Globus Medical, Inc. reported a 12.5% increase in sales for the third quarter on November 1. Total sales were $94.8 million. It was the company’s first quarterly report since going public in August.
“Globus continued to deliver sales growth in excess of the overall spine market, ” said David Paul, chairman and CEO of the company. Paul said the company’s top line growth was achieved in a challenging spine market. He added that nearly 100% of the company’s sales growth was attributable to internally-driven, organic projects.
Larry Biegelsen of Wells Fargo estimates the global spine market declined 0.1% on a constant currency basis during the quarter, an improvement over the second quarter which declined 0.7% on a constant currency basis.
MIS and Lateral Platform Products
A company press release said the increased sales were driven by growth from “Disruptive Technology” products, including minimally invasive (MIS) and lateral platform products. International sales grew by over 38% and represents 8% of total sales. The company does not break out specific product categories.
Paul noted the company’s first PMA (premarket approval) in September for the Secure-C cervical artificial disc. He also pointed to strong positive cash flow while making significant investments in infrastructure and Algae Therapies, a recently created interventional pain management division..
Merrill Lynch analyst Bob Hopkins wrote the quarter sales numbers were about $500, 000 short of consensus. He attributed the shortfall to delays in bringing on new sales reps and a slow kyphoplasty launch.
Hopkins said the company’s revenue growth over the last seven quarters GMED’s has ranged from 10% in first quarter of 2011 up to 21% by the first quarter of 2012. He says the volatility is a direct function of the company’s business model, which is highly dependent on new product launches and ability to hire new sales reps away from other spine companies. “The company has a solid list of new product launches that will help increase growth rates.”
