Globus Medical (GMED) Q1 2026 Earnings Transcript

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DATE

Thursday, May 7, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Keith W. Pfeil
• Chief Financial Officer — Kyle Kline
• Vice President, Investor Relations — Brian Kearns

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RISKS

• Kline said, "in the first quarter, we also saw a decline in revenue, driven by the structural changes made within sales and marketing of the Nevro business at the tail end of 2025," and expects Nevro performance "will probably get a little bit worse before it gets better."
• Management cited a sequential revenue step-down in Enabling Technologies and noted that a shift to leasing versus cash sales could "impact overall top-line performance."

TAKEAWAYS

• Revenue -- $760 million, up 27% as reported and 25.5% constant currency.
• Non-GAAP EPS -- $1.12, representing 64.7% growth.
• U.S. Spine Revenue -- $347 million, up 10% and achieving 58 weeks of consecutive growth.
• International Spine Revenue -- $51 million, up 16.4% as reported and 9.8% constant currency.
• Enabling Technologies Revenue -- $27 million, up 21.1% with a noted shift toward more leases and rentals rather than outright sales.
• Trauma Business Revenue -- Growth of 34%, driven by both core trauma line share gains and increased PRECICE limb lengthening production after insourcing manufacturing.
• Nevro Revenue -- $83 million, with sequential decline of 17.1% compared to fiscal Q4 2025; management anticipated lumpiness due to sales force restructuring.
• Adjusted Gross Profit Margin -- 69.2%, compared to 67.3% prior-year, attributed to fixed cost leverage, favorable mix, and manufacturing/supply chain synergies.
• Adjusted EBITDA Margin -- 32.3% overall; base business 34.8%, Nevro standalone 11.8%.
• GAAP Net Income -- $124 million, delivering $0.90 diluted GAAP EPS.
• Operating Cash Flow -- $202 million, with quarter-end cash, cash equivalents, and marketable securities of $800 million; capex spend was $40 million (5.2% of sales).
• FDA 510(k) Clearances -- Received for Scripps patient-specific lumbar spacers and rods, positioning the company as the only provider with a complete, integrated patient-specific lumbar offering.
• Share Repurchase -- $110 million bought in 2025, $390 million buyback authorization remaining.
• 2026 Guidance -- Revenue reaffirmed at $3.18 billion to $3.22 billion, implying 8.2%-9.6% growth; non-GAAP EPS guidance increased to $4.70-$4.80, up from $4.40-$4.50, reflecting 18.1%-20.6% growth on margin improvements.
• R&D and SG&A Expense -- R&D was $37 million (4.8% of sales); SG&A was $298 million (39.2% of sales), with base business leveraging scale and synergy actions.

SUMMARY

Globus Medical (NYSE:GMED) achieved significant margin gains, posting an adjusted gross profit margin of 69.2% due to fixed cost leverage and ongoing supply chain initiatives. Base business revenue increased by 13.2%, with musculoskeletal and enabling technology segments delivering double-digit growth. Leadership highlighted a durable, expanding robotics pipeline, and gained two 510(k) clearances for a fully integrated, patient-specific lumbar implant suite. The revised non-GAAP EPS guidance, now $4.70-$4.80, reflects durable cost improvements and synergy capture, while top-line guidance remains steady to account for expected Nevro volatility and changes in sales model mix.

• Management stated that the recurring Enabling Technologies lease/rental shift is already factored into full-year revenue targets.
• Pfeil emphasized that recent U.S. Spine growth stems primarily from market share gains against an estimated 3%-3.5% industry growth.
• Pfeil described increased competitive activity from Medtronic (NYSE: MDT) and others as slowing deal cycles but maintained that the Excelsius platform stands out for multi-site regulatory clearance and workflow features.
• Kline confirmed capex priorities are innovative product development, inventory set expansion, facility investment, and disciplined M&A evaluation.

INDUSTRY GLOSSARY

• Enabling Technologies: Globus Medical’s segment for navigation, robotic guidance, and surgical-planning products that augment procedural accuracy and workflow, driving recurring revenue via implants and service contracts.
• PRECICE: A proprietary limb lengthening portfolio using motorized intramedullary nails; former NuVasive product line now fully integrated with Globus-manufactured supply.
• ExcelsiusGPS: Globus Medical's floor-mounted robotic navigation system for spine and select cranial and orthopedic procedures, FDA-cleared for multiple anatomical applications.
• Scripps Studio Design: Custom implant planning software enabling surgeon-driven design for patient-specific spine hardware, compatible with the Excelsius platform.

Full Conference Call Transcript

Brian Kearns: Thank you, Kathy, and thank you, everyone, for being with us today. Joining today's call from Globus Medical, Inc. will be Keith W. Pfeil, President and CEO, and Kyle Kline, Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical, Inc. website at www.globusmedical.com. Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-Ks for the 2025 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today.

Our SEC filings, including the 10-Ks, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of the Globus Medical, Inc. website.

With that, I will now turn the call over to Keith W. Pfeil, our President and CEO.

Keith W. Pfeil: Thanks, Brian. Good afternoon, everyone, and thank you for joining us on today's call. Our first quarter results demonstrate our ongoing focus as we continue to scale and capture share while maintaining operational discipline, driving margin expansion, favorably impacting Q1 and our full-year results looking ahead. Overall, we are moving with purpose and in the right direction. As we progress through 2026, look for market share-taking top-line growth coupled with exciting product launches while increasing gross margins and driving meaningful earnings expansion. Stepping back for a minute, I want to give a little perspective and highlight what we have accomplished by looking at our trailing twelve-month performance and the activity that has occurred since the close of fiscal 2022.

