Q3 2020 Globus Medical Inc Earnings Call
[music].
Welcome to the club Medicals third quarter fiscal 2020 earnings call at this time all lines will be on the Cuban Commission held.
Held after the prepared remarks, I'll now turn the call over to Brian Cronin Senior Vice President of business development and Investor Relations Mr., Chris. Please go ahead.
Thank you Shannon so thank you everyone for being with us today joining.
Joining todays call from Globus medical will be Dave Demski, President and CEO, Dan Scavilla Executive Vice President Chief Commercial Officer, Keith file Senior Vice President and Chief Financial Officer.
This review is being made available via webcast accessible through the Investor Relations section of the Globus medical website at Www Dot Globus medical Dot Com B.
Before we begin let me remind you that some of the statements made during this review are or maybe considered forward looking statements. Our form 10-K for the 2019 fiscal year and our subsequent filings with the Securities and Exchange Commission identifies 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-K are available on our web site, 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 right.
Conciliations 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 website.
With that I'll now turn the call over to Dave Demski, our president and CEO.
Thank you, Brian and good afternoon, everyone.
I'm very excited to report record revenue record non-GAAP, EPS and outstanding adjusted EBITDA for Q3.
Not only are we seeing a healthy bounce back and surgical procedures, we are taking market share and growing.
Revenue for the quarter was 216 million up 10% from Q3 19.
Muscular skeletal solutions increased by 14% led by our U.S. spinal implant business, which grew at a stellar 17% in Q3.
Revenue from enabling technologies was 9 million up 66% sequentially compared to Q2, but down by $5 million compared to Q3 19.
To give some perspective on the enabling technology results. The third quarter is traditionally the slowest quarter for capital sales. However, last year, we grew by 125% in the third quarter and posted 14 million in revenue tying our highest quarter for the year.
Given these challenging comps the sequential improvement is more indicative of the health of this part of our business.
As the economy open back up in Q3, our capital teams were able to begin rebuilding their pipelines and moving deals along many.
Many of these deals closed in October and we have actually sold more robots in October than we did for all of Q3.
Non-GAAP EPS was 49 cents per share up 15% from Q3 19 matching the best quarter in our history.
Adjusted EBITDA was also a healthy 35% for the quarter. These.
These results highlight the lean efficient operating philosophy of built into our business. Our profitability was somewhat inflated in Q3 due to issues you need to the pandemic such as limited travel the elimination of the most peer to peer cat, a very educational activities and the change in industry conference participation to virtual events.
On the Flipside results also reflect continued investments in iron ore and trauma research.
This resulted in a drag of nine cents on a non-GAAP EPS and six percentage points on adjusted EBITDA in other words aside from iron ore and trauma the rest of our business produced 41% and adjusted EBITDA in Q3.
Are you a spinal implant business grew by 17% in the quarter. This.
This team is firing on all cylinders.
We've launched five new products in 2020 with continued strong uptake and keep in the he brought online a threed printed interbody spacers and stable our fourth generation expandable M.I.S.T. those spacer.
As we alluded to last quarter, we have had to limit access to these products until we expand our threed manufacturing capacity, which should be online this quarter.
We also saw a significant growth from resonate our new low profile extreme angle anterior cervical plate the features automatic locking.
In addition, we have resolved many of our supply issues and biologics, which grew by 16% in the us during the quarter.
Implant pull through from robotics continues to be a source of growth in.
In addition to the ever growing installed base, we have put a major emphasis on adoption and usage of Excelsius GPS driven largely by our implant sales team.
Finally, we launched the Excelsius GPS inner body module late in Q3 and are beginning to see increased interbody usage as a result.
Competitive recruiting and Onboarding continued to be a significant factor in taking market share.
Onboarding revenue for Q3 was an all time high and recruiting is comparable to the record performances achieved in the last two years.
Our international spine business was down by 1% for the quarter, while most markets showed very strong growth in the quarter. The overall results were dampened by countries experiencing upticks in cobot cases, namely, India, the UK and Japan.
Trauma continued its strong performance in Q3, growing 16% sequentially and 96% over Q3 90.
We continued to invest in this business when an aggressive sales rep expansion plan and several new products expected to launch in 2021.
Revenue from enabling technologies was $9 million in the quarter. This part of our business was most impacted by the Lockdowns earlier this year.
Even when surgical volumes are low our implant teams had a reason to be in the hospital, which gave them opportunities to call on surgeons.
Tourists, where the capital team have much larger geographies, which require air travel and they typically need to set appointments to call on surgeons and executives. These aspects of the business were effectively shut down for the entire second quarter.
Well, we attempted to maintain visibility and momentum via virtual event. It simply was not as effective in building pipelines.
As the economy opened up we have been able to resume the activities that lead to sales and are now seeing a robust pipeline emerged now.
As I mentioned in my opening we have actually sold more robots in October than we did for all of Q3 and expect to produce year over year growth and enabling technologies for Q4.
