Q4 2021 Globus Medical Inc Earnings Call
Hello, and welcome to the Globus medical fourth quarter and full year 2021, Paul at this time all lines will be on mute and a Q&A session will be held after the prepared remarks I will now turn the call over to Brian Kearns Senior Vice President of business development and <unk>.
Investor Relations Mr. <unk>. Please go ahead.
Thank you, Chris and thank you everyone for joining us today.
Joining todays call from Globus medical will be Dave Demski, President and CEO , Dan <unk> Executive Vice President and President of water and Keith Pfeil, 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 are or may be considered forward looking statements. Our Form 10-K for the 2021 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.
Any forward looking statements made today are.
Our 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.
These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures.
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 will now turn the call over to Dave Demski, our president and CEO .
Well, thank you, Brian and good afternoon, everyone.
Globus finished an outstanding 2021 with a strong fourth quarter performance revenue for the year was a record $958 million, an increase of 21% over 2020 or $169 million in growth.
To put that in perspective, our growth dollars alone would have ranked us in the top 10 spawning companies in the world.
Revenue in 2021 was 22% higher than 2019 and outstanding performance in itself given the disruption caused by Covid, but magnified further by a recent independent research report showing that each of the other top six spine companies actually had sales declines over that same time period.
We achieved record sales and growth, while maintaining industry, leading profitability generating a record $2 <unk> and non-GAAP EPS of <unk>, 42% increase over 2020, and adjusted EBITDA of 34, 6%.
Even as we invested heavily in INR trauma and competitive recruiting.
Revenue for the quarter was $250 million of 7% over Q 'twenty as COVID-19 related headwinds remained strong throughout the quarter.
non-GAAP EPS was <unk> 49 per share a 16% decrease compared to the artificially high for Q2 'twenty.
Not only where business travel and surgeon education activity severely curtailed last year. Several other non operational factors as Keith will expound upon in his remarks also impacted the decline.
Adjusted EBITDA in the fourth quarter was a strong 34%.
Enabling technology continues to gain momentum producing a record $25 million in revenue for Q4, an increase of 40% over $4 20.
For the full year, enabling technology revenue was $81 million, an outstanding 100% increase over 2020.
The clinical superiority of <unk> GPS is the primary factor driving this growing momentum.
Robotic utilization, which is the number of cases performed per install robot was at an all time high in 2021, and nearly 30000 procedures have been completed using the <unk> GPS technology since launch.
Our spinal implant business continues to experience the flywheel effect of an increasing number of robots being sold combined with increasing utilization of each robot.
Our U S spine business grew by 3% in Q4 as Covid related shutdowns had a significant impact throughout the quarter. We saw this trend continue into January but all signs point to a rebound commencing late in Q1.
For the full year the U S spine business grew by 18% as we continued to take significant market share.
Robotics pull through coupled with contributions from recent product introductions and competitive recruiting were all factors driving growth.
Our international spine implant business grew by 9% in the quarter a remarkable result in light of Covid impacts and an ongoing drag from Japan.
Due to the impact of strategic moves we've made in Japan last year, we expect to see continued declines there through the first half of 2022 with the growth to follow off a reset baseline.
Should result in accelerated overall international growth in the second half of this year.
Trauma or drama revenue was up 32% in the fourth quarter and 39% for the full year.
Competitive recruiting of new product launches are driving growth. The anthem. Many frac system was launched unlimited basis in Q4 with excellent feedback from surgeon users.
Our preceding to full launch in Q1, we've had a series of impactful product launches planned for the first half of 2022.
We plan to launch the <unk> <unk> imaging system on a limited basis later this quarter with a full launch following in late Q2 early Q3.
There is tremendous anticipation and excitement about this technology among surgeons and we already have double digit order side.
The <unk> ecosystem Globus medicals unique combination of robotics imaging and freehand navigation that provides a seamless scalable and unmatched clinical experience for surgeons is about to become a reality.
I am extremely proud of our team's performance in 2021.
Record growth in profitability exciting clinically impactful, new technology introductions, and an unmatched focus on providing value to surgeons and their patients.
Thank you for a great year.
I will now turn the call over to Keith.
Thank you, Dave and good afternoon to everyone joining us for today's call.
Globus capped off a record 2021 with a robust Q4 performance despite ongoing cohort related disruptions and shutdowns.
For the full year 2021 revenue was $958 1 million growing 21, 4% as reported.
