Q1 2021 Globus Medical Inc Earnings Call
Uh-huh.
Welcome to Globus medical his first quarter of 2021 earnings call.
This time all lines won't be on mute any Q&A session will be held after the prepared remarks at that time, if you would like to ask a question. Please press star and the number one on your telephone keypad to enter the queue.
I will now turn the call over to Brian Kearns Senior Vice President of business development and Investor Relations Mister Kerns. Please go ahead.
Thank you Catherine and thank you everyone for being with US today, joining today's call from Globus medical will be Dave Dembski, President and CEO Dance Kivela Executive Vice President Chief Commercial officer, President of trauma, and Keith style, 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.
Before we begin let me remind you that some of the statements made during this review or or maybe considered forward looking statements.
From 10-K for the 2020 fiscal year and our subsequent filings with the Securities Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected and any forward looking statements made today.
R. M C C violence, including the 10-K are available on our website.
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 yeah.
Believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacement swore and should be read together with the most directly comparable GAAP financial measures reconciliations to the most directly comparable GAAP measures are available in the schedule is accompanying the press release and on.
The Investor Relations section of the Globus medical website with that I will now turn the call over to David <unk>, Our President and C E O.
Thank you, Brian and good afternoon, everyone.
We got off to a great starting to one continuing the momentum we established in 2020.
All fast is from the business perform well in the quarter as we continued to take meaningful market share.
Revenue for the quarter was 227 million of 21 per cent on a day adjusted basis over the first quarter of last year non.
P. P. S. It was 49 cents per share and increase of 67 per cent and adjusted EBITDA was 35 per cent.
Once again iron Iron your spine by the way I cannot revenue from Q1 was 15 million 86 per cent over the first quarter of last year.
Do you want is typically a slow quarter for capital sales, but our revenue in queue I'm actually surpassed our revenue for the entire first half of 2020.
The clinical spirituality of our robotic technology continues to be recognized by surgeons as shown by back to back quarters of strong growth.
U S Bank continues to take significant market share growing by almost 22 per cent on a day adjusted basis.
Altered from her biotics contributions from new product introductions, a resurgence in our biologics business and competitive recruiting where all factors driving growth.
The international spinal implant business was essentially flat for the quarter.
Strong growth in most markets was offset by declines in Japan as expected primarily due to the transition of our sales force composition there.
We expect both of these trends strong growth in the rest of the world and headwinds in Japan to continue throughout 2021, and we remain very positive about the health of our international business.
We had a number of exciting product introductions in the quarter, but I would like to highlight too because they demonstrate the synergies inherent between our capital and implant product development edges.
The first is the corbeil lateral either system comprised of a novel Retractor and an innovative unibody spacer design for the L. Five S. One just space through a lateral patient position.
Horrible as the latest addition to the most comprehensive suite of a lateral everybody solutions on the market today.
Or lateral technology concludes multiple expandable options static spacers and integrated plate spacers solutions that can address all levels of the lumbar spine to either from or lateral patient position.
Furthermore, Celsius lateral 360 procedural solution allows surgeons to safely and efficiently treat multiple anybody levels and place M. I S medical screws, while the pizza remains in a single position.
The second is creal won the market's first medical screw designed specifically for robotic spine surgery with excel since G. P. S.
<unk> simplifies critical preparation, while maintaining navigational accuracy and increasing pull out strength by 86 per cent compared to traditional medical screws tap the size.
The rigid robotic arm and navigational accuracy like Celsius G. P. S. Combined with Korea one's unique screwtape are designed to save time and improve efficiency in the O R by eliminating procedural steps.
Early feedback on both systems has been very positive.
Shifting to trauma relatives up over 100 per cent in Q1 compared to the first quarter of 2021.
We are focused on salesforce expansion and have several exciting product launches plan for the second half of this year.
Well, we expect continued sequential growth year over year growth mace low a bit in the coming quarters as we face challenging comps.
We have filed with the F. B a from five 10-K clearance on our imaging system and are ramping up manufacturing and operations for an anticipated Q3 launch.
We also pointed to launch the perennial module for a G. P. S. Later this quarter.
[noise] Globus has emerged from the pandemic is a stronger company growing much faster than our large appears with a strong balance sheet and healthy cash flows as we look forward to the future, we see tremendous opportunities to accelerate our growth and high on our spine trauma and total joint we have an exciting line up a product introductions plan for 2021, but.
Full advantage of our potential beyond this year, we are going to ramp up investment and R&D resources moving forward. We will also be aggressive in pursuing acquisition targets that enable us to further differentiate our portfolio.
