Q3 2024 Globus Medical Inc Earnings Call
Welcome to Global SMeticals 3rd quarter, 2024 earnings call. At this time, all lines will be on mute and a Q&A session will be held after the prepare remarks. I will not turn the call over to Brian Kearns, Senior Vice President of a Business Development and Investor Relations. Mr. Kearns, please go ahead.
Brian Kearns: Thank you Victor and thank you everyone for being with us today. Joining today's call from Globe of Smedical will be Dan Skivilla, President and CEO and Keith Files, Chief Operating Officer and Chief Financial Officer.
Brian Kearns: This review is being made available via webcast, accessible through the investor-relation section of the Glovis Medical website at www.glovismedical.com
Brian Kearns: Before we begin, let me remind you that some of the statements made during this review are, or maybe considered, forward-looking statements.
Brian Kearns: are 410K for the 2023 fiscal year and are subsequent filings with the Security's and exchange commission identified certain factors that could cause or actual results to differ materially from those projected in any forward-looking statements made today.
Brian Kearns: RSCC Filings, including the 10K, 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 gap. We believe these non-gap financial measures provide additional information pertinent to our business performance.
Brian Kearns: These non-gap financial measures should not be considered replacements for and should be read together with the most directly comparable gap financial measures.
Reconciliation to the most directly comparable got measures are available in the schedules accompanying the press release and on the investor relation section of the Globis Medical website. With that I will now turn the call over to Dan Skivilla, our President and CEO.
Dan Skivilla: Thanks, Brian, and good afternoon, everyone. September 1st, marked the one year anniversary of the Globus New Vase of Murder, making this quarter the fourth consecutive combined earnings release with sales growth, strong financial performance, and best in-class innovative product launches.
Brian Kearns: Gloves delivered an exceptional third quarter, with sales of $626 million, growing $63% or $242 million. Non-Gat PPS was a record 83 cents, increasing 45% even with the 20% increase in diluted shares versus prior year.
Brian Kearns: We also had a record free cash flow of $162 million in Q3. This amount is equivalent to our 2020-3 full-year free cash flow.
Brian Kearns: These results reflect our continued drive in market penetration, synergy, acceleration, and sustained profitable growth through financial discipline.
Brian Kearns: Based on our results so far, I would like to compliment the entire Gloves team for their speed and effort in completing the most successful spine merger in history. They're still a great deal of work ahead of us, but I look forward to building from this base and accelerating growth as we move into the future.
In addition to our great financial performance.
Brian Kearns: Gloves wants four new products in Q3 across our businesses, reaching 13 product launches year to date, and more to come this year.
Brian Kearns: These results are a testament to our incredible team working tirelessly around the clock to drive integration. Overcome challenges and create scalable solutions so that we can reach steady state quickly and shape the markets in which we compete while delivering innovation to our surgeons.
Brian Kearns: Focusing on the performance of our business, you aspiring group 55% in Q3 with significant gains across our product portfolio in expandables and my ask screws, biologics, lateral and cervical offerings.
Brian Kearns: The growth is driven by several factors including a high retention rate at all levels of our field sales team, successful distributor to direct conversions.
Brian Kearns: The strength of our combined product offering, increasing product cross-selling, implant pull-through from robotic procedures and contributions from prior period competitive effort creating.
Brian Kearns: Competitive rep recruiting remains strong in Q3, and the pipeline is solid as we enter Q4. 2024 is positioned to be one of the strongest competitive recruiting years, as we continue to attract the most successful and tenured competitive professional reps who see the power and future we can offer them as a destination of choice for innovation and growth.
Brian Kearns: As mentioned earlier, we continue to flex our innovation muscle, launching four new products from our prolific R&D pipeline in Q3. I want to share these meaningful launches with you.
The Excelsius Navigation Hub pairs navigational accuracy with innovative patient safety features such as patient array shift tracking and navigation of door pro-oscillating instruments.
Brian Kearns: The hub seamlessly integrates with Globus products and procedures, offering enhanced navigation of best-in-class instruments and implants for a complete procedural solution from the cervical spine to the sacrum.
Brian Kearns: is the only freehand navigation system on the market to offer the versatility of three distinct imaging workflows.
Brian Kearns: The first is with Excelsius 3D imaging with automatic registration for optimized flexibility and efficiency.
Dan Skivilla: The second is preoperative CT to fluoroscopy merging. And the third is interoperative 2D fluoroscopy.
Dan Skivilla: Excelsi's Hub Navigated Instruments are an expansive and comprehensive suite of navigated instruments that enable the navigation of a wide variety of open and minimally invasive spine procedures, including XLIF, TLIF, posterior cervical fusion, thoracolumbar fusion, and SI joint fusion.
Dan Skivilla: They are designed for optimal camera tracking throughout the procedure and are compatible with innovative angled navigation arrays that reduce the need for interoperative camera adjustments, streamlining all workflows, while maintaining backward compatibility with existing Excelsis GPS navigating instruments.
Dan Skivilla: Deactivi 3D Total Knee System is a contemporary total knee solution that pairs cementless reconstruction with operative efficiency and anatomic fit.
Dan Skivilla: Compatible with manual robotic-assisted workflows, Actify 3D is engineered to combine implant endurance and a porous lattice interface for cementless fixation, addressing surgeon preferences and varying patient anatomies.
Dan Skivilla: Actify 3D complements the Excelsius Flex robot with the TKA Total Knee Arthroplasty application that received FDA clearance in late Q2.
Dan Skivilla: E-Flex enables consistent, accurate anatomic cuts while maintaining surgeon flexibility and tactile feel.
Dan Skivilla: It accommodates varying surgeon preferences by offering imageless and CT-based workflows, ergonomic and unrestricted jiggless resections, and restores surgeon control while active tracking is engaged.
Dan Skivilla: The system features advanced registration and planning algorithms to enable streamlined and efficient procedures. The system is slated for launch in Q4.
Dan Skivilla: for Trauma.
Dan Skivilla: The Captivate Sola headless compression screw system provides a fast and efficient solution for fracture repair, bone reconstruction, joint fusion, osteotomy, and arthrodesis. This headless screw is capable of accommodating a wide range of patient anatomies, the intuitive graphic case design, aids efficiency, and reduces space in the OR.