On a day adjusted basis sales grew by 22, 1% with two fewer selling days in the U S and international.
Net income was $149 $2 million, resulting in fully diluted earnings per share of $1 44.
non-GAAP net income was $211 $4 million generating a record $2 <unk>, a fully diluted non-GAAP earnings per share.
Adjusted EBITDA was 34, 6% for the year and we generated a record $219 4 million of free cash flow for the full year.
Q4, 'twenty, one revenue was $250 million growing seven 1% as reported and eight 5% on a day adjusted basis with one less selling day in the U S and international compared to the prior year quarter.
Net income was $15 1 million and non-GAAP net income was $51 $1 million.
Our Q4 diluted fully diluted earnings per share was <unk> 14.
Fully diluted non-GAAP earnings per share was <unk>, 49%.
Adjusted EBITDA was 34, 1%, we generated $59 $2 million of free cash flow for the quarter.
Taking a deeper dive into sales Q4 U S revenue was $213 million seven 2% higher compared to Q4 of 2020, driven by our INR and U S spine businesses.
National revenue for Q4 was $37 $1 million growing six 8% over the prior year quarter led by growth in spinal implants, despite lingering COVID-19 impacts and the impact of our strategic changes in Japan as Dave mentioned earlier.
Constant currency basis International revenue grew by eight 7%.
Q4, gross profit was 75, 3% versus 73, 9% in the prior year quarter.
140 basis point improvement was driven primarily by non repeating inventory reserves in the prior year quarter and was consistent with our expectations noted in our Q4 2020 earnings commentary.
Full year 2021, gross profit was 75% compared to 72, 4% in the prior year.
The increase in full year gross profit is primarily the result of lower inventory reserves and operational and supply chain efficiencies, partially offset by sales mix.
Looking ahead to 2022, we project a mid seventies gross profit rate.
Research and development expenses in Q4 were $51 million or 24% of sales compared to $15 2 million or six 5% of sales in the prior year quarter.
The increased spending is primarily reflective of in process research and development acquired during the quarter.
Adjusting for these costs Q4, 2021 research and development expense was $16 7 million or.
Or six 7% of revenue in line with the prior year quarter as a percentage of sales, but $1 $5 million higher driven by incremental investments in head count across our spine INR and trauma businesses.
Our full year 2021 research and development expenses were $97 3 million or 10, 2% of sales compared to $84 5 million or 10, 7% of sales in the prior year.
Adjusting for the acquisitions made in both periods research and development expenses were $63 million or six 6% of sales in 2021 compared to $60 1 million or seven 6% of sales in 2020.
The increase in spending is reflective of our continued investment in research and development to foster foster future growth and is consistent with comments made earlier in the year.
We expect our R&D expenses to be approximately 7% of sales in 2022.
SG&A expenses in the fourth quarter, or $106 6 million or 42, 6% of sales compared to $92 million or <unk> 39, 4% of sales in the prior year quarter.
The resulting increase is reflective of higher sales compensation and benefit costs as well as increased travel and training expenses driven by the resumption of normalized travel levels. Following the COVID-19 impacts experienced in the prior year.
Full year SG&A expenses were $408 1 million or 42, 6% of sales.
At $354 8 million or 45% of sales in the prior year.
The resulting decrease as a percentage of sales is reflective of leverage on fixed costs as a result of the higher volumes when comparing against the COVID-19 impact to 2020.
The income tax rate for the quarter was 23, 8% compared to 14, 9% in Q4 of 2020 with the resulting increase driven primarily by lower tax benefits associated with stock option exercises.
Our full year 2021 income tax rate was 17, 3% slightly lower than the 18, 8% in 2020, driven primarily by the nonrecurring tax treatment related to a 2020 acquisition, partially offset by lower tax benefits associated with stock option exercises.
Looking ahead to 2022, we expect our effective tax rate to be approximately 20% for the full year, which assumes no significant changes in the current U S tax policy.
Fourth quarter net income was $15 1 million and non-GAAP net income was $51 1 million Q4 diluted earnings per share was <unk> 14.
And non-GAAP diluted earnings per share were <unk> 49, compared.
Compared to <unk> 58 in the prior year quarter.
The quarter over quarter decrease was driven by more normalized levels of travel training and meetings noted above were noted earlier as well as non operational items, primarily a higher tax rate as previously mentioned higher stock compensation expense and lower interest income.