Globus at an outstanding first quarter, producing excellent financial results of delivering on several key strategic objectives.
We're set up for an amazing your if we continue to execute all parts of the company or performing well and we're working together as a team.
I'm grateful for the dedication ability and effort of our worldwide Globus team members as they serve our customers and patients I will now turn the call over to Keith.
Thanks day and good afternoon, everyone. As David commented are strong first quarter results demonstrate our continued momentum and point to continued market share gains are focused on driving execution, along with our long standing commitments innovation and technology have positioned as well as he worked at fully emerged from the impacts of COVID-19. This is at.
And our first quarter sales profitability and cash flow growth.
<unk> revenue was $227.3 million growing 19.3 per cent as reported and 27 per cent on a day adjusted basis compared to the first quarter of 2020 revenue.
Revenue grew $18 seven per cent on a constant currency basis as compared to the first quarter of 2020.
But we experienced COVID-19 impacts in January and early February revenue grew sequentially each month and accelerated as we move further into February and March.
Net income was $45.3 million and non-GAAP net income was $49.7 million driving 49 cents, a fully diluted non-GAAP earnings per share.
Adjusted EBITDA was 35.2 per cent in our free cash flow was $49 $9 million.
Moving further into sales U S revenue was $193.3 million or 22% higher than the first quarter of 2020, driven by the continued strength of R. U S spine business as well as higher INR revenue extending from additional capital sales.
International revenue for the quarter was $34 million, representing a five nine per cent increase vs. The first quarter of 2020 as.
As Dave noted earlier international implant sales were essentially flat however growth in robotics was the key contributing factor in our year over year improvement.
We continue to see strong implant growth and most of our international markets. However, this as being partially offset by declines in Japan, driven by our previously discussed Salesforce transition.
First quarter gross profit was 75.8 per cent compared to 74.4% in Q1 of 2020 the.
The improvements the gross profit were driven mainly by improve manufacturing efficiencies and lower warehouse costs.
The lower warehouse cost per primarily labor related as as the result of a warehouse move which occurred in the prior year quarter and did not repeat in the kind of your quarter.
Our research and development expenses for the quarter or 14.9 million or six six per cent of sales compared to $15.4 million or 8.1 per cent of sales in the first quarter of the prior year.
There are you spending was driven primarily by lower travel lower meeting expenses and low or consulting costs. This lower spending is partially offset by higher salary and benefit costs driven by increased head count.
Looking ahead, we plan to increase our investment in R&D as we progress through 2021, those investments will continue to drive our class seating capabilities across robotics and spine will also positioning us to further penetrate the trauma and joint markets.
[noise] SG&A expenses for the first quarter, where $97.9 million or 43.1 per cent of sales compared to $93.5 million or 49.1 per cent of sales driven primarily by higher sales compensation costs, partially offset by low or travel entertainment a meeting expenses as well as leverage on our spending as a result of the high.
Your sales volumes.
The effective income tax rate for the quarter was 27 per cent in line with expectations, though slightly higher than the 22 per cent right in the first quarter of 2020.
As I mentioned earlier adjusted EBITDA for the quarter was 35.2% is reflected from my earlier comments, specifically around revenue growth gross profit improvement and overall leverage.
We ended our first quarter was $838 $4 million of cash cash equivalents and marketable securities net cash provided by operating activities was $63.6 million and free cash flow was $49 $9 million as mentioned earlier.
At this time the companies revising as previously announced 2021 guidance of $889 in net sales and $1.83 and fully diluted non-GAAP EPS.
We have now expect full year net sales to be $925 million and are non-GAAP EPS to be $1.89, representing 17.2 per cent revenue growth and 31.3% non-GAAP EPS growth vs 2020.
Looking back on our strong Q1 results and our expectations for the remainder of the year, we remain well positioned to aggressively execute across all fronts.
We continue to be extremely positive about our business and its ability to take share across our entire portfolio, all wall, bringing new and exciting products to market.
This coupled with our commitment to expanding R&D investments, while aggressively pursuing acquisitions that compliment our portfolio will position us for continued growth over the long term and drive exceptional shareholder value I truly feel the best is yet to come.
Now open the call for questions.
Ladies and gentlemen, just as a reminder, if you'd like to ask a question. Please press star and the number one on your telephone keypad.
So our first question comes from the line of <unk>.
<unk> credit Suisse.
Oh, okay.
You would break it up that we can't hear Ya.