Speaker Change: In addition to driving growth from the 13 products we've launched so far this year.
Speaker Change: I look forward to sharing future impactful launches as we go through the rest of 2024.
Dan Skivilla: This is a year of record launches for us, and this innovation is key to building long-term growth while working through near-term merger integration.
Dan Skivilla: We are investing significantly in comprehensive product development training to harmonize our product development processes between Audubon, San Diego, and Methylene. And this is expected to further expand our significant lead over the competition in IP generation and new product development.
Dan Skivilla: Enabling technology sales for $38 million, an increase of 39% versus prior year.
Dan Skivilla: Q3 was the highest number of unit placements since launch, growing 50% over prior Q3, including the acceleration of our rental program where, unlike unit sales, we recognized revenue over the rental contract life.
Dan Skivilla: Robotic procedures continue to accelerate, growing 34% versus prior year and exceeding 84,000 robotic procedures performed since launch.
Dan Skivilla: As mentioned earlier, the Excelsius Hub launch in Q3 is going well as we enter the freehand navigation market, opening the largest market segment of navigation for Globus Innovation and Growth.
Dan Skivilla: The combination of the E3D imaging system with the eHub navigation platform gives Globus the most comprehensive and sophisticated navigation offering available. We also plan to advance navigation further in the near future with our XR Augmented Reality Headset.
Dan Skivilla: designed to work with the Excelsior's Hub.
Dan Skivilla: We expect to gain FDA clearance of the headset in Q4.
Dan Skivilla: The DuraPro and Versera Power Tool Systems launched in Q1 continue to differentiate our Power Tool offerings and pair seamlessly with our enabling tech portfolio.
Dan Skivilla: The unique ability of door pro-oscillating drill to add extra safety around soft tissue structures including neurovascular anatomy While allowing for easy removal of bone help surgeons work safely and efficiently
Dan Skivilla: Market interest remains high for our state-of-the-art Excelsis 3D imaging system, with most surgeons immediately recognizing and appreciating the stark differentiation over existing systems and seeing the value of combining E3D with the Excelsis GPS or HOP.
Dan Skivilla: We're delivering on our promise to create and launch our Enabling Tech Ecosystem, an ecosystem that is designed and built from the ground up to communicate together seamlessly.
Dan Skivilla: Investment in this area remains strong as we enhance our ecosystem offering and bring about more functionality in our imaging, navigation, and robotic current and future portfolio.
Dan Skivilla: Our international spinal implant business delivered record sales in Q3 growing 86% on a constant currency basis compared to prior year with high double-digit growth in most markets, strong dollar contribution driven by Japan, Germany, the UK, Italy, Brazil, and Colombia.
Dan Skivilla: We have yet to fully harness the power of the Combined Globus Invasive Product Offerings internationally and feel this will be a significant tailwind moving forward in 2025 and beyond.
Dan Skivilla: The combined trauma and NSO business delivered 99% growth for Q3, driven by the continued powerful performance and market penetration of our base trauma business, combined with the fast uptake of the Nuvasis specialty orthopedic growth now.
Dan Skivilla: The combination of these two businesses is one of the strengths of our merger, offering a broad range of products and market-changing innovation.
Dan Skivilla: Integration is progressing well as we continue to cross-train our field, implement common global systems, expand our investment and sets, and bring new products to market. There's been a great deal of progress from our teams and we're fortunate to have such strong leaders throughout the world.
Dan Skivilla: You can see from this quarter's financials, synergies have been identified and actions have begun to realize benefits, focusing on out-of-pocket spending and prioritizing investments to match future growth plans. In-house organizational structures have been implemented and we're working towards reaching steady state by year-end.
Dan Skivilla: I want to thank the World Wide Globus team for your dedication and support, delivering an incredible quarter, and furthering the pathway to becoming the preeminent musculoskeletal technology company in the world. I will now turn the call over to Keith.
Keith: Thanks, Dan, and good afternoon, everyone. During our third quarter, we passed the one-year mark since the closing of the invasive merger.
Keith: Much work has been done thus far in becoming the most successful spine integration at the one-year mark.
Keith Files: Much work remains. We are hard at work to continue in this vein. I'm extremely pleased with the outstanding results of our third quarter.
Keith Files: As I look at sales performance, profitability, the balance sheet, cash flow, and cash generation, I see Q3 as a fundamentally complete quarter. All facets of the business performed, and the outcomes are clearly visible in our third quarter results.
Keith: Revenue for the third quarter was $625.7 million, growing 63.1% as reported. Day-adjusted sales growth was 60.8%, with one more selling date in the US versus Q3 of 2023.
Keith: Our Q3 gap net income was $51.8 million, resulting in 38 cents of fully diluted earnings per share. This compares the gap net income of $1 million and one penny of fully diluted earnings per share in the prior year quarter.
Keith: Q3'24 non-GAAP debt income was $114 million, growing 73.9% versus the prior year quarter, resulting in 83 cents of fully diluted earnings per share.
Keith: Third quarter non-GAAP earnings per share grew 45% despite a 20% increase in diluted shares as a result of the merger. Our third quarter adjusted EBITDA was 31% and free cash flow was a record $161.7 million.
Keith: Musculoskeletal revenue in the third quarter was $587.4 million, growing 65% as compared to the prior year quarter, driven mainly by the contributions from the Nuvasiv merger. On a pro forma basis, assuming Nuvasiv was in our prior period results, musculoskeletal revenue grew 5.4% compared to Q3 of 2023.
Keith: Growth was again led this quarter by U.S. Spine and our international spine business.
Keith: Growth was driven by increased sales within the U.S. market across our eGPS and E3D products. In addition, we also sold and shipped our first eHub units during the quarter. Overall, the third quarter represented a record for total Excelsius units placed in a quarter.
Keith: Looking ahead to our fourth quarter, the capital market remains healthy and we are well positioned with a strong pipeline and seek to close the year strong.
Keith: U.S. revenue in the third quarter was $495.8 million, growing 60.3% as reported compared to the prior year quarter. Looking at the quarter on a pro forma basis, U.S. revenue grew 7.3%, driven predominantly by U.S. spine and enabling technologies.
Keith: Looking back on the past year since the merger closed, I call attention to the fact that our U.S. business has grown on a pro forma basis in each of the four quarters led predominantly by our U.S. Spine and Enabling Technologies businesses.