Looking ahead to 2022, we're expecting a mid <unk> adjusted EBITDA rate.
Full year diluted earnings per share were $1 44, and non-GAAP diluted earnings per share were $2 <unk>.
Reflecting a 42, 2% increase over 2020, primarily related to higher sales volumes. Following the 2020 impact of COVID-19, partially offset by approximately <unk> of non operating headwinds related to a higher share count and lower interest income.
Q4, adjusted EBITDA was 34, 1% compared to 36, 2% in the prior year quarter.
Full year 2021, adjusted EBITDA was 34, 6% compared to 29, 4% in 2020.
Net cash provided by operating activities were $76 $3 million for the fourth quarter and a record $276 $3 million for the full year 2021.
Free cash flow was $59 2 million for the fourth quarter and a record $219 4 million for the full year 2021.
Company remains debt free.
At this time the company is establishing full year 2022 guidance, we are projecting full year 2022 sales guidance of $1 <unk> 5 billion.
Representing 7% growth versus 2021.
We are guiding to a full year fully diluted non-GAAP earnings per share of $2 <unk>.
Presenting three 3% growth versus 2021.
I note that the 2022 guidance includes approximately <unk> of non operating headwinds, including higher shares worth for.
The higher tax rate or <unk> and higher stock compensation expense were <unk>.
Adjusting for these non operational factors, our 2022 guidance would have been $2 27, 8% higher than 2021.
Overall, we view this guidance is appropriately conservative and reflective of the current operating environment around COVID-19 and inflation related impacts.
Our 2021 results represent our teamwork, our commitment and our focus on execution, we continue to differentiate ourselves in the marketplace and is a testament of the hard work and dedication of each of our Columbus employees. We remain excited for the future as we continue on our mission of improving patient care.
Operator, we will now open the call for questions.
Thank you.
Last quick question, you will need to press star one on your telephone to withdraw your.
Question. Please press the pound.
Standby LC compile the Q&A roster.
Our first question comes from Matt mix excuse me, Matt mix at Credit Suisse.
Your line is open.
Great. Thanks.
Thanks, so much for taking the questions and congrats on a really strong finish to a pretty amazing year given the circumstances.
I wanted to follow up on.
Some of the comments around <unk>.
Yes guidance in particular as you pointed out there are some items that.
Ex those items of 7% to 8%.
Can you talk a little bit about where in your guidance Youre contemplating things that some of the other companies in this space have talked about like rising input costs staffing challenges labor costs.
Freight et cetera, things that generally are driving up operating costs up a little bit.
Maybe maybe give us a sense of how those figure into your guidance and I have one quick follow up.
Thanks. This is Keith speaking, so we projected our guidance at $2 10, and as we look at the year.
We see inflation as a market event everyones experiencing it and we havent baked in our numbers, but when you step back and look at the 240 to $2 10, I commented on the <unk> of non operating headwinds, but the other things that are that are impacting the business as we think about getting back to more normalized levels of spend.
Really the travel and the trainings that go along with the surgeons and <unk> that we provide that's worth going into next year likely an 8% headwind and then one of the things that we commented on earlier in the year was our and continued investment into R&D and as you look into next year, we're seeing roughly I would say call it <unk> of <unk>.
<unk> investment in R&D.
When you look at those things together, coupled with the inflation, we're landing at about $2 10.
Okay and can you maybe just elaborate a little bit on the spend on R&D and sort of the expectations for returns in terms of growth or programs that you are investing in.
So we're continuing to invest heavily in our in our spine business.
Well as a robotic businesses, we've talked about that in Q1.
Of our of our earnings call earlier in the year and really all time points to us continuing to do that.
Dave talked earlier about some of the benefits that we're seeing for robotic technologies, we continue to invest in that and really grow for the future.
Okay and then just one quick follow up I had was on.
The environment for.
Robots and spending in capital equipment in general.
Some of the other companies in this space have talked about a fairly strong.
Year for equipment.
A strong year for robots.
Any sense.
Whether this is something that needs to sort of.
Take a breather or catch up here in 2022 or weather.
Orders and demand in the pipeline for new deals with.
Would indicate just continued strength into 2022.
Yes, Matt this is Dave.
It's very strong I don't see any.
Curious in particular, it's been accelerating.
The demand for <unk> has been strong.
Becoming more and more common.
The narrative has changed from why robotics to which robot.
We're clearly establishing our.