Surgeon interest in demand for robotic technology is strong and growing.
On the product development front, we launched the Excelsius GPS Interbody module in September and upgraded several systems early feedback on the technology has been very favorable.
We also made great progress on the final development and validation activities for our imaging system and expect to file with the FDA in November we are beginning to build units for an expected Q1 launch.
Finally, as we reported last quarter, we received FDA clearance on the cranium module for Excelsius GPS we anticipate doing our first procedures in January.
Overall, we had an outstanding third quarter and what has been a remarkable year for our company.
I'm proud of the resiliency determination and grip the team has shown in the face of challenging circumstances.
Spinal implant business is on track to achieve positive growth on a year to date basis by the end of this week.
That in itself is an amazing accomplishment for a company our size and it is our goal to achieve positive growth on a consolidated basis by the end of the year of.
Of course that assumes no major cobot resurgence and continued excellent execution by our team, but its certainly within our grasp.
I will now turn the call over to Keith.
Thanks, Dave and good afternoon, everyone.
So we continue to navigate through uncertain times Globus delivered an exceptional third quarter performance demonstrating strong market share growth, while seeing a return of elective procedures.
As we progressed through the pandemic, we remain focused on competitive recruiting and Onboarding and continued investment in R&D to drive new and exciting product launches the contributions from those new products and a focused approach to selling arc Celsius robot. These.
These objectives, coupled with our focus on execution have proven successful and are evident in our Q3 results.
We remain well positioned to continue driving above market share gains as we look to the future.
Overall, our Q3 revenue was $216.1 million, an increase of 10.1% as reported with the same number of selling days in the us and international but one less selling day in Japan.
Third quarter net income was $44.2 million up 15.4% over the prior year third quarter non-GAAP net income was $49.1 million driving 49 cents, a fully diluted earnings per share representing 14.9% growth over the prior year Jeff.
Adjusted EBITDA was 34.8% and our free cash flow was $35.9 million.
Turning our attention to sales our third quarter us revenue was $182.1 million or 11.9% higher than the third quarter of 2019, driven by the strong bounce back if you X spine, partially offset by lower iron ore sales due to the lingering impacts of COVID-19.
Our us spinal implant business showed great momentum in the quarter and continues to drive above market growth as we drive further penetration.
International revenue for the third quarter was $34 million higher by 1.4% over the prior year quarter.
The performance of our spinal implant business varied by region, showing strong growth within Spain, Australia, Germany, and Italy. However, we continue to see ongoing cobot impacts in Japan, the UK and India.
Our third quarter gross profit was 73.6% compared to 76.9% in Q3 of 2019.
The decline in gross profit was due to higher inventory reserves adjusting for that impact gross profit would have been 75% and consistent with my comments last quarter, noting that we expected a mid seventys gross margin as revenues return to pre coated levels.
Research and development expenses for the third quarter were $14.4 million and 6.7% of sales compared to $14.5 million and 7.4% of sales in Q3 of the prior year.
During the year, we've continued to maintain our high level of investment we expect our R&D expense to run approximately 7% of sales looking ahead, which is inclusive of continued significant investments in our iron ore and trauma businesses.
SGT expenses for the third quarter were $89.2 million or 41.3% of sales compared to $88.5 million and 45.1% of sales in the third quarter of the prior year.
The increase in spending is reflective of higher sales compensation due to the increased sales volume, but was offset by expenses lower expenses related to travel and training.
While travel and training expenses increased sequentially from Q2 to Q3, they are still lower than the prior year driven by the continued impact of COVID-19.
The impact of lower travel and training is worth approximately 150 basis points SGN AG.
We expect these expenses to rise in the fourth quarter, but not returned to pre covered levels until sometime in the first half of 2021.
Our effective tax rate for the quarter was 16.8% compared to 18.1% in the third quarter of 2019.
The slight decrease year over year reflects the favorable tax impact of stock option exercises in the current year period.
Looking ahead, we expect our 2020 full year tax rate to be approximately 21%.
Adjusted EBITDA margin for Q3 was 34.8% well above our Q2 margin of 14.7% and 137 basis points ahead of our Q3 2019, adjusted EBITDA margin of 33.4%.
It is worth noting that included in our Q3 adjusted EBITDA, our total iron ore and trauma investments was 610 basis points.
Our results demonstrate the lean efficient operating philosophy contained within our business culture, while also highlighting our strategic approach to investing in worthwhile initiatives look.
Looking ahead to 2021, we expect to deliver an overall mid thirtys adjusted EBITDA range, assuming no major recurrence of Cove at 19.
We ended the quarter with $685.2 million of cash cash equivalents and marketable securities.
Net cash provided by operating activities was $53.2 million and free cash flow was $35.9 million, our free cash flow of $7.9 million lower than Q3 of 2019, driven by a deferral of our federal income tax payment from Q2 to Q3 as a result of the cares Act, which we commented on last quarter.
