. and, where applicable, our consolidated subsidiaries. (b) NuVasive Merger On September 1, 2023, pursuant to that certain merger agreement (the “NuVasive Merger Agreement”) with NuVasive, Inc. (“NuVasive”) and Zebra Merger Sub Inc. (“Merger Sub”), Merger Sub, a wholly owned subsidiary of the Company, merged with and into NuVasive, with NuVasive surviving as a wholly owned subsidiary of the Company (the “NuVasive Merger”) . Upon the consummation of the NuVasive 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 (“Class A Common”), and the right to receive cash in lieu of fractional shares. Refer to Note 3, Asset acquisitions and Business Combinations for further information. Globus was deemed to be the accounting acquirer of NuVasive for accounting purposes under U.S. generally accepted accounting principles (“U.S. GAAP”). Accordingly, prior periods within these consolidated financial statements may not be comparable. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP. (b) Principles of Consolidation The accompanying consolidated financial statements include the accounts of Globus and its majority-owned or controlled subsidiaries . 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. 71 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (c) Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the 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 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. (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. 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. 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 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. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of sales. Nature of Products and Services A significant portion of our Musculoskeletal Solutions product revenue is generated from consigned inventory maintained at hospitals or with sales representatives. Revenue from the sale of consigned musculoskeletal products is recognized when we transfer control, which occurs at the time the product is used or implanted. For all other Musculoskeletal Solutions product transactions, we recognize revenue when we transfer control, which is generally when we transfer the title to the goods, provided there are no remaining performance obligations that can affect the customer’s final acceptance of the sale. For Musculoskeletal Solutions service transactions, we recognize revenue in the period the service is performed for the amount of consideration expected to be received. In certain cases, we offer the ability for customers to lease surgical instrumentation primarily on a non-sales type basis. The majority of Enabling Technologies 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. Revenue for the performance obligations recognized at a point of time is recognized when we transfer control to the customer, which is generally at the point of shipment, but can also be at either delivery or installation, depending on the terms of the arrangement . In certain cases, we offer the ability for customers to lease enabling technologies primarily on a non-sales type basis. 72 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. 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. Year Ended December 31, (In thousands) 2024 Beginning contract liabilities $ 27,749 Revenue recognized from contract liabilities ( 28,630 ) Advance consideration received during the period 32,690 Ending contract liabilities $ 31,809 (e) Concentrations of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, are primarily marketable securities and accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of entities comprising our customer base. We perform ongoing credit evaluations of our customers and generally do not require collateral. There was no customer that accounted for 10% or more of sales for the years ended December 31, 2024, 2023, and 2022 , respectively. (f) 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 December 31, 2024 and 2023. Short-term and long-term marketable securities are recorded at fair value on our consolidated balance sheets. Any change in fair value of our available-for-sale securities, that do not result in recognition or reversal of an allowance for credit loss or write-down, are recorded, net of taxes, as a component of accumulated other comprehensive income or loss on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of marketable securities are determined on a specific identification basis. Realized gains and losses, interest income and the amortization/accretion of premiums/discounts are included as a component of other income/(expense), net, on our consolidated statements of operations and comprehensive income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review declines in the fair value of our securities to determine whether they are resulting from expected credit losses or other factors. If the assessment indicates a credit loss exists, we recognize any measured impairment as an allowance for credit loss in our consolidated statements of operations. Any other impairments not recorded through allowance for credit losses is recognized in our other comprehensive income. (h) 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. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. 73 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories: Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques. Contingent consideration represents contingent milestone, performance and revenue-sharing payment obligations related to acquisitions and is measured at fair value, based on significant inputs that are not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. We assess these assumptions on an ongoing basis as additional data impacting the assumptions is obtained. The fair value of contingent consideration is recorded in business acquisition liabilities on our consolidated balance sheets, and changes in the fair value of contingent consideration are recognized in acquisition-related costs in the consolidated statements of operations and comprehensive income. The fair value of contingent restricted stock unit grants (“RSUs”) is recorded as additional paid-in capital in the consolidated balance sheet on the day of the grant due to the remote likelihood of forfeiture. The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the excess recorded as goodwill. We utilize Level 3 inputs in the determination of the initial fair value. (i) Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. The majority of our inventory is finished goods and we utilize both in-house manufacturing and third-party suppliers to produce our products. We periodically evaluate the carrying value of our inventories in relation to estimated forecasts of product demand, which takes into consideration the life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories. Once inventory has been written down, it creates a new cost basis for inventory that is not subsequently written up. (j) Property and Equipment Property and equipment is recorded at cost less accumulated depreciation. Additions or improvements are capitalized, while repairs and maintenance are expensed as incurred. Depreciation is recognized using the straight-line method over the related useful lives of the assets. When assets are sold or otherwise disposed of, the related property, equipment, and accumulated depreciation amounts are relieved from the accounts, and any gain or loss is recorded in the consolidated statements of operations and comprehensive income. (k) 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. Goodwill is tested for impairment at least annually or whenever events or circumstances indicate that a carrying amount may not be recoverable. We first consider qualitative indicators of the fair value of a reporting unit when it is unlikely that a reporting unit has impaired goodwill. Goodwill may also be tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount to the estimated fair value of the reporting unit. Fair values may be estimated using an income or discounted cash flow approach. We perform our annual impairment test of goodwill in the fourth quarter of each year. Intangible assets consist of purchased developed technology, customer relationships, in-process research and development (“IPR&D”), supplier network, patents, re-acquired rights, and non-compete agreements. Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from 1 to 21 years. Intangible assets with finite useful lives are tested whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If an impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset. Fair value is generally determined using a discounted future cash flow analysis. IPR&D has an indefinite life and is not amortized until completion of the project at which time the IPR&D becomes an amortizable asset. Intangible assets with indefinite useful lives are tested for impairment annually or whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If the related project is not completed in a timely manner, we may have an impairment related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value. During the twelve months ended December 31, 2024, there were no impairments in goodwill, finite-lived intangible assets, or IPR&D. 74 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (l) Impairment of Long-Lived Assets We periodically evaluate the recoverability of the carrying amount of long-lived assets, which include property and equipment, as well as whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. An impairment is assessed when the undiscounted future cash flows from the use and eventual disposition of an asset group are less than its carrying value. If an impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset group. Our fair value methodology is based on quoted market prices, if available. If quoted market prices are not available, an estimate of fair value is made based on prices of similar assets or other valuation techniques including present value techniques. During the years ended December 31, 2024, 2023, and 2022 , we did no t record any impairment charges related to long-lived assets. (m) Cost of Sales Cost of sales consists primarily of costs from our manufacturing operations, costs of products purchased from third-party suppliers, reserves for excess and obsolete inventory, depreciation of surgical instruments and cases, royalties, shipping, inspection and related costs incurred in making our products available for sale or use. (n) Research and Development Research and development costs are expensed as incurred. Research and development costs include salaries, employee benefits, supplies, consulting services, clinical services and clinical trial costs, and facilities costs. Costs incurred in obtaining technology licenses and patents are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future use. (o) 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. Expense for performance-based restricted stock units is recognized when the performance condition is deemed to be probable. Compensation expense for awards includes the impact of forfeiture in the period when they occur. We estimate the fair value of stock options utilizing the Black-Scholes option-pricing model. Inputs to the Black-Scholes model include our stock price, expected volatility, expected term, risk-free interest rate and expected dividends. Expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options offering period which is derived from historical experience. The risk-free interest rate assumption is based on observed interest rates of U.S. 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 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. We assumed equity-classified awards for certain NuVasive RSUs, and performance restricted stock units (“PRSUs”), as part of the NuVasive Merger. These RSUs and PRSUs are measured at the grant date based on the estimated fair value of the award. The fair value of equity instruments that are expected to vest is recognized and amortized over the requisite service period. The Company has granted awards with up to five-year graded or cliff vesting terms (in each case, with service through the date of vesting being required). No exercise price or other monetary payment is required for receipt of the shares issued in settlement of the respective award; instead, consideration is furnished in the form of the participant’s service to the Company. 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. (p) Derivative Financial Instruments The Company recognizes all derivative instruments as assets or liabilities in its Consolidated Balance Sheets and measures these instruments at fair value by revaluing these assets and liabilities at the end of each reporting period. Gains and losses are recorded as a component of other expense, net in the consolidated statements of operations and comprehensive income. The effects of these derivative instruments are immaterial to the Company’s financial statements. 75 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (q) 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. (r) Provision for Litigation We are involved in a number of proceedings, legal actions, and claims. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. We expense legal costs related to loss contingencies as incurred. (s) 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. (t ) Foreign Currency Translation The functional currency of our foreign subsidiaries is generally their local currency. Assets and liabilities of the foreign subsidiaries, and intercompany receivables and payables of a long-term investment nature, are translated at the period end currency exchange rate and revenues and expenses are translated at an average currency exchange rate for the period. The resulting foreign currency translation gains and losses are included as a component of accumulated other comprehensive income. Gains and losses arising from intercompany foreign transactions are included in other income, net on the consolidated statements of operations and comprehensive income. (u) Restructuring Costs Restructuring costs represent costs associated with the Company’s 2024 Synergy Plan. This plan was designed to optimize the organizational structure, realize synergies from the NuVasive Merger and leverage the strength of both Globus and NuVasive. 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 charges and one-time termination benefits. (v) Accounts Receivable and Related Valuation Accounts Accounts receivable in the accompanying consolidated balance sheets are presented net of allowances for expected credit losses. 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. (w) Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which such items are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established to offset any deferred tax assets if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. 76 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Significant judgment is required in determining income tax provisions and in evaluating tax positions. We will establish additional provisions for income taxes when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold that a tax position is more likely than not to be sustained upon examination by the taxing authority. In the normal course of business, we and our subsidiaries are examined by various federal, state, and foreign tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of the provision for income taxes. We periodically assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability, and deferred taxes in the period in which the facts that give rise to a revision become known. (x) Recently Issued Accounting Pronouncements In December 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03 , Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) . The update improves financial reporting by requiring that public business entities disclose additional information about certain costs and expenses categories: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization in the notes to financial statements at interim and annual reporting periods. This update is effective for fiscal years beginning after December 15, 2026, 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 December 2024, the FASB issued ASU No. 2024-04 Debt—Debt with Conversion and Other Options (Subtopic 470-20). The amendments in this update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. To account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. This update is effective for fiscal years beginning after December 15, 2025, 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 December 2023, the FASB issued 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. 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. (y) Recently Adopted Accounting Pronouncements 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 amendment was applied retrospectively. The Company adopted ASU No. 2023-07 as of January 1, 2024. See Note 16 Segment and Geographic Information in the accompanying notes to the consolidated financial statements for further detail. 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. The ASU introduces new disclosure requirements to provide investors with information about contractual restrictions, including the nature and remaining duration of such restrictions. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. 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 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 ASC 606, Revenue from Contracts with Customers. This update is effective for fiscal years 77 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 No. 2021-08 as of January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements. NOTE 3. ASSET ACQUISITIONS AND BUSINESS COMBINATIONS Asset Acquisitions During the first quarter of 2024, the Company completed a share acquisition of a biotechnology 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 ASC 805, Business Combinations. 