Keith: International revenue during the third quarter was $129.9 million, growing 74.8% as reported compared to the prior year quarter.
Keith: On a pro forma basis, international revenue grew 5.1 percent, driven by strong implant growth primarily in our EMEA countries, partially offset by lower capital sales.
Keith: Q3 GAAP gross profit was 53% compared to 62.2% in the prior year quarter, which is inclusive of product-related intangible amortization for both periods presented.
Keith: The decline in GAAP gross profit is primarily the result of step-up amortization from the Nuvasiv merger, which will end during our fiscal fourth quarter.
Keith: The declining gross profit rate was driven primarily by the inclusion of new bases in our consolidated results as well as a higher mix of capital sales in the quarter.
Keith: We expect the full-year adjusted gross profit rate to be in the range of 67% to 68% for the full year 2024. Looking ahead, we expect to work back towards the goal of a mid-70s adjusted gross profit margin as we complete the integration and realize all of the synergies across manufacturing, operations, and vendor management.
Keith: Research and development expenses in the third quarter were $35.4 million, or 5.7% of sales, compared to $29.3 million, or 7.6% of sales in the prior year quarter.
Keith: The increase in spending is the inclusion of an evasive in our consolidated results, partially offset by synergy actions taken.
Keith: Consistent with our previous expectations, we still expect R&D expenses to be in the range of 6.5% to 7% for the full year 2024.
Keith: SG&A expenses for the third quarter were $240.7 million, or 38.5% of sales, compared to $156.2 million, or 40.7% of sales, in the third quarter of the prior year.
Keith: Consistent with prior quarters, the increase in total SG&A dollars is directly the result of the newvasive merger, partially offset by cost actions taken and fixed cost leverage on spending.
Keith: Consistent with our comments last quarter, we still expect full-year SG&A expenses to improve one to two percentage points over the full-year 2023 SG&A expense as a percentage of sales.
Keith: Net interest expense in the third quarter of 2024 was $0.8 million compared to net interest income of $7.8 million in the prior year quarter.
Keith: The resulting $8.6 million pre-tax unfavorable impact is driven by the use of cash to A, fund an evasive line of credit pay down at merger close.
Keith: B, fund sharer purchases related to our buyback plan, and C, interest expense from the senior convertible note, which is assumed from Nuvasive at merger close.
Keith: Our non-GAAP tax rate for the quarter was 29.1% and does not include this non-recurring benefit. We expect our full year non-GAAP tax rate to be in the range of 24 to 25% for the full year 2024.
Keith: Shifting the cash flow, our third quarter results were stellar with both record operating cash and free cash flow.
Keith: Operating cash flow was $203.7 million and free cash flow was $161.7 million. As Dan mentioned earlier, our Q3-24 free cash flow was essentially our entire cash flow for fiscal 2023, which is $165.2 million.
Keith: The drivers of the improved cash flow are twofold. One, we are seeing the cash benefit of SynergyCapture roll through our P&L as our cash earnings continue to improve. And two, we are unwinding the impacts of the system go-live to accounts receivable, which I commented on during our first quarter call.
Keith: Specifically, our U.S. systems go live in Q1 temporarily impacted accounts receivable, which resulted in a higher working capital investment. As expected, we are seeing this issue improve and expected to drive working capital improvements through the fourth quarter and into early 2025.
Keith: Our record free cash flow was also achieved in a quarter where capital expenditures were approximately 6.7% of sales.
Keith: showing evidence of our investment in the business, namely SpineSets, during the quarter. Our expectation is that full year 2024 CapEx will be in the range of 4.5% to 5.5% of sales.
Keith: I began my remarks today commenting that I viewed our third quarter results as a fundamentally complete quarter.
Keith: A key driver of that statement was based on our cash flow for the quarter. To further highlight, now that we have a full four quarters behind us since the merger, we are starting to see the financial vision we envisioned for the merged Globus company become more of a reality.
Keith: In these trailing four quarters, operating cash flow was $415 million, and free cash flow was $293.8 million.
Keith: Our capital allocation priorities remain unchanged. Our long-term vision is to maintain strong financial discipline with little to no debt, invest in organic and inorganic opportunities, while providing a return to shareholders through shareware purchases.
Keith: Share repurchases have and will remain an integral part of our approach moving forward. I remind everyone that since the merger closed, we've spent a total of $310.3 million on share repurchases.
Keith: Shifting over to debt and looking ahead to early 2025, it is our intent to use existing cash reserves to repay the $450 million senior convertible notes which are due to mature in March of 2025.
Keith: Now I'd like to spend a few minutes discussing our integration progress and Synergy Capture.
Keith: Looking back on the decisions made and actions taken thus far in 2024, we are heavily focused on our U.S. operations, namely territory realignments, elimination of cost redundancies, facility consolidations, system integrations, and contract renegotiations.
Keith: Year 2 efforts will focus on further refinement of our international systems and its footprint, the implementation of additional warehouse efficiencies, and most importantly, product insourcing efforts.
Keith: We've begun ordering the machinery and equipment that will drive our insourcing initiatives that will encompass both of our manufacturing facilities in Pennsylvania and Ohio.
Keith: As we execute this, we will seek to expand our manufacturing know-how with new and expanded capabilities, all while fostering a sense of teamwork and collaboration as we bring together the knowledge and approaches of both legacy organizations.
Keith: As it relates to Synergy Capture, we previously communicated our expectation of $170 million of Synergies over three years with the ability to realize 40% or $68 million in Year 1.
Keith: 40% or an incremental $68 million in year two, and 20% or an incremental $34 million in year three. While we expect and remain committed to achieving the $170 million in savings over three years, we are updating the time phasing of these savings.
Keith: We now expect to realize 55% or approximately $94 million in year one, 30% or $51 million in year two, and 15% or $25 million by the end of the third year.
Keith: This timing improvement in savings ties back to our globalist culture of moving with a sense of urgency as our employees are relentlessly changing patients' lives. We'll provide additional updates to our projections when necessary as we move ahead.
Keith: Based upon our Q3 performance and outlook for the remainder of the year, we are again increasing our previously provided guidance.
Keith: We now expect 2024 net sales to be in the range of $2.49 billion to $2.5 billion. A revised net sales guidance implies 3.9% to 4.3% growth over 2023 performer revenues of $2.396 billion.