On a year to date basis, our free cash flow of $69 million or 10% higher than our year to date free cash flow in Q3 of 2019.
I highlight this given the fact that we've been able to grow our free cash flow year over year. Despite the impacts of COVID-19, and our commitment to continue investing in inventory.
In Q3, we did not repurchase any of our class a common shares in connection with the previously authorized and announced share repurchase program consistent with last quarter. We currently have $95.3 million remaining on the original $200 million authorization. The company will fund the share repurchase with its operating cash flows.
As I conclude my comments I'd like to take a moment to recognize our global team members for the strong third quarter.
Our results continue to reflect the spirit and can do attitude of our employees as Dave mentioned, we look forward to closing the year on a strong note and hope to be able to drive overall year over year sales growth, assuming no major resurgence of coated.
I will now open the call for questions.
[noise] as a reminder to ask the question.
Thats Star one on your telephone to try your question for Tom and his team he's done by when we compiled it today roster.
Our first question comes from Matt.
Your line is open.
Hey, good afternoon can you hear me okay.
Yes, Matt.
So thanks, so much for taking the questions. Congrats on a really strong quarter given the environment for lots of reasons.
You could maybe just.
Give us a sense of what the.
You know what the what the tone of it sounds like a robot or.
Just as are accelerating here a little bit.
What what's the tone and the type of interest that you're getting in that channel anything you could tell us that how that's evolved say since it's our time and into here in October when it seems like things are picking up and.
And then I had to add one follow up.
Yes, Thanks, Matt I think.
I'd characterize it as as a strong certainly strong interest.
If you go back.
Two our history with the with this technology when we when we first bought it was huge amount of skepticism most surgeons.
I will never use something like that.
It started to grow where there was there was interest in sort of tire Kickers and then there was early adopters and I feel like we are switching over.
We're about on the verge of words, it's becoming the question is when am I going to adopt this in my practice is becoming much more mainstream and and carlin not the people have done that yet, but the attitude of surgeons.
Is that.
Well beyond the skepticism we saw early on and they're interested in understanding how we can benefit them and coming coming at it with that perspective. So pipeline is really strong right now a lot of interest in.
We really haven't experienced a ton of impact due to co would in terms of closing them. So it's really encouraging.
That's great.
Then I guess the other is.
And.
Probably spent a fair amount of time talking about this maybe this this today Tonight and the next week or so at least this is just what what if anything in terms of.
The tone of procedures looks like.
Things were encouraging in from Q June to July and his team.
Encouraging it to maybe August and September and then now we see what we see all over the news and folks are a little bit more concerned about the prospect beginning cases down or whatever might happen. The next.
A couple of months any any anything that you can call out as to what you're seeing or.
Or what maybe your surgeons are expecting over the next several months, maybe maybe even as it pertains to what we learned back in August July and August and some of the areas that were under some some heightened pressure would be helpful. Yes. Good. Good question I mean, our results in the third quarter or really are are reflective of the fact that we've seen roll.
Doing shutdowns.
Other electives and various pockets throughout the country, even even in Q3.
San Antonio was down for a little bit we do a lot of business in Charleston, South Carolina. Other parts of that were shut down they've come back on a hearing reports like Flagstaff was down a couple of weeks ago. So it's there are pockets they there.
Not seeing that massive across the board shutdown of electives and they're coming back much quicker as well so.
Our business has actually grown.
October we had our best and we'd go over in our history last week as a company in the U.S. So.
Even in spite of these rolling shutdowns the volumes out there are very strong and I think.
That coupled with the fact that we are growing as a company is produced through as the results. We continue to see even into last week and this week.
Well congrats is pretty impressive.
Stop there and.
Get back in queue. Thanks.
Thanks, Matt.
Our next question comes from.
Wells Fargo. Your line is open.
Hi, Thank you so much for taking the question I'm I'm I'm wondering if you guys can give us a little more color on the underground feed you may be seeing in October I know you mentioned that you are up but you know any incremental color there and then.
Just curious if you can talk a little bit about the imaging platform. You would you make the submission in Q4, you know with expected launch in Q1 21 I'm. Just wondering you know you guys on track and should we expect the limited launch once you go much light.
Thanks again.
No specifics on October we were having a great month.
Put it that way.
Well as I've talked to Matt about we're seeing strong surgical volumes on in the U.S. from a from an implant side and clearly we had a good good month when it comes to robots.
In terms of the imaging system Yeah. We're on track, we're actually really happy with the the final touches on the verification validation activities.
And the various test that it has the passport were and then the final throes of that where we expect to file with the FDA in November and then it's up to them, but we.
We expect that we'd be able to launch. This in Q1, I don't think you'll see much revenue impact in Q1, and as we as we ramp our production even the first half of the year will be a little bit muted, but we think this could have a significant impact in the second half of next year.