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 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 of contingent consideration, which is payable upon meeting the Good Manufacturing Process milestones, as promulgated by the U.S. Food and Drug Administration (the “FDA”), and consideration of $ 10.0 million contingent upon the developed products obtaining approval from the FDA. Contingent consideration will not be recorded in this asset acquisition until the milestone is met. Business Combinations During the third quarter of 2024, the Company completed one acquisition that was not material to the overall consolidated financial statements during the periods presented. This acquisition has been included in the consolidated financial statements from the date of acquisition. The purchase price consisted of approximately $ 0.1 million of cash paid at closing and $ 4.0 million in contingent consideration payments, resulting in goodwill of $ 4.1 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 consolidated financial statements during the periods presented. This acquisition has been included in the consolidated financial statements from the date of acquisition. 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 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 consolidated financial statements during the periods presented. This acquisition has been included in the 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 fourth quarter of 2022, the Company acquired the membership interests of Harvest Biologics LLC, which engages in the business of selling systems that produce autologous biologics. The purchase price consisted of approximately $ 30.0 million of cash paid at closing, plus $ 0.1 million of preliminary post-closing adjustments. The Company recorded identifiable net assets, based on their estimated fair values, for inventory of $ 3.0 million, goodwill of $ 14.2 million, customer relationships and other intangibles of $ 10.5 million with a weighted average useful life of 20 years, and developed technology of $ 2.4 million with a weighted average useful life of 8 years. The Company 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 consolidated financial statements during the periods presented. This acquisition has been included in the 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. 78 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NuVasive Merger On September 1, 2023, pursuant to that certain merger agreement with NuVasive and Merger Sub, Merger Sub, a wholly owned subsidiary of the Company (“Merger Sub”), merged with and into NuVasive, with NuVasive surviving as a wholly owned subsidiary of the Company (the “NuVasive Merger”). Upon the consummation of the NuVasive 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, and the right to receive cash in lieu of fractional shares. As part of the NuVasive Merger, the Company assumed equity awards for certain NuVasive RSUs and NuVasive PRSUs in accordance with the terms of the Merger Agreement. Certain awards included a change in control provision (single trigger) which accelerated the vesting of the awards on the closing date of the NuVasive Merger. These awards were considered as part of the total purchase price. The unvested awards will continue to vest in accordance with the terms of the original award agreement, except for certain PRSUs that were converted into RSUs. Once vested, the holders will receive shares of the Company’s Class A Common. Of the total consideration for the assumed equity awards, $ 28.6 million was allocated to the purchase price and $ 42.3 million was deemed compensatory as it was attributable to post acquisition vesting. 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 NuVasive 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, $ 16.9 million of expense has been recognized for the year ended December 31, 2024. Concurrently with the NuVasive 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 (the “2025 Notes”), the privately negotiated call options (the “2025 Hedges”) and the privately negotiated warrants (the “2025 Warrants”). The aggregate consideration in connection with the closing of the NuVasive Merger was as follows: (In thousands) NuVasive shares outstanding as of September 1, 2023 52,451 NuVasive accelerated equity awards 632 Globus exchange ratio 0.75 Globus Class A common stock issued in exchange for NuVasive shares 39,813 Globus closing share price $ 54.10 Total Value Class A common stock $ 2,153,860 2025 Warrants 579 Repayment of revolving credit facility 420,762 Fair value of assumed equity awards 28,635 Total purchase price $ 2,603,836 We accounted for the NuVasive 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. The following table summarizes the final purchase price allocation for the NuVasive Merger as of December 31, 2024: ‎ 79 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (In thousands) Preliminary Purchase Price Allocation as of September 1, 2023 Measurement Period and Other Adjustments 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) $ 158,112 $ 38 $ 158,150 $ — $ 158,150 Accounts receivable 249,591 ( 6,912 ) 242,679 — 242,679 Inventories 570,300 ( 12,266 ) 558,034 16,969 575,003 Property, plant, and equipment 361,118 598 361,716 ( 1,019 ) 360,697 Operating lease ROU asset 90,457 ( 32,174 ) 58,283 — 58,283 Intangible assets 1,222,000 ( 323,000 ) 899,000 — 899,000 Other long-term assets 25,973 13,111 39,084 — 39,084 Deferred income taxes 4,837 977 5,814 — 5,814 Total Assets $ 2,682,388 $ ( 359,628 ) $ 2,322,760 $ 15,950 $ 2,338,710 Current Liabilities 185,175 ( 1,718 ) 183,457 13,387 196,844 Operating lease liabilities, including current portion 109,110 ( 7,758 ) 101,352 — 101,352 Business acquisition liabilities, including current portion 66,873 — 66,873 — 66,873 Senior convertible notes 409,500 — 409,500 — 409,500 Deferred income taxes and other tax liabilities 194,553 ( 16,035 ) 178,518 ( 19,501 ) 159,017 Other liabilities 37,496 ( 23,797 ) 13,699 ( 2,471 ) 11,228 Total liabilities $ 1,002,707 $ ( 49,308 ) $ 953,399 $ ( 8,585 ) $ 944,814 Fair value of acquired identifiable assets and liabilities $ 1,679,681 $ ( 310,320 ) $ 1,369,362 $ 24,534 $ 1,393,896 Purchase price $ 2,603,836 $ 2,603,836 $ 2,603,836 Less: Fair value of acquired identifiable assets and liabilities ( 1,679,681 ) ( 1,369,362 ) ( 1,393,896 ) Goodwill $ 924,155 $ 1,234,475 $ 1,209,940 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. Details of our valuation methodology and significant inputs for fair value measurements are included below. 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 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: the amount and timing of future cash flows, the selection of discount and royalty rates, and the assessment of the asset’s economic life. The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The following table summarizes the estimated fair value of NuVasive’s identifiable intangible assets acquired and their amortization period (in years): Fair Value as of (In thousands) December 31, 2024 Useful Life Developed Technology $ 607,000 8 Customer Relationships 292,000 11 Fair value of the 2025 Notes was determined using the publicly traded price. 80 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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. Supplemental Unaudited Pro Forma Information The following are the supplemental consolidated financial results of Globus and NuVasive on an unaudited pro forma basis, as if the acquisitions had been consummated as of the beginning of fiscal year 2022. (In thousands) 2023 Pro forma net sales $ 2,395,812 Pro forma net income 187,585 The unaudited pro forma net income of $ 187.6 million for the year ended December 31, 2023 was updated to reflect the finalization of the purchase price allocation adjustments made during the measurement period. The unaudited pro forma net income for the year ended December 31, 2023 was adjusted to exclude $ 111.4 million of acquisition-related costs incurred in 2023 that under a pro forma basis would be included in the year ended December 31, 2022. NOTE 4. NET SALES The following table represents net sales by product category: Year Ended December 31, (In thousands) 2024 2023 2022 Musculoskeletal Solutions $ 2,365,352 $ 1,448,260 $ 926,703 Enabling Technologies 154,003 120,216 96,140 Total net sales $ 2,519,355 $ 1,568,476 $ 1,022,843 NOTE 5. MARKETABLE SECURITIES The composition of our short-term and long-term marketable securities was as follows: December 31, 2024 (In thousands) Amortized ‎ Cost Gross ‎ Unrealized ‎ Gains Gross Unrealized Losses Fair ‎ Value Short-term: Municipal bonds $ 8,990 $ 8 $ ( 25 ) $ 8,973 Corporate debt securities 29,596 1 ( 62 ) 29,535 Commercial paper 36,527 4 ( 1 ) 36,530 Asset-backed securities — — — — Government, federal agency, and other sovereign obligations 30,676 4 ( 99 ) 30,581 Total short-term marketable securities $ 105,789 $ 17 $ ( 187 ) $ 105,619 Long-term: Municipal bonds $ 6,538 $ — $ ( 13 ) $ 6,525 Corporate debt securities 25,382 4 ( 115 ) 25,271 Asset-backed securities 19,690 2 ( 71 ) 19,621 Government, federal agency, and other sovereign obligations 14,772 2 ( 57 ) 14,717 Total long-term marketable securities $ 66,382 $ 8 $ ( 256 ) $ 66,134 81 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2023 (In thousands) Amortized ‎ Cost Gross ‎ Unrealized ‎ Gains Gross ‎ Unrealized ‎ Losses Fair ‎ Value Short-term: Municipal bonds $ 11,210 $ — $ ( 224 ) $ 10,986 Corporate debt securities 38,416 — ( 853 ) 37,563 Government, federal agency, and other sovereign obligations 2,004 — ( 56 ) 1,948 Total short-term marketable securities $ 51,630 $ — $ ( 1,133 ) $ 50,497 Long-term: Municipal bonds $ 7,180 $ — $ ( 109 ) $ 7,071 Corporate debt securities 21,707 — ( 432 ) 