Globus Medical, Inc. added to the positive spine news for the third quarter by reporting $107.2 million in sales, up a whoppin’ 13.1% over the previous year.
Analyst Bob Hopkins of Bank of America called it a “robust quarter.”
The company beat consensus by $1 million. U.S. sales growth was 13%, while outside the U.S. sales rose 19.1%. According to company management, sales of disruptive technology products increased this quarter to $45 million or by 20.7% from the prior year’s quarter. Innovative fusion sales increased to $63 million or by 8.3% from the prior year’s quarter.
“We are very pleased with our industry leading top-line growth and profitability this quarter. Our growth this quarter is again attributable to the increased adoption and success of newer, more disruptive products, which are designed to provide better treatment for the patient, and are safer and easier to use for the surgeon, ” commented David Paul, chairman and CEO. “During the quarter we launched CREO, our next generation pedicle screw platform, one of the most significant projects in our history.”
Record Sales Rep Hiring
The company also continued to recruit sales reps at a record pace and launched five new products during the quarter. The company also reiterated its annual revenue guidance of approximately $432 million.
Piper Jaffray’s Matt Miksic said that looking ahead to 2014, he believes the company’s new product launches in Creo, Kinex and Lattice could help accelerate revenues.
Momentum of the 3 P’s
During a conference call with analysts on October 30, 2013, Dave Demski, the company’s president and COO said he and his colleagues were continuing to see generally “positive momentums from the three P’s: pricing, procedures, and PODs (physician-owned distributors). Consistent with last quarter, pricing pressure remains in the low to middle single digits, somewhat improved from recent years. Payer pushback on procedures seems to have hit bottom. It’s not getting any worse, but not improving significantly either.”
Goldman Sachs’ Aetna Warning
He added that the company has not seen any specific impact from the recent Aetna policy announcement nor does he see this as a material threat in the long run. A few days later however, Goldman Sachs downgraded the company’s stock, saying, “We see the recent Aetna policy change to deny coverage for cervical interbody devices as shaving approximately 0.8%-0.9% off of our prior 2014 revenue estimates alone and the figure could become more meaningful if additional commercial payers follow suit.”
Finally, Demski said the company was pleased with the recent OIG report showing higher utilization and cost associated with PODs. “We see this as yet one more data point in the growing momentum to eliminate this business structure from our industry. While it is impossible to predict the timing, the trend is clearly going in the right direction.”
At the conclusion of the call with analysts, Bill Plavonic, Cannacord’s analyst, summarized the general theme of the other analysts and said, “Congratulations on a solid quarter.”