Yeah, Let me let me let me try this hold on I'm sorry.
Is that better.
Yes. It is.
Okay, sorry about that so uhm, congrats on a really strong quarter uhm.
Just I don't even know what to say some of these numbers are really impressive but.
One question on robots in Hong Kong, an implant so.
Uhm, we have seen just very strong growth across the robot no category I guess, you could say since the middle of last year I can always ask the same question every corner.
But if you could maybe describe where some of this and.
90, 790% growth.
Your savings is coming from the name of the types of centers or.
Is this a competitive regional it does it does a robot in a city in a in a center across town.
To have a real non handle also maybe describe what feels like an inflection point and then and then what.
What.
To the timing, where you can think about in terms of your pulled through on these robots.
<unk> <unk>.
A quarter or two to sort of start.
Drive in in your plans to call on mentioned one one quick follow up on implants.
Sure, Matt I think we're seeing the the growth is really everywhere.
We've got centers that are buying their second or even third robot. We have you know the first robot in town kind of situations where in community or in universities I think you'll really see in the technology starting to take off just just generally and we're starting to see that you may be right I hope you're right that we're at that inflection point where the.
It becomes mainstream.
To your second part of your question when we see implant from it it's usually the quarter. After I mean that that first quarters about getting and install getting both trained on it getting enough speed and then once they start using it will see the implants uhm pull through and the following quarter.
That's great and then on implant is a good maybe get some sense of where in the category of implants that you're seeing the most strength and we're kind of thing.
Some slowness in the beginning of the quarter of some of the other companies has talked about meeting sort of cervical or your original sign or types of centers any color would be would be very helpful. As to the pattern that you saw in Q1 thing.
Sure.
Oh no no no discernable pattern in terms of mix from our standpoint, we are getting really strong growth from some of the products. We gotta do this last year or three D line of spacers as well as table. We've also as I mentioned in my prepared remarks, I'm pretty O. One is really gotten off to a quick start for us.
So that the.
Other than that I I don't see a pattern as you alluded to or maybe somebody else had mentioned on a call.
Great. Thank you so much thank you.
Our next question comes from the line of Kayla crime went to true security.
Great. Thanks, guys and I'll ask a bad congratulatory comments.
I'm, just I'm I'm, enabling tech business I need to authentic performance like 14 $40 million in sales what did you say that sounds sort of a baseline for quarterly performance going forward and can you help us understand how you're assuming that this business will grow into the second part of this year with with with further contribution from imaging.
Yeah, Kayla was capital was really challenging to predict how are you gonna do because each sales. It is you need it's it's much easier for us to predict where ever gone in the implant business because that's recurring.
Certainly we expect to grow from here. We we think this business has a lot of runway to it both for globus as well as the industry. So.
All of those factors are pulling in the right direction and we're gonna be rolling out. Some additional technology is you know later this year hopefully where is the plan in Q3. So I do believe will see higher sales, but we're not gonna put a number to that at this point.
Okay. That's that's fair Uhm and then you mentioned you plan to be aggressive from an emanate perspective, I guess, what does that mean relative can tie you guys have acted historically I think historically chosen to look at and either earlier stage assets or less expensive more more mature.
<unk> I mean, it should we expect to see more of the same in terms of that strategy or are you considering from higher price assets or a throughout the assets at this point. Thank you for taking the questions.
Sure Yeah that we are looking to be more aggressive there in terms of the amount. We're we're going to invest so we're looking at a little bit bigger, but the emphasis is really on an expanding the differentiation within our portfolio. So we're looking for a technology not necessarily scale.
That's how we're we're looking at things at this point.
Alright, Thank you for.
Your next question comes from the line of it Stephen like men with Oppenheimer.
Thank you hi, guys Uhm I on the on the salad sequential performance of U S spine, which was was even better than it was it gets in 2019 I'm. Just wondering if you could go a little bit more to what you were see if there was anything in the quarter.
That particularly snapback I know you mentioned gave the biologics business was that is sort of an outsize contributor uhm to the strong sequential that you saw from <unk>.
I don't really know what our sequential growth was I thought it was out from going from from from from two four to Q1 day. It was down overall, but the U S spine business I mean over overall I wouldn't say like our implant business R. U S final implant business performing extremely well and biologics fit.
Back as as you commented that he he doesn't take me away if we've been seeing that as long as they even in terms of the biologic for the last six months or so and that's that's a continuing trend, but typically do force stronger than Q1, and I I don't I just don't have the numbers in front of me right now and then I'll just remind you that the COVID-19 January pretty hot.