21,275 Asset-backed securities 17,499 — ( 338 ) 17,161 Government, federal agency, and other sovereign obligations 30,363 — ( 442 ) 29,921 Total long-term marketable securities $ 76,749 $ — $ ( 1,321 ) $ 75,428 The short-term marketable securities have effective maturity dates of less than one year and the long-term marketable securities have effective maturity dates ranging from one to three years as of December 31, 2024 and 2023, respectively. NOTE 6. FAIR VALUE MEASUREMENTS The following table represents the fair value of assets and liabilities, as of December 31, 2024 and 2023, respectively, including the following: (In thousands) Balance at ‎ December 31, ‎ 2024 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 496,676 $ 423,977 $ 72,699 $ — Municipal bonds 15,498 — 15,498 — Corporate debt securities 54,806 — 54,806 — Commercial paper 36,530 — 36,530 — Asset-backed securities 19,621 — 19,621 — Government, federal agency, and other sovereign obligations 45,298 — 45,298 — 2025 Hedge 22 — 22 — Liabilities: Senior Convertible Notes due 2025 443,003 443,003 — — Bifurcated Conversion Option of the Senior Convertible Notes due 2025 22 — 22 — Business acquisition liabilities 123,235 — — 123,235 (In thousands) Balance at ‎ December 31, ‎ 2023 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 203,689 $ 203,689 $ — $ — Municipal bonds 18,057 — 18,057 — Corporate debt securities 58,838 — 58,838 — Asset-backed securities 17,161 — 17,161 — Government, federal agency, and other sovereign obligations 31,869 2,928 28,941 — 2025 Hedge 687 — 687 — Liabilities: 82 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Senior Convertible Notes due 2025 417,363 417,363 — — Bifurcated Conversion Option of the Senior Convertible Notes due 2025 687 — 687 — Business acquisition liabilities 139,358 — — 139,358 Our marketable securities and certain cash equivalents are classified as Level 2 within the fair value hierarchy, as we measure their fair value using market prices for similar instruments and inputs such as actual trade data, benchmark yields, broker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors . The bifurcated conversion option and 2025 Hedges 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 December 31, 2024 was $ 443.0 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. Fair value of the revenue-based business acquisition liabilities was determined using a discounted cash flow model, probability model and an option pricing methodology. The significant inputs of such models are not observable in the market, such as certain financial metric growth rates, volatility and discount rates, market price risk adjustment, projections associated with the applicable milestone, the interest rate, and the related probabilities and payment structure in the contingent consideration arrangement. The following are the significant unobservable inputs used in the two valuation techniques: Unobservable input Range Weighted Average* Revenue risk premium 2.0 % - 5.8 % 3.1 % Revenue volatility 14.0 % - 15.8 % 14.3 % Discount rate 5.2 % - 8.5 % 6.3 % Projected year of payment 2025 - 2034 * 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 years ended December 31, 2024 and 2023, respectively included the following: Year Ended December 31, (In thousands) 2024 2023 Beginning balance $ 139,358 $ 68,258 Purchase price contingent consideration 25,111 66,873 Changes resulting from foreign currency fluctuations 246 — Contingent cash payments ( 64,382 ) ( 11,044 ) Contingent RSU grants ( 2,500 ) ( 1,925 ) Changes in fair value of business acquisition liabilities 26,521 17,434 Contractual payable reclassification ( 1,119 ) ( 238 ) Ending balance $ 123,235 $ 139,358 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. We translate the financial statements of our foreign subsidiaries with functional currencies other than the U.S. dollar into the U.S. dollar for consolidation using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. Some of our reporting entities conduct a portion of their business in currencies other than the entity’s functional currency. These transactions give rise to receivables and payables that are denominated in currencies other than the entity’s functional currency. The value of these receivables and payables is subject to changes in currency exchange rates from the point at which the transactions are originated until the settlement in cash. Both realized and unrealized gains and losses in the value of these receivables and payables are included in the determination of net income or loss. Foreign currency translation gain/(loss), which include gains and losses from derivative instruments, was a loss of $ 43.3 million for the year ended December 31, 2024 and a gain of $ 14.1 million for the year ended December 31, 2023, and are included in other expense, net in the Consolidated Statements of Operations and Comprehensive Income. 83 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) To manage foreign currency exposure risks, we may use derivatives for activities in entities that have short-term intercompany receivables and payables denominated in a currency other than the entity’s functional currency. The fair value is based on a quoted market price (Level 1). As of December 31, 2024, a notional principal amount of $ 5.0 million was outstanding to hedge currency risk relative to our foreign currency-denominated receivables and payables. Derivative instrument net gain on our forward exchange contracts were $ 1.4 million as of December 31, 2024 and are included in other expense, net in the Consolidated Statements of Operations and Comprehensive Income. The fair value of the forward exchange contract derivative instrument asset (liability) was di minimis as of December 31, 2024. The derivative instruments are recorded in other current assets or other current liabilities in the Consolidated Balance Sheets commensurate with the nature of the instrument at period end. NOTE 7. INVENTORIES Inventories as of December 31, 2024 and 2023, respectively included the following: December 31, (In thousands) 2024 2023 Raw materials $ 121,984 $ 103,349 Work in process 45,775 37,321 Finished goods 491,474 707,465 Total inventories $ 659,233 $ 848,135 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 $ 215.4 million the year ended December 31, 2024, respectively. Of the $ 215.4 million amortization, $ 5.5 million related to a prior period catchup of amortization associated with the final measurement period valuation adjustment recorded to the inventory balance. During years ended December 31, 2024, 2023, and 2022, net adjustments to cost of sales related to excess and obsolete inventory were $ 23.4 million, $ 10.9 million, and $ 6.4 million, respectively. The net adjustments for the years ended December 31, 2024, 2023, and 2022 reflect a combination of additional expense for excess and obsolete related provisions ($ 34.2 million, $ 18.1 million, and $ 18.5 million, respectively) offset by sales and disposals ($ 10.8 million, $ 7.2 million, and $ 12.1 million, respectively) of inventory for which an excess and obsolete provision was previously recorded. NOTE 8. PROPERTY AND EQUIPMENT Property and equipment as of December 31, 2024 and 2023, respectively included the following: Useful December 31, December 31, (In thousands) Life 2024 2023 Land — $ 9,731 $ 9,748 Buildings and improvements 31.5 100,128 102,449 Equipment 5 - 15 215,100 206,392 Instruments, modules, and cases 5 741,125 672,018 Other property and equipment 3 - 5 41,611 22,020 1,107,695 1,012,627 Less: accumulated depreciation and amortization ( 545,786 ) ( 425,695 ) Total $ 561,909 $ 586,932 Instruments are hand-held devices used by surgeons to install implants during surgery. Modules and cases are used to store and transport the instruments and implants. 84 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Depreciation expense related to property and equipment was as follows: Year Ended December 31, (In thousands) 2024 2023 2022 Depreciation $ 134,651 $ 93,702 $ 50,517 NOTE 9. GOODWILL AND INTANGIBLE ASSETS The change in the carrying amount of goodwill during the years ended December 31, 2024 and 2023, respectively included the following: (In thousands) December 31, 2022 $ 197,471 Additions and adjustments 1,235,890 Foreign exchange 1,179 December 31, 2023 1,434,540 Additions and adjustments ( 550 ) Foreign exchange ( 1,603 ) December 31, 2024 $ 1,432,387 Intangible assets as of December 31, 2024 included the following: December 31, 2024 (In thousands) Weighted Average Amortization Period (in years) Gross ‎ Carrying ‎ Amount Accumulated ‎ Amortization Intangible ‎ Assets, ‎ net Customer relationships & other intangibles 10.6 $ 355,727 $ ( 88,164 ) $ 267,563 Developed technology 8.0 681,477 ( 157,889 ) 523,588 Patents 16.1 9,023 ( 5,057 ) 3,966 Total intangible assets $ 1,046,227 $ ( 251,110 ) $ 795,117 Intangible assets as of December 31, 2023 included the following: December 31, 2023 (In thousands) Weighted Average Amortization Period (in years) Gross ‎ Carrying ‎ Amount Accumulated ‎ Amortization Intangible ‎ Assets, ‎ net Supplier Network 10.0 $ 4,000 $ ( 3,667 ) $ 333 Customer relationships & other intangibles 10.6 353,849 ( 54,871 ) 298,978 Developed technology 8.0 695,226 ( 