Both Globus Medical, Inc. and NuVasive, Inc. reported their second quarter results this past week, but the main thing Wall Street and institutional investors wanted to know was, is the merger on track to close, as both managements had been saying, in the third quarter ending September 30, 2023?
Globus NuVasive Merger on Track for Q3 Closing
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The answer, from each of the individual company analyst calls, is “yes.”
Analysts were understandably concerned when the proposed deal, which was formally announced on February 9, 2023, was delayed as regulators had questions for both companies.
Combined, Globus and NuVasive would become the second largest supplier of spine surgeon products with an expected 22.4% market share—below Medtronic Spine’s 30.3% share.
The next largest supplier after a combined Globus and NuVasive would be JNJ’s Synthes/DePuy operating unit at 12%.
In fact, as the following chart shows, post-merger, seven companies would comprise 87% of all spine surgical product shipments.
" data-large-file="https://i0.wp.com/ryortho.com/wp-content/uploads/2023/08/Globus_ExpectedMarketShareEOY2023_WEB.jpg?fit=850%2C478&ssl=1" src="https://i0.wp.com/ryortho.com/wp-content/uploads/2023/08/Globus_ExpectedMarketShareEOY2023_WEB.jpg?resize=850%2C478&ssl=1" alt="" width="850" height="478">Courtesy of RRY Publications LLC ©
What, perhaps, the regulators might be missing, is that these market share percentages reflect the mature business of supplying spine surgery hardware. The true competition is emerging in the digital future of spine surgery.
All of surgical medicine is transitioning from an artisanal past and into a future of engineered processes and computational medicine—including a dramatic increase in drug and biologic innovation.
Globus Soundly Beat Wall Street’s Q2 Sales and Earnings Estimates
Globus, right now, is the best performing integrated supplier of orthopedic implants, instruments, biologics, and digital solutions in the industry.
Here are the numbers:
- Second quarter sales: $292 million, up 11%, and well above Wall Street’s $280 million forecast
- Gross profit: 73%—which is about average
- Earnings before Interest, Taxes and Amortization (non-cash) profit margin: 33%—by far the best all of orthopedics.
It’s also worth noting that Globus ended the June quarter sitting on top of $612 million in cash and investments and zero long-term debt.
React:
Discussion
This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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