Keith: We are delivering sales growth in a year of extensive integration.
Keith: Before I provide a revised, fully lit, non-GAAP EPS guidance, I'd like to call attention to a change we made during the quarter related to our non-GAAP reporting, where we will no longer adjust for the impact of the acquisition of in-process research and development.
Keith: This change in reporting will unfavorably impact our previously provided 2024 non-GAP EPS guidance by 9 cents as a result of our Q124 IP R&D acquisition.
Keith: Given this change, as well as our expectations on business performance, our revised, fully diluted, non-GAAP EPS is now expected to be in the range of $2.90 to $3.00 per fully diluted share.
Keith: A revised guidance range assumes a $0.19 increase to operational performance, partially offset by the $0.09 impact due to no longer adjusting for the acquisition of IP R&D as previously stated.
Keith: Overall, this change reflects our views of enhanced profitability driven by improving business performance while more closely aligning our non-GAAP reporting with the most comparable GAAP measure.
Keith: Our Q3 performance reflected the underlying strength of our business. We achieved meaningful sales growth, drove enhanced profitability, and generated record-free cash flow, all while still investing in our business.
Keith: I'm extremely pleased with our results and remain excited for what's to come.
Keith: Closing out on my comments, I'd like to once again thank our employees for their commitment and dedication.
Keith: In a state of change, we've continued to deliver innovation and new products to our partners based on our culture of maintaining operational excellence and a focused, disciplined approach to cost, thus ensuring we have the right product at the right price and on time. We will now open the call for questions.
Speaker Change: Thank you, and at this time, we'll conduct a question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. Until we draw your question, please press star 1-1 again. Please stand by while we provide the Q&A roster. One moment for our first question.
Speaker Change: And our first question comes from Matt Miksic from Barclays. Your line is open.
Matt Miksic: Thank you. Thank you. Thank you.
Matt Miksic: Hey, good evening and congrats on a really strong quarter guys.
Speaker Change: Thanks. Thank you.
Matt Miksic: So one quick question on margins and then a follow-up on robots, if I could.
Matt Miksic: Margins, obviously, EBITDA margins popped up nicely. You mentioned some of the things that were driving that sort of acceleration into the low 30s.
Matt Miksic: Could you maybe highlight the large moving pieces that got you there faster, certainly faster than we were expecting and Street was expecting? And then I mentioned I have one quick follow-up.
Speaker Change: Sure, so Matt I'll take the first part of that question, or actually I'll take the first part of what you stated. Really when you look back on the year...
Speaker Change: We aggressively went after eliminating cost redundancies as well as facility consolidation like I commented on in the quarter As we got into the year We identified more and more places where we felt that there was opportunity for savings and really as we as really looked at the year Come together. The key focus for us is driving cash savings You know, I'm not super interested in driving or finding ways to generate non cash savings
Speaker Change: We really took a look at four wall spending and said what do we need to do to really drive improved profitability. That's really about it.
Speaker Change: Okay. Well, I'm sure there'll be follow-ups on that. But on robots, one of the things I think we've asked about since the beginning and since the merger was announced is, you know, behind this mission of doubling the field force,
Matt Miksic: and selling a robot across a broader...
Matt Miksic: broader field force, what's the what has the progress been like on the on the invasive side, you know, reps getting into and getting you into accounts and kind of what's the look forward on that?
Speaker Change: Thanks. Hey Matt, I'll take that one. So it's been progressing well. It's really been several fold.
Matt Miksic: The first one is we have been training our reps on the system itself, so we've been bringing our team in, making them experts, getting them comfortable with that so that they understand how to perform this, and I've seen...
Matt Miksic: dozens and dozens of teams from the former Innovasive team in our labs running through that. At the same time our product development team has been working to take
Matt Miksic: the great and invasive products like Reline or Modulus and get those onto the software, that's been done. We're actually working now to, and we're waiting for approvals of that to come through to go. It's really a combination of those two that will allow us to make that more functional.
Matt Miksic: In addition to that, we've already been obviously seeding through conversations with surgeons, bringing them in for VIPs, having conversations with that. I'll tell you, I'm pleased where it is. The real thing we need to do is get the approvals to use those Nuva products out on our system, and I think that's really what 2025 is going to be for us.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Thank you. Thank you.
Speaker Change: And our next question comes from the line of Vic Chopra from Wells Fargo. Your line is open.
Speaker Change: Hi, congrats on the quarter. This is Dino on for Vic. I just wanted to ask about if you have an update on the FDA warning letter that recently came out. What update can you provide on it and what are the next steps? Do you expect it to be resolved soon and what, if any, is the commercial impact?
Speaker Change: Thanks, Dino. I'll take that as well. So, just again to remind everybody, that warning letter was really about our internal processes of how we handle complaints. It was not directed towards the actual robot, nor did it imply any issues with the robot or with patient safety. It was about how we handle complaints.
Speaker Change: And it was really about the array of criteria we selected when we were analyzing complaints. The FDA would like us to do more, in which case we did. We went back to the very first complaint and went through every single one of them.
Speaker Change: realized that our outcome would not change with all the additional criteria.
Speaker Change: We've agreed to put that going forward. We've submitted that out to the FDA. We've had a few back and forth for clarification. And now we're in the phase of just proving it out as an effective approach. And we're willing and we're excited to actually have them come back in for re-inspection to get this behind us.
Speaker Change: Warning letters in the past from other companies tend to last in the year or excess of a year.
Speaker Change: So we're seeing if we can close that down and do that faster than that normal curve.
Speaker Change: As far as sales, there's no doubt there's probably been a few customers that were worried about this. We've gone out and had direct conversations with them. We've assured them in several different ways that it's not a product-related issue. And while there's some impact, I wouldn't quantify it, and I don't feel that it's been significant to date.
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Speaker Change: Got it. That's helpful. And then one follow-up.
Speaker Change: on
Speaker Change: The Capital Equipment Environment, just what's your view on the Capital Equipment Environment heading into Q4, and how are you feeling about 2025 after two of your competitors recently received FDA approval for their spy robots?
Speaker Change: This is Keith. I'll take that. You know, I think about going into Q4, we feel good about where the capital environment is. Our pipeline remains strong. There's a lot of inbound interest.