74,636 ) 620,590 Patents 16.1 9,266 ( 4,564 ) 4,702 Total intangible assets $ 1,062,341 $ ( 137,738 ) $ 924,603 85 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes amortization of intangible assets for future periods as of December 31, 2024: (In thousands) Annual ‎ Amortization 2025 $ 112,208 2026 108,454 2027 107,380 2028 104,070 Thereafter 363,005 Total $ 795,117 NOTE 10. ACCRUED EXPENSES Accrued expenses as of December 31, 2024 and 2023, respectively included the following: December 31, (In thousands) 2024 2023 Compensation and other employee-related costs $ 151,819 $ 140,817 Legal and other settlements and expenses 6,746 9,335 Accrued non-income taxes 34,088 23,726 Royalties 10,612 10,130 Rebates 33,105 27,605 Other 24,221 28,847 Total accrued expenses $ 260,591 $ 240,460 NOTE 11. DEBT The carrying values of the 2025 Notes, acquired in the NuVasive Merger, as of December 31, 2024, were as follows: December 31, (In thousands) 2024 2023 0.375 % Senior Convertible Notes due 2025: Principal $ 449,987 $ 449,987 Unamortized fair value adjustment for acquisition accounting 6,658 33,275 0.375 % Senior Convertible Notes due 2025 443,329 416,712 Embedded Conversion Option 22 687 Debt, net of unamortized fair value adjustments for acquisition accounting $ 443,351 $ 417,400 December 31, (In thousands) 2024 2023 Interest expense: Contractual coupon interest $ 1,688 $ 364 Amortization of fair value adjustments for acquisition accounting 26,630 9,076 Total interest expense recognized on Senior Convertible Notes due 2025 $ 28,318 $ 9,440 Effective interest rates: Senior Convertible Notes due 2025 6.4 % 6.8 % Line of Credit In September 2023, we entered into an unsecured credit agreement with U.S. Bank National Association, as administrative agent, Citizens Bank, N.A., as syndication agent, Royal Bank of Canada, as documentation agent, U.S. Bank National Association and Citizens Bank, N.A., as joint lead arrangers and joint book runners, and the other lenders referred to therein (the “September 2023 Credit Agreement”), that 86 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) provides a revolving credit facility permitting borrowings up to $ 400.0 million and has a termination date of September 27, 2028 . We may request an increase in the revolving commitments in an aggregate amount not to exceed (i) $ 200 million or (ii) so long as the Leverage Ratio (as defined in the September 2023 Credit Agreement) is at least 0.25 to 1.00 less than the applicable Leverage Ratio then required under the September 2023 Credit Agreement, an unlimited amount. Revolving Loans under the September 2023 Credit Agreement bear interest at either a base rate or the Term SOFR Rate (as defined in the September 2023 Credit Agreement) plus, in each case, an applicable margin, as determined in accordance with the provisions of the September 2023 Credit Agreement. The Applicable Margin ranges from 0.125 % to 0.625 % for the Base Rate and 1.125 % to 1.625 % for the Term SOFR Rate. We may also request Swingline Loans (as defined in the September 2023 Credit Agreement) at either the Base Rate or the Daily Term SOFR Rate. The September 2023 Credit Agreement is guaranteed by certain direct or indirect wholly owned subsidiaries of the Company. The September 2023 Credit Agreement contains financial and other customary covenants, including a funded net indebtedness to adjusted EBITDA ratio. As of December 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 On September 1, 2023, in connection with the closing of the NuVasive Merger, the Company, NuVasive and Wilmington Trust National Association, as trustee (the “Trustee”) entered into a supplemental agreement (the “First Supplemental Indenture”) to the Indenture, dated March 2, 2020 (the “Base Indenture”), by and between NuVasive and the Trustee, relating to NuVasive’s $ 450.0 million in aggregate principal amount of 0.375 % Convertible Senior Notes due 2025. As of the closing date of the NuVasive Merger, $ 450 million of aggregate principal amount of the 2025 Notes were outstanding. Pursuant to the First Supplemental Indenture, the 2025 Notes are convertible into the Company’s Class A Common at a conversion rate of 8.0399 shares per $ 1,000 principal amount of 2025 Notes, which is equivalent to a conversion price of approximately $ 124.38 per share, subject to adjustments. The 2025 Notes may be settled in cash, stock, or a combination thereof, solely at the Company’s discretion. Pursuant to the terms of the First Supplemental Indenture, Globus agreed to guarantee NuVasive’s obligations under the Indenture. The 2025 Notes bear interest at a rate of 0.375 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The 2025 Notes mature on March 15, 2025 , unless earlier converted, redeemed, or repurchased in accordance with their terms. The NuVasive Merger constituted a Merger Event as defined in the Base Indenture. 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. 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. No principal payments are due on the 2025 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the 2025 Notes do not contain any financial covenants and do not restrict the Company from conducting significant restructurings, paying dividends or issuing or repurchasing any of its other securities. Upon the initial recognition of the 2025 Notes pursuant to the purchase accounting for the NuVasive 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 Company recognized, at the NuVasive Merger closing, the embedded conversion feature at fair value of $ 1.7 million and allocated the residual $ 407.8 million of the 2025 Notes fair value to the host debt instrument. As of the December 31, 2024, the fair value of the embedded conversion feature was $ 21.7 thousand. As a result of the NuVasive 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. 2025 Hedges On September 1, 2023, in connection with the closing of the NuVasive Merger, the Company, NuVasive, and certain dealers entered into amendment and guarantee agreements with respect to privately negotiated call option transactions (the “2025 Hedges”) pursuant to which NuVasive purchased options from such dealers exercisable into its own common stock in connection with the sale of the 2025 Notes. Pursuant to such amendment and guarantee agreements, the 2025 Hedges are exercisable into Globus Class A Common in certain circumstances and the Company guaranteed NuVasive’s obligations under the 2025 Hedges. Subject to the amended 2025 Hedges, the Company is entitled to purchase up to 3,617,955 shares of the Company’s Class A Common at a strike price of $ 124.38 . The 2025 Hedges will expire on the second scheduled 87 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) trading day immediately preceding March 15, 2025 and are expected to reduce the potential equity dilution upon conversion of the 2025 Notes if the daily volume-weighted average price per share of the Company’s common stock exceeds the strike price of the 2025 Hedges. In accordance with ASC 805, the Company recognized the 2025 Hedges at an acquisition date fair value of $ 1.7 million. The 2025 Hedges do not meet the equity scope exception described in ASC 815-40, Contract in Entity’s Own Equity, and will be presented as assets on the consolidated balance sheet with subsequent measurement at fair value with changes in fair value recognized as “ Other income/(expense)”. As of December 31, 2024, the fair value of the 2025 Hedges is $ 21.7 thousand recorded within the Other Assets with the consolidated balance sheet. An assumed exercise of the 2025 Hedges 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. 2025 Warrants On September 1, 2023, in connection with the closing of the NuVasive Merger, the Company, NuVasive, and certain dealers entered into amendment and guarantee agreements with respect to privately negotiated warrant transactions (the “2025 Warrants”), pursuant to which NuVasive sold warrants to such dealers for its own common stock in connection with the initial sale of the 2025 Notes. Pursuant to such amendment and guarantee agreements, the warrants are exercisable into Globus Class A Common in certain circumstances and the Company guaranteed NuVasive’s obligations under the 2025 Warrants. Subject to the amended 2025 Warrants, the holders of the 2025 Warrants are entitled to purchase up to 3,617,955 shares of the Company’s common stock at a strike price of $ 170.45 . The 2025 Warrants will expire on various dates from June 2025 through October 2025 and may be settled in net shares or cash, at the Company’s election. 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. NOTE 12. EQUITY Share Repurchases On March 11, 2020, the Company announced a share repurchase program, which authorized the Company to repurchase up to $ 200.0 million of the Company’s Class A Common. On March 4, 2022, the share repurchase program was expanded by authorizing the Company to repurchase an additional $ 200.0 million of the Company’s Class A Common. On September 27, 2023, the share repurchase program was expanded by authorizing the Company to repurchase an additional $ 350.0 million of the Company’s Class A Common. The repurchase program has no time limit and may be suspended for periods or discontinued at any time. 