Globus Medical, Inc. (NYSE:GMED) Q1 2018 Earnings Conference Call Transcript

May 02, 2018 • 04:30 pm ET


Globus Medical, Inc. (NYSE:GMED) Q1 2018 Earnings Conference Call Transcript


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David M. Demski

in Q1 and exited the quarter with a large pipeline of prospects. You will recall that the first half of 2017 was an extremely strong hiring period for Globus. Many of those reps will be rolling off their non-competes by mid-year. We typically see an increase in revenue from reps as they redeploy into their old territories, which bodes well for the second half of this year. We're also starting to see implant pull through from surgeons who have converted to Globus implants, after incorporating the ExcelsiusGPS system into their practices. As the installed base of ExcelsiusGPS grows, the impact from these conversions should accelerate.

We are also beginning to assign territories to reps who have completed training as part of the development program we initiated two years ago. We are cautiously optimistic that these folks will become productive straight commission reps over the next one to two years. For the second consecutive quarter, our international spinal implant business achieved double digit organic growth. The Japan business continues to lead, as the increased investments in sets and manpower begin to pay off. We also saw a significant improvement in several other key markets such as Australia, Germany, Italy, and Spain.

We exceeded our internal expectations for Emerging Technology revenue as an interest in our ExcelsiusGPS system remains robust. The execution by our capital sales team, our clinical support personnel and our implant sales team has been outstanding. While the earliest assess we have had in robotics is exciting, I don't want to lose sight of the true long-term potential of this technology. Computer-assisted surgery, robotics navigation, augmented reality, artificial intelligence will transform the way spine surgery is done. In order to accelerate this transformation, we are investing heavily in two areas: First, we are relentlessly focused on driving utilization of the systems we have installed. Simply selling a lot of robots is not our goal. To add value and the patient care continuum, ExcelsiusGPS must be used regularly and in order for that to happen, surgeons must feel comfortable with the system.

To that end, we are providing world-class clinical support. We are moving surgeons through a training curriculum to enable them to perform more technically demanding and complex procedures, and we are continuously (inaudible). Second, we are working on several development initiatives to improve other aspects of the procedure beyond the placement of pedicle screws. If we deliver on these two areas, the runway for our robotics business is enormous, particularly when one considers the synergistic impact of our implant technology and innovation.

Our trauma business also continues to progress, though at an earlier stage. We are currently in the process of building out sets and hiring salespeople and expect to be launching systems later this summer. In spite of the heavy investments we are making in our Emerging Technologies, we have maintained industry-leading EBITDA and EPS. Our profitability is a testament to our lean and efficient organizational structure worldwide. In sum, we're very happy with our start in