<unk> was added impact in February as well and then then marshals with a strong month for us So I'm not I'm not sure how much I know there was still some COVID-19 restrictions in some markets in March but it was it was pretty light so.
It's just the the four things I mentioned, a continued to be the the.
Things that were executing well, it's it's closer from robotics is the new products. We launched biologics has has made it come back I think we've commented on for the last couple of quarters. It's continued into Q1 and then finally competitive recruiting is always part of our our growth strategy.
Okay, Great and then two seconds. It keeps me I could talk a little bit more about your your updated margin go pretty year I'm not sure if you're talking about EBITDA for the full year and when you talk about are indeed acceleration. Thank you put any numbers on that for US any range is in terms of as a percentage.
Sales for the year.
Sure. So from an <unk> perspective, we historically said that we run about seven per cent of sales based on some of the comments around investment and find robotics trauma and joints, we'd expect that number to move a little north of that as we look ahead in 2021.
As we think about that was that that very first part of your question could you repeat that one more time, just EBITDA Marshalls day of the year.
EBITDA I mean, we came into the air expect name, we're gonna see margin expansion from 2019 and 2020, we still view ourselves as of mid thirties EBITDA business, even with this increased investment.
We're really happy with how the year started when we came in to when we came into 2021.
The COVID-19 impact from the beginning of the year cause you know a little bit of concern, but when we look back and see how we finished we feel really good about where we're sitting and we feel comfortable I'm, saying, we're still a mid thirties EBITDA business.
Great Congrats that.
Thank you.
Your next question comes from the line of Shag anything.
<unk> with lots of Aargau.
Oh, great. Thank you for taking my question.
Outstanding quarter Uhm. So uhm I was just wondering if you could talk about you know.
How that is tracking relative to my.
And then how much off the sales growth Q1 was backlog and then just with respect guidance uhm.
I have a five per cent, but yes, just about by about one and a half per cent of the midpoint. So could you just discuss the Pacific standard how do you talk about it. Thank you.
So I'll take the first part to gun March was a really strong month April continued to be really strong as well so I I feel like the economy and you know.
[noise] spine business at least is back in an operating.
Really pretty COVID-19 level, so true feel really good about that aspect of the business I'm gonna like cheese handle the the guidance yeah. So the guidance. So we we grew top line by from.
882, O 925, but our our bottom line day and grow quite as much when you step back and look at that obviously the volume is driving an increase but want a couple of things I want to call out is that we did we did talk about some investments and our trauma trauma spine robotics and INR businesses also our share count as a little bit higher but when you step back.
And look at our overall guidance and you compare it to 2019 work rowing our top line by about 17, 20%.
Bottom line at $1.89 will grow about 12, and a half per cent, but I do want to call out when you're doing that coughing and you look at our overall growth. When you. When you go back and look at 2019 and look now there's a lot. There's about 19 center that backs from what I would call non operating items that would include interest income tax higher stock comp and share and higher <unk>.
Your account when you take that 19 sanson add it to our dollar 89, you get to something closer to $2, an eight cents, which would give us about 24% on a more normalized basis. So really when you step back and look at a revised guys. We really think we're well positioned.
Especially looking at where we were in 2019.
Oh, that's really helpful kind of interest.
Let me just check to the backlog calm would you want that sounds.
Was attributable to the backlog.
Yeah, that's that's a little bit more of a tougher question I mean, when you think about last year and coming in the queue. One released last year, we called out about a 20 million dollar impact driven by COVID-19 surely. This year, we were impacted in January and we're starting to see that sequential improvement in February and March, but if I step back and look at it I would say, it's almost a push you over a.
Here, David anything you'd have to that.
So in quarter, one last year vs. This you're on an input because this is kind of.
It's a little challenging to to decipher because every different sections of the country or a different.
COVID-19 kind of of reactions of restrictions, but.
As well as we can.
Understand I think there's just probably a net zero impact between Q1 last year and two one this year from U S implant standpoint.
I got it.
Sure.
Your next question comes from the line of Henrickson with Citibank.
Hi, good afternoon, and congrats on a great quarter, let's start with the ortho trauma results you mentioned it was up 100 per cent.
And then kind of yep.
Although it's gonna improve sequentially and won't be at that growth rate can we just.
Add a little more detail on kind of what's driving that growth what are the strategies around the sales force expansion and kind of how.
Expect that to play out throughout the rest of 2021 and into 2022.