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 12 months ended December 31, 2024. As of December 31, 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. Funding of share repurchases is expected to come from operating cash flows and excess cash. Shares repurchased by the Company are accounted for under the constructive retirement method, in which the shares repurchased, are immediately retired, as there is no plan to reissue the shares. The value of the retired shares includes the 1% excise tax accrual as a result of the Inflation Reduction Act of 2022. The Company made an accounting policy election to charge the excess of repurchase price over par value entirely to retained earnings. Common Stock Our amended and restated Certificate of Incorporation provides for a total of 775,000,000 authorized shares of common stock. Of the authorized number of shares of common stock, 500,000,000 shares are designated as Class A Common and 275,000,000 shares are designated as Class B common stock (“Class B Common”). The holders of Class A Common are entitled to one vote for each share of Class A Common held. The holders of Class B Common are entitled to 10 votes for each share of Class B Common held. Each share of our Class B Common is convertible at any time at the option of the holder into one share of our Class A Common. In addition, each share of our Class B Common will convert automatically into one share of our Class A Common upon any transfer, whether or not for value, except for permitted transfers. For more details relating to the conversion of our Class B Common please see “Exhibit 4.2, Description of Securities of the Registrant” filed herein. The holders of Class A Common and 88 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Class B Common vote together as one class of common stock. Except for voting rights, the Class A Common and Class B Common have the same rights and privileges. Accumulated Other Comprehensive Income (Loss) The tables below present the changes in each component of accumulated other comprehensive income/(loss), including current period other comprehensive income/(loss) and reclassifications out of accumulated other comprehensive income/(loss) for the years ended December 31, 2024 and 2023, respectively: (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive income/(loss), net of tax, at December 31, 2023 $ ( 1,862 ) $ ( 8,330 ) $ ( 10,192 ) Other comprehensive income/(loss) before reclassifications 2,038 1,786 3,824 Amounts reclassified from accumulated other comprehensive income/(loss), net of tax ( 493 ) — ( 493 ) Other comprehensive income/(loss), net of tax 1,545 1,786 3,331 Accumulated other comprehensive income/(loss), net of tax, at December 31, 2024 $ ( 317 ) $ ( 6,544 ) $ ( 6,861 ) (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive income/(loss), net of tax, at December 31, 2022 $ ( 15,093 ) $ ( 9,537 ) $ ( 24,630 ) Other comprehensive income/(loss) before reclassifications 17,420 1,207 18,627 Amounts reclassified from accumulated other comprehensive income/(loss), net of tax ( 4,189 ) — ( 4,189 ) Other comprehensive income/(loss), net of tax 13,231 1,207 14,438 Accumulated other comprehensive income/(loss), net of tax, at December 31, 2023 $ ( 1,862 ) $ ( 8,330 ) $ ( 10,192 ) Amounts reclassified from accumulated other comprehensive loss, net of tax, related to unrealized gains/losses on marketable securities were released to other income, net in our consolidated statements of operations and comprehensive income. Earnings Per Common Share The Company computes basic earnings per share using the weighted-average number of common shares outstanding during the period. Diluted earnings per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, unvested RSUs, and PRSUs. These are included in basic net income per share as of the date that all necessary conditions have been satisfied and are included in the denominator for dilutive calculation for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. 89 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, (In thousands, except per share amounts) 2024 2023 2022 Numerator: Net income/(loss) for basic $ 102,984 $ 122,873 $ 190,169 Adjusted net income (loss) for diluted 102,984 122,873 190,169 Denominator for basic and diluted net income per share: Weighted average shares outstanding for basic 135,726 113,087 100,469 Dilutive stock options, RSUs, and PRSUs 2,137 1,543 2,174 Weighted average shares outstanding for diluted 137,863 114,630 102,643 Earnings per share: Basic $ 0.76 $ 1.09 $ 1.89 Diluted $ 0.75 $ 1.07 $ 1.85 Anti-dilutive stock options and RSUs excluded from the calculation 5,164 6,295 3,851 Anti-dilutive warrants excluded from the calculation 3,618 3,618 — Anti-dilutive Senior Convertible Notes due 2025 excluded from the calculation 3,618 3,618 — Total $ 12,400 $ 13,531 $ 3,851 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 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 2025 Notes could be converted. The effect is only included in the calculation of diluted net income per share for those 2025 Notes which reduce net income per share. NOTE 13. STOCK-BASED AWARDS We have four stock plans: our 2012 Equity Incentive Plan (the “2012 Plan”) and our 2021 Equity Incentive Plan (the “2021 Plan”), the NuVasive 2014 Equity Incentive Plan (the “NuVasive 2014 Plan”), and the Ellipse Technologies 2015 Incentive Award Plan (the “Ellipse 2015 Plan”). The 2021 Plan and the Ellipse 2015 Plan are the only active stock plans. 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 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. The options granted expire on a date specified by the Board, which is ten years from the grant date. Options granted to employees vest in varying installments over a four-year period. The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012. The 2012 Plan terminated as to new awards pursuant to its terms in 2022. Following effectiveness of the 2021 Plan, we have no t issued any additional awards under the 2012 Plan; however, awards previously granted under the 2012 Plan remain outstanding and are administered by our Board under the terms and conditions of the 2012 Plan. Under the 2012 Plan, the aggregate number of shares of Class A Common that were able to be issued subject to options and other awards is equal to the sum of (i) 3,076,923 shares, (ii) any shares available for issuance under the 2008 Equity Incentive Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3 % of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board. The number of shares that were able to be issued or transferred pursuant to incentive stock options under the 2012 Plan was limited to 10,769,230 shares. The shares of Class A Common covered by the 2012 Plan included authorized but unissued shares, treasury shares or shares of common stock purchased on the open market. The 2021 Plan was approved by our Board in March 2021, and by our stockholders in June 2021. Under the 2021 Plan, 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. 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. The shares of Class A Common covered by the 2021 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market. 90 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In connection with the NuVasive 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 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 December 31, 2024, pursuant to the 2021 Plan, the NuVasive 2014 Plan, and the Ellipse 2015 Plan, there were 9,892,082 shares 276,530 shares, and 359,464 shares, respectively, of Class A Common reserved and 3,117,085 shares, 0 shares, and 287,392 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 year ended December 31, 2024 is summarized as follows: Option ‎ Shares (thousands) Weighted average exercise price Weighted ‎ average ‎ remaining ‎ contractual ‎ life (years) Aggregate ‎ intrinsic ‎ value ‎ (thousands) Outstanding at December 31, 2023 11,401 $ 53.02 Granted 2,789 56.76 Exercised ( 2,450 ) 44.98 Forfeited ( 781 ) 57.68 Outstanding at December 31, 2024 10,959 55.47 6.6 $ 298,597 Exercisable at December 31, 2024 6,482 53.13 5.1 191,773 Expected to vest at December 31, 2024 4,477 $ 58.85 8.7 $ 106,824 The total intrinsic value of stock options exercised was $ 75.7 million, $ 10.8 million, and $ 26.3 million, during the years ended December 31, 2024, 2023, and 2022, respectively. The fair value of the options was estimated on the date of the grant using a Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2024 2023 2022 Risk-free interest rate 3.52 % - 4.75 % 3.45 % - 4.77 % 1.46 % - 4.04 % Expected term (years) 4.7 - 7.5 4.7 - 4.8 4.7 - 9.9 Expected volatility 34.0 % - 39.0 % 35.0 % - 38.0 % 33.0 % - 35.0 % Expected dividend yield —% —% —% The weighted average grant date fair value of stock options granted during the years ended December 31, 2024, 2023, and 2022 was $ 22.53 , $ 21.47 , and $ 22.10 per share, respectively. Restricted Stock Units Restricted stock unit activity during the year ended December 31, 2024 is summarized as follows: Restricted Stock ‎ Units (thousands) Weighted ‎ average ‎ grant date fair value ‎ per share Weighted ‎ average ‎ remaining ‎ contractual ‎ life (years) Outstanding at December 31, 2023 820 $ 54.98 Granted 37 67.90 