Q2 2021 Globus Medical Inc Earnings Call
[music].
Welcome to Globus Medical's second quarter, 2021 earnings call that day.
This time all lines will be on mute and the Q&A session will be held after the prepared remarks.
I will now turn the call over to Kelly Senior Vice President and General Counsel.
Caller. Please go ahead.
Okay.
Thank you for being with US today, joining todays call from Globus medical will be Dave Demski, President and CEO, Dan <unk> Executive Vice President Chief Commercial Officer, and Keith Pfeil, Senior Vice President and Chief Financial Officer.
This review is being made available via webcast accessible through our Investor Relations section on the Globus medical website at Www Dot Globus medical dotcom.
Before we begin let me remind you that some of the statements made during this or you are or may be considered forward looking statements. Our form 10-K for the 2020 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward looking statements made.
Okay.
Our C S E SEC filings, 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 GAAP.
We believe these non-GAAP financial measures provide additional information pertinent to our business performance.
Non-GAAP financial measures should not be considered replacements for 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 schedules 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 Dave Demski, our president and CEO.
Thank you Kelly and good afternoon, everyone.
Globus had another outstanding quarter in Q2 building on the momentum we've established over the past 2 years as we continue to take market share.
Given the impact of COVID-19, it's difficult to draw meaningful insights about the business by comparing the results for Q2.2020. So my comments will be primarily focused on comparisons to the second quarter of 2019.
Revenue for the quarter was a record $251 million up 29% over 2019.
Non-GAAP EPS was <unk> 56 per share a 38% increase in adjusted EBITDA was a strong 35%.
Once again, INR and U S. Prime underway INR revenue was a record $21 million up 73% over <unk> 19, and our third consecutive quarter of strong growth.
The clinical superiority of ex else's GPS continues to be recognized by surgeons as reflected in our recent announcements of surpassing 20000 procedures using Excelsior.
More significantly the average number of procedures per robot reached an all time high in 2021, reflecting an acceleration in adoption.
U S spine continues to take significant market share growing by 30% over Q2.19 full.
Pull through from robotics contributions from new product introductions, a resurgence in our biologics business and competitive recruiting were all factors driving growth.
We're beginning to see several virtuous cycles emerge all emanating from the value created by the adoption of our robotic technology.
We have surgeons, who utilize associates for the majority of their cases master increasingly complex pathology is because of the technology and may even perform surgery in situations that would be considered inoperable without robotic assistance.
These surgeons wholeheartedly endorse like Celsius to their peers, leading to additional robot sales.
We have surgeons, who have not previously used globus into plants, but due to ex Lcs gain exposure to our entire line of innovative spinal implants and have begun to utilize globus for non robotic cases as well.
We have surgeons, who may not have initially champion and the purchase of the robot, but after seeing the success of their colleagues also adaptive technology, which has driven globus implant usage and led to the purchase of additional robot.
Finally, we have attracted successful competitive reps, who after losing a portion of the business through a robotic conversion have decided to join the team with the best technology, bringing additional business with them.
As these scenarios increasingly play out we are seeing what amounts to a flywheel effect on our business.
At the heart of it is the utilization in value created by the Excelsior technology.
It's not about merely placing robots, it's a focus on utilizing technology to improve spine surgery.
The growth we have seen in our U S business over the past 2 years is a testament to the power of the transformation taking place.
On the international front, our spinal implant business grew by 5% in the quarter strong growth in most markets was offset by declines in Japan, a trend we identified last quarter and expect to continue throughout 2021.
Unfortunately, the transition in Japan, while necessary for the long term health of our business is masking the very strong performance by much of the rest of the world.
We lost <unk> <unk> in Q2, adding a 3.3 D printed spacer to rise L Alpha korbel and transcontinental to create the most comprehensive suite of lateral interbody solutions on the market today.
This broad product portfolio gives surgeons the ability to perform a lateral access surgeries utilizing multiple expandable options multiple static spacers and integrated plate spacer solutions to address all levels on the lumbar spine through either a prone or lateral patient position.
Furthermore, the Celsius lateral 360 procedural solution allows surgeons to safely and efficiently treat multiple antibody levels and place pedicle screws, while the patient remains on a single position.