That's helpful and then if I could just squeeze in one one a one additional question could you just discuss your initial thoughts on the corporate tax reform wondering Nike Biden administration, and you know what should we expect and how do you expect losses.
Yes.
Thanks, John I mean at this point I really have no comment on that.
Our view is that if there is a change in corporate tax due to the administration change its going to affect the market as a whole and we will deal with that at the appropriate time.
Thank you.
Okay.
Our next question comes from David Lewis with Morgan Stanley. Your line is open.
Hi, good afternoon. Thanks for taking the question just a couple from me here I guess, the the first maybe for Dave for you I mean, the U.S. traction or the last quarter and this again this quarter is pretty substantial just when you could give us some more granularity on what you think is driving that I know, we have covered recovery, but it's pretty clear that momentum you built last year sort of returned this year and it doesn't.
So that you're taking share a section I wondered if you could kind of flush out the new products wrap acquisition lower attrition, what has sort of accelerated but looks like a kind of a share capture situation. These last six months for you and I had a couple of follow ups for Keith.
Sure David well, you Oh, you hit it a couple of the major factors first.
First of all we've had some great product introductions. This year, we're getting a lot of traction from our feeder online opportunity cronyn spacers Sable is our ideas our fourth generation of expandable T. lift device. That's that's been going extremely well, we saw resonate which is our new cervical plate take off this quarter.
Combine that with the growing base of robots out there I mean, even if each one produces some pull through but as we've got this large installed base you know, there's some momentum behind that.
And then our recruiting and onboarding in a separate that into two two buckets right recruiting is getting folks hired onboarding is the process that our folks go about like trying to convert that business.
Well the Rep is on his non compete our folks around him have to do that and then as they come off their non competes either at 12 months or 18 months, that's when we'll see a significant.
Growth as well so you're seeing the the combination of all those things occurring and really being executed quite well by our us sales team. So.
It's all of the above.
Okay very helpful. And then Keith I appreciate the margin commentary you gave us for for next year I Wonder if you just help us on or kind of underpins your confidence in sort of getting it as margin numbers, which are materially up over 2019, and maybe you could help us I mean street consensus numbers clearly have you growing double digits 21 over 19 any granularity you can provide as to how we should be thinking about you asked Trey.
Mens, obviously ex us probably going to be a little more sluggish.
Any focus you can give us on top or bottom line for next year other than margins be very very helpful. Thank you. Yeah. Thanks. Thanks for the question I'll talk a little bit about margins I know.
We've talked before about Globus being in the 33 to 37 range for EBITDA. This quarter. We landed at 34 eight I did call out that we had a little bit a tailwind because of some travel and training our NSG and eight but we do have a little bit of a headwind in in Cogs because of that higher inventories there you know.
Assuming that we go into next year and and have normal normal sales are what I would say sales not impacted by 12, it I'm pretty comfortable that we're going to be in that 33 to 37 range that was still caution that you know I don't want to give a specific number at this point, but.
But as we landed this quarter 20 points to being a bright future as we move ahead on as I look up into gross margin as we move ahead and continue to drive.
Penetration in U.S. market that the profitability on those U.S. sales will help drive incremental dollars dropping to the bottom line, which helps the overall story, because you're going to get leverage on your fixed costs at the same time, you're going to see continued investment in depreciation or any investment in status to kind of drive additional depreciation expense. So as I look ahead I still feel good about.
Mid Seventys gross profit in a in a non coated environment or in sales that aren't impacted by coated.
Our next question comes from right.
Your line is open.
Hi, Thanks for taking our questions. This is actually Max on for Ryan and just wanted to go back to the pull through aspect of robotic deployments and in the past and today you talked about how as installed base grows we should see pull do grow kind of exponentially I. Just wondering if you can provide some more detail around the efficiencies import there you saw in the third quarter as a result of the <unk>.
I've already having robotic systems in place and then just kind of thinking you know moving ahead. You know if you would think about an exponential pull through grass say is there a certain number of placements, where you think hold through takes off and if so do you kind of have a good sense of when we can possibly or when you could possibly hit that milestone.
Yeah, Thanks, Matt I'm, probably not going to be able to help you out much on the on the analytics there.
Just.
Conceptually as we as we sell a robot.
They were much more efficiently the cases go much better with our screws. So.
So that right right there create some pull through we also have done deals where you know there there's an implant purchase component to the deal. So that that is a built in structural factor.
And then the long term as we as we see surgeons adopt the technology basin, the hope there and our and our strategic goal is to.
Get the get their partners and the other folks operating in a hospital to utilize the robot as well and.
Potentially pull their implant business over along with.
The surgeon champion, who usually there's usually one or two surgeons, who championed the purchase of the robot, but there's oftentimes several surgeons operating the hospitals. So that's been our focus of late is to drive that adoption make sure. It's because it's a it's a good launch in terms of the folks have bought it and that gives us the basis and to go after other surgeons.