Vested ( 367 ) 54.10 Forfeited ( 74 ) 54.10 Outstanding at December 31, 2024 416 $ 57.05 2.64 91 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Performance-Based Restricted Stock Units Performance-based restricted stock unit activity during the year ended December 31, 2024 is summarized as follows: Performance-Based Restricted Stock ‎ Units (thousands) Weighted ‎ average ‎ grant date fair value ‎ per share Weighted ‎ average ‎ remaining ‎ contractual ‎ life (years) Outstanding at December 31, 2023 106 $ 53.61 Granted — — Vested ( 18 ) 54.10 Forfeited ( 21 ) 54.10 Outstanding at December 31, 2024 67 $ 53.57 1.73 Stock-Based Compensation Compensation expense related to stock options granted to employees and non-employees under the Plans and the intrinsic value of stock options exercised was as follows: Year Ended December 31, (In thousands) 2024 2023 2022 Stock-based compensation expense $ 54,191 $ 38,995 $ 32,810 Stock-based compensation expense classified in Acquisition-Related Costs — 13,747 — Net stock-based compensation capitalized into inventory 95 31 657 Total stock-based compensation cost $ 54,286 $ 52,773 $ 33,467 As of December 31, 2024, there was $ 87.1 million of unrecognized compensation expense related to unvested employee stock options, RSUs, and PRSUs that vest over a weighted average period of 2.4 years. NOTE 14. INCOME TAXES The components of income before income taxes are as follows: Year Ended December 31, (In thousands) 2024 2023 2022 Domestic $ 149,514 $ 181,752 $ 247,260 Foreign ( 28,792 ) ( 16,359 ) ( 4,241 ) Total $ 120,722 $ 165,393 $ 243,019 The components of the provision for income taxes are as follows: Year Ended December 31, (In thousands) 2024 2023 2022 Current: Federal $ 112,768 $ 81,504 $ 60,927 State 25,650 15,190 12,408 Foreign 13,357 4,075 1,845 151,775 100,769 75,180 Deferred: Federal ( 104,581 ) ( 46,217 ) ( 16,429 ) State ( 13,385 ) ( 6,421 ) ( 3,142 ) Foreign ( 16,071 ) ( 5,611 ) ( 2,759 ) ( 134,037 ) ( 58,249 ) ( 22,330 ) Total $ 17,738 $ 42,520 $ 52,850 92 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A reconciliation of the statutory U.S. federal tax rate to our effective rate is as follows: Year Ended December 31, 2024 2023 2022 Statutory U.S. federal tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 5.5 4.1 3.0 Foreign taxes 0.4 ( 0.6 ) 0.7 Valuation Allowance 10.6 0.4 ( 0.5 ) Tax credits ( 9.0 ) ( 3.4 ) ( 1.3 ) Stock-based compensation windfall ( 5.0 ) ( 0.9 ) ( 1.2 ) Nondeductible expenses 3.9 1.3 — Foreign inclusions ( 0.8 ) ( 0.9 ) — Acquisition related charges — 4.9 — Other 0.6 ( 0.2 ) — Legal entity reorganization ( 8.6 ) — — Uncertain tax position ( 3.9 ) — — Effective tax rate 14.7 % 25.7 % 21.7 % Deferred income taxes reflect the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting purposes and tax purposes. Significant components of our deferred income taxes are as follows: December 31, (In thousands) 2024 2023 Deferred tax assets: Inventory reserve $ 70,011 $ 27,228 Accruals, reserves, and other currently not deductible 47,434 37,798 Stock-based compensation 41,084 39,715 Capitalized R&E 83,581 68,832 Net operating loss carryforwards 110,386 128,810 General business and other credit carryforwards 33,995 42,569 Lease Liability 27,449 22,887 Other 45,703 30,948 Total deferred tax assets 459,643 398,787 Valuation allowance ( 182,607 ) ( 190,762 ) Total deferred tax assets, net of valuation allowance 277,036 208,025 Deferred tax liabilities: Depreciation and amortization ( 173,845 ) ( 244,348 ) Right of Use Asset ( 12,065 ) ( 12,370 ) Total deferred tax liabilities ( 185,910 ) ( 256,718 ) Net deferred tax assets/(liabilities) $ 91,126 $ ( 48,693 ) In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize a portion of the benefits of these deductible differences at December 31, 2024 and 2023. The Company has established valuation allowances of $ 182.6 million and $ 190.8 million at December 31, 2024 and 2023, respectively, primarily related to the uncertainty of the utilization of certain deferred tax assets comprised of tax loss carryforwards in various jurisdictions. The decrease in the valuation allowance during 2024 was primarily driven by the internal reorganization, as well as the mix of earnings in loss entities. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. 93 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) At December 31, 2024, the Company had $ 1.3 million and $ 326.8 million of federal and foreign net operating loss carryforwards, respectively. Federal net operating loss carryforwards begin to expire in 2026 and foreign net operating losses carry forward indefinitely. The Company has California research and development income tax credit carryforwards of $ 40.1 million. The California credits can be carried forward indefinitely. The Company has foreign tax credit carryforwards of $ 2.1 million which expire beginning in 2027 . Due to the “change of ownership” provision of the Tax Reform Act of 1986, utilization of the Company’s net operating loss and credit carryforwards may be subject to an annual limitation against taxable income in future periods. As a result of any future ownership changes, the annual limitation of loss and credit carryforwards may cause them to expire before ultimately becoming available to reduce future income tax liabilities. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Year Ended December 31, (In thousands) 2024 2023 2022 Unrecognized tax benefits at the beginning of the year $ 33,757 $ 986 $ 1,052 Additions related to current year tax positions 2,601 853 — Additions related to prior year tax positions 27,922 32,045 50 Reductions related to prior year tax positions ( 7,917 ) ( 127 ) ( 116 ) Unrecognized tax benefits at the end of the year $ 56,363 $ 33,757 $ 986 The additions related to current year tax positions for the year ended December 31, 2024 of $ 2.6 million are primarily related to additional current year reserves. The additions related to the prior year tax positions for the year ended December 31, 2024 of $ 27.9 million are related to the historical positions from the NuVasive Merger, partially recorded to goodwill using the acquisition method of accounting. The reduction s related to prior year tax positions for the year ended December 31, 2024 of $ 7.9 million are primarily related to the resolution of certain foreign and U.S. federal tax positions. The impact of our unrecognized tax benefits to the effective income tax rate is as follows: December 31, (In thousands) 2024 2023 2022 Portion of total unrecognized tax benefits that, if recognized, would affect the effective income tax rate $ 33,958 $ 27,601 $ 1,355 Due to recent tax reform in the U.S. and favorable treaties between the U.S. and countries in which the Company’s controlled foreign corporations operate, the Company has the ability to repatriate earnings without incurring additional tax liabilities. Accordingly, the Company has not recorded a liability for taxes associated with any future distributions of these undistributed earnings. Interest and penalties are recorded in the statement of income as provision for income taxes. The total interest and penalties recorded in the statement of income was immaterial for the years ended December 31, 2024, 2023, and 2022. We do not expect a significant change in our uncertain tax benefits in the next twelve months. We are subject to federal income tax as well as income tax of multiple state and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examination by tax authorities in major jurisdictions for years prior to 2020 as of December 31, 2024. NOTE 15. COMMITMENTS AND CONTINGENCIES We are involved in a number of proceedings, legal actions, and claims arising in the ordinary course of business. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount in the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows. 94 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Moskowitz Family LLC Litigation On November 20, 2019, Moskowitz Family LLC filed suit against us in the U.S. District Court for the Western District of Texas for patent infringement. Moskowitz, a non-practicing entity, alleges that Globus willfully infringes one or more claims of six patents by making, using, offering for sale or selling the COALITION MIS ® , CORBEL ® , MAGNIFY ® -S, HEDRON IATM, INDEPENDENCE MIS ® , INDEPENDENCE MIS AGX ® , FORTIFY ® and XPAND ® families, SABLE ® , RISE ® , RISE ® INTRALIF, RISE ® -L, ELSA ® , ELSA ® ATP, ALTERA ® , ARIEL ® , CALIBER ® and CALIBER ® -L products. Moskowitz seeks monetary damages and injunctive relief. On July 2, 2020, this suit was transferred from the U.S. District Court for the Western District of Texas to the U.S. District Court for the Eastern District of Pennsylvania. On December 14, 2023, a jury returned a defense verdict in favor of Globus. 