Our lead there and then as I mentioned, there is a lot of enthusiasm over our <unk> <unk> system, which is going to launch later this quarter. We've had every surgeon we showed that <unk> seems like they want one so I don't see it backing off at all.
Yeah.
Great Thanks and congrats.
Thank you.
Thank you.
Our next question comes from Matt Taylor of UBS. Your line is open.
Excuse me hi, guys. Thanks for taking the question.
So I wanted to ask the first one about margins longer term, maybe just talk about the difference between what Youre doing this year with some of the investments obviously headwinds year over year from spending back to normal and inflation and how we should think about margins longer term.
You start to get more leverage at some point and what would the inflection point for that be.
Thanks for the question.
It's a good question, but as I look at where we're at and where we're going and our goal is to always maintain a mid seventies GP.
As we look longer term and look at our EBITDA rates were always looking to be in that mid <unk> range. We could we could toggle our investments in various parts of our business really is.
<unk> that but we're investing now to drive growth to drive topline growth for the future and as we get that growth that's going to create a more fixed cost leverage in our P&L. So I think by doing that and investing for growth today helps project the margins going forward I feel that we're going to work to try to stay in that range.
Yes, I can add a little bit maybe to that Matt in the spine business I don't think youll see much.
Much greater improvement in our margins there, but we have a lot of operating leverage in front of us and the orthopedic side of the business and the capital side those are both.
Fairly nascent businesses for us and we're funding it with spine, but.
Once we start to hit some volume numbers, there I think those businesses will definitely expand.
Can I ask a follow up on the robotic strength I mean, you've talked in the past about getting pull through on these placements and so obviously had a great year in 2021 with enabling Tac I guess are you still seeing the same kind of trend and could that bode well for pull through on implants in 'twenty two.
Yes. It does we're seeing that generally the same kinds of trends and as a company we're focusing on.
Really going back to that installed base and seeing if we can get more.
More users to utilize the technology once it's placed in the hospital and that's a big focus for us in 2022.
Great. Thank you guys. Thanks, so much.
Thank you.
Thank you.
And next we have begun seeing RBC your line is open.
Great. Thank you for taking the question I guess my first one is on <unk> imaging system.
Can you talk to us about the delay why why is there a delay in the launch and then just elaborate on your go to market strategy.
Are you targeting the replacement opportunity Greenfield, obviously going after a major competitor.
So just any color there would be helpful. And then on the week on robotics do you still plan to launch that in the second half and then I have a quick follow up.
Yeah.
Well, thank you Shannon and I will try to.
It goes off one by one in terms of the delay.
It's just taken longer than we thought it's nothing significant in terms of the technology.
Our hurdle to get over there is just a lot to do to get that over the line.
I wish I wish we were a bit earlier, but very confident we can get it.
Get it done this quarter go to market I think initially we're going to be targeting our installed base of <unk> users. Those are there's a high demand among them, it's going to make those procedures mud.
Much more efficient.
Much much easier for them to do.
And then from there we'll be branching out to target more of that free hand navigation.
<unk>.
You alluded to earlier.
And then I apologize I forgot the last part of your question.
I was just wondering if you plan to launch the Vic on robotics.
Platform in the second half of 'twenty, two if you'd like you'd previously indicated.
Thats been delayed as well we're going to be early early 'twenty three is the target for that.
Got it and then just as a follow up I was wondering if you could talk about trends that you're seeing on the procedure volume side in Q1, So in January and February and.
Spine. It typically has a high been burdensome procedures come back pretty quickly. So do you expect there.
To come in Q1, or do you expect a longer tail given staffing shortages. Thank you for taking the questions.
Sure, Yes January was really bad.
We've already started to see a turning in February at the last three weeks.
Progressively higher not back to where we want it to be but definitely I think we've hit bottom and we're going in the right direction.
Im not going to try to predict what's going to happen with Covid, though.
It's proved to be fruitless for everyone, but it's encouraging where we are right now.
Thank you.
Thank you.
And next we have Matthew O'brien.
Piper Sandler your line is open.
Great. Thanks for taking my questions I guess just for starters on the topline guidance. This time last year, you guided about $35 million below the street.
Well above what you initially guided.
Actually what the street was modeling and this time youre guiding about $25 million below the street and I know January was soft and maybe <unk> is pushed a little bit in terms of the contribution but.
There are other factors that we should be thinking about I don't know if thats, a rep hiring perspective or a robot.