Don't really have any any analytical or.
Numbers to share with you and from that impact, but I can tell you that it's there and it's part of that part of the reason for our growth.
Got it. Thank you and then switching topics a little bit and I go back to Aegion Sable again, just trying to get a sense of how much demand you weren't able to fill in the third quarter and whether or not you can provide any detail around what that potential impact when a bank. The top line and then you know you had your increase manufacturing.
Ashley come on come on line in the fourth quarter will you be able to backfill any of these orders I'm just trying to get a sense of whether or not we can see a bolus of revenue from these products in the fourth quarter.
And or early 2021.
Yeah, you're you're probably not going to see it in the fourth quarter the capacity is coming online.
In November and then we really can't get products actually made it through the whole process and sterilize until late in the quarter. So I don't think you're going to see a big incremental impact from Q3 to Q4, but but that should be in place next.
Next year, there there really is no opportunity to to back backfill. The orders of those cases are done those surgeries have been performed to the patients are hopefully home and doing well. So we just have to focus on the future.
You give you some quantitative metrics, we're doubling our capacity. So we expect to double what we can sell as we go forward and and clearly if we have more traction than that we'll continue to add capacity as we see it.
Got it thank you.
Our next question comes from Matthew O'brien with Piper Jaffray. Your line is open.
Good afternoon, everyone. This is Patrick on for Matt. We really appreciate you taking the time to answering our questions I wanted to look at robotics to start.
On a really interesting last quarter, you kind of talked about the spectrum for capital and it seems like a lot of the work you know you have a ton of surgeon interest, which is really great. But you mentioned, there's certain hospitals, who they just don't have the time to speak with you today are impacted by Corona virus at the same time, you have hospitals, who really want to differentiate themselves get that excelsius.
In and take advantage of the situation I'm just curious if you could kind of expand on the dynamics youre seeing in that market place right now things shifting more towards hospitals wanting to differentiate themselves. Some of those customers are willing to talk to you any color there would be a appreciate it then I have a quick follow up.
Sure Patrick we're we're gaining more access I mean that that's really the message is that in Q3, we were.
Shutdown from face to face interactions, which.
We we attempted to stay in front of folks as best we could virtually but that just wasn't that effective and in terms of really.
Cementing their interest in getting them to go forward with executives to the purchase the equipment. So I think now that we're able to be in front of folks have as I mentioned two to one of the earlier callers. The the tone has changed a little bit towards how how is this going to help my practice versus our.
I don't need it and of that so.
Skepticism that we saw and are in the early days I think.
It's not only US is the fact that we have competition out there that are also extolling the benefits of robotic surgery, we have like Stryker with with Maaco.
I'm really driving the use of robotics and orthopedic so I think that the general tone has really changed.
And I think we'll continue to change as we get more and more systems out there, it's just going to be coming away surgeries done and.
At that point, it's the battle is who's Who's got the best system, who can who can offer the most advantages and I feel good about where we stand competitively.
Our next question comes from Richard Newitter.
<unk> Your line is open.
Hi, Thanks for taking my questions.
Thanks, Congrats on the quarter and a challenging environment.
I just want to sure I heard correctly I think you said that you're on track to grow on a on a total consolidated revenue basis for 2020.
And if that's the case.
Since you said that you expect growth in enabling technologies that in Fourq, you relative to last year I'm, just curious what would that imply.
By the double digit trend or sustaining for total revenue growth in fourq.
Of this year.
Is that the underlying assumption there that the U.S. continues at its mid to high teens level or is there a pick up in international the kind that they kind of get there I'm just curious what the embedded expectation is you're going to continue to grow double digits in effect potentially accelerate on a total revenue basis.
Hey, rich thanks, just to clarify so we're on track and the U.S. to to achieve year to date growth U.S. implants are actually by the by the end of this week into the end of October it's a goal to grow consolidated for the year. So I would not say that we're on track for that but I think we have a really good shot at it.
We really haven't slice and dice, where are those components are coming from but on an overall basis or.
We believe that that's achievable and were certainly working worked hard to get there.
Okay, but they found that they found the trend that you are saying is strengthening seemingly in October.
Nothing you know all else equal to suggest that you know you wouldn't at least the stable and in that U.S. core spine business.
If not better on the implant side you.
All else equal for the rest of the quarter correct.
Our U.S. spine business is really strong right now we have a great October I haven't gone back and so what we did last last October so I I don't have the growth numbers in my mind, but I can tell you sequentially and then qualitatively we were having a really good month.
So I am expecting enabling to grow for the for the quarter given the strong start and the pipeline that we have.
How it all shakes out into its pieces I'm not sure what those growth rates are.
Okay. That's helpful. And then just you know I think I think someone got at this in an earlier question I just want to.
Take your fourth will they come to the market improvement.
In the U.S. versus you know, what you are doing better than others and share gains.
You know it.