Since then, revenue has more than tripled. We have generated six times the amount of free cash flow, all while closing two significant deals, extinguishing almost $1 billion in debt, while deploying over $600 million to repurchase over 10 million shares at an average price of under $60 a share. That represented greater than 25% of the dilution that was created from the NuVasive merger. We sit here today debt-free, generating significant free cash, and have launched over 30 new products during this time frame. Simply stated, we have leaned in and meaningfully scaled our business while maintaining the DNA of Globus of innovation, execution, and financial prudence.

I am thrilled with our results in Q1 and look forward to what 2026 and beyond has in store for our business. Turning attention to our top-level performance, Q1 revenue totaled $759.9 million, growing 27% as reported and 25.5% on a constant currency basis. Fully diluted non-GAAP earnings per share was $1.12, growing 64.7% over the prior-year quarter. Our Q1 base business revenue totaled $677.2 million, growing 13.2% as reported versus the prior-year quarter, led by continued strength in U.S. Spine, while also seeing improved performance across Enabling Tech and International Spine. Digging further into U.S.

Spine, this business continues to show strength and resilience, as it grew 10% in Q1 versus the prior-year quarter, marking the third consecutive quarter of 10% growth. Our U.S. Spine sales team remains resolute and focused operating against the backdrop of driving achievement against key objectives. We have seen this momentum continue and are now sitting at 58 weeks of consecutive growth. Cross-selling, competitive recruiting, and robotics pull-through are key to this strategy as we continue to capture volume and drive meaningful share growth across the category.

Consistent with prior quarters, our growth remains broad as we continue to see double-digit growth across many categories, including standard fixation, MIS pedicle screws, expandable TLIF, ALIF, posterior cervical, as well as cervical plating. Categories such as power tools and products such as DuraPro continue to capture new share and drive incremental cross-selling opportunities as we seek to gain a greater share of each spine procedure. Competitive recruiting remains a strategic priority, and the spine leadership team is aligned from the top down to aggressively perform against this objective.

The process of doing so remains a competitive moat for Globus and our execution around rep onboarding with sets and inventories continues to differentiate us, as our supply chain meets the needs of the field by providing high-return capital investments, which is a testament to our philosophy: having the right products at the right price and being on time. Robotics pull-through remains a key driver, and as we demonstrate greater flexibility in how customers acquire capital, we seek to more aggressively drive the recurring revenue, whether through implants, disposables, service, or case coverage. Strategically, we are slightly altering our approach to capturing more accounts and expanding upon surgeon and rep training, thus driving success at accounts with enabling technologies.

Our first quarter saw Enabling Technologies post revenue of $26.9 million, growing 21% over the prior-year quarter. We saw a sequential step down in Q1 consistent with history. However, we maintain momentum in closing deals while also seeing greater penetration of international markets. Our pipeline of deals remains robust. However, the mix of pipeline deals is shifting with a greater focus on leases and rentals compared to the historical mix of outright sales, which historically resulted in higher upfront revenue recognition. This aligns with my earlier comments and the strategy of refocusing our capital approach to drive implant and other recurrent revenue product pull-through, all of which has been implied in our revenue guidance for 2026.

Despite new and enhanced robotic competitors in our space, ExcelsiusGPS remains the standard for ease and simplicity with our floor-mounted navigation-based robotic approach. The ground-up design with its native platform gives surgeons the access and control they need to facilitate a spine procedure while seamlessly navigating through our workflow. To date, we have seen almost 130,000 robotic procedures and will continue to penetrate the market to launch new successful programs that foster utilization. No other competitive systems, including recently introduced products, have been able to replicate the reliability, ease, or accurate workflow attributes of our robot.

Our international spine business grew 16.4% as reported and 9.8% on a constant currency basis as we did not repeat the supply chain disruptions which occurred in the first quarter of the prior year. Strength was seen mainly in the EMEA and LATAM regions, and our growth was broad based, including both direct and distributor businesses across our international markets. On the product front, I am pleased to announce that early in our second quarter, we received two FDA 510(k) clearances for both our patient-specific Scripps spacer system comprising seven patient-specific lumbar interbody systems as well as patient-specific Scripps rods. Both the Scripps spacers and rods are designed by surgeons using the Scripps Studio Design and surgical planning software application.

Scripps lumbar spacers are static, static integrated, and expandable thoracolumbar interbody fusion devices additively manufactured with patient-matched endplate topography for maximum stability. The patient-specific Scripps spacers may be placed using ExcelsiusGPS instruments for navigation, ExcelsiusGPS, Excelsius Hub, and ExcelsiusXR. Scripps patient-specific rods are precision bent to the surgeon's pedicle screw placement plan and designed to reduce time spent on intraoperative rod bending. Rods are compatible with our CREO, Reline, and REVERE pedicle screw systems for both open and MIS procedures. Scripps Studio screw plans can be uploaded to our ExcelsiusGPS and Excelsius Hub systems for robotically navigated screw placement intraoperatively.

Our platform keeps the physician at the center of the planning process with an intuitive interface allowing the surgeon to efficiently fine-tune disc height restoration, spinal alignment, and pedicle screw placement, translating their precise clinical intent directly into the implant design. Our software is treated as an advanced tool rather than a replacement for clinical judgment, ensuring the implant perfectly executes to the surgeon's operative strategy. Our expandable offering incorporates our proven technology, allowing surgeons to insert the implant at a lower height designed to minimize nerve retraction and reduce the impaction forces required to implant the spacers. Once in the disc space, the spacer can be expanded to restore optimal disc height.