Respective that gives you a little bit more caution versus kind of where the street was modeling things.
Thanks, Matt.
I'm sorry.
We don't pay that much attention to the street, we look internally to our own forecast and we always want to be appropriately conservative going into a year I.
I feel really confident in the business U S. Spine business has been just cranking away robotic momentum is there.
We're going to have three D out this year, Japan is going to turn around the second half. So I feel really good about the business. We just have taken a very conservative approach over the years.
When we give guidance and we're doing that again.
Okay Fair enough and then the follow up is on acquisitions.
Sorry, if I cut somebody out there.
Theres been some talk about you guys doing a scale acquisition I'm curious if you have any thoughts about the need for scale in spine and then if not there is some pretty interesting assets still in the spine space, but more on the management side of things are those higher on the list in terms of things that you're potentially looking at from a acquisition perspective.
Okay.
No, it's actually a bit different.
More active in terms of.
Growing the business through some BD on the orthopedic side of the business I think.
We're really strong in spine.
There's really nothing in spine.
<unk> to us at the moment, we're more focused on.
The other piece of our business, which is smaller.
There is nothing I would say transformative in the in our in our sites.
Right now, but we are looking at several.
To size deals.
Our history in the past.
Great guys. Thank you for your question.
That's perfect. Thank you.
Yeah.
Thank you.
Next we have David Saxon Needham Your line is open.
Yes, hi, guys good afternoon, and thanks for taking the questions.
Maybe one on enabling tact.
It doubled this year.
Really built out the enabling platform.
<unk>, three <unk> et cetera.
How should we think about those launches kind of starting to ramp.
And for 'twenty to be another double.
Yes.
I think.
As I said, we're going to get some.
A few units out this quarter kind of a.
Soft launch if you will with the full launch starting in probably end of Q2 it might be end of Q3, and then strong in the second half of this year.
I don't want to comment on the double.
We don't really drill into the components of our business I can tell you that we're really excited about what we're seeing from our technology from the adoption of our technology.
Not only what's right in front of us, but some things we have coming after that.
Okay got it.
And then maybe on trauma.
Kind of how close are you to having a full portfolio there.
And then in terms of growth, 32% in the quarter.
Is that sustainable in 'twenty two thanks for taking the questions.
Sure.
Bag in trauma.
By the second half of this year I think for us kind of a <unk>.
Interesting term, we're going to have enough in our bag to be a full line player and be able to compete with.
The major companies by the end of this year.
And is that growth rate sustainable.
Yes, I think that.
Certainly achievable in 2022.
Great. Thank you.
Thank you.
Next we have Greg <unk> of Bank of America. Your line is open.
Hey, guys. Thanks, Thanks for taking the questions maybe a follow up on.
Top line guidance and to the extent that you guys are willing to share.
How do you think about the contributions from from each of the businesses I know generally you've been reluctant to talk.
Sure that info, but in terms of the composition of the guidance how do we think about that incremental revenue coming in where is it coming from and to what extent.
Thanks for the question.
As David said earlier, we're not going to get a ton into the parts and pieces, but what I will say is if you look at the business, where there by muscular skeletal and INR or you look U S versus international the parts and pieces of our business. We continue to feel extremely positive about.
As we look into 2022 and beyond.
Testing in our business, we're driving investment for the future and we feel that we will see that turn out to us taking share and driving sales growth.
I alluded to in my earlier prepared comments that our guidance is appropriately conservative, but there is nothing that I sit here and feel that we have kind of a kind of an ongoing issue that I would be concerned about our ability to grow across our business like I said, whether it's U S international musculoskeletal versus INR.
Got it thanks, Keith that's helpful and then.
Dave I think you alluded to it but wanted to ask more specifically how to think about some of the new product Rollouts. Obviously, you have three D coming.
Coming out and launching this year, but from a new product perspective.
Is it do you have a number of launches coming this year on the spine side do you have a number coming on iron ore side, just maybe a little bit more perspective of what to expect during the year.
Sure. Thanks, Craig.
I think we've been pretty clear that the.
It's a big one coming with <unk>, followed by our by our hub for him.
Offering I think spine, we are typically 10 to 12 launches a year.
Currently our target going into 2022 trauma is probably the real bright spot there is a number of.
Products that we were.
Working on for a while they're going to hit early early part of this youre going through this year. So.
And then our orthopedics business actually has some some losses as well so.
That's.
Who we are and who we are going to be in.