Speaker Change: There's lots of quotes getting turned around.
Speaker Change: We're leaning in and we're really focusing on selling our robot, which we still feel is best-in-class technology. And if you remember, one of the premises of the merger was to actually double our total available market and introduce this to more surgeons through the invasive side. That is and will remain our focus.
Speaker Change: We will willingly compete head-to-head with any competition in any account, but our main focus is going to be taking advantage of the surgeons we're active with to place those units through next year.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Matt Taylor from Jefferies. Your line is open.
Speaker Change: All right, great. This is Yong Lee for Matt. Thanks for taking our questions.
Yong Lee: You know, it's been a little bit more than a year since the deal closed. Can you level set us on...
Yong Lee: How many reps might have guarantees that are expiring? Is it a material number of reps or revenue per practice? It sounds like you're seeing pretty good retention on the reps.
Speaker Change: I guess are you also maybe seeing some competitive responses from the other companies on your reps?
Speaker Change: Thanks, Emily. I'll take that as well. There was word in the street falsely spread that the majority of our people are on contracts. I'm not sure why someone would come up with that. It's simply untrue. It shows that people are disconnected with the industry.
Speaker Change: We have historically had few people who are on contracts and to date even combined as one. That still remains very low for us. It is not a significant impact by any stretch with that.
Yong Lee: And like regular business, we aggressively go after competitive recruits and our competition goes after competitive recruits. We're not seeing anything unusual with that related to this merger at that point.
Yong Lee: But I do want to stress the word in the street is simply incorrect. We do not have the majority of folks on guarantees at all.
Yong Lee: It's a very manageable number. It has been managed that way. We expect our people to perform with the best-in-class portfolio. And unlike other companies, we don't have to guarantee them to do that. The products and the innovation allow them to self-sustain.
Speaker Change: All right, great. Thanks for the presentation there.
Speaker Change: I guess one to follow up on, you know, really strong growth, OUS, you know, you increase investments in the OUS business.
Speaker Change: I wanted to hear a little bit about your thoughts on the international sign business profitability. You know, there's a lot of opportunities and tailwinds on the revenue side, but can OUS, IBIDA, StackUp versus the U.S.?
Speaker Change: This is Keith. I'll take that question. I mean, absolutely. I mean, international profitability is going to vary country to country, but a couple of things you got to think about is, you know, we're operating in places where pricing may be favorable and you're driving volume growth of the same products that we're making here in the U.S.
Speaker Change: So, as you incrementally add more product internationally, you can drop more variable profit to the bottom line just by the nature of what you're selling. So, absolutely there's an ability to create more of an enhanced profitability internationally as we move forward, which can have a compounding effect on the larger business.
Speaker Change: All right, great. Thanks so much for the color and I'm looking forward to seeing you guys in London. Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Shagun Singh from RBC Capital Markets. Your line is open.
Shagun Singh: Great, thank you for taking the questions and congratulations on a really strong quarter. I guess just two for me. The first on the Recon robotic launch, you know, you did, you know, call out, you know, what the features are going to be. Can you maybe elaborate on what do you think is going to be most differentiated? You know, what's your commercial strategy and how we should think about the impact in 2025? And then I guess for my second question on capital allocation, you had previously called out a focus on complementary M&A. It seems like you still have more work to do on Nuvasive, but the big chunk is behind you. So can you just elaborate on your appetite and preference for deal size, etc. Thank you for taking the questions.
Speaker Change: Thanks, Shagun. I'll take the first part of it. You know, I think what we're excited about with the robot is it's obviously
Speaker Change: Newly designed, built from scratch. I feel like the movement of its arm itself is really a benefit of what we do. I think the accuracy of what we can come up with using all the latest technology is really good as well. I think, you know, ultimately it can be many different things where we wanna get into. The big thing I like about this is the multiple workflows, whether you wanna do CT or imageless with that.
Speaker Change: The fact that it can instantly go, you don't need to send something away for planning of it to get it organized. So there's a lot of flow and efficiency, there's a lot of flexibility that I think put in the hands of a surgeon, coupled with the newness and latest technology built from the ground up, I think can be meaningful and impactful.
Speaker Change: and I think as time passes we'll see what opportunities are out there and really move based on what we see as a fit for us as we move forward.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from Matthew O'Brien from Piper Sandler. Your line is open.
Speaker Change: Hey, this is Phil Han for Matt. Thanks for taking our questions and congrats on the great quarter. I really wanted to ask about the guidance update. You beat in Q3, and I hate to ask it this bluntly, but you beat the street by a bit over $20 million.
Speaker Change: raised by 15. I think it implies Q4 revenues growing in the 2-3% range. Is that the right way to think about things and any color on how that's broken out between musculoskeletal and enabling technologies?
Speaker Change: Sure, so I'll just keep I'll take the question. I mean really when we provide guidance we're providing guidance on the full year
Speaker Change: Obviously, we had a strong quarter, but we're still maintaining appropriate conservatism going into Q4. In saying that, though, we remain extremely positive about the progress that's made and where it's going. We don't provide breakouts between enabling tech and musculoskeletal. I would really just fall back on the comments that I had on the call. Our musculoskeletal business really has grown this year, led by U.S.
Speaker Change: by U.S. Spine and International Spine and our enabling tech business looking in the Q4. The pipeline remains strong and we remain positive about it.
Speaker Change: That's helpful, and in that context, and relatedly, I know you've described the new and improved Globus as a high singles, low doubles grower into the future. Just curious to get your take, and I understand it'll probably be light, but any color on next year, I think the street's at 7%.
Speaker Change: but just any way to help bridge us between this year and next. Thank you so much.
Speaker Change: Thanks for that second part, or second question. I mean, at this point, we're not looking too much into 2025 or providing color at this point. You know, we're coming out of this year, we've managed to work through bringing the businesses together, and we remain positive and really, we stick by what we said. We still think Globus could be a mid-to-high single-digit grower.
Speaker Change: I think one of the indications for that as well is as we keep talking about our strong competitive recruiting activity and our strong product launches that we're putting out to build the platform for future growth.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: And our next question comes from David Saxon from Needham & Company. Your line is open.
David Saxon: Great. Good afternoon, Dan and Keith. Congrats on the quarter and thanks for taking my questions.
David Saxon: I wanted to follow up on the guidance question.