Finally, our patient-matched spacers and rods are bundled with our high-quality implants and best-in-class disc prep and retractor systems while integrating with our Excelsius suite, thus ensuring final placement matches the digital pre-op plan to ensure proper navigated placement. With our Scripps approvals, we will be the only company positioned to offer a complete portfolio of patient-specific lumbar interbody spacers and rods integrated with our enabling technology, truly establishing us as the one-stop shop for lumbar patient-specific implants. The team is working tirelessly to finalize the launch plan and bring these new exciting products to market shortly.

We remain excited for the future as the team embarks on an enhanced focus of development and investment to bring new products to market in 2026 and beyond. I sit here today truly excited for what we have in store for 2026. Our trauma business posted a 34% increase over the prior-year quarter with growth coming from both our core trauma line through share taking as well as our PRECICE limb lengthening portfolio. Our Anthem elbow plating system continues to be a standout product exceeding our expectations as surgeons have responded to this product based on the anatomic fit of this plating system.

Consistent with comments last quarter, demand on this product has continued to surpass initial expectations such that we will be delivering additional sets to the field in the second quarter. Both in PRECICE, driven by our ability to now fully satisfy the market after we transitioned manufacturing from the former NuVasive facilities to Globus in early 2025. Manufacturing output has now surpassed the historical output at the former facility such that we are now able to fully supply the market. Our commercial focus will remain on level one and level two trauma centers as we seek to drive share growth with a smart approach to investment that balances inventory and set availability in a manner that drives high ROI.

We will remain diligent in sticking to this plan as we move ahead. First quarter Nevro revenue finished at $82.7 million as we have adopted the Globus approach to driving profitable sales growth. Although the strategy rollout led to sales declines, we had expected lumpiness to occur with this business as we work through bringing it under the Globus umbrella in its first 24 months. The team is actively recruiting new sales personnel and mapping new product introduction plans while transitioning to our revised selling model.

We are and will remain active on the recruiting front as we move through 2026 and expect to return to a more historical run rate revenue late in the second half of the year as new associates are fully trained to enter the market. We are focused on enhanced training protocols moving forward and will stress this for all new and existing Nevro sales associates given the substantial clinical data pointing to our high-frequency technology offering a clinically superior solution for patients suffering from chronic pain.

We are committed to this business and bringing these technologies to market while ensuring the business is positioned in a manner that will drive profitable sales growth over the long term as we seek to grow the existing business through improved go-to-market strategies and new product development while devising products to expand the use of Nevro's patent portfolio outside of the direct markets in which they operate today. Longer term, this continuum of care is complementary to our overall product portfolio and will help drive our strategy moving forward. Operationally, we continue to execute on manufacturing and supply initiatives across our business to drive gradual and meaningful improvements to core product profitability.

We reiterate our commitment to achieving a mid-70s adjusted gross margin profile over the long term, leading to expanded levels of profitability, helping drive overall returns above our cost of capital. As we move further into 2026, our key areas of focus will remain on driving organic sales growth while continuing to internally invest and launch new products. Our moats of innovation, vertical integration, a high-touch salesforce, a scalable platform, and financial discipline allow us to move fast to address our long-term goals of improving outcomes and solving unmet clinical needs.

Our approach to product development will remain focused on a ground-up mindset that is procedure enabling, integrating imaging, navigation, robotics, surgical intelligence, and implants in a more thoughtful way to improve ten-year surgical outcomes in 95% or better. Surgical intelligence will focus on bringing together patient selection, surgical techniques, and complementary implants with technology to drive proceduralization while creating a closed-loop intelligent ecosystem to help surgeons continuously drive outcomes higher. Thank you to all of our Globus team members from all around the world. Your teamwork, dedication, and focus are how we continually work to solve unmet clinical needs. I will now turn the call over to Kyle.

Kyle Kline: Thanks, Keith, and good afternoon, everyone. Our first quarter delivered exceptional results on both the top and bottom line and is an impressive beginning to 2026 for the entire Globus Medical, Inc. team. Sales grew 27% as reported, compared to the first quarter of the prior year, with over 13% of growth coming from the base business, including strong growth from substantially all of our underlying businesses. Our top-line results were once again highlighted by the domestic spine business, which had its third straight quarter of 10% growth. We continued to see margin expansion in the quarter, with adjusted gross profit margin over 69% as we remain focused on disciplined execution of manufacturing and supply chain initiatives.

We also achieved record Q1 fully dilutive non-GAAP earnings per share of $1.12. In today's prepared remarks, I will provide insights into our quarterly business performance, including the impacts of Nevro, and an update on guidance for 2026. First quarter 2026 results were highlighted by revenue of $759.9 million, growing 27% on an as-reported basis and 25.5% on a constant currency basis. GAAP net income was $124.3 million, resulting in $0.90 of fully diluted GAAP earnings per share. Non-GAAP net income was $154.9 million, delivering $1.12 of fully diluted non-GAAP earnings per share, or 64.7% of non-GAAP EPS growth over the prior-year quarter. Adjusted EBITDA margin was 32.3% in 2026.

Our Q1 2026 base business Globus adjusted EBITDA margin was 34.8% and standalone Nevro adjusted EBITDA margin was 11.8% for the quarter. Our first quarter net sales of $759.9 million reflect base business Globus sales totaling $677.2 million, growing 13.2% as reported and 13.1% on a day-adjusted basis, with the same number of selling days in the U.S. and international and one more selling day in Japan compared to the prior year. Base business Globus sales grew 11.9% on a constant currency basis. As mentioned in my opening remarks, we saw growth across substantially all of our underlying businesses, led by U.S.