The number one focusing the company is to drive great technology.
Great. Thanks for taking the questions guys.
Thank you.
Thank you.
Next we have Ryan Zimmerman of <unk> your.
Your line is open.
Alright.
For taking the questions and congrats on a great year I just wanted to follow up on a couple of questions.
David when you think about U S spine performance kind of relative to the market.
You look at some of the larger players they were down a bit in the fourth quarter. Some of the smaller players. We saw were up about double digits, obviously with <unk>.
A few major players still yet to report next week, but I guess I'm kind of curious if you can kind of talk about the U S performance that growth this fourth quarter relative to the market and kind of where do you think you're tracking.
Relative to that level and if you could kind of give us color on what you think that level was just given the dynamics in the fourth quarter through the quarter it would be helpful.
Thanks, Ryan, it's really challenging to figure out where we are given COVID-19 . So.
From the early returns of some of the folks who have reported again, we're taking significant share.
Alright, I can't speak to the smaller guys, who have reported or how that impacts us.
And I don't really have a feel for the overall market.
No. It was heavily impacted by COVID-19 , so likely down versus versus prior year overall, but that's more of just a guess and kind of where we where we landed versus some of our earlier trends. Our business is strong I can tell you that we havent lost significant pieces of business in the U S and we continue to.
See.
Growth in the recent product introductions that we've continued to sell robots and drive pull through from that so.
It's strong I, just can't I can't really see the overall market and it's really hard to.
Figure out what's going on given what.
What's happening with Covid.
Okay.
Two follow ups from me one we've heard some of the larger capital equipment companies have obviously called out chips.
As being a gating factor to sales are meeting demand in 2022, one wanted to see if there is any concern there around chips for the <unk> platform or for three D and whether that could gain sales and then I'll just ask the other sneaking a quick follow up to.
The Japan distributor distributor dynamics, how much of a lift should we expect when that distributor dynamic clears in the second half of 2022 and the international business. Thank you.
Sure.
In terms of chips I would just I would.
Extend that to all supply chain. So it's not just chips. It's all components are challenging it hasnt cost us revenue now, but it's certainly on our radar and making our life really hard.
It's a risk that's out there for 2022.
I'll, let I'll, let Keith maybe handle the international of course as it relates to Japan the distributor dynamic.
As we look ahead, we finished 2021 and I think international grew by about 11%. We've historically said that we believe that the international business can grow mid to high teens, I would expect us to be able to get back to that on an annual basis. So you would expect the second half of the year to accelerate ahead of that to potentially balance.
And to get closer to that 15 by the end of this year.
Thanks, Keith Thanks, Dave appreciate it.
Sure.
Thank you.
Next we have Kyle rose Kenneth.
Your line is open.
Great. Thank you for taking the questions.
I wanted to start on enabling I mean look you put up a good quarter and enabling the tough backdrop and particularly without.
The imaging platform, maybe just help us understand kind of where that stands from a utilization perspective into your customer base.
You're talking about a really good utilization there is continuing to see strong pull through can you just kind of level set maybe how many of your customers might have it or on a percentage basis or on an absolute basis, just trying to really understand where we are in the uptake and the adoption within the historical core global customer base.
Yes.
To be honest I don't feel comfortable sharing that information from a competitive standpoint.
Totally fair I had to try.
Yeah.
I also wanted to touch on the orthopedic side of the business. So it's been a couple of years since you acquired the <unk> business I think earlier in the call you talked about the fact that the recount robot is going to come in 'twenty three.
Where do you stand just from a from an implant perspective do you have the right implants, there do you need to make different investments from.
From an M&A perspective technologies distribution, just help us understand what you need to do on that total joints business before the recon robot comes next year. Thank you.
Sure.
We do not have the implant portfolio, we need to really make a strong outing. So we are working on that have been working on that and expect to roll some products out this year.
I don't see us filling that.
The gaps in our product portfolio with acquisitions in terms of hips and knees in particular.
I do think there's opportunity for scale there. So that's not off the table because we are very small right now.
Then the extremities is an interesting.
Segment for us as well so fast growing segment. So that's an area where we've we've taken a look at a few things.
Does that help.
With your question.
Yes, thank you very much.
Sure.
Thank you.
And next we have Samuel Pitofsky twist.
Your line is open.
Hi, Thanks for taking the questions just a first quick one on the U S spine just would be curious to hear about.