Thanks, Matt is standard <unk> uhm. So a couple of things I mean, certainly were were please too.
Can we have and get inroads into markets that we have when we continue to see that occur.
Q1, but we'll expect that to go through the year.
At the same time, but we we have stepped up in a recruiting and we see that there is an activity. That's a helping us further bring reps on board I don't really break it out by quarter, but again I would think that again off of smaller numbers the higher growth rate helps in in getting more people and will matter right by Rep right now with that Dave also meant.
<unk> that I would support.
We have what I consider significant product launches coming to the second part of the year and that will further help us drive in and grow that way. So we've always said traumas going to be a longer term growth year by year and not an explosion and I think it's playing out that way. We just have to continue with our investments and a focus.
Okay. Thanks, My color there and then just moving to cervical uhm, that's starting to get more attention within recent acquisition from reason product launches Uhm do you have your secure see with the two level indication, but kind of what are your thoughts on the market overall compared to kind of traditional fusion and then.
Any commentary that you have on any future development would be great and thanks for taking the questions.
Sure My let me just generally correct you there we don't have two levels on secure see we only have one level and I think that's a challenge for for US I think that segment has a lot of future potential it's not huge right now, but I I do think it's a good treatment for patients. So we're actively evaluating what our options are there.
And we will be.
A strong competitor going forward in that in that segment.
Okay.
Your next.
Hello.
Katherine you cut out a little bit.
We couldn't hear what you said I'm sorry. Your next question comes from the line of Jason Whities with North line.
Hi, Thanks for taking the questions first just a clarification are you implying that <unk> <unk>.
The final months of a quarter pretty much saw an increase in volume input and should we anticipate pretty much day minimis COVID-19 impact for the rest of the year I'm just trying to figure out how.
What you're thinking isn't COVID-19 and how it might affect the quarters going forward.
March was a was a good month, because I think it was about a month in our history actually an overall revenue. So it was it was strong month like.
Like I alluded to earlier, there was still some regions. Some some regions of the country that were.
Shut down and restricting electives, but there are others that I think included some from bounce back so on a net basis I think March was.
Sort of a typical free COVID-19 kind of quarter.
Your your guess is as good as anyone going forward until April what's a good month, but and hopefully the vaccine.
Effective and and we're back to normal going forward, but that's.
First of all I don't think there's any more clear than anyone else's.
Okay that that is actually that's helpful and also just on the accounts that.
Acquire or place a robot could you kind of explain it gives us a little more color in terms of what happens in terms of their utilization of implants uhm. It sounds like you said that you do see a dramatic increase in usage I don't know if you can quantitative it'll give us some guidance in terms of what how how an account gets transformed once they get a robot installed.
It it goes all over the map there's there's some.
The the robot itself is much more efficient for services, if that utilize our screws so that that in itself.
Typically drive volumes for the cases, where they use the robot now that we've added in her body solutions to it.
<unk> again, it's works much more efficiently with our antibody devices and we have a significant number of our sites that are either buying it within her body solutions are upgrading their installed base with that and.
And then we also have the scenario where we.
We will sign a committed purchase agreement with the with the hospital and the rebates from that implant.
Deal will be used to pay off the capital over time, which is something a lot of our competitors do as well. So we have all of those scenarios. So it's hard to say.
Any particular account could be one of those three so they're.
It varies in and we have not share the the the actual quantitative impact and we're gonna keep that as a competitive information.
Okay. Thanks for the question and a strong quarter. Thanks. Thank you.
Your next question comes from the line of Kyle range, So I can't afford.
Great. Thank you for taking the questions can you hear me all right.
Yes.
So I wanted to kind of take a more of a bigger picture question here just talk more about the competitive dynamics of the U S. Fine market that we're seeing I mean, obviously exceptional growth today, but also for really the last two to three quarters since the third quarter were seen a.
A big step function in growth for Globus relative to the broader groups. So maybe you could just help us bucket, where that's really coming from you know how much is coming from competitive hiring how much is coming from implant pull through from from the robot and then how much is kind of coming from just you know new products and the iterative new product flow the companies.
Been able to generate interest we're seeing it exceptional growth your it indicate some real share taken just really trying to understand.
Where that's coming from.
Yeah, well, thank you Carla and I I agree with you we've I really Q1 of last year.
The strong quarter. So we've we've been on this track for about a year and a half I would say, but I am not going to help you out by telling me, where it's coming from just from a competitive standpoint.