Spine, which achieved 9.6% as-reported growth, and International Spine, which grew 16.4% on an as-reported basis and 9.8% on a constant currency basis. Trauma and our neuromonitoring businesses each grew over 30%, and Enabling Technologies started the year off with over 20% growth compared to Q1 2025. Nevro contributed $82.7 million of revenue during the quarter. On a sequential basis, Nevro's revenue contribution declined by $17.1 million, or 17.1%, compared to Q4 2025. As mentioned over the prior few quarters, since announcing the Nevro acquisition, our goal with Nevro was to right-size the business to drive profitable sales growth, while reducing excess spending to quickly adopt the Globus approach.

In 2025, we saw positive progress in profitability through enacting significant organizational and procedural changes, culminating in an achievement of non-GAAP EPS accretion occurring in the first three quarters. In Q1 2026, we continue to see the lasting and sustainable impact of these cost control actions. However, in the first quarter, we also saw a decline in revenue, driven by the structural changes made within sales and marketing of the Nevro business at the tail end of 2025. Although we were not sure on exact timing, we had expected this decline to occur at some point in the early innings of owning the business, and it has been anticipated in our top and bottom line guidance for 2026.

Pivoting back to overall results, musculoskeletal revenue achieved $733 million, growing 27.3% over Q1 2025. Base business Globus musculoskeletal revenue was $650.3 million, growing 12.9% as reported. Enabling Technologies revenue was $26.9 million, growing 21.1% as reported. The Enabling Technologies business saw a bounce back in both sales dollars and units when compared to a softer Q1 2025. While we remain flexible in our offerings for our customers to acquire capital, as shared in Keith's comments about the pipeline earlier, we note that Q1 2026 results were primarily from cash sales, which we have seen historically in this business. U.S. revenue during Q1 2026 was $604.9 million, growing 25% as reported.

Base business Globus U.S. revenue during Q1 2026 was $537.7 million, growing 11.1% versus the prior-year quarter. Our base business Globus U.S. growth was primarily driven by our U.S. Spine, Neuromonitoring, and Trauma businesses, all of which have achieved double-digit growth for three straight quarters when comparing to the comparable quarter of the prior year. Q1 2026 international revenue was $155 million, growing 35.6% as reported and 27.8% on a constant currency basis. Globus base business international revenue was $139.5 million, growing 22.1% as reported and 15.1% on a constant currency basis compared to the prior-year quarter.

International growth was seen across the board, with our EMEA and LATAM regions achieving double-digit as-reported and constant currency growth and APAC achieving high single-digit as-reported and constant currency growth. We note that the growth achieved this quarter was against a prior-year comp that was negatively impacted by the timing of distributor orders and temporary supply chain disruptions. We feel positive on our international spine business prospects this year as we work to finalize international integrations in 2026. Turning to the P&L, GAAP gross profit margin in the quarter was 66.4% compared to 63.6% in the prior-year quarter.

Adjusted gross profit margin was 69.2% compared to 67.3% in the prior-year quarter, primarily driven by increased sales resulting in fixed cost leverage, favorable sales mix, and the impacts of synergy execution through our manufacturing and supply chain initiatives. Our base business Globus adjusted gross profit margin was 69.3%. As I mentioned in our fourth quarter prepared remarks, we have leaned into manufacturing and supply chain initiatives, driving the build back to a mid-70s adjusted gross profit target. From Q3 2024 forward, we have seen improvement in adjusted gross profit metrics in each sequential quarter.

Q1 2026 continued that trend, maintaining a 69.2% adjusted gross profit margin from Q4 2025 despite the normal sequential step down seen in revenue from Q4 to Q1. We reiterate our expectation of adjusted gross profit margin falling in the range of 69% to 70% in 2026 and our long-term goal for mid-70s adjusted gross profit percentage. Research and development expenses in Q1 2026 were $36.5 million, or 4.8% of sales, compared to $33.1 million, or 5.5% of sales, in the prior-year quarter. Base business Globus R&D expenses totaled $32.7 million, or 4.8% of sales.

The resulting decline in legacy Globus R&D both in dollars and as a percentage of sales is attributable to synergy capture resulting in lower headcount and leverage from higher sales volume. Nevro R&D was $3.9 million, or 4.7% of Nevro sales. As we have worked through the integration of both NuVasive and Nevro, we reset the legacy business product development processes to align with the Globus approach. We expect that this will pay dividends in 2026 and beyond as we look to minimize the timeline from concept to launch for our innovative technologies.

In 2026, we expect R&D expense to be in the range of 5% to 6% of net sales with a ramp in spend moving methodically throughout the remainder of the year. SG&A expenses in Q1 2026 were $297.8 million, or 39.2% of sales, compared to $242.8 million, or 40.6% of sales, in the prior-year quarter. Base business Globus SG&A expenses were $251.7 million, or 37.2% of sales. For base business Globus SG&A, the increase in spend is attributable to increased sales compensation costs from higher volume and increased employee benefit costs, partially offset by decreased employee-related costs from synergy actions. Nevro contributed $46.1 million of SG&A expenses in the quarter, or 55.7% of Nevro sales.

Q1 2026 net interest income was $5.4 million compared to $1.7 million in the prior-year quarter. The $3.8 million favorable change is being driven by a decline in interest expense from the paydown of the remaining $450 million outstanding convertible debt in Q1 2025 that was assumed from the NuVasive merger. The GAAP tax rate for Q1 2026 was 20.9% compared to 27.2% in the prior-year quarter. Our non-GAAP tax rate for the quarter was 21.6% compared to 26.6% in the prior-year quarter. Our GAAP and non-GAAP tax rates in the current period were favorably impacted by stock option windfall benefits. Cash, cash equivalents, and marketable securities were $799.3 million as of 03/31/2026, compared to $629.1 million at 12/31/2025.

