Globus Medical raises 2025 EPS guidance to $3.75–$3.85 as Nevro integration accelerates profitability

Earnings Call Insights: Globus Medical (GMED) Q3 2025

MANAGEMENT VIEW

* CEO Keith Pfeil opened with, "We are extremely pleased with our overall Q3 performance, delivering sales of $769 million and non-GAAP diluted earnings per share of $1.18, growing 22.9% and 42.6%, respectively, over the prior year quarter." Pfeil highlighted record free cash flow of $213.9 million and emphasized that "the business delivered on nearly all of its objectives during the quarter, driving results and establishing confidence as evidenced in our ability to revise upward our full year financial guidance."
* Pfeil detailed strong U.S. Spine growth at 9.6%, noting "we now sit at 32 weeks of consecutive growth" and called competitive recruiting a "bright spot." He added that the Nevro business contributed $99.3 million in revenue and achieved "a positive adjusted EBITDA margin, finishing at 16.2%."
* New product launches included ExcelsiusXR, an extended reality navigation headset, and new FDA 510(k) clearances for ExcelsiusGPS instruments. Pfeil described the Excelsius platform as enabling a "single vendor spine ecosystem across capital, implants and software."
* Regarding the Trauma business, Pfeil stated, "Challenges experienced with precise manufacturing are now behind us, which will drive continued growth looking ahead," reporting a 17.2% revenue gain for the segment. The legacy trauma portfolio reached "the milestone of 80% plus of matching our competitors' portfolios."
* CFO Kyle Kline said, "The third quarter of 2025 for Globus was exceptional. We posted record results this quarter in revenue, earnings and cash flow generation." Kline cited 10% growth in domestic Spine over Q3 2024, and noted Nevro's sequential sales growth and "now be accretive to non-GAAP earnings per share in fiscal year 2025."

OUTLOOK

* Kline announced, "we are adjusting our 2025 net sales guide to be in the range of $2.86 billion to $2.9 billion compared to our previous range of $2.8 billion to $2.9 billion. The revised revenue guidance implies growth over 2024, ranging from 13.5% to 15.1%." He added, "we are also adjusting our 2025 fully diluted non-GAAP earnings per share guide to between $3.75 and $3.85, an increase to our previous range of $3 to $3.30."
* Pfeil stated, "we feel confident that our guidance represents our best estimate of anticipated results for 2025."
* Management indicated that Q3 included $0.07 of nonrecurring tax favorability not expected to recur.

FINANCIAL RESULTS

* Reported revenue was $769 million, up 22.9% year over year. Non-GAAP diluted EPS was $1.18, representing a 42.6% increase from the prior year.
* Free cash flow for the quarter reached $213.9 million, with operating cash flow at $249.7 million.
* Legacy Globus business delivered $669.8 million in revenue, growing 7% as reported. Nevro contributed $99.3 million, up 4.9% sequentially.
* Adjusted EBITDA margins for legacy Globus were 35.3%, and 16.2% for Nevro. Consolidated adjusted EBITDA margin was 32.8%.
* Adjusted gross profit margin improved to 68.1% versus 66.5% in the prior year, while Nevro adjusted gross profit was 67.6%.
* SG&A expenses included a one-time net charge for estimated litigation of $28.3 million, which was excluded from non-GAAP results.

Q&A

* Richard Newitter, Truist Securities: Asked about drivers of U.S. Spine strength and sustainability, including robotics pull-through and competitive rep conversions. Pfeil responded, "our strength is broad, meaning that in -- in basically all of our categories that we track, we're seeing growth in spine... Yes, you have the robotic pull-through... but also competitive reps."
* Newitter followed up on enabling tech and changes in capital sales strategy. Pfeil explained, "over time, we see the model changing a little bit more aggressively away from outright purchases upfront," noting increased leasing and pay-per-click models.
* Vikramjeet Chopra, Wells Fargo: Asked about Nevro margin progression and profitability drivers. Pfeil stated, "we want to drive basically getting this business integrated into the Globus umbrella...we've done that, but we haven't touched sales and manufacturing operations because we want to make sure the continuity of that business continues forward."
* Chopra inquired about Q4 enabling tech growth under new capital structures. Pfeil said, "we feel really good about the pipeline...the overarching goal is to drive the long-term ability to get the implant growth."
* Caitlin Roberts, Canaccord Genuity: Asked about hospital decision-making delays for enabling tech and customer receptiveness to lower-cost options. Pfeil attributed delays to increased competition, the need for review of available offerings, and shifting capital priorities at hospitals. On XR navigation, he said, "XR is just -- it's a goggles or a headset that XR needs to be coupled with our ExcelsiusHub."
* Thomas Stephan, Stifel: Asked about Nevro's positive year-over-year growth durability. Pfeil replied, "it's early to comment on that...I think it would be early to comment on full year-over-year growth on a pro forma basis."

SENTIMENT ANALYSIS

* Analyst tone was generally positive, with a focus on sustainability of strong performance, especially in U.S. Spine and the Nevro integration, but included probing questions on margin sustainability and evolving business models. Management maintained a confident yet cautious tone, frequently emphasizing operational strength and pipeline quality, but avoided overcommitting on forward-looking specifics. Pfeil used phrases like, "we feel very positive about our Spine business," and, "I'm encouraged where we landed."
* Compared to the previous quarter, management showed increased confidence, particularly regarding Nevro's accretiveness timeline, while analysts remained eager for more forward visibility but acknowledged the improved results.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for 2025 was revised upward for both revenue and non-GAAP EPS; previous guidance was $2.8-$2.9 billion revenue and $3-$3.30 EPS, now $2.86-$2.9 billion and $3.75-$3.85 EPS.
* Nevro integration accelerated, with profitability now expected in fiscal year 2025 rather than the second year post-acquisition.
* U.S. Spine growth rate increased to 9.6% from 5.7% as reported in Q2, with 32 consecutive weeks of growth now noted, up from 19 weeks previously.
* Free cash flow rose significantly from $31.3 million to $213.9 million quarter-over-quarter.
* Management tone shifted from "cautiously optimistic" to more assertive, especially regarding synergy realization and sustainable growth, while analysts maintained a cautiously positive view.

RISKS AND CONCERNS

* Management acknowledged ongoing integration activities for Nevro, with focus on supply chain and production centralization.
* Delays in enabling technology sales attributed to longer hospital review cycles and increased demand for flexible capital structures.
* Pfeil noted, "we want to be cautious with our comments" regarding potential risks in Nevro's future top-line performance as integration continues.
* SG&A included a one-time litigation charge, which management excluded from non-GAAP results.

FINAL TAKEAWAY

Globus Medical reported record sales, earnings, and cash flow in Q3 2025 while raising full-year guidance for both revenue and non-GAAP EPS. The successful integration of Nevro has already achieved accretiveness ahead of schedule, driven by operational synergies and cost initiatives. U.S. Spine growth remains robust, and management continues to emphasize innovation and operational discipline as key drivers for sustainable, long-term value creation.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/gmed/earnings/transcripts]

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