Moving to INR product development, we are waiting 5.10-K clearance for the Excelsior 3 D imaging system I remain cautiously optimistic regarding clearance and launch of the system late in Q3.
The full launch of an excel states cranial module is slated for later this quarter as well.
Shifting to trauma revenue was up over 250% compared to the second quarter of 2019, 29% over the second quarter of last year and relatively flat sequentially.
We're focused on sales force expansion and have several exciting product launches planned for the second half of this year in 2022.
In summary, we're off to a fantastic start in 2021.
It promises to be an amazing year, if we continue to execute the way we did in the first half all parts of the company are performing well and we're working together as a team.
I'm grateful for their dedication ability and effort of our worldwide Globus team members as they serve our customers on patients I will now turn the call over to Keith.
Thanks, Dave and good afternoon, everyone.
Globus is coming off a fantastic second quarter and continues to build momentum through ongoing market penetration for our implant business and further adoption of our robotics technology.
Q2 contingent continues a trend of strong revenue profit and free cash flow growth.
Before I jump into my discussions on the quarter I want to highlight that all focused on majority of my comparative comments, the second quarter of 2019.
There are a few areas, where I will provide comparisons against both Q2 of 2019 and Q2 of 2020.
This will provide the most meaningful insights into our business.
Our second quarter revenue was $251 million growing 29% as reported versus Q2 of 2019 and 28, 9% on a constant currency basis on a day adjusted basis sales were higher again by 28, 9%. The same number of selling days in the U S and 2 more selling days in Japan, when compared to Q2 of 2019.
Q2, net income was $41.5 million and non-GAAP net income was $57.9 million driving 56 fully diluted non-GAAP earnings per share.
Adjusted EBITDA was 35%, we generated $58 million of free cash flow.
Our second quarter U S revenue was $215.1 million for 34, 5% higher versus the second quarter of 2019 reflective of continued share growth across our implant business and the increasing adoption of robotics technology within INR, which is inclusive of Dave's earlier comments.
International revenue for the second quarter was $35.9 million growing 3.9% compared to Q2 of 2019.
We experienced strong growth in most international markets, which was dampened by lower sales in Japan based on our previously discussed the sales transition as mentioned in Q1, we expect Japan to be a headwind as we progressed through 2021. However, this will strengthen our position in Japan over the longer term.
Q2, gross profit was 74, 6% compared to 77, 4% in Q2 of 2019. The primary drivers of the decline for higher planned depreciation expense related to instruments in cases slightly higher product costs, driven by the mix of sales and additional inventory reserve expenses associated with a nonrecurring write off of raw materials.
Research and development expenses for the quarter for $15.5 million or 6.2% of sales essentially in line for Q2 of 2019, but lower as a percentage of revenue driven by the impact of higher sales.
The planned increases in spend we outlined last quarter have not materialized, yet as labor markets remain tight however.
However, we remain committed to expanding our R&D team as we continue to develop new and innovative products across our portfolio.
SG&A expenses for the second quarter for $107.3 million for 42, 7 percentage of sales compared to $88.4 million for 45, 4 percentage of sales in the second quarter of 2019.
The higher spending in Q2 of 2021 was mainly a result of higher sales compensation costs. However, SG&A is lower as a percentage of revenue due to the leverage impact of higher sales.
The effective income tax rate for the quarter was 15, 1% as compared to 19% from the second quarter of 2019.
Lower tax rate was driven primarily by tax benefits associated with stock option exercises.
As a reminder, Q2.2020 results include the large charged to R&D expenses associated with the <unk> acquisition, which also impacted our effective tax rate.
We concluded Q2 with $914.2 million of cash cash equivalents and marketable securities net cash provided by operating activities was $59.2 million and free cash flow was $58 million.
Year to date free cash flow is $107 million and on a rolling 4 quarter basis. The company has generated a record $202.7 million of free cash flow.
For the high earnings in the business and lower capital expenditures as well as working capital improvements.
At this time the company is increasing its 2021 guidance to $950 million on net sales and $2 on fully diluted non-GAAP earnings per share.
The industry is experiencing a decline in case volume early in the third quarter as surgeons take extended vacations and regional shutdowns of elective procedures emerge due to the Delta variant of COVID-19, we expect the.