The increase in cash is driven by operating cash flow of $202.4 million primarily from higher net income and partially offset by cash spend on capital expenditures of $39.6 million, or 5.2% of sales. In Q2 2025, we announced a new share repurchase program of $500 million under which we purchased $110 million of shares in 2025. We have $390 million of authorization remaining under this program as of 03/31/2026. Our capital allocation strategy remains unchanged. First, we will prioritize internal investment in innovative product development efforts. Second, we focus capital spending on building sets for our worldwide sales force and investing in facilities, machinery, and equipment to continue to increase our manufacturing footprint.

Third, we will continue to buy back shares through our share repurchase program, minimizing dilution and increasing shareholder value. And finally, we will continue to evaluate complementary M&A while focusing the use of our capital on driving investment for long-term profitable growth. Pivoting to financial guidance, Globus Medical, Inc. reaffirms its full-year 2026 revenue guidance of $3.18 billion to $3.22 billion, and we are increasing our guidance for non-GAAP fully diluted earnings per share to be in the range of $4.70 to $4.80 from the previous range of $4.40 to $4.50. The revenue guidance implies growth over 2025 ranging from 8.2% to 9.6%.

The revised fully diluted non-GAAP earnings per share guidance implies growth over 2025 ranging from 18.1% to 20.6%. The upward revision of fully diluted non-GAAP earnings per share guidance reflects a favorable increase in expectations from the margin expansion seen in Q1, which we expect to have a favorable impact on our full-year results. We are extremely pleased with the start to 2026 and remain upbeat on the performance of our core businesses. Our efforts to drive lasting and profitable growth have taken shape over the past few quarters, and we remain excited regarding our prospects going forward. The Globus team's can-do attitude, resilience, and desire to win is reflected in the results that we achieve.

Your everyday efforts are appreciated, and together, we drive Globus to be the leading musculoskeletal technology company in the industry. Operator, we will now open the call for questions.

Operator: Thank you. To ask a question, you will need to press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Please stand by while we compile our Q&A roster. Your first question comes from the line of Laurence Biegelsen with Wells Fargo.

Ross Osborne: Hi. Thanks for taking our questions. This is Ross Osborne on for Larry. So maybe starting off your guidance and the reiteration of the top line, are there any incremental headwinds to revenue we should be thinking about versus when you established guidance at the beginning of the year? Or is this conservatism at this point?

Kyle Kline: Thanks for the question. When we think about guidance, our main point in reiterating guidance is that we feel confident in our numbers. We feel confident with what we have done and been able to achieve in Q1, and feel confident in terms of the rest of the year from a guidance perspective. As you think about our prepared remarks, we noted that the U.S. Spine business was up 10%, the international spine business was up 10% on a constant currency basis, and we saw strength across many of our underlying businesses.

But we also commented on a decline that we saw in Nevro coming from Q4 into Q1, something that was expected from the lumpiness, and the fact that at some point, we would see some lumpiness in that revenue. I think our overall expectation for the full year is still a strong conviction in what our guidance is, and ultimately, these numbers and our results were built into our expectation this year.

Ross Osborne: Thank you.

Operator: Thank you. Your next question comes from the line of Shagun Singh with RBC Capital Markets. Your line is now open.

Shagun Singh: Great. Thank you so much, and congratulations on a strong print here. You know, I just wanted to ask a high-level question on the performance here. You know, I heard you say a couple of things around scale, capturing share, recurring revenue, and using an alternative approach here around enabling tech. And it seems like the base strategy is still in place, which is robotic pull-through and then cross-selling here. But it seems like you are doing something else differently. So can you just talk about your strategy and how you are able to deliver such strong results here in Q1?

Keith W. Pfeil: Shagun, this is Keith. Thank you for the question, and thank you for the comment on the strong quarter. As you think about what we are doing, our strategy as it relates to implants really has not changed with rep recruiting, new product innovation, and robotic pull-through. The thing that we are really slightly altering sits on the enabling tech side. We historically have been more focused on just selling the robot. And as time passed, one of the things we saw is we need to get a little bit more flexible in how robots are placed in the hospitals. There are always changing CapEx environments. There is more competition in the field.

And, really, at the end of the day, we are looking to drive the implant and the implant procedure to make sure that we are getting more of that case. So as we look at a robot, what is important to us is that the robot gets placed, or the robot or the navigation system gets placed in the hospital, and our teams are trained.

The hospital is trained, or the personnel in the OR are trained, and that we are making sure that all the programs that we launch are successful with back-end support and really working to ensure that we are driving what I would call the replenishment sale in the OR, which is the implants, the instruments, service, all the things that go along with the case. That would really be the biggest thing that I would say that we are altering. As I think about the strong numbers and the business performance, really go back to some of the things I touched on in my prepared remarks. Our U.S. spine business is performing really well.

We have had several quarters here of 10% growth, and more importantly, last year we talked about having some challenges early in the year in supply chain. Those challenges are really behind us. We are getting sets out into the field. We are getting inventory out into the field. And that is helping the team make sure that we can cover all the cases that they are being faced with. As I look across the rest of the portfolio, internationally last year we spoke about the first quarter being a little bit soft for some supply chain reasons also. We are not seeing that same thing this year.

So as I look across our business, specifically spine, our spine business is performing well both in the U.S. and internationally, and we are continuing to see more contributions from our trauma business. Enabling tech did not have the rough quarter in Q1 that it did last year. We had a nice 21% growth. But again, as we think about that business moving forward, as I mentioned in my prepared remarks, we want to be more flexible.

That mindset of being more flexible is contemplated in our revenue guidance for this year because in situations where there is more of a lease or a rent approach, you are not going to see all that upfront revenue recognition that you would historically. We are making sure we are taking that into consideration.