We're pulling all those levers and they were gonna continue to pull him in and I'm confident in our team's gonna keep executing so that that's all I can share with you right now.
That that's fair I had to try and let me ask one more robotic question now, obviously really strong quarter to start the year, but we're also seeing really good good implant growth here. So out maybe just non was understand how many what proportion of your robots are being sold outright vs versus placed I'm just trying to understand how much of a uni.
Placements and he's really outpacing some of that revenue, we're seeing on the on the enabling side.
And the mix of our robots in terms of how they're getting so hasn't changed the vast majority of our robotic sales are still outright sales.
It really hasn't changed since we've started selling robots, we can sell all the different ways that day mentioned earlier, but still a majority of them are outright outright purchases.
Thank you for taking the question.
Thank you.
Your next question comes from the line of Ryan Zimmerman with B T I T.
Afternoon. Thanks for taking my questions I'm Gonna ask Kyle's question, they're a little different manner, David and see if it feel take a bite, but the competitive environment. As we noted is not kept up with the pace that that globus hasn't so to ask it another way I mean, what what do you think or how would you characterize.
Competitors in the market, particularly the mid and larger ones in terms of what they're not doing that.
That you're seeing out there because.
It does seem like been at this for over a year now with these types of share gains and so clearly that they're not doing something they you figure it out and then I don't know if you have any thoughts on kind of your other competitors.
Yeah, I I would I would be remiss, if I spoke you'll have anyone in the market, but I will tell you Ryan that the fundamental driver is technology right. So our implant technology are enabling technology, they're differentiated they're stronger they're driving clinical value. So that enables us to just.
Alright, so bad but it's also very attractive for other reps, who are stuck at those other companies to come over or they're they're good reps. They have good relationships they want to come over and sell the best.
The best technology on the market so that that drives are competitive.
Recruiting it as well, it's really the thing underneath it and then we continue to innovate we've got a really strong group across the company really.
It's fine obviously spinal implants, we've been noted for a long time for the differentiation there a robotic an enabling technology is we're just scratching the surface with what what we have that you've already that you know about it and what you actually don't know about yet we have some really exciting things coming.
And then in dance area in there and they're also area between trauma and enjoys we we have some things that you probably won't see that innovation until next year, but those are those are coming as well. So it all comes down to technology. We were founded as an engineering company and that remains our core.
And there is one thing that I would add to that today's comments that I would say that we've done exceptionally well as we've executed I think we have all of the things they've talked about when you think through the last year year and a half I think the company has executed extremely well that's really helped drive a lot of the benefits that were saying.
Sure. That's that's very helpful and I appreciate you, giving some color. They're just one follow up for me. So I think in the fourth quarter you guys built out some additional manufacturing capacity and it was really expected I think to be up and running in the first quarter of 21 and correct me if I'm wrong, there, but could you just comment on kind of what that does if you were.
Constrain on any product families are categories, and and kind of you know what that additional capacity does and when that comes online for whatever specific product areas that you did expanded thank you.
Sure Yeah, we are still a bit capacity constrained and some are and some of the segments of the company, particularly three day. We've added that we're still you've got to qualify the equipment and you've got to get the products made you gotta get them.
Sterilized and put through the.
<unk> cycle. So we were still not seeing the full impact of that and actually with the growth that we've seen here in the last nine months, where we continue to add capacity.
It's a great problem to have but it's it's challenging problem in the in the environment.
We're in right now to keep up with the demand.
Thank you.
Your next question comes from the line of David Saxon with an E M.
Good afternoon, and it really an incredible a quarter Uhm first question is just an enabling tech you noted some international robot placement thirds, just wondering if you could share where there was work and then as your prepared for the imaging launch I mean at this point you have some <unk>.
Orders lined up that are gonna be easy for for the third quarter.
So I'll take I'll take the first part of your question inane.
Enabling tack, we really don't disclose what countries that were selling in what I will say is that we are actively marketing the product and the countries that we can we can sell a product and and there's a there's a lot of laws about the product and we're excited about what it can bring gone for.
David in terms of the three day system, where we're not able to market it or take orders for it until it's approved so that's we don't have that but I will say there's been a lot of interest is serge.
Surgeons have have seen.
Product and giving us input on it so.
And the other thing I wouldn't get too far ahead of the auto where our skis is is with the with the FDA. So we have to we have to get there.
Brutal and reason why we do anticipate a third quarter launched it's it's it's a subject to their approval so.
I know the products gonna sell really well.
Don't know when we're gonna start just yet we're confident in our submission.