Impact from vacations to reverse in September and October once kids go back to school while.
While it is hard to predict the impact of the recent increases in Covid cases, I'll remind everyone that the spine market has shown great resilience and dealing with COVID-19, and Globus, specifically has been able to take market share through the previous outbreaks. While we expect the situation to be transitory. We do project a sequential decline in revenue in Q3 associated with the procedural.
Slow down.
Our second quarter results continued the strong start to 2021 year to date, we've generated $478.4 million on revenue 35, 1% and adjusted EBITDA and $1.5 and non-GAAP diluted earnings per share.
As we look ahead to the back half of the year. We are focused on our continued push to take implant share and drive the adaptation of our robotics technology, while continuing to launch new and exciting products.
We'll do all of this while maintaining our strong operational focus on execution and disciplined in our approach to managing the business. We are committed to expanding our investment and will continue to pursue complementary complementary acquisitions, all of which will drive long term shareholder value on.
Thankful to our Globus team in their pursuit of excellence as we continue to serve our customers and patients. We will now open the call for questions.
At this time, if you would like to ask a question you will need to press star 1 on the telephone keep on thank.
Thank you. Please stay on Murdo will compile the Q&A roster.
Yes.
Our first question comes from the line of Simon Cheng from Wells Fargo. Your line is open.
Thank you so much for taking the question I guess just 2 from me.
On the first 1 on capital, obviously with a very strong quarter on Adobe is bad.
Approaching inflection probably exiting 2020 so.
So if you can just touch on the outlook of the business in the second half just given seasonality and that.
Even beyond that in 2022 and beyond that would be helpful. And then I have a follow up.
Yes sure.
So John this is Keith Thanks for the question generally speaking I mean, we feel extremely positive about our business.
For the back half of the year everything that we've done in the first half as shown on that was executed well and we're taking share as we look to the back half.
We remain positive across our entire business as it relates to 2022 I think it's a little early to give comments on 2022, but as we look at our last several quarters, we feel that we're well positioned to drive for the future for for sales growth.
I got it the question was just a little bit focused on capital. So just ex LTE as GBS can you.
Talk to us a little bit about the outlook of that business just given that it seems like it's at an inflection point so.
Should we think about it on the back half just given seasonality and then beyond that just specific to capital.
Thanks for going to comp.
The third quarter is typically a slower quarter relative to some of the other ones on capital usually the fourth quarter is at the end of the budget cycle for a lot of.
Accounts, so that tends to be the strongest and then theres a little second wave at the second quarter. So you might see a little dip there, but generally speaking we're very bullish about.
The adoption of ex public Celsius, and I think thats, creating additional demand. So our pipeline continues to be very strong.
We're very bullish about the technology for the rest of this year and into next year as well.
I got it and then just with respect to your guidance.
We look at it over 2019.
Can you just help us understand what <unk>, what you've included in there for backlog.
We are hearing that the spine backlog question.
Substantially realized during the first half from what are you anticipating in the back half for backlog and then.
Anything on the impact of the.
Corona virus variants that would be helpful. Thank you.
I think as we look to the back half for the year sugar on again, we remain positive when I don't want to go back to 2019 and I look at our business. Our current guidance to 950 implies 10% compounded annual growth from 2019 to 2020 to 2021 as we look and I would also commented that there's debt growth is organic.
On that growth is coming across all facets of our business and to drive that level of organic growth shows that we feel very positive about where we're going.
Thank you.
Our next question comes from the line of Matt <unk> from Credit Suisse. Your line is open.
Yeah.
Hey, thanks.
Thanks, so much for taking the questions and congrats on another really strong quarter.
I'm sure everyone on the line, we'd love to hear if you're willing to share that average procedures per robot number that you mentioned.
Hi, Mark this quarter, but I'm guessing that you would have said it if youre going to share it but we'd love to hear it.
2 questions from me I guess, if I could.
Follow up on your comment on vacations that day.
I suspect that will get some folks.
Tien tsin, just because that had been kind of.
Hypothesis heading into Q3 potentially that we may see something like that.
Yeah.
If possible maybe sketch out.
What has the historical David you mentioned the historical revenue trend in Q3 is down.
How much more if any.
