Globus Medical Inc.
02/24/2026 | Press release | Distributed by Public on 02/24/2026 16:09
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. You should review the "Risk Factors"and "Cautionary Note Concerning Forward-Looking Statements"sections of this Annual Report for a discussion of certain of the important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis. Certain amounts and percentages in this discussion and analysis have been rounded for convenience of presentation. This "Management's Discussion and Analysis of Financial Condition and Results of Operations" generally discusses the fiscal years ended December 31, 2025 and 2024 and provides year-to-year comparisons between the fiscal years ended December 31, 2025 and 2024. Discussions of the fiscal year ended December 31, 2024 and year-to-year comparisons between the fiscal years ended December 31, 2024 and 2023 that are not included in this Annual Report can be found in "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations"of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on February 20, 2025.
Overview
We are an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures to assist surgeons in effectively treating their patients and to address new treatment options. With numerous products launched since the founding of the Company, we offer a comprehensive portfolio of innovative and differentiated technologies that address a variety of musculoskeletal pathologies, anatomies, and surgical approaches. We separate our products and services into two major categories: Musculoskeletal Solutions and Enabling Technologies.
NuVasive Merger
On September 1, 2023, pursuant to that certain merger agreement (the "NuVasive Merger Agreement") with NuVasive, Inc. ("NuVasive") and Zebra Merger Sub Inc. a wholly owned subsidiary of the Company ("Zebra Merger Sub"), Zebra Merger Sub merged with and into NuVasive, with NuVasive surviving as a wholly owned subsidiary of the Company (the "NuVasive Merger"). Under the NuVasive Merger Agreement, each share of common stock, par value $0.001 per share, of NuVasive issued and outstanding immediately prior to the effective time of the NuVasive Merger (other than certain excluded shares as described in the NuVasive Merger Agreement) was cancelled and converted into the right to receive 0.75 fully paid and non-assessable shares of Class A common stock of Globus, $0.001 par value per share, and the right to receive cash in lieu of fractional shares.
Nevro Merger
On April 3, 2025, pursuant to the terms of that certain merger agreement (the "Nevro Merger Agreement") with Nevro Corp. ("Nevro") and Palmer Merger Sub, Inc., a wholly owned subsidiary of the Company ("Palmer Merger Sub"), Palmer Merger Sub merged with and into Nevro (the "Nevro Merger" and, together with the NuVasive Merger, the "NuVasive and Nevro Mergers"), with Nevro surviving as a wholly owned subsidiary of the Company. Upon the consummation of the Nevro Merger, each issued and outstanding share of common stock of Nevro, $0.001 par value per share, was cancelled and converted into the right to receive cash in an amount equal to $5.85 per share of common stock of Nevro, without interest and subject to any applicable withholding taxes.
Product & Service Categories
While we group our revenue into two categories, Musculoskeletal Solutions and Enabling Technologies, they are not limited to a particular technology, platform or surgical approach. Instead, our goal is to offer a comprehensive product suite that can be used to safely and effectively treat patients based on their specific anatomy and condition, and is customized to the surgeon's training and surgical preference.
Musculoskeletal Solutions
Our Musculoskeletal Solutions consist primarily of implantable devices, biologics, accessories, unique surgical instruments, spinal cord stimulation treatment therapy, and neuromonitoring services, used in an expansive range of spinal, orthopedic and neurosurgical procedures. Musculoskeletal disorders are a leading driver of healthcare costs worldwide. Disorders range in severity from mild pain and loss of feeling to extreme pain and paralysis. These disorders are primarily caused by degenerative and congenital conditions, deformity, tumors and traumatic injuries. Treatment alternatives for musculoskeletal disorders range from non-operative conservative therapies to surgical interventions depending on the pathology. Conservative therapies include bed rest, medication, casting, bracing, and physical therapy. When conservative therapies are not indicated, or fail to provide adequate quality of life improvements, surgical interventions may be used. Surgical treatments for musculoskeletal disorders can be instrumented, which include the use of implants, or non-instrumented, which forego the use of hardware but may include biologics. Our spinal cord stimulation treatment therapy uses neuromodulation technology delivered by an implantable device that delivers electrical impulses to
treat chronic pain. Our neuromonitoring services use proprietary software-driven nerve detection and avoidance technology and include intraoperative neuromonitoring ("IONM") services to aid spine surgery.