Can you give us that's what do you think a normalized kind of spine market.
Growth rate is right now relative to your kind of 17% you're clearly taking share. What's you know how much of the market potentially just pick up from from some of the backlog work now and then and maybe V shaped recovery.
Versus just surely glow the specific issues that had benefited you.
Yes, I really don't know where to draw that line up both are occurring we certainly saw a nice bounce back and procedures overall, so it'll be interesting to see how the other folks report on that.
We're we're we're all I know I know that we're taking market share and we just don't have the granularity and in our systems to.
Two.
Differentiate those too so sorry, sorry that I can't be more helpful.
Okay, and actually maybe one last one biologic side I think you called out low teens growth for that business I know that had been a business that was pressured due to some oh, you know product disruption issues in the past what was the growth rate last quarter and you know is that it is a good trajectory for that business going forward.
Oh I don't know the core of the grocery last quarter, we didn't we didn't comment on it. We just we you saw some things resolved this quarter. That's why we called it out and frankly, we have some more opportunities in front of us. So I'm I'm hopeful 2021, it will be even.
Even better as we as we resolve some of the outstanding issues.
Thank you.
Our next question comes from that too.
<unk> Your line is open.
Hi, Thank you for taking the question. So I guess I just wanted to focus again on the robotics pick up here in the <unk>.
Little surprising frankly, given the environment.
Do you think any of the enhancements that you're working on or are helping to where are you from.
Competitors or do you think this is more of a demand for overall robotics would love to hear about how those enhancement you playing into that.
Yes, I do think the enhancements are helping us sell robots are not only the enhancements, but just the longer we get out there I think its established that our our programs are operating at a really high level. There's a lot of adoption. The surgeons are really seeing value in the technology.
I'm not sure that's always true for our competition. So that's that's also a factor I'd I can't really speak to what the overall market is doing but I know there is.
As we get into head to head evaluations from a technology usability functionality standpoint, we consistently great out as as much better than the other alternatives.
Thanks, and I was hoping you could offer some thoughts on the outlook for your your trauma business and management.
Sorry to break into some hospitals when the environment is like you do have some momentum going now do you think that could continue to go up and what are the gating factors. So we're trying to be become a bigger part of your business.
Thanks I. Appreciate the question, we did have record sales in Q3, and whats promising with ads over half of that growth came from new surgeons, a while cove. It is certainly a taxi or the D.A.T. committees, and allowing new products and slowing us down somewhat we are getting the right traction the right approach I think we all remain bullish on the investment.
And see growth coming out of trauma through the rest of this year and certainly into 2021.
Again, certainly hindered by some of the cobot activity that offset again by strong recruiting it still continues with us.
Great. Thank you guys.
Our next question comes from Oh Rose with Canaccord. Your line is open.
Great. Thank you for taking the questions. So I kind of want to stick on the on the robot eat here and maybe less what youve seen I guess year to date, but we'll talk more about the future. So you just recently launched the Interbody module now you're going to submit the the imaging platform at year end.
In launch that next year. It was just help us understand what the addition of the imaging platform does from your from your enabling a strategy and then how we should think about the next steps of innovation across robotics.
Sure Carl the the the imaging component really.
If you think about the computer assisted spine surgery, you have the two components one would be just navigation. So freehand navigation, where are you using threed images combined with navigation to track where you are in the case and then robotics is the next evolution, where you're you're using the robot to the guide he is.
Permits to do the procedure.
We've been competing in the robotic space, clearly, but but there.
It was a strong installed base of drew navigators and not all of it.
You experience a lot of benefit from going from freehand to navigate it. So we want to be we want it we're really expanding our portfolio to be able to address the navigators. If you will who are not ready to make the move into a into robotics and that's a pretty substantial.
Segment. So it just gives us one more tool to.
I'll address that the yeah overall computer assisted grew.
Group.
And I think as you as you look forward I.
I don't think Weve really unveil, but much of what we're working on beyond the imaging navigation I I think we've talked about the fact that we're working on a wrote a robot to hope to a total knee and then ultimately total hips that will be probably the next thing on the horizon and then and we do have a couple of other projects, but we're not ready to announce.
Well those are just yet we're focused more on the the next steps, which will be the imaging system.
Immigration that goes along with that and then the cranial about rollout.
Great I appreciate that additional color there and you talk to US you know the.
The last couple quarters, just about somebody encouraging metrics, you're seeing from a utilization side and the pull through on the robot.
You also talked about you know folks.
Focused on more on utilization with the implant sales teams can you maybe talk about how that focus with the implant sales teams has it has evolved over the course of the past several years and just the fact that you've got enough new systems in place that you can have the implant guys call on it or is there something different about the sales process that you're seeing a ball.
So it's not the sales process. So much we just Ah we still have a capital team that's that works together with our implant teams to follow through on that on the capital sale. It's really wants that robot gets installed we want the the implant team to own the day to day operation of it as they become experts in how that technology benefit.