Impact are you expecting if it's down 3 historically should we expect channel 5 just some sense of what the Incrementals and then I have 1 follow up if I could.
Thank you Matt.
As expected, we're not going to disclose on average number.
So really really excited about that I think thats. This validation on what we've been doing and to see that technology being utilized.
Really a bellwether for was that for.
For the future so.
Super excited about that trend.
In terms of vacations I think.
The situation. This year, we really didn't have much in the spring I would say we started to see a little bit after school was over in June.
They just see more pronounced on prolonged at this point.
Obviously, there was a pent up demand among in our society for travel we're seeing on the surgeons take that but I fully expect that they'll be back in once school starts again in September so we're expecting a strong September October.
Clearly given the dramatic change on the Covid situation, but I think there'll be transitory, but from a sequential standpoint, it's going on it's going to cause us to dip a little bit here on the third quarter.
Fair enough and then the follow up is a question I get often.
Some of the growth rates, you've been putting up.
Over the past several quarters.
How to.
Harsh.
There is kind of growth drivers that are.
That are causing you to grow so much faster than market and I know, there's many but if you could zero in on.
Couple of like how much of a factor is the move into 3 D printed implants.
And how much of a factor at this point do you feel like the robot is in sort of closing the distance between call. It.
2% underlying growth in <unk>.
80% 2 year stack growth that you've put up.
Yes, I'm not going to drill down into real granular numbers, but I will tell you that the robotics technology on the computer assisted technology as transformational so we've always been an innovative company.
Attracted new surgeons through some great technologies, great implant technologies. So we're still seeing that but on top of that we have this transformation on the way surgeries being done and I think we're leading the way in terms of robotics. So that's got a big impact.
But it also helps us bringing over reps sales.
Sales reps on this business willing to sell.
What is going to be more cost effective for them. So.
Tried to tried to convey that a little bit with some of the situations that we described but theres a synergistic effect so.
It's really challenging to parse it out and say which ones for import.
Clearly from a long term standpoint.
Computer assisted segment is something that we're seeing a lot of growth from it.
The trend is up so so we're excited about where we're going with that.
That's great. Thank you.
Yeah.
Your next question comes from the line of Richard <unk> from SVP Leerink. Your line is open.
Alright, thanks for taking the questions and congrats on another very strong performance.
Wanted to maybe just start off on the imaging system that.
You guys have I think with the FDA right now any updates on the timelines there if I missed it I apologize.
And then I'd also just love to hear kind of your views of.
The year, 1 launch and contribution potential for that product, especially with some other imaging modalities recently FDA approved <unk> or turning commercial from some of your competitors.
So thoughts there and then I have a follow up thanks.
Sure rich thank you.
With the FDA now we responded to some questions on its back with them and were.
We will prove it this quarter and then we will.
We're planning on a commercial losses, it's going to be the ended the quarter or early.
Early in the fourth quarter now.
Look in.
In terms of our projections.
Yes.
It's really challenging to come up with a number but I will tell you that every surgeon and we show it to is excited about.
Getting the technology and we obviously have to work through the contracting process with their hospitals, but.
Just anecdotally, we had several who have.
Stopped the planned purchase of other competitive systems until as ours is ready so.
The benefits this technology is going to bring a significant versus what's out there today. So we're excited about the impact.
We just need to at this point I think make enough of them next year to satisfy the demand.
Okay. That's that's helpful.
Just on the cadence here.
I appreciate the comments around <unk> seasonality, maybe being a little more pronounced vacations.
But just on the capital side, what is implied in your guidance for the the seasonal kind of cadence.
Of enabling technologies, Inc. <unk> the high watermark in your guidance and for Q.
You typically get a seasonally stronger quarter higher than <unk>, but not necessarily as high as Q2 or are you assuming a typical kind of <unk> is the strongest quarter.
In your in your updated guidance.
I think thanks for the question I think the way to look at that is Q3 is typically a slowdown quarter followed by Q for picking it picking up in terms of high watermark for Q2 versus Q4.
I can say that its necessarily.
Can it be a whole lot different than history. We remain again, we remain positive about where we're going but we do see that slowdown coming sequentially in Q3 across the entire business. Some of which will include a slowdown in robotics as we enter the third quarter.
Thanks, a lot.