Enabling Technologies
Our Enabling Technologies are comprised of imaging, navigation and robotics ("INR") solutions for assisted surgery which are advanced computer-assisted intelligent systems designed to enhance a surgeon's capabilities, and ultimately improve patient care and reduce radiation exposure for all involved by streamlining surgical procedures to be safer, less invasive, and more accurate. The market for our Enabling Technologies in spine, cranial and orthopedic surgery is still in its infancy stage and consists primarily of INR systems. In spine, a majority of these technologies are limited to surgical planning and assistance in implant placement for increased accuracy and time savings with less intraoperative radiation exposure to the patient and surgical staff. As our Enabling Technologies become more fully integrated with our Musculoskeletal Solutions, a continued rise in adoption is expected. Furthermore, we believe as new technologies are introduced, Enabling Technologies have the potential to transform the way surgery is performed and most importantly, continue to improve patient outcomes.
Geographic Information
To date, the primary market for our products and services has been within the U.S., where we sell our products and services through a combination of direct sales representatives employed by us and distributor sales representatives employed by exclusive independent distributors, who distribute our products for a commission that is generally based on a percentage of sales. We believe there is significant opportunity to strengthen our position in the U.S. market by increasing the size of our U.S. sales force and we intend to add additional direct and distributor sales representatives in the future.
During the year ended December 31, 2025, international net sales accounted for approximately 19.4% of our total net sales. We have sold our products and services in approximately 64 countries other than the U.S. through a combination of sales representatives employed by us and exclusive international distributors. We believe there are significant opportunities for us to increase our presence in both existing and new international markets through the continued expansion of our direct and distributor sales forces and through the commercialization of additional products.
Seasonality
Our business is generally not seasonal in nature. However, sales of our Musculoskeletal Solutions products and neuromonitoring services may be influenced by summer vacation and winter holiday periods during which we have experienced fewer surgeries taking place, as well as more surgeries taking place later in the year when patients have met the deductibles under insurance plans. Sales of our Enabling Technologies products may be influenced by longer capital purchase cycles and the timing of budget approvals for major capital purchases.
Components of our Results of Operations
We manage our business globally within two operating segments, which is consistent with how our management reviews our business, makes investment and resource allocation decisions and assesses operating performance. We have concluded that these operating segments are aggregated into one reportable segment, based on the aggregation criteria.
Net Sales
We sell implants and related disposables, primarily to hospitals, for use by surgeons to treat musculoskeletal disorders. We generally place surgical sets, which contain our implants, disposables, surgical instruments and cases, in the field with our sales representatives, and the surgical sets are maintained either with our sales representatives or at our hospital customers that purchase the surgical sets used in surgeries. We recognize revenue when the implants and related disposables have been implanted or used in a surgery, or for sets that are sold directly, when title to the goods and risk of loss are transferred to the customer and there are no remaining performance obligations which affect the customer's final acceptance of the sale.
We generally recognize INR solutions revenue when control transfers to the customer based on the terms of the arrangement, which typically occurs at the time the product is shipped or delivered. Depending on the terms of the arrangement, we may also defer the recognition of a portion of the consideration as we satisfy future performance obligations related to the provision of maintenance and support.
Cost of Sales
While we have increased our in-house implant product manufacturing capacity and assemble our INR systems in-house, we also have products manufactured by third-party suppliers. Substantially all of our suppliers manufacture our products in the U.S. Our cost of sales consists primarily of costs from our in-house manufacturing, costs of products purchased from third-party suppliers,
excess and obsolete inventory charges, depreciation of surgical instruments and cases, royalties, shipping, inspection and related costs incurred in making our products available for sale or use.