Its surgeons and their patients they become more effective and converting the surgeon you know the competitive surgeons down the hall, who doesn't use our implants or uses the robotic technology any advantages is that brings to convert that surgeon over to using that robot, which means they're going to use our implants as well.
Yeah.
Great. Its very helpful. Thank you for taking the questions and Russia corner.
Our next question comes from it came from.
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Hi, guys. Thanks for taking our questions and congrats on the quarter and so we're getting I think quite a bit about 2021, and I just any guidelines or commentary that can provide going forward that would be helpful. I mean, a lot of companies I think are in looking at 2019 as sort of a baseline or normal year end right.
Now the street is modeling mid teens growth off that that 2019 level for you guys. In 2021 is that sort of a reasonable place to be or is there anything else, we should be considering as ever look into next year.
Thanks for the question. This is Keith a you know as we think about 2021 I think it's really premature to be discussing where we think we're going to land a you.
No we really want to get through this quarter, you know that some of the news that came out today regarding cases, a rising across Europe and concerns that it's going to come over to the U.S. I think given that I would like to get through this next quarter and is as we get to 2021 or if we are in a position to give guidance give guidance at that point.
Great. Thanks, and then just a couple on that on that enabling tech business I mean, it sounds to me like you guys are on track right now to deliver a record quarter in the robotics segment. So I guess I just want to understand sort of the durability of the momentum you're seeing in October I mean, you know could this be a $15 million to $20 million per quarter for the enabling tech business.
Okay, and then just a follow up on the imaging system I mean, it sounds like you guys are expecting to launch in the first quarter I'm just would love that to understand how you're thinking about the launch strategy and just compare contrast that with what you thought when you launched Excelsius 'cause it I think Dave you made a good point that.
Yes, Dr. out we're on Super skeptical I think when you first launch the robot. So I think I would love a little bit more clarity about that item. Thanks sure Taylor well, we did 14 million in the fourth quarter last year on an it and we're going to we expect to be more than that but that's probably all I can share with you on where we were.
The land this quarter and in terms of the imaging system. Yeah. That's a much different launch then yeah. It was really evangelical sale when we got out there with Oh, Excelsius GPS, but the imaging system is is really targeted at install base of navigation of navigators.
The robotics is is really expanding the pie if you will for computer assisted where we're going after that installed base with the imaging systems that will be focused on.
Big installations, there and.
Walking through with the surgeons the advances in our technology has over what they're using today, which you know as we've been able to preview a a little bit and get some feedback from our.
Our design teams and then some of those showings weve had at NASS that those advantages seem to be very compelling theres a lot of excitement and a lot of anticipation of the launch.
Yeah.
Oh.
Our next question comes from James.
Like security your line is open.
Hi, Thanks for taking the questions first off I don't know if it's possible to quantitate the cobot impact in the quarter I mean first off was there any at all in the U.S. and that you did point out somebody in Oh, U.S., but love to see what how you guys quantitate that.
Yeah, I'm not sure I understand what when you say the <unk> impact just so I'm just curious if you. If you if you look in procedure volumes and if you look at your accounts I'm is there a way of for kind of understanding what the range of cobot potential cobot impact was this quarter.
Analytically now I would we don't have the ability to sort of differentiate between whether that was oh, a patient that was supposed to be operated on in may or one that came in last week, but I can tell you anecdotally, we've certainly got a bounce back that we as we alluded to last quarter. You know, we started seeing a a real ups.
Taken procedural volume really really June and then that continued through the entire third quarter, which is up it was just kind of unusual from a seasonality standpoint, so that clearly those a lot of that activity was was because as a bounce back from the second quarter, but I can say at the same time I know from our recruiting in our in our new products.
The.
Information together on that they were getting new surgeons with new customers. So its both but I I. We don't have the ability to tell you, which pieces growth and which which is <unk>, which is the market. So I think I think as the other folks report as a bigger companies report you guys will get a sense for.
Ah that overall growth and how our market shares have shifted.
Okay. That's helpful. And then you know on the recruiting side I mean, that's that is a big driver or one of the pieces on your six driving success here, obviously, you continue to record pace.
I think you hinted at <unk> in the last couple of quarters that you know it seems like you're where you pull from which is the larger companies in general there's a lot of excitement comfort globus for a variety of reasons.
I I wonder though.
It sounds like the pace is continuing.
Do you sense that your larger competitors are pulling back at all or in a and as I look across the landscape as well do you have a sense of whether other companies are trying to step up recruiting efforts are actually pulling back given the uncertainty.
No I think everybody's recruiting I think though the advantage. We have is the technology that we have the implant technology, which we've been a leader in for for.
17, or 18 years and now you couple that with our enabling platform. The success, we've had in robotics or the imaging system coming I think perhaps or just excited about selling new technology. It gives them the ability to grow and grow their business and everything in common there is another influence. So they were they want to come to a.