I could squeeze 1 more in Dave you mentioned I think in your in your opening remarks international spinal implants growing 5% year over year was that was that a comment on for 2019 or 2020.
19.
Thank you.
Yes.
Your next question from is from the line of Kyle Rose from Canaccord. Your line is open.
Great. Thank you very much.
Reiterate the comments on the on the strong quarter wondering if you could just talk if maybe from a bigger picture perspective, what youre seeing as far as capital demand with respect to how customers want to order.
Or pay for.
The robotics, and then kind of maybe your expectation on a go forward basis, where.
You have robots placed are you seeing any difference in interest for from the imaging modality as far as installing upgrades and things of that sort with the installed base that you have.
Within the robotics.
Yield as it stands now and then I have 1 follow up.
Sure Kyle and then thank you.
Yeah.
In terms of how customers want to pay for it I think there's really no change in that over time.
Everybody has their own capital constraints or willingness.
To make other arrangements, we're not seeing a big change there.
I would say that people are familiar with our technology and how it's Celsius works on probably more prone to have interest in imaging systems, just because they have experience with us and with our technology because they know the value that it brings but.
It really opens up for us a competitive.
On a segment that we're currently challenge to address so if somebody on.
Already adopted computer assisted technology and that they're doing for the hand navigation.
We've achieved some benefit from the computer at that point, so, it's probably a little more challenging to get them to make the next step to robotics so by half.
<unk>, we're going to be able to have a comparable product to what exists today.
Pete for that business, along with moving people up the robots.
Great. That's very helpful. And then just from a bigger picture perspective, I mean, we've seen over the last several years.
You go from spine and extend yourself the day trauma, obviously youre launching more enabling technologies, you've you acquired still cash. So just kind of trying to understand where are you in the lifecycle of going emerging into a broader orthopedic organization, when we think about hips and knees.
And potentially extremities and things of that sort of it from a long term whats next.
Well I think we'd have a lot of work to do with the start that we've made particularly in the total joint area. We really we really think the.
Particular advantage, we can bring there is again the computer assisted aspects. So we're still on development of our.
Robotic solution there.
And that's where we're going to be able to differentiate ourselves from from the competition. So it's early innings, there and then on trauma is making great progress.
We walked you through over the over the last couple of years.
Here's what we continue to expand that portfolio and expand our footprint.
And as Keith alluded to we are active in considering other ways to grow the business through acquisitions, but at this point, we don't have much for to discuss on that area.
Thank you.
Our next question comes from the line of Matt Taylor from UBS. Your line is open.
Hi, everyone. This is John on the answer on that thanks for taking our questions.
I guess, maybe just wanted to follow up on that.
You mentioned, you're seeing some early impacts from Delta in Q3.
What are some of the areas in the U S or O U S that youre seeing.
Some of that impact areas.
The areas that youre paying more attention to given the increase in AR hospitalizations.
Yes, I think it's just mirrors where the.
The outbreaks are most significant so Florida.
Uh huh.
A lot of it.
We've seen Arkansas, Louisiana at this point.
Internationally I don't have im not as close to that personally to comment on.
Okay, Great that's helpful.
I guess, maybe 1 on Palmer who is on.
Flat sequentially.
Focused on these launches on new products and expanding the sales force.
Was just wondering maybe from a product portfolio perspective.
Where do you think you are relative to the competition.
How much.
More product families and types.
And the portfolio.
Thanks for the question. This is Dan Covid. So just a couple of things. We've always said trauma is a long term play and we look at it over the long term horizon. So while its relatively flat sequentially. That's not something we're hung up on so much as just along the journey.
Q2 was compared to a record high with several of our territory is actually breaking records in Q1. So the fact that they maintain that is a very good positive trend for us as we go forward to do this.
That said.
And as David mentioned, we've got several key launches that we plan to come out in the second half of the year.
That will get us further up into the procedural coverage, we think at that point, we should have the ability to cover about 70% to 75% of the procedures.
With our expansion of our R&D resources that we have planned for and hired will accelerate further.
For 2022 with the ability to actually cover off more of that GAAP. So I feel very bullish on where we are the traction we've made and what the next steps are to really get out there and be a complete trauma portfolio.
Alright, thank you.