Research and Development Expenses
Research and development expenses primarily consist of engineering, product development, clinical and regulatory expenses, consulting services, outside prototyping services, internal and external research activities, materials, depreciation, and other costs associated with development of our products. Research and development expenses also include personnel and consultants' compensation, stock-based compensation expense, and acquired research in process with no alternative future use. We expense research and development costs as they are incurred.
We expect to incur additional research and development costs as we continue to develop new products. These costs will increase in absolute terms as we continue to expand our product pipeline and add personnel.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of salaries, benefits and other related costs, including stock-based compensation, for personnel employed in sales, marketing, finance, legal, compliance, administrative, information technology, medical education and training, quality and human resource departments. Additionally, provision for litigation is included within selling, general and administrative expenses and is recorded when a loss is known or considered probable and the amount can be reasonably estimated and in the case of a favorable settlement, income when realized. Our selling, general and administrative expenses also include commissions, generally based on a percentage of sales, to direct sales representatives and distributors. We expect selling, general and administrative expenses will increase in absolute terms with the continued expansion of our sales force and commercialization of our current and pipeline products. We plan to hire more personnel to support the growth of our business.
Amortization of Intangibles
We amortize finite lived intangible assets over the period of estimated benefit using the straight-line method. Indefinite lived intangible assets are tested for impairment annually or whenever events or circumstances indicate that the carrying amount of the asset (asset group) may not be recoverable. If impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset. Fair value is generally determined using a discounted future cash flow analysis.
Acquisition-Related Costs
Acquisition-related costs represent the change in fair value of business acquisition-related contingent consideration and specific costs related to the consummation of the acquisition process, such as banker fees, legal fees and other acquisition-related professional fees.
Restructuring Costs
Restructuring costs represent costs associated with the Company's plans to optimize the organizational structure, merge synergies and leverage the strength of both commercial organizations.
Income Tax Provision
We are taxed at the rates applicable within each jurisdiction. The composite income tax rate, tax provisions, deferred tax assets and deferred tax liabilities vary according to the jurisdiction in which profits arise. Tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities, and require us to exercise judgment in determining our income tax provision, our deferred tax assets and liabilities, and the valuation allowance recorded against our net deferred tax assets.
Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not that the future realization of all or some of the deferred tax assets will not be achieved.
Critical Accounting Estimates
The preparation of the consolidated financial statements requires us to make assumptions, estimates and judgments that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of sales and expenses during the reporting periods. Certain of our more critical accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for
calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. On an ongoing basis, we evaluate our judgments, including but not limited to those related to inventories, recoverability of long-lived assets and the fair value of our Class A common stock. We use historical experience and other assumptions as the basis for our judgments and making these estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in those estimates will be reflected in our consolidated financial statements as they occur. While our significant accounting policies are more fully described in "Part II; Item 8. Financial Statements and Supplementary Data; Notes to Consolidated Financial Statements; Note 2. Summary of Significant Accounting Policies"below in this Annual Report, we believe that the following accounting policies and estimates are most critical to a full understanding and evaluation of our reported financial results. The critical accounting policies addressed below reflect our most significant judgments and estimates used in the preparation of our consolidated financial statements. We have reviewed these critical accounting policies with the audit committee of our Board of Directors.
Revenue Recognition. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. For purposes of disclosure, we disaggregate our revenue into two categories, Musculoskeletal Solutions and Enabling Technologies.
Our Musculoskeletal Solutions products consist primarily of the implantable devices, disposables, unique instruments, and neuromonitoring services used in an expansive range of spine, orthopedic trauma, hip, knee and extremity procedures. The majority of our Musculoskeletal Solutions contracts have a single performance obligation and revenue is recognized at a point in time. For our IONM services, revenue is recognized in the period the service is performed for the amount of consideration expected to be received.