A portion of the growth in the U S coming from robotics specific instrumentation versus where youre seeing potentially share gain with other ports other parts of the portfolio.
Yes. Thanks for the question in terms of breaking out we typically don't break out the parts and pieces of where the growth is coming from what I would what I would say is that as you look at our U S spine business, it's really a combination of what we always talked about new product innovation, our competitive recruiting and the pull through from implants.
<unk> III continuing to propel the business from a growth perspective, and we see that continuing as we enter 2022.
Great.
Helpful and then.
When thinking about <unk> and going to customers with it in.
In terms of any competitive trialing or you are you seeing it being trialed against other more novel imaging technologies on the market or or is it typically being compared to end of life competitor out there.
Interesting question.
I assume.
It is.
We don't really trial against it but we have customers looking at our technology.
I think there.
Their interest is probably lines up with the market share of the other imaging systems in the market, particularly ones that are utilized more in spine.
I'm sure that some of the more innovative ones are getting a look but we don't care that much about them.
Not disproportionately I think maybe I can answer it that way.
Okay. Thanks.
Okay.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound key.
Our next question comes from Steven Lichtman of Oppenheimer.
Your line is open.
Thank you hi, guys.
Wanted to ask you first on trauma.
Where do you think you stand now in terms of coverage of procedures in terms of your product portfolio and also from a salesforce perspective, just love to get an update on where you feel you are overall in terms of being able to.
Go out the market.
Okay.
Hey, Steve is Danske Villa so again, it's always be evolving and expanding story, we have about 14 family products out there now I think with that we're saying we would cover 50% to 60% of the market certainly plan as David said to launch several more this year to cover that further.
I believe and through what I'm, saying, we're at a point, where we're able to get into some significant.
Facilities and support their needs for the most common procedures in with that is the main driver of growth for us. So we will continue to expand the product line and fill that out over time, but we're in a good spot now.
With that is the competitive recruiting that's been accelerating for us. So again, we are small and we have a lot of spaces to fill but the traction that has been occurring really through 2021 is very promising and I do feel bullish as we argue from what I've seen so far in the first quarter 2022 that that will continue.
Great. Thanks, Dan.
Keith just a follow up on gross margin and I apologize. If you mentioned this but just relative to 2021, given the inflation commentary should we assume gross margin down or there is some offsets that.
You can keep it relatively flat to maybe.
Or even up in 2010.
Thanks for the question, we projected mid seventies GP I think it's fair to assume that we are seeing inflation, just like everybody else, but we're also growing in it.
Obviously getting us some leverage in our cost structure. So as I think about 2020 to mid Seventy's is kind of kind of where I see I wouldn't project one project upside.
Okay got it thanks guys.
Thank you.
Thank you.
And we now have decent.
Kaplan.
Is open.
Hi, Thanks for taking the questions just two follow ups, one on guidance and one.
On trauma, but so first off.
Your guidance I think the way you described it especially related to product launches kind of assumes.
Our strong second half versus the first half.
So related to that one are we assuming that I know, we can't predict COVID-19 with covered pretty much worked its way throughout the throughout the year and then secondly related to that in the first quarter.
I'm not sure how to read your comment that generally is very weak. It bounce back should this be a normalized first quarter or is it going to be a little weaker.
Relative.
Last year, because of because of the COVID-19 impact and launches.
Thanks.
Thanks for the question Dave commented that January was weak, but we are starting to see some bounce back in February will it all bounce back in the same quarter versus having some bleed through into Q2, we don't necessarily know, but I think your earlier comment about some of the launches and a strong second half I think that's directionally correct.
Okay, and then I don't know.
So if you can comment on this but you did mention that you had it sounds like in a record year in terms of sales force hires in the past you've kind of give us indication of how large you have been able to grow your sales force percentage wise.
Can you can you give us any kind of indication on that in terms of.
What 2021 look like and it sounds like 2022, Youre optimistic that you can do go into some of our run rate.
Yes.
'twenty one was not a record year for US I think we had a really strong quarter, but we've had years that were better.
For a renewed emphasis on it I can tell you the pipeline right now is extremely strong so we're coming out of the gate strong but.
Last year was a Goodyear just wasn't our best.
Okay. Thanks, a lot I appreciate it.
Sure.
Thank you.
With no further questions that concludes the Globus medical fourth quarter and full year 2021 earnings call. Thank you all for joining us for the call and have a nice evening.
Yes.
Yes.
Okay.
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