Your next question comes from the line of jewelry on here from Morgan Stanley. Your line is open.
Hi, everyone. Thanks for taking the question Tonight, just on the seasonality factor on the sequential decline in the third quarter you came off the record sales in second quarter. I think consensus has you at $230 million for the third quarter is that kind of the right way to think about the sequential decline just given the momentum in the business and it's just kind of difficult to.
Look back at history.
See underlying trends just given that the portfolio has changed robotics has entered the picture, but any help in kind of framing what the seasonality and sequential decline will look like in the third quarter.
Thanks for the question. This is Keith I think that you said roughly around 230, I I think that makes sense and when you look back in history. Typically from Q2 to Q3 were kind of flattish, but with with our strong second quarter here and the comments that we raised about I've seen a sequential decline when I look at it I feel like Q3 is going to look at.
And feel a little bit more like Q1, so I think that your comment there is reasonable.
Okay got it thank you and.
Just on the spend not materializing as the labor market remains tight type comments was that solely directed at R&D or was that kind of broadly across SG&A also just kind of want a better understand that dynamic as we're moving into the back half of the year on how your how your guidance is built around that comment. Thank you.
My comment was really focused on R&D.
So as I look at the spending as spending is really flattish compared to 2019.
I wanted to raise that because we had talked previously about being more aggressive in investing and I wanted to point that out on the labor markets tighten it doesn't change our view for the 1 thing I do want to call out is with our Q2 number of about $15.5 million in R&D. There is a higher people investment in there 1 of the things that we've done is we've gone back.
It looks at our R&D last year during Covid and identified previous acquisition costs that were what I would call stranded we've worked to take those costs out of the P&L.
So there are savings there, which is kind of masking some of the growth and the last thing I would add is from a from a coming back from Covid are spending is coming back and things like travel you still see a little bit of a tailwind in R&D as it relates to travel.
Great. Thank you for taking the questions.
Your next question comes from the line of David Saxon from Needham and company. Your line is open.
Yes, good morning, good afternoon, and thanks for taking my questions.
Just 1 on the imaging launch.
Correct me if I'm on.
But I guess you you've just passed the 150 ex Celsius placements. So with the imaging launched do you feel like you can get.
Getting to a majority of those accounts over the next 12 to 18 months and then I think you mentioned supply it could be an issue.
That right or is that just kind of dependent on on how the <unk>.
Launch goes.
Yes, Thanks, David.
The comment on supply was really more anecdotal than that.
Has been a lot of interest expressed by surgeons as well.
Reviews.
Technology to them.
Really channel, it's challenging to translate their enthusiasm towards the hospitals willing to spend.
Just on your other point about where the selling it to current robotics users.
Yes.
<unk> for us, but I really think the.
The more significant value for us is to go after other.
Users of other technology today.
Just to sell 2 of our same customers. So I really see this as again, our ability to take market share on the computer assisted side.
Okay. Thanks, and then just a follow up on the R&D.
And the labor markets, I mean trauma and ortho I think has been a focus and is a focus so is there any impact on on those initiatives.
And then also could you just give us an update on.
The total joint robot I think it was 2022 last I heard thanks, so much for the questions.
Thanks as dance Covid so.
Earlier on in the year, we had talked about our willingness to invest and expand resources in R&D and Keith just went into some details on that on that.
That was with the intent of pulling forward and accelerating future launches so while the entire world and especially in the U. S. Is currently looking at some labor shortages, we're not signaling that having an impact on any of our in process launches at this point only what we could bring forward at a faster pace. When we do staff up that's really the intent.
Are those comments as far as the joint robot it is progressing very well.
We've gone through.
Designs on some of the design freezes to the point, where we've had several surgeon trials on it gaining positive feedback and we do believe that it is on track for the second half, possibly later part of the second half of 2022 to become marketable based on all the information we currently have.
Yes.
Your next question comes from the line of Matt Henriksson.
Paul from Citi. Your line is open.
Yes, hi, thanks for taking the questions.
First turning back to robotics, and you talk about record high average procedures.
That is interesting given the fact that you have a lot of new ex Celsius adopters in the market.
Normally new adopters with water down the average.
Are you seeing those new adopters get up to speed faster or are you seeing kind of your legacy users kind of reaching an inflection point and get even utilize the robot even more.