Shagun Singh: Thank you. That is really helpful. And then, just very quickly on the mid-70s gross margin target long term, any directional guidance of how long it might take you to get there?

Keith W. Pfeil: I would say, as I look at the last several quarters, we have had consistent steps forward in our adjusted gross profit margin. I expect to see that happening at about the same cadence. I think that there are a lot of supply chain initiatives going on to help us achieve that.

Kyle Kline: The only thing I would add is, as you think back on the six sequential quarters in terms of improvement, we expect to continue to see improvement. Something that we felt really strong about and positive as we saw results for this quarter is that we did have a 69.2% gross profit in Q4. Now, with sales coming down, you typically see that gross profit come down a little bit as well historically from Q4 to Q1. The fact that we were able to maintain that, I think, sets us up positively to continue to expand our margin as we look forward through the rest of the year.

Shagun Singh: Thank you.

Operator: Your next question comes from the line of Matt Taylor with Jefferies. Your line is now open.

Matt Taylor: Hi, guys. Thanks for taking the question and nice result here. Thanks. So maybe I just wanted to double-click on understanding the confidence to raise earnings by so much. Even though you beat revenue in Q1, maintaining that—

Keith W. Pfeil: So really two questions in there. One is just unpacking the sources of EPS upside to make that more clear, and then why not raise the top line a little bit too given all the momentum? Thanks, Matt, for the question. As I think about the top line, and Kyle mentioned earlier, we remain confident in the parts and pieces of our business. Our legacy base Globus business is performing at a high level. As I think about revenue and why we did not raise the top line, it is still early in the year, number one. But number two, a couple of things we commented on: I commented on the change in approach slightly with enabling tech.

That change may impact revenue as you look out the rest of the year, which, again, could impact overall top-line performance. And then secondly, we commented on some lumpiness that we saw in Nevro. As we work to further bring that business in, we are mindful of that as we move ahead. That is a good reason why we did not take top line up. When you think about the bottom line, it really touches back on the things that Kyle said in his prepared remarks. We have seen a nice step forward in gross margins. As he just answered in the previous question, you have not seen that sequential step down in gross margin from Q4 to Q1.

That points to the manufacturing and supply chain initiatives that are happening. That to us is durable savings that should continue to happen. So when you think about how we performed—last year, we generated $0.68 in Q1; this year, it is $1.12—it is a nice increase. But as you think about where we are at through the rest of the year, those incremental changes should continue to occur in the gross margin line. And then, stepping down to OpEx, there are still synergy actions that are occurring. And as the business continues to scale, you are going to see greater leverage on the bottom line, which will drive enhanced profitability.

All of those things together point to us feeling confident about taking the number up.

Matt Taylor: Great. Thank you for the additional color.

Operator: Your next question comes from the line of Matt Miksic with Barclays. Your line is now open. Matt, if your phone is on mute, please unmute your line.

Matt Miksic: Hi. Thanks. Yeah. Thanks so much for taking the question. I was wondering about just robot demand—hospital investments, robot platforms.

Keith W. Pfeil: Thanks, Matt. This is Keith. If you are thinking about the pipeline and what we are seeing, I see a healthy environment. Last year, we talked about having a soft Q1. This year, I would say coming into the year, we came in with a fairly strong pipeline. We converted a lot of that in Q1. As I look into the second quarter and beyond, I would say we have a large pipeline. The thing that I see in the pipeline this year is that the mix of how we are offering these robots is slightly different, where you see a higher mix of leases and rentals being quoted.

But from my perspective, I see a durable market here, and we are going to continue to aggressively go after it the remainder of the year.

Matt Miksic: That is great. Thanks so much. Sorry about the confusion there. So the other was just on what you are seeing competitively. If there has been any change—we all know some of the big moves that other companies have made in the space or maybe are contemplating making—and any shift in competitive dynamics that you are seeing either from the smaller players in the space or from some of the traditional larger players in spine in the U.S. in particular? Thanks.

Keith W. Pfeil: As I think about the competitive landscape, what I see is we are competing mainly against Medtronic. That is what I see routinely. Obviously, as more competitors have entered the space, I would say that the speed to closing deals has elongated a bit because hospitals are now requiring everyone to go back and look at all the competitive offerings that are out there. But when I sit and look at Excelsius versus the competition, I still think we are very well positioned. When you think about the Excelsius technology, it was designed from the ground up. It is FDA cleared for cranial, cervical, sacrum, pelvic, and orthopedic applications, with end effector tracking.

There are just a lot of things that are still very unique to Excelsius. And even with some of the things that our competitors have come out with, they are really now just catching up to where Excelsius has been. So as we think about where the robot is positioned, and even the rest of our tools, we still think we are really well positioned to compete in this market.

Operator: Thank you. Your next question comes from the line of Richard Newitter with Truist Securities. Your line is now open.

Richard Newitter: Hi, guys. Thanks for taking the questions. Congrats on the quarter. I wanted to ask on enabling tech. I think this is something you had mentioned, the strategy shift, actually over the last two quarters. It makes a ton of sense to try to get the Trojan horse, if you will, into more institutions faster. I guess, just with the guidance reiterated, is there a kind of switching of components that you would advise the analysts to move around? I see a consensus enabling tech around $150 million for 2026. We are at $104 million.

I am just curious if there is any comment you could give on either of those two numbers just as we refine our models and get the components right to get to your guidance?

Kyle Kline: Thanks for the question, Rich. We are not going to break out our guidance into the different parts and pieces. But what I would point you to is, in Q1 we were still having primarily upfront cash revenue recognition type deals, and Keith commented on the pipeline being a larger percentage than in the past in terms of rentals and leases and other types of models. I think you could use that to help guide your thoughts in the rest of the year.