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 December 31, 2024. NOTE 16. RESTRUCTURING AND OTHER COSTS As of December 31,2024, the Company incurred restructuring and other costs primarily related to employee termination benefits as a part of the Company’s 2024 Synergy Plan. The Company’s 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 and July 2024. Totals include stock-based compensation expense, classified in accordance with ASC 420, Exit or Disposal Cost Obligations , where applicable. The following table provides a summary of recognized pre-tax costs for the twelve months ended December 31, 2024: Twelve Months Ended (In thousands) December 31, 2024 Cost of Sales $ 178 Research and Development 2,154 Selling, General and Administrative 3,573 Restructuring Costs 23,773 Total restructuring and other costs $ 29,678 The following table provides a summary of activity related to the restructuring program for the twelve months ended December 31, 2024: Twelve Months Ended (In thousands) December 31, 2024 Beginning Balance $ — Charges 29,678 Cash Payments ( 21,177 ) Settled non-cash (a) ( 5,754 ) December 31, 2024 $ 2,747 (a) Represents share-based compensation settled without cash payments. NOTE 17. LEASES The Company leases certain equipment, vehicles, office and storage facilities via various operating and financing lease agreements. Our leases have initial lease terms ranging from one year to seventeen years . 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. 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. We generally estimate discount rates using our incremental borrowing rate, and based on other information available, at commencement date of a lease when determining the present value of future payments, as most of our leases do not provide an implicit rate. 95 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 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 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 consolidated balance sheet were as follows: December 31, (In thousands) 2024 2023 Asset: Operating lease right-of-use asset $ 49,647 $ 59,931 Finance lease right-of-use asset 518 797 Total leased assets $ 50,165 $ 60,728 Liabilities: Current: Operating lease liability 10,249 11,967 Finance lease liability 233 475 Long-term: Operating lease liability 83,588 91,037 Finance lease liability 298 337 Total lease liabilities $ 94,368 $ 103,816 The table below summarizes the Company’s lease costs arising from the operating and financing lease obligations: Twelve Months Ended December 31, (In thousands) 2024 2023 2022 Lease expense: Operating lease expense $ 25,272 $ 19,471 $ 2,588 Finance lease expense Depreciation of right-of-use asset 585 903 — Interest expense on lease liabilities 92 67 — Total lease expense $ 25,949 $ 20,441 $ 2,588 Future minimum lease payments under non-cancellable leases as of December 31, 2024 are as follows: (In thousands) Finance ‎ Leases Operating ‎ Leases 2025 $ 257 $ 16,297 2026 190 14,663 2027 95 13,400 2028 25 11,547 2029 5 11,440 Thereafter — 62,585 Total minimum lease payments $ 573 $ 129,932 Less: amount representing interest ( 42 ) ( 36,095 ) Present value of obligations under leases 531 93,837 Less: current portion ( 233 ) ( 10,249 ) Long-term lease obligations $ 298 $ 83,588 T he table below summarizes the Company’s supplemental cash flow information and assumptions used: 96 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Twelve Months Ended December 31, (In thousands, except weighted average lease term and discount rate) 2024 2023 2022 Other supplemental cash flow information: Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases $ 14,300 $ 19,773 $ 2,545 Operating cash flows for finance leases 92 67 — Financing cash flows for finance leases 1,003 913 — Total cash paid for amounts included in the measurement of lease liabilities $ 15,395 $ 20,753 $ 2,545 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 2,289 $ 9,043 $ 1,915 Financing leases $ 394 $ — $ — Weighted-average remaining lease term Operating leases 7.7 14.9 2.4 Financing leases 2.4 2.6 — Weighted-average discount rate Operating leases 4.8 % 8.3 % 3.5 % Financing leases 5.3 % 4.4 % — NOTE 18. RETIREMENT BENEFIT PLANS We sponsor 401(k) Plans covering all eligible U.S. employees, and a retirement plan for all eligible Puerto Rico employees. Under the 401(k) Plans, we make matching contributions ranging from 3 % to 4 % of the employee’s compensation for the period. Additionally, we contribute to various foreign retirement benefit plans required by local law or coordinated with government sponsored plans which cover many of our international employees. The benefits offered under these plans are reflective of local customs and practices in the countries concerned. Company contributions to these retirement plans were as follows: Year Ended December 31, (In thousands) 2024 2023 2022 401(k) and other retirement plan contributions $ 16,069 $ 10,525 $ 7,154 NOTE 19. SEGMENT AND GEOGRAPHIC INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. Daniel T. Scavilla, Chief Executive Officer is identified as the CODM who determines resource allocation, investing activities, and performance assessment. The CODM uses revenue, gross profit and operating income to assess financial performance of the segments and make key operating decisions. Our CODM does not evaluate operating segments using asset or liability information. The Company identified two operating segments, Musculoskeletal Solutions and Enabling Technologies based on the overall management structure and business strategy. The Company aggregates 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. 97 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table represents total segment revenue, significant segments expenses and other expenses for the years ended December 31, 2024, 2023 and 2022, respectively: Year Ended December 31, 2024 2023 2022 Net Sales $ 2,519,354 $ 1,568,476 $ 1,022,843 Less: Cost of goods sold ( 719,160 ) ( 404,785 ) ( 229,323 ) Amortization of inventory fair value step-up (a) ( 215,420 ) ( 71,656 ) ( 894 ) Depreciation cost of goods sold ( 100,899 ) ( 71,733 ) ( 33,508 ) Research & development employee related cost ( 119,166 ) ( 95,208 ) ( 57,124 ) Research & development other (b) ( 44,588 ) ( 28,802 ) ( 15,890 ) Selling, general & administrative employee related cost ( 763,188 ) ( 514,810 ) ( 360,003 ) Selling, general & administrative other (c) ( 173,107 ) ( 103,858 ) ( 59,754 ) Provision for litigation ( 314 ) ( 434 ) ( 2,341 ) Acquisition related costs ( 29,623 ) ( 68,274 ) ( 5,959 ) Amortization ( 119,373 ) ( 51,032 ) ( 17,735 ) Other segment expenses (d) ( 66,320 ) ( 26,880 ) ( 10,506 ) Operating income 168,196 131,004 229,806 Interest income (expense) ( 4,189 ) 20,130 14,233 FX transactional gain (loss) ( 43,285 ) 14,259 ( 1,020 ) Income before taxes $ 120,722 $ 165,393 $ 243,019 (a ) Amounts primarily related to inventory step-up associated with the NuVasive Merger (b) Amounts include IPR&D and other non-employee related costs (c) Amounts include non-employee related costs including taxes and fees (d) Amounts include restructuring expense and credit losses The following table represents total net sales by geographic area, based on the location of the customer for the years ended December 31, 2024, 2023 and 2022, respectively: Net Sales Year Ended December 31, (In thousands) 2024 2023 2022 United States $ 2,000,067 $ 1,279,765 $ 871,939 International 519,288 288,711 150,904 Total $ 2,519,355 $ 1,568,476 $ 1,022,843 98 Table of Contents GLOBUS MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table represents total property and equipment, net by geographic area: Property and Equipment, Net As of December 31, (In thousands) 2024 2023 United States $ 523,002 $ 527,332 International 44,716 59,600 Total $ 567,718 $ 586,932 NOTE 20. SUBSEQUENT EVENT On February 6, 2025, the Company entered into an Agreement and Plan of Merger (the “Nevro Merger Agreement”) with Nevro Corp., a Delaware corporation (“Nevro”), and Palmer Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Palmer Merger Sub”). The Nevro Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth therein, Palmer Merger Sub will merge with and into Nevro (the “Nevro Merger”), with Nevro surviving the merger as a wholly owned subsidiary of the Company. Under the Nevro Merger Agreement, at the effective time of the Nevro Merger (the “Effective Time”), each share of common stock, par value $ 0.001 per share, of Nevro (“Nevro Common Stock”) issued and outstanding immediately prior to the Effective Time (other than certain excluded shares as described in the Nevro Merger Agreement) will be cancelled and converted into the right to receive cash in an amount equal to $ 5.85 per share of Nevro Common Stock. The transaction represents a total equity value of approximately $ 250 million. Either Nevro or Globus may terminate the Nevro Merger Agreement under certain circumstances described in the Nevro Merger Agreement, resulting in a termination fee payable to the other equal to $ 10 million or $ 15 million, depending on such circumstances. Nevro will also be required to make a payment to Globus equal to $ 15 million if the Nevro Merger Agreement is terminated because Nevro’s stockholders fail to approve the Nevro Merger Agreement and, at the time of such failure, Nevro’s board of directors has not changed its recommendation to its stockholders in favor of the Nevro Merger. The transaction is expected to close late in the second quarter of 2025, subject to the approval of Nevro’s shareholders, regulatory approval, and other customary closing conditions. 99 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.