Like low the technology and the interest that surgeons have so from a long-term perspective, it's gonna be a great product for us.
Okay got it and then my second question is just one trauma you noted uhm product launches, you're you're planning for the back half. So just wondering you know.
How long it you think it'll take to get you know to a full trauma portfolio is that kind of like a 12 to 18 months process or is that a little longer term. Thanks, so much for taking the questions.
Hey, David is to ask the all thanks for the question. So yeah. They they the launches that we have planned for the second half of the year line meaningful will still be filling the bag.
What both David and Keith had mentioned is our increased investment that we're planning to do with Globus worth though both the need the joints from the trauma will actually accelerate the development and placement of products in the market at a rate faster than our initial strategic plan and so we're leaning in using the financial muscle of the company to bring.
More resources throughout the organization to actually fill out that bag faster I don't have an exact date for you I would tell you, though as we exit this year will be in a really strong position to compete I think within 12 to 18 months will have more to actually start significantly supporting larger institutions and displacing competition and that's really.
The goal of this increased investment as they make that happen faster.
Great. Thank you for it.
Your next question comes from the line asthma Taylor with E B S.
Hi, guys congrats on a great quarter. Thanks for taking the question.
I was just trying to square your comments from the last call cause I remember you said.
January there was like a 15 to 18 teen per cent drag on the U S business and and just some improvement in February. So it must have been a real rebound and margin I just wanted to make sure getting the math right is that drag relative to kind of the.
Underlying double digits, you had been growing last year. So yep. That's true then January was Yano flattish then you saw some improvement in February that will allow us to back into the exit right in in March.
Yes in terms of the it was relative to our if you will the fourth quarter sort of October November run rates that we were seeing COVID-19 started to hit again in December.
So that was the commentary was 15 to 18 per cent of that but.
Keep in mind.
As we're comparing to last year March.
You know, we got hit with COVID-19 halfway through March of 20.
So as you compare year over year.
You've got January and February negative impacts from 21, and a March negative impact and 20 and is one of the other callers head as I think the impact there was about flat. So so the COVID-19 impact was was relatively neutral from the U S between the two.
Q1 last year and coupon this year and then within a quarter. We definitely saw a progression from January was was bad February got better and marshals good.
Okay.
Okay, Great and could you take us through any.
Lots or help on what you believe recovery will look like through the year in your international business, just given your exposure to Japan, and some geography is doing better or worse help us help us parse that out a bit.
Yeah, we're we're doing well in almost every other market in Japan is going to be a headwind. That's our biggest biggest country again, we're confident in the team that we have in place there.
The process of rebuilding if you will in those areas where we.
Gone away from certain distributors.
It's just.
Robotic technology is gonna rule out this year, so that'll that'll be all.
The average point as well so I I think it'll it'll mirror, what we saw this quarter, where the two are gonna probably offset each other too.
Large extent.
Go through this year and hopefully by the end of the year, we'll see some some of that growth in Japan starts to pick up sequentially.
Great. Thanks, a lot.
Your next question comes from the line average anywhere.
Thanks for taking the questions and can get that from the performance of corner two questions. The first is on on what's assumed and guidance right now.
I appreciate that thank you bumped the outlook on a very strong one too.
But what you had last provided guidance at the beginning of the year. You had suggested that day you weren't baking in any assumption per really much of a pick up in growth in the back half of the year.
Relative to a strong second half was 2020 I'm just curious with the commentary that March you know picked up big April's better than March.
You know the the the.
The guidance free wasn't quite that much more than the ones you paid I'm just curious what you're assuming from the back half.
Uh-huh.
Thanks for the question Uhm, if you think about going from the 880 925, clearly we came out and finished with a strong Q1.
As I think about her as we think about Q1 in the queue to we still expect good momentum into Q2, but I will say just to clarify that April is a little bit of a slowdown from March but we still feel strong about where Q2 is going to land step.
Stepping back and looking at the 925, Holistically I would still say, they're still appropriate conservatism in there from a globus perspective.
As we look because when you get to Q3 and Q4, we know we had those strong bounce backs last year and still or selling is environment, where we're still not sure how Q3 and Q for what will turn out but we're we're position right now I really fall back and some of the earlier statements is that we feel positive about where we're at we came out of a strong Q1, we're going into the queue to that we see.
Is going to be a strong quarter, we still want to maintain that conservatism as we look to the back half of the year just because it's April a lot can happen between now now and the end of the year.
It's just an extremely strong one <unk> place and at quarter end and I'm. Just wondering if something structurally has changed either mindset capital prioritization on ortho robotics or.