Richard Newitter: Okay. Thanks for that. And then I guess, just on Nevro, one question we have gotten: I believe spinal cord stimulation might be captured under the pilot WISER program that CMS has in place. I was just curious, is that right? And then, is that something that you have seen in any of the pilot states so far impacting the results at all and something you think will have an impact at any point going forward?

Keith W. Pfeil: Rich, this is Keith. I have not seen that impacting us or impacting how we go to market. And I have really no comment. Because I have not seen it, I cannot say that I have seen it in any specific state at this point.

Richard Newitter: Thank you.

Keith W. Pfeil: Thank you.

Operator: Thank you. Your next question comes from the line of Brian Zimmerman with BTIG. Your line is now open.

Brian Zimmerman: Hey, good afternoon, and congrats on a nice quarter. I wanted to ask a couple of questions, if I could. A couple things on Nevro. We did not have last year—they actually never reported Q1 2025—and I am wondering, this is kind of a two-part question, but wondering if you have those numbers and can give them out just so we have some basis for comparison year over year. And then, given the guidance and in the context of the guidance, does Nevro get worse before it gets better—kind of implied in your comments, Kyle? And then I have a follow-up.

Kyle Kline: Thanks for the question. We are not going to give out that Q1 of last year number. The only comment I would make is if you looked at Nevro's business historically, consistent with our business, you would typically see a step down from Q4 to Q1. So that would be expected last year as well. Separately, in terms of the expectation for the rest of the year, it is hard to predict because we are starting to see what happened in Q1, finally—that lumpiness that we have been talking about throughout 2025. My expectation is likely that it will probably get a little bit worse before it gets better.

Then I would point you to Keith's remarks of expecting to get back in the direction of historical norms late in the back half of the year.

Brian Zimmerman: Okay. Appreciate that. That is helpful. And then, on gross margins, I appreciate the comments and the long-term guidance. I am wondering, is the gross margin opportunity purely a cost exercise from your seat, or do you need price to drive your gross margins higher, and can you do that in spine in such a competitive market? And can you lay out some of the insourcing opportunities in Ohio or things where you see the best low-hanging fruit on gross margins?

Kyle Kline: Thanks. So I would answer that and say that it is some of each. We are obviously focusing on cost, and that is something that Globus has always focused on, from manufacturing and supply chain initiatives—going back to what NuVasive had done historically from a manufacturing perspective versus what Globus had done—trying to align those sites and the approach within those sites. That gets you to the point of having some efficiency on the COGS line.

From the top-line perspective, I think it points to our strategy of launching new and differentiated products and trying to identify places where we can get pricing premiums there as well to try to fight off any type of price erosion that is out there in the field and also find opportunities to sell those new and exciting products at a higher premium.

Keith W. Pfeil: The only thing I would add is, as I think about that, we have always modeled that you are going to launch new products, but you are going to see price erosion—you might be down that 1%. But as you think about getting that mid-70s gross margin profile, the majority of that really comes from our ability to drive costs. It is really getting a more efficient supply chain, thinking about your contracts, thinking about how you manufacture. You are going to get leverage on your manufacturing footprint as you continue to drive growth. A lot of that comes from that ability to really focus on the cost side of things.

Brian Zimmerman: Thank you.

Operator: Thank you. Your next question comes from the line of David Saxon with Needham and Company. Your line is now open.

David Saxon: Good afternoon, Keith and Kyle. Thanks for taking my questions, and congrats on the strong quarter here. I wanted to ask on the EPS guidance. You raised it—I guess this is your third time this year—and you are starting to bump up against where the Street is for 2027. I would love to understand how you think of Globus' go-forward EPS growth profile—with the path to mid-70s gross margin, maybe Nevro comes back, and some other cost actions. Can you be a double-digit grower over the next few years? And then, Kyle, if you could just clarify what the tax assumption is for the guide as well.

Kyle Kline: Thanks, David, for the question. Thinking about raising guidance here a couple of times, I think what we would point to is seeing the results that we have had both for the end of the year in Q4 as well as here in Q1. We have taken away positive momentum primarily in gross profit margin expansion, and I think that is really the catalyst to why we feel good about the business. Obviously, we feel good about sales and where we are at with sales. As you have sales and sales growth, you are going to get leverage on your bottom line as well. So those two things are driving that guidance push a little bit higher.

I will not comment on 2027 and specifically what we are looking at in terms of the out years. If you think about what we have always said with Globus, we strive to be that high single-digit top-line grower, and we look to go above and beyond that on the bottom line and outpace that growth on the top line.

Keith W. Pfeil: We feel really good about our business, and we see a lot of organic growth opportunity across our business. As we look ahead, we are going to be spending more in R&D—doubling down in spine R&D and enabling tech R&D. That is something that we see happening as we move forward that will be a bit of an offset to some of that—

Operator: Please remain on the line. Your conference will resume shortly. Please stand by. Thank you. Thank you again for standing by while we troubleshoot.

Keith W. Pfeil: Are you guys back?

David Saxon: Yes. We are back.

Kyle Kline: Technical difficulties, David. Sorry about that.

David Saxon: No problem. I think you answered my question well. So I will just throw my second one in, which is just around the competitive rep hiring. That has been a driver for a long time. Can we get an update on where you are from a geographic coverage perspective in the U.S.? Is it more about filling any gaps you might have, or is it more about density at this point? Thanks so much.

Keith W. Pfeil: Our competitive rep program continues like it has with history. As we look to add, I am always looking to add density. There always could be gaps to fill here and there, but at the end of the day, we are always looking to add quality reps to our team. That has not changed.