David Saxon: You know, it is kind of low single digits, sequential growth. I think in a normal year, we're closer to high single digits.
David Saxon: So, I mean, I heard you say kind of appropriate conservatism that baked into the guide, but I just want to be clear. Are you seeing anything in the market that kind of would, you know, be a risk in your view? And then, I guess, second to that is I thought guidance assumed around 150 million of dis-energies this year. Is that still the case in any way to kind of gauge where we are with dis-energies? And then I'll have a quick follow-up.
Speaker Change: Sure, sure. So, it's really just a guidance as I think about the year.
Speaker Change: You know, we're extremely positive with where we are and how we finished.
Speaker Change: The $150 million disc synergy, you'll note that I did not reference it in my prepared remarks. I think that as time passes, we feel more and more confident. Is there the risk of having synergies in the future? Sure, there could be risks, but at the same time,
Speaker Change: at what point did it become part of just running your business? You know, we remain appropriately conservative, like I said earlier, but going into Q4 and into 2025, we remain positive. If I think about...
Speaker Change: Anything specifically that we looked at, we did see a little bit of an impact related to some of the hurricanes and some shortages related to IV bags. That's really the only main thing that I would call out as I go into my Q4 and get into it deeper.
Speaker Change: Okay, super helpful, thanks for that. And then just on the trauma portfolio, I heard the combined...
Speaker Change: NSO and trauma was like 99%. I think trauma historically has kind of been in the 40 to 50%. Is that still the case? And any way you can give us a sense for the size of that portfolio in terms of revenue contribution? Thanks so much.
Speaker Change: Yeah, we don't actually break that out right now with where that is. Both have great uptake, they're both growing well, super high double digits with it. But we're really not in a position to split them out or actually lay out what the dollar impact is right now.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Steve Lickman from Oppenheimer. Your line is open.
Steve Lickman: Thank you, evening guys, and congratulations. Dan, one of the drivers you mentioned up top for this quarter was a successful distributor to direct conversions. Can you talk about what the impact is of those conversions and where you are in that process?
Speaker Change: Yeah, Steve, glad to. So, you know, we started out with Globus years ago.
Speaker Change: doing those conversions and coming into more direct exclusive sales force. We obviously did the same with several of the former Nuva distributors, bringing them in. And, you know, what that is, it just allows us to invest better in those markets, hire people, push through, get the right amount of reps.
Speaker Change: share that risk with the former distributors so that we can get more rapid growth out of that type of approach. That's really the benefit. There's some more out there that have not converted or chose not to convert, which is fine. But where we do have that opportunity, we're taking advantage, again, more to use the power and cash of Globus.
Speaker Change: to create further growth and faster impacts into those areas.
Speaker Change: You'd say, Dan, that you're kind of toward the end of that process, is that right?
Dan Skivilla: I don't know if I'd say towards the end of that process. We're a year in, we've done several. I would say, you know, there's probably several more. I don't want to reveal numbers or locations yet. But I think it's really, you know, several things. We want to make sure that people get...
Speaker Change: But it's clear for anyone who has gone through that, it's a very big benefit to them.
Speaker Change: when we start using these approaches. And I think the goal, Steve, is to remain focused on that just for the sake of controlling our sales force in a better way and really accelerating how we can invest in there.
Speaker Change: Okay, got it. And then on orthopedics, your focus initially is in total primary ease, where of course, you know, it's most synergistic with robotics.
Speaker Change: As you approach accounts, whether hospital or ASC,
Speaker Change: How are you looking to overcome not having as full a bag as the major players? Do you see a need to sort of rapidly advance products like Uni or others? How are you thinking about that?
Speaker Change: Yeah, great question. Everything that we need is in progress. Nothing is ever fast enough for me. It's just the nature of what it is.
Speaker Change: But the knee is developed and ready to go. We're really far down the path of what I think is a fabulous revision knee.
Speaker Change: Everything related to HIP is really either approved or in play.
Speaker Change: and we're moving the robot further along in the hip development itself. You know, like anything, it's a journey. I would tell you we're going to be in a stronger spot this time next year.
Speaker Change: Well, but I think when surgeons understand that and see where we're investing in how they're willing to come along with us And so again, I think the real start of this is going to be in 2025
Speaker Change: And like Spine, it'll be a slow journey as we go and make inroads, unlike, you know, what we did with robots, which was a big bang. I think this is going to be one of those steady climbs that we get out there, but I really do think 25 will become the meaningful year of impact there.
Speaker Change: Got it. Thanks, Dan.
Speaker Change: One moment for next questions.
Speaker Change: Our next question will come from the line of Matthew Blackman from Stifel. Your line is open.
Matthew Blackman: Good afternoon, everybody. Thanks for taking my question. Just one, and look, I appreciate you're not going to want to talk too much about 2025, but Keith, can you maybe just help us to think through
Matthew Blackman: It may be in the broadest sense the most important puts and takes
Speaker Change: on the top and bottom line next year's anything you'd call out tonight as we think through our our 2025 numbers and I'm just reflecting on this quarter's performance you're back.
Speaker Change: to market levels of growth. He posted 31% plus EBITDA margins and there's still incremental...
Speaker Change: cost synergies next year, and then I look at consensus at something like $3.33.
Speaker Change: or something in that neighborhood. Just given this quarter's results, that number feels low, but we'd love to hear what you guys think.
Speaker Change: and if at the least the thought process I just laid out is sound and I'm not missing anything. Thanks.
Speaker Change: So thanks for the question. I think qualitatively stepping back and looking at the business, you know, year two, what do you think or what do you expect could happen? You would expect...
Speaker Change: More cross-selling to occur as the team further integrates in the U.S. and international. You would expect to see greater cross-selling of the robots. There was a question earlier that I believe Dan commented on, that there's a lot of inbound interest from legacy NuVasive customers related to eGPS.
Speaker Change: We're continuing to come out with more and more technology products. So that all points to a positive when you think about the top line.
Speaker Change: As you move to the bottom line, you're gonna annualize some of the synergy capture that you generated this year.
Speaker Change: Plus, you're going to drive some slight improvements, I think, early on operationally, but really as I think about the synergy capture from insourcing, that benefit is really the back half of 25 and into 2026.