A company that has great technology. So I don't think its the fact that we recruit I think it's just the tools we have to recruit with.
Okay and then just last quick question Nast was kind of online and not you know getting a lot of attention if anything any new product launches that you had during NASA do you think are worth highlighting that are you know likely drive 2021.
No. We I don't think we rolled anything out at NASS, So where we're focused on those three D.
Printed cases that we alluded to earlier the new cervical plate is doing really well stable. We've got we've got a couple more things we're trying to get out by the end of this year, but we're always Ah at any anytime we have 20 or 30 projects and development in spine alone or so so weve over the years as that was just a continuous.
Five point of innovation.
Okay, great. Thank you very much sure.
Our next question comes from Steven <unk> Oppenheimer. Your line is open.
Hey, guys. Thanks for taking our question. We were just wondering if you could provide maybe some more color on.
What you're seeing in terms of patient flow today versus pre Kobe.
Last quarter, I think you called out an average of about 85% of pretty cold that level.
Has that returned 100% at all during Threeq you and.
Looking ahead do you see decreasing shift up procedures to its seats offsetting any downturn. Thanks.
Yes, Thanks, Steve we we gather.
Gather that information last quarter, because we knew that was a significant question on folks minds and it's not part of our normal analytics. So we we did not update us so I really can't provide a more color on it I know our volumes continue to be strong. So I assume that means the clinic flows is is adequate and.
Especially strong.
And in terms of I think your second question was about any of these I didn't quite sure at all so maybe you can repeat it.
Yeah I was just wondering if on the increasing shipped a procedure it sees could that potentially offset any any future downturn. If it's good buyers Oh has more of a resurgence in the fall winter timeline.
Certainly and then we saw that the first time round. We there was some shift into AOCI is for the for the easier cases, but they can't really do the complex stuff and you see so if you know if we have a big you know you kind of.
Countrywide kind of shutdown that we saw it in the past and we will be impacted.
As I spoke about earlier, what we're seeing now is easily sporadic.
Smaller or less duration kind of shutdowns, which have.
I have not impacted us to the extent that we saw you know back in the second quarter.
Okay, Great that's helpful.
Just one quick follow up on the progress and trauma any color you can provide on how many reps you have there in the field currently and and new products in 2021 that we should be focused on.
I I, just Keith I actually don't have any comment on that in terms of the number of reps. We just we're going to continue to recruit and add to our business as we move forward and you can to watch it grow sequentially and year over year.
Okay. Thanks.
Again, if you would like to ask a question that's star one on your telephone keypad. Our next question comes from Matthew Boss <unk>.
Your line is open.
Hi, good afternoon, everyone. Thanks for taking my questions actually started on international I, where you look like you're back to roughly three kobin revenue levels, you help us think through how bad business track back towards Pico bit like growth rates and I. Appreciate that the resurgence of cases is that can you confounder.
But beyond who made over there [laughter] fighting he need to execute on to get you back that it's sustainable double digit growth.
[noise] beyond Cove, it or we just we Ah.
You have to do the things that we've always done.
To be successful, which would starts with technology getting getting our best technology in.
In front of surgeons hiring reps, having make sure we have a strong sales force and a good representation and then as we've added in the last several years is driving the enabling technology, which is frankly been a.
Surprisingly strong when when we first got into this I I was concerned that the the price that would would be prohibitive for some.
Oh, the international markets, but we haven't really seen that we've seen strong demand and oh really around the world and the placements had done a really encouraging.
Yeah, we haven't you have approval in Japan, which is our largest international market and we're hopeful that we can get a system or to installed in the fourth quarter.
Certainly a lot of interest there and that would be a big opportunity for us going forward.
I appreciate that and then my last question you were sort of asked this I'm trying to ask and again, a little bit differently, just thinking through sort of the biggest gating factors left that attack <unk> when I think about it obviously there are multiple elements here its portfolio with hiring training and set the point, making sure there are others, but.
And are there any one or two that you know as you look out over the next 12 months added outlet store or others that would have us thinking about as being sort of the most important and how we should think about them evolving again over the next and you pick a timeframe 12 months 21 months.
Well I think you picked a most of the points, where we'll go at 12 months from now right now it's going to be about expanding the footprint through feet on the street to recruiting and taking existing pipeline that we have will be key at the same time, gaining access to an additional access into the accounts were in English.
And getting more procedures with two sets we have that will become the majority of growth and drivers for us in the first 12 months. The second 12 months are getting up to 24 month question, it's going to be a continued expansion of the portfolio to where we can meaningfully displace existing competition with our full portfolio. That's really what the second label called named while they can.
And feet on the street and gain access.
All right. Thanks, so much appreciate it congratulations on the quarter.
Thank you.
With no further questions I will now conclude the Globus medical third quarter 2020 earnings release Conference call. Thank you all for joining US you may now disconnect.
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