David Saxon: Great. Thank you.

Operator: Thank you. Your next question comes from the line of Caitlin Roberts with Canaccord. Your line is now open.

Caitlin Roberts: Hi. Thanks for taking the questions, and congrats on a great quarter. Any commentary on geopolitical risks in the Middle East, either from a revenue exposure or a cost/supply perspective?

Kyle Kline: Thank you, Caitlin. It is a great question. From a geopolitical risk perspective, I do not see any material risk from a revenue perspective based on sales in the Middle East or other places. From a cost perspective, we also see little to no risk there as it relates to geopolitical events.

Caitlin Roberts: Great. And then just any commentary on the progress in the ortho and then the eFlex rollout?

Keith W. Pfeil: No comments at this point. We are continuing to develop implants. As that becomes more prominent, we will update on that in the future.

Caitlin Roberts: Understood. Thank you.

Kyle Kline: Thank you.

Operator: Thank you. Your next call comes from the line of Tom Steffen with Stifel. Your line is now open.

Tom Steffen: Great. Hey, guys. Thanks for taking the questions. First one, on the revenue guide, I wanted to ask about phasing. Comps are a little wonky in Q2 versus 2H this year. So can you help us think about revenue cadence for the rest of the year? And then I will have a follow-up.

Kyle Kline: Thanks for the question. I would say your typical pattern that you would see in the past, pre any of the acquisitions and the noise that came in from having an acquisition during the year, is you typically see a step down from Q4 to Q1, like we saw here, and then a step up into Q2, roughly a leveling off in Q3, and then an increase again for harvest season in Q4. I would point you to those historical norms for how revenue will have a cadence throughout the year.

Tom Steffen: Got it. That is great. Appreciate that. And then just my follow-up on OUS Spine—you are already back to double-digit growth. I know supply issues were a dynamic last year, but you mentioned finalizing some integrations in the back half. Can you talk about expectations for the rest of the year in OUS Spine? Is there a path to that business potentially accelerating as 2026 progresses, or is around this 10% range more reasonable for constant currency growth?

Kyle Kline: Good question. I would point you to the fact that we saw double-digit growth in the mid-teens on the spine business from an as-reported basis. If you looked at it from a constant currency basis, it is just under 10%. So we did see some favorability from currency in Q1. I would also point you back to last year, first quarter, where we had some supply chain disruption and some movement in terms of stocking orders as well, which made it a little bit of a softer comp.

If you go back to what we talked about in Q4 and what I will reiterate here, our expectation for that business is to pick back up as we move throughout the year. Despite the fact that we had a strong Q1, I still think as you work your way throughout the year, there is not a massive revenue acceleration in terms of growth year over year. But as we look to exit the year and get back to consistently in that low double-digit growth pattern.

Keith W. Pfeil: I think we are going to grow into this. Long term, we still think the international business grows low to mid double digit—call it up to 15%—but we are going to grow into that over time. Our approach is to go deeper in the markets that we are operating in. We are not looking to suddenly add more countries because we want to drive density where we are operating.

Tom Steffen: Got it. Thanks, guys.

Operator: Thank you. Your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is now open.

Anna Runci: Hi. This is Anna. I am on for Matt this afternoon. Thanks for taking the questions. I will just keep it to one in the interest of time here. I wanted to ask on U.S. Spine. You commented to 10% U.S. Spine growth, strong run rate for the past few quarters. Wondering if you could provide any more detail on how much of that growth comes from market share gains versus underlying market growth? And then just any comments you could provide on the health of the market in general? Thanks.

Keith W. Pfeil: I would say that the majority of our growth is really coming from share gains. We do not spend a lot of time looking into research in terms of how the market is performing, but I would say that the market is probably growing 3% to 3.5%, give or take. From my perspective, the majority of growth you are seeing from us is obviously in excess of that, and that is because of us taking share.

Anna Runci: Excellent. Thank you.

Kyle Kline: You are welcome.

Operator: Thank you. Your next question comes from the line of Matt Blackman with TD Cowen. Your line is now open.

Drew Ranieri: Hi, Keith and Kyle. It is Drew Ranieri on for Matt tonight. Keith, maybe just a question to go back on enabling technology. We have seen soft tissue robotic companies have a pretty regular cadence of launching their next-generation systems. As you are looking at the ExcelsiusGPS development roadmap, are you thinking about how the system evolves since you are stepping up on R&D spend? Is the focus still to broaden applications or end effectors, or are you focused more on efficiencies? And maybe, as the next generation comes, does that bring more surgeons into the fold about using robotics in spine surgery? Thanks for taking the question.

Keith W. Pfeil: Thanks. It is a great question. I am a little more limited in my comments, but as I think about the evolution of Excelsius, it truly comes down to more refined software and how the software performs in the OR. I think about interbody fusion, DuraPro, integrating DuraPro, and additional cranial procedures. That is what we are thinking about as we move forward in terms of enhancing the software. There is a lot to unpack there. Those are my comments that I would leave for now.

Drew Ranieri: Okay. Maybe if I can just squeeze one in too—sorry for the time. We have heard other ortho and spine companies talk about weather and the Kaiser strike. Was that any drag for you in the quarter? And would you get those procedures back in the second quarter or throughout the year?

Keith W. Pfeil: I would say there is maybe a small impact, but given the performance of the business, I do not want to say that we could have finished higher. I am comfortable with our prepared comments. As we think about the rest of the year, we are thinking about growing wherever we can and driving smart growth across our business.

Drew Ranieri: Thanks.

Keith W. Pfeil: Thank you.

Operator: Thank you. With no further questions, this concludes the Globus Medical, Inc. earnings call. Thank you for participating. You may now disconnect.

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