Yeah, Matt I'm not sure I have the granularity to answer that.
My data is more on at the top level. So I think it's.
It's probably more the legacy users are utilizing the technology.
Greater amounts because as you are to your point it does take a while for new users to kind of get up to speed and bill.
Okay.
Helpful and then just turning to the international.
International market.
Could you just provide a little more color on the progress you are making in Japan. The timeline still seems in line, but just any additional commentary and then.
The Japan headwind.
You guys are still up over second COVID-19 could you just comment on which markets on which countries, we're driving that growth.
Sure.
The worst is behind us and Japan.
So we're looking back to last year, we still have.
We've got to get through a full cycle right for full year, and then we'll kind of reset the numbers. There on I believe we will be back to strong growth in that market.
In terms of the rest of the world.
We're strong in a number of companies countries historically for US, Australia, UK, Germany, and kind of what's going on.
For the major populations are.
Good medical carriers that we track pretty well.
Correctly with that.
Great. Thanks for taking the questions.
Sure.
Your next question comes from the line of Jason <unk> from Northland. Your line is open.
Hi, Thanks for taking my questions.
Maybe you mentioned early on the commentary that Youre.
Youre doing new types of procedures that hadn't been done before with robotics can you elaborate in terms of how this how the robots being used.
And particularly those newer procedures that hadn't been done in the past.
I think it just.
Comes balance as sort of complex deformities.
Challenging.
Entry ways, where they just they just don't have a lot of room.
Not necessarily kind of trust themselves.
With a manual procedure they can rely on the precision of the robot to get into really difficult angles for them in tight spots. So.
Come in deformity, corrections or sometimes like a tumor resection and those those kinds of procedures.
Okay, that's helpful and on.
On the trauma business I don't know if we'd get an update in terms of kind of what the run rate is for that business at this point.
Just as a sanity check I know that you've kind of talked about growth rates.
Curious to know kind of what the run rate is at the current moment for that business.
So we don't tend to break out our sections of the business or comment on them or project them forward with that and especially with trauma given its size.
It can really swing depending on how we hire reps when we launch a product how we enter into accounts as they are difficult to lay that out but just in general we stay away and just do our forecasting at the top for total Globus and when trauma becomes a larger part of our business for break it out at the appropriate time, but right now we tend to really not focus on that from $1 from perspective.
That's all very fair can I ask kind of what the threshold might be.
Okay.
That threshold and we're several years away from that I believe I mean, we haven't we have a lot of things planned, but I think we're still so little well a little while away from that.
Okay, and just last question related to trauma, if I could it.
It sounds like your view, you'll be about 70% coverage in terms of product portfolio.
The end of this year and it sounded like you were out youll, probably round out the rest of it.
In some time into next year at least from what from the commentary you had on this call.
You know I'm just curious in terms of the products, you're putting out there are these sort of.
Sort of fulfilling our portfolio of products or are you kind of beginning to I'll also add in some differentiated products.
That might really move the needle.
The answer is a little dog, so certainly need the basic bag, which we focus on but with that it's going to be some plus additional features that have gotten the attention of the market and usage in our allowance, allowing us to penetrate the market.
What we'll do though as we fill that back and get complete is accelerate some of those innovations and fast follow on innovations that we want to do just like we did in spine. That's the intent, but we're for now getting the basic getting it tested adding in some strong features and then looking to accelerate debt as we go forward.
Great guys. Thank you very much I'll jump out.
As a reminder to ask a question you will need to press star 1 on your telephone keypad.
Your next question comes from the line of Sam Bogacki from curious your line is open.
Thanks for thanks for taking the question just.
Cause me to jump back to the sequential comp you talked about on.
Our revenue from surgeons on occasions potentially coming back in September October should we read that as maybe a little bit more.
Revenue on a better sequential kind of day minute into.
For the fourth quarter.
Alright.
As a percentage of the total year, a little bit more revenue in the fourth quarter then on typical given that.
Delay of revenue there.
Thanks, Tim for the for the question I don't know that I would draw any strong conclusions from that I think that as we look for the back half.
We comment on the sequential slowdown from Q2 to Q3 I had a question earlier that asked you know what does that feel like relative to consensus and I comment that really it's going to be I feel it right now we're gonna be able to closer to Q1.