Speaker Change: Again, when you get into year two, the focus really is, again, on managing your four-wall spending. So what is four-wall spending? It's looking at things like consulting spend and outside spend. How do you identify ways to either reduce that spend or find ways to bring it in-house? That's really going back to the strategy of Globus, and we're going to continue to focus on that in year two.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question will come from Ryan Zimmerman from BTIG. Your line is open.
Ryan Zimmerman: Hey, good evening. I'll echo everyone's sentiment. You know, we came out of NASS, you know, in probably what I would argue is one of the best buying markets we've seen in years, just judging by some of the feedback and commentary from management teams, and I'm wondering, Dan, if
Speaker Change: If you can give your thoughts about just the durability of that, you know, what you see as kind of, you know, the spine market and, you know, what's driving that and also maybe kind of your thoughts on how it can continue.
Speaker Change: Thanks, Ryan. You know, it does seem to be a strong year this year, and I would tell you that it seems to be above historical growth and normal growth. I don't think any of us could ever say it's pent up demand from COVID or anything like that, like we went through in the past.
Speaker Change: You know, that said, I think when you run your historics on this kind of data, the market does tend to be about a 3 to 3.5% growth. And I think I'll still set my sights there to say probably over the long term this will be somewhere between a 3% to 4% growth.
Speaker Change: Well, I think changing demographics can be some of the lift. I think some of the income and people having jobs Therefore having insurance to do it can be part of a lift
Speaker Change: I don't know if we're looking towards a future where you've got five to seven percent growth in the spine market. I think it's going to just get back down to, you know, my guess, and it is an absolute guess just based on history, somewhere between the three to fours in normalized state, and just progress that way.
Speaker Change: That's fair. And then, excuse me, if I could ask Keith a couple conceptual questions as I think about, you know, the future for year two of the merger. You know, Keith, you talked about just some of those in-house manufacturing dynamics.
Speaker Change: It doesn't sound like you want to put numbers out there. I imagine you have some ideas, but maybe you could help Give us some guardrails
Speaker Change: around some of that in-house manufacturing initiative for next year as it relates to kind of what you could or couldn't do from a margin perspective. And the second part of my question is more on the R&D side, which is, you're moving into these markets like large-joint
Speaker Change: you talked about R&D at six and a half to seven percent but I would imagine you have to
Speaker Change: maybe step up conceptually R&D to develop more products as we think about 2025 and beyond. And so am I thinking about, you know, that correctly as well? Any color on those two would be appreciated.
Speaker Change: Brian, let me jump in and we'll kind of start with the back part of that first.
Brian Kearns: Keep in mind that we always spend, I consider, heavily in R&D. And so everything that we need...
Brian Kearns: is currently in the margins we have and in the percents we have. There's nothing we're waiting to do.
Speaker Change: And it's not like we're at a milestone before we start. And so just keep in mind that the R&D spending you have encompasses everything that we're putting out, things that we want to do and we talk about. I don't think it's a step up. We'll take the opportunity to discover new things and go in new areas, and we'll certainly increase spending there. I think as Keith's always said, maybe looking around 7% of sale would be a great target to go to.
Speaker Change: but I don't feel like we have a portfolio that's been untouched. I feel like everything's moving so I just want to answer that one first and I'll kind of turn over the first part of your question to Keith. Yeah so you know you think about insourcing and what's planned and obviously we got to get all the machinery and equipment into each of the locations and get the machines program to run but at the end of the day the goal is really to to really drive a lower cost per unit and as you drive a lower cost per unit for what you're insourcing you're also going to get fixed cost leverages across across both locations.
Speaker Change: You know, as we do this, also, the goal here is to cross-pollinate both of the manufacturing facilities so that they can make both Globus and Legacine evasive product. That helps lower our risk.
Speaker Change: But it also allows us to become more efficient with how we plan both existing products and then new product development. Over time, that creates the flywheel effect to drive some of your fixed cost savings.
Speaker Change: I would also say, Brian, you've got to burn through the existing inventory that's on the shelf.
Speaker Change: and then go work that through. And so we'll look to see what that impact is next year.
Speaker Change: But recognize it's more of a long-term play than a splash. And that really ties back, Ryan, to what I said earlier on a previous question is that, you know, any gross profit improvement really is going to be smaller in 2025, but it's going to be in the back half of the year. As we get into the year, I would expect to see that benefit first coming through in cash because your working capital investment is going to change because of your insourcing inventory.
Speaker Change: Congrats again, guys. Very stellar quarter. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you
Speaker Change: One moment for our next question. As a reminder, that's star 11 for questions.
Speaker Change: Our next question comes from Lina Craig-Bedrew from Bank of America Securities. Your line is open.
Lina Craig-Bedrew: Good afternoon, guys, and congrats on the quarter. I wanted to start, when, you know, when you did the ANOVA deal, you know, you looked at it on a, you know, really with the synergies on a three-year period.
Speaker Change: you know, just taking your Q4 guidance, you know, that two to three percent and then your aspirational goal to get to the mid to high single digit. So
Speaker Change: I guess I kind of wanted to...
Speaker Change: to ask you if...
Speaker Change: you know, if you need, like, if it's a three year period to get to that aspirational goal, or, you know, with some of the cross selling synergies that that
Speaker Change: you expect to come through soon. Can that happen faster? I think investors are just trying to get a sense for what can that acceleration look like or when can we see you guys reach that mid to high signal digit growth?
Speaker Change: Thanks, Greg, for the question. This is Keith. I mean, as I think about going into next year, we should start to be able to see the growth rates accelerating. I don't want to give too much color yet on 2025, but it is our expectation that as we get into next year, it really ties back to some of the things I had said earlier, that you would expect more cross-selling to occur both across musculoskeletal enabling tech. You should start to realize that next year.
Speaker Change: Yeah, and Craig, one of the things I'd add to that, and that's what we're pulling out in our commentary, is we're putting in place all of the pieces to achieve that, whether it's the manufacturing and expanding, the investment in sets.
Speaker Change: You know, everything that we've been calling out, the launching of products, the retention of the sales force, the competitive recruiting.
Speaker Change: We're really putting all the building blocks in place here to deliver that.
Speaker Change: We're not in a position to commit yet because, just to be honest, we haven't run through 2025 yet. We haven't had a chance to get it approved internally. It's, as you know...
Speaker Change: Something will release as we get into January as normal.