Has anything dramatically shifted there thanks.
Yes, thanks routes from where our goal is to compress that capital cycle and make the technology and the economic opportunity for the hospital compelling enough to breakout of the capital cycle. So I would say it was challenging last year when you couldn't get in front of the executives and surgeons and it's that's still a challenge.
But it's possible now so that that is one structural difference between last year and then I will just remind you that.
End of <unk>.
Exited.
The year I said, our pipeline was really strong so the deals that we had that we were we were pursuing as we exited the year several of them were closed in the quarter and I'll say that again, we've got we continue to have a strong pipeline and a lot of potential as we look at Q2.
Really impressive congratulations thank.
Thank you. Thank you.
And ladies and gentlemen, just as a reminder, if you'd like to ask a question. Please press star and the number one on your telephone keypad.
Your next question comes from the line of Matt O'brien with Piper Sandler.
Hi, This is <unk> on for Matt Thanks for taking the questions and congrats on the quarter. So first off just following up on imaging how much of that is baked into your guidance for this year.
<unk> be more of a 2022 impact that we should expect.
We're not going to sit and break out the parts and pieces because we know that coming from Q1 are coming from our eight eight and 925, we know that it was a nice move forward, we still want to maintain a maintained some conservatism in our number but one thing I will say is that even though we're not breaking out the parts and pieces, we do hope to launch. It later this year.
Great. Thank you and then one last one can you just expand on some of your efforts in the ASC channel. There is a huge push in the ortho space cause that shift to the ASC is how are you positioning yourself to new.
Three.
Three that but still stay competitive in the hospital setting.
That's a great question I don't know that anybody's fully figured that out at this point, but you know more.
You should see in terms of both capital and our implants.
Is probably the way to go there they are constrained.
In terms of their capital budgets that are constrained typically in terms of their operating.
Our operating budgets and their space issue. So so we're.
We're trying to look at products that address all of those constraints.
While we focus as well on the hospital environment.
It's a challenging but.
How do they impact the opportunity for us.
Thank you.
Your last question comes from the line of Craig Bijou with Bank of America.
Hi, guys. Thanks, Thanks for taking the question just wanted to start with a high level a couple high level questions on the use of robotics in spine and really wanted to get a sense for.
I guess could you give us a sense for what percentage of your procedures are.
Our on the robot is it 10% or is that.
Roughly in the ballpark and then secondly.
Maybe higher level thoughts on how you see the use of robotics in spine over time.
Is there a percentage of procedures that you expect that will ultimately be done with a robot and then how.
What's that progression over the next couple of years.
Thanks, Craig.
<unk> of our percentage right now we don't share that information from a competitive standpoint, I will tell you that its an internal focus of the company, though we're highly focused on driving adoption and utilization in the installed base because because ultimately that's why it's going to continue to grow as the value of.
Computer assisted technology is recognized and we were able to measure it more and more people are going to do it utilize it I actually think it's going to be standard of care.
I don't know when that'll be I, certainly think within 10 years it could be sooner.
It's hard to say I do think that there is a growing.
Acceptance by surgeons.
The technology, and I and I and I see a lot of anecdotal evidence where guys are just shifting over to everything they're doing and they're really seeing those benefits. So.
We're pushing as hard as we can to drive that.
And we're doing that both with our.
Our procedural focus in the field as well as trying to make the technology, just better easier to use and more efficient in the or so.
I wish I had a better answer for you, but we're super bullish on where it's going in and our ability to compete there.
I appreciate that and maybe just a follow up on some of your acquisition commentary.
You targeted areas is it more the enabling technologies.
The ortho you've done a couple of deals there or spine technologies anyway.
Im assuming youre looking in all of those areas, but is there any any one of those areas and maybe more of a focus than than the others.
Well I think the answer is we're looking at all of them, but we have a very broad line of innovation in spine. So it's probably less likely that we would find something there.
And the opposite of that is true on the on the or.
Ortho side, so those are probably going to be.
Things that fit better into what we're doing and to have a bigger impact.
But we're open to any and all areas, where we can improve the differentiation of our portfolio.
Great. Thanks for taking the questions guys.
Sure.
I'd like to turn the call back over for any closing comments.
Okay.
Thanks, very much for everybody and with no further questions. This ends the Globus medical first quarter earnings call. Thanks for joining us from Goodnight.
Ladies and gentlemen, this concludes today's conference call. We thank you for your participation you may now disconnect.
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