Vs. Obviously Q2 as I look to the spread I mean, typically I go back.
Several years, where typically roughly 25% of our sales in Q3 to 27% in Q4.
I don't see that being a whole lot different as we look to the back half of the year.
Okay. That's really helpful. And then as we as we get closer to the launch of true excuse me the imaging system.
Can you give us how is the thinking companies thinking about selling the systems to driving on.
Great appointments robotics, or how can we think about the imaging system, maybe even potentially helping to drive greater sharing and plans going forward. Thanks.
Thanks, Sam Yes, I think it will have the same sort of impact on robotics has.
It's going to be.
It's going to work better with our implants and there is a natural tendency to utilize the <unk>.
Implants on the enabling technology, so I think that they will have.
Very similar impact on what we're seeing in robotics in terms of pulling through implants with it.
Thanks for taking the questions.
Your next question comes from the line of Matt O'brien from Piper Sandler Your line is open.
Hi, This is <unk> on for Matt Thanks for taking the questions and congrats on the quarter.
So first for us with new on the new competitive navigation systems coming to market such as Paulson Hollow, how do you foresee this impacting our ability to sell robots in the future and how are you positioning the company to withstand these a bunch on competitive pressures.
Thanks, Chris.
I think robotics as a step up from from navigation.
<unk> seen that in.
Success, we've had so far for next evolution.
Sure.
Computer assisted surgery, so I don't think for newer.
Obligation systems that are going to have on.
On impact on us at all in terms of on robotic sales. It's another competitor from a from a navigation standpoint, so with the imaging system.
There will be other competitors.
Even seen everything that everyone has to offer.
Certainly no that we stack up very favorably against the competitors are that are in the market today and we've got some significant advantages over them.
Hello, Paul Thank you.
And just lastly.
From a modeling standpoint on the margins with the it seems like the top line on the EPS guidance does suggest you're probably going to stay on that mid 30% EBITDA range that you suggested in the past, but can you just confirm that's kind of where you're going to shake out for for the end of the year and where that can go into 2022.
I can't I mean, thanks.
Thanks for the question I can confirm that yes, we still feel like we're in mid Thirty's EBITDA business as we look for the back half of the year.
Going ahead, and I think it's still a little early to talk about 2022 from our perspective, but what I would say is that we've had we've had a history.
Being in mid Thirty's, EBITDA business and I expect that to continue.
Thank you.
Okay.
Our last question comes from the line of Craig <unk> from Bank of America. Your line is open.
Good afternoon, guys. Thanks for taking the questions just a couple on robotics.
David want to go back to 1 of your comments that you made that youre seeing.
In the accounts that you've placed excel since youre seeing.
Use expand beyond the surgeon champion so on that comment on that pretty interesting. So.
Wanted to see if if thats relatively a new phenomenon or if youre just starting to see that now for maybe systems that were placed a couple of years ago.
And if if you had been seeing it is it potentially accelerating from what you saw over the last couple of years.
Yeah. Thanks, Craig.
It's been there from the beginning.
Would say robotics from general interest in that by Surgeons has grown so I think it is accelerating I don't think its anything.
Particularly for us.
I think that Theres, just more interest in robotics, so more surgeons are interested in getting trained.
And the ones, where they are in the hospitals, where we've already sold it.
Kind of a layup for us theyre interested.
So, but we've seen it from the beginning some of our early.
Early sales were 2 accounts that have multiple systems because of the growth.
Usage of among the surgeons.
Searches across the board.
Got it understood and then just.
I mean, how would you characterize your growth in in the systems, where you are in the accounts, where you do have <unk> installed I mean is it.
Multiple on top of kind of what youre growing.
Otherwise.
If I understand your question.
We grow faster in robotics accounts than we do in non robotic accounts.
Yes, I was yes.
Yes.
What I was asking I was hoping that you might quantify that to some extent.
Yes.
Net of information from our standpoint.
Just not comfortable sharing it.
Okay Fair.
For taking the questions guys sure. Thank.
Thank you.
With no further questions.
The Globus Medical's second quarter earnings conference call. Thank you for participating and have a good evening.
[music].
Okay.