Speaker Change: But we feel confident with everything that we're doing, and we feel like we're in a really strong spot to deliver what we've committed to here, and of course, like anything, we'll strive to beat that and accelerate where we can.
Speaker Change: Got it. Okay, that's helpful. And if I could just ask on the Power Tools...
Speaker Change: I know just launched this year, it's probably not a huge dollar revenue contribution, but you know, I did want to see if there's, you know, if you'd be willing to provide any anything on kind of the size or the ramp or growth of the power tools specifically. And then one just clarification of where you book those revenues.
Speaker Change: I'll handle that first part.
Speaker Change: We're really pleased with the launch, we think that the potential and the interest that we see with the surgeons, whether it be through VIP
Speaker Change: or the feedback we're getting when they are being used in the operating room is very positive.
Speaker Change: The pull-through that we're seeing of disposables and its usage is, again, a very good leading indicator that these things are being well-adapted. Keep in mind that this is one part of a procedural solution. And so, while we look to them as a standalone, truly, it's really about how well they can go freehand with our navigation up or how they work with the Excelsius robot, et cetera, right? So, it's all part of the entire program that goes.
Speaker Change: The application that we see longer term within trauma and joints as well, very promising. So, you're right, we're not going to really call it out, but I would tell you that what we see is this can be a significant growth driver as we thought it would be in the upcoming years and it's doing well for this year. And it is a component of musculoskeletal.
Speaker Change: Got it. Thanks, guys.
Speaker Change: Thank you.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Thank you. Bye-bye.
Speaker Change: Our next question comes from Caitlin Cronin from Canaccord. Your line is open.
Caitlin Cronin: Hey, thanks for taking the question. Congrats on a good quarter. You know, just starting with the ortho robot, maybe a reminder of what's the value prop here over competitor systems, i.e. the price point, footprint, etc.
Speaker Change: Thanks, I'll take that. I would say that footprint is certainly one of them to be considered, especially as you work in ASCs. We've looked at this and we're really pleased with how we've designed it to go in there.
Speaker Change: One of the things Kaitlyn and I had mentioned earlier is I think that just the fact that it's a newer robot that we've really built within the last year or two.
Speaker Change: using some of the newest componentry, the ability to have smooth and articulating movements that I think are really good. The fact that you can do a registration with or without CT, how you want to operate this.
Speaker Change: We don't need pre-planning to be sent away, it's something that a surgeon can decide to do either the day before or right in the OR.
Speaker Change: So we'll build more on that and get through that. You know, we're still working how to put that out with our Q4 launch. But all in all, I think the main components of that I've just laid out. We just probably have a lot more polish than what I just laid out for you.
Speaker Change: Yeah, it's a great question. I'm going to say the answer is all the above with that. I'm really pleased with the ones we've put together so far. The procedures that have occurred have really been strong. There's a lot of excitement out in the field and also with our surgeons with these. You know, given that it is currently the largest
Speaker Change: section of navigation entering into that actually opens up a brand new field for us.
Speaker Change: While we think the long-term play will be robotics, we obviously recognize there's always going to be multiple avenues for surgeons to treat patients, and so we want to just offer that as best we can, whether it be robotic or freehand.
Speaker Change: But I would tell you again, with the activity we've seen so far late in the third quarter, I think that this can be meaningful for us as we set our eyes on what to do and grow and achieve some of our goals in 2025 and beyond.
Speaker Change: Thanks so much.
Speaker Change: Thank you. As a reminder, that's star 11 for questions, star 11. One moment for our next question.
Speaker Change: Next question comes from Richard Newitor from Truist Securities. Your line is open.
Richard Newitor: Hi guys, thanks for taking the questions, congrats on the quarter. Thanks, thank you.
Richard Newitor: Yes, nice job. The first question I had,
Richard Newitor: Dan, I think you had said that you expect meaningful contribution.
Speaker Change: from the Orthorobotic Initiative in 2025 or something to that tune. I thought you had kind of suggested that would probably be a little bit more of a gradual wrap into the out years. I just, is that a change in expectation? Did I hear that right?
Dan Skivilla: Yeah, no, you heard the right words, Rich, and I'll articulate. Thanks for calling it out. Given the fact that it has not been contributing much to us at all, this is one of the pathways forward to become a growth engine. So keep in mind that obviously
Speaker Change: The ortho market is doubled out of the spine. One would say $20 million versus $10 million with that. And us piecing together all of the implants and getting them designed and ready to go now with the robot at our fingertips.
Speaker Change: I'm thinking that it can add to our dollars. I don't think it will become the growth driver of Globus as we come out with next year's forecast.
Speaker Change: But I'm saying that it can actually get out from the R&D side or lower Contribution into something that will mean a bit more for us in the company and set the stage for 25, 26 and onward
Speaker Change: But again, not a main growth driver of 25, but I would want to see the change in its revenue contribution to the company really starting in 2025 with all of those components in play.
Speaker Change: Okay, that's helpful clarification. And this question is kind of another angle to 2025. So, directionally, if I think about the
Speaker Change: If you were going to deliver overage relative to kind of where the street is sitting, it's about 7% per homer growth to 25 on the top line, about 31% or 100.
Speaker Change: about a 100 basis point margin improvement. Where do you think you, or where do you have more confidence?
Speaker Change: you could, you know, you have more cushion or more ability to achieve overage relative.
Speaker Change: to those estimates. I'm just trying to get a sense, is it on the top line or is it maybe some of the visibility you have on the cost savings? We'd love to just hear your kind of thoughts on that.
Keith Files: Rich, this is Keith. I'll take that question. As I think about it...
Speaker Change: You know the place that I would look really would be COGS, cost of goods sold You know do you have the ability to take out more spending or turn the inventory quicker?
Speaker Change: in-house to drive greater profitability in the 25. That would be the place. I think that, you know, I think we continue to look at spending outside of COGS or outside of the gross profit caption, but I think if it was going to accelerate anywhere to drive more profitability, it would be in the core product cost.
Speaker Change: Thank you.
Speaker Change: You're welcome.
Speaker Change: Thank you
Speaker Change: And with no further questions in the queue, that concludes the Global Medical Earnings Call. Thank you for participating. You may now disconnect. Everyone have a great day.
Speaker Change: Thank you. Thank you.