Our Enabling Technologies products are advanced hardware and software systems, and related technologies, that are designed to enhance a surgeon's capabilities and streamline surgical procedures by making them less invasive, more accurate, and more reproducible to improve patient care. The majority of our Enabling Technologies product contracts contain multiple performance obligations, including maintenance and support, and revenue is recognized as we fulfill each performance obligation. When contracts have multiple performance obligations, we allocate the contract's transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.
Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of sales.
Excess and Obsolete Inventory.Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. The majority of our inventory is finished goods, and we utilize both in-house manufacturing and third-party suppliers to produce our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories. Once inventory has been written down, it creates a new cost basis for inventory that is not subsequently written up.
The need to maintain substantial levels of inventory increases the risk of carrying excess inventory. Many of our Musculoskeletal Solutions products come in sets that feature components in a variety of sizes so that the implant or device may be customized to the patient's needs. In order to market our Musculoskeletal Solutions products effectively, we must often maintain and provide surgeons and hospitals with surgical sets, back-up products and products of different sizes. For each surgery, fewer than all of the components of the set are used, and therefore certain portions of the set may be considered excess inventory since they are not likely to be used. One of our primary business goals is to focus on continual product innovation. Though we believe this provides us with a competitive advantage, it also increases the risk that our products will become excess or obsolete inventory prior to sale or prior to the end of their anticipated useful lives. When we introduce new products or next-generation products, we may be required to take charges for excess and obsolete inventory that have a significant impact on the value of our inventory or on our operating results.
Fair Value Measurements.Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories:
Level 1-quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2-observable inputs other than quoted prices in active markets for identical assets and liabilities; and
Level 3-unobservable inputs for which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques.
Contingent consideration represents contingent milestone, performance or revenue-sharing payment obligations related to acquisitions and is measured at fair value, based on significant inputs that are not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions that we believe would be made by a market participant. We assess these assumptions on an ongoing basis as additional data impacting the assumptions is obtained. The fair value of contingent consideration is recorded in business acquisition liabilities on our consolidated balance sheets, and changes in the fair value of contingent consideration are recognized in acquisition-related costs in the consolidated statements of operations and comprehensive income. The fair value of contingent restricted stock unit ("RSUs") grants is recorded as additional paid-in capital in the consolidated balance sheet on the day of the grant due to the remote likelihood of forfeiture.
The purchase prices of business acquisitions are primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the applicable acquisition date, with the excess recorded as goodwill. If the estimated fair values of the liabilities assumed on the acquisition date exceed the tangible and identifiable intangible assets acquired, the excess will be recorded to bargain purchase gain.We utilize Level 3 inputs in the determination of the initial fair value.
Goodwill and Intangible Assets.Goodwill represents the excess of purchase price over the fair values of the identifiable assets acquired less the liabilities assumed in the acquisition of a business. Goodwill is tested for impairment at least annually or whenever events or circumstances indicate that a carrying amount may not be recoverable. We perform our goodwill impairment analysis at the reporting unit level. We perform our annual impairment analysis by either comparing a reporting unit's estimated fair value to its carrying amount or doing a qualitative assessment of a reporting unit's fair value from the last quantitative assessment to determine if there is potential impairment. We may do a qualitative assessment when the results of the previous quantitative test indicated the reporting unit's estimated fair value was significantly in excess of the carrying value of its net assets and we do not believe there have been significant changes in the reporting unit's operations that would significantly decrease its estimated fair value or significantly increase its net assets. If a quantitative assessment is performed, the evaluation includes management estimates of discounted cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies. We perform our annual impairment test of goodwill in the fourth quarter of each year.
Intangible assets consist of purchased developed technology, customer relationships, in-process research and development ("IPR&D"), trade names and patents. Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to twenty-one years. Intangible assets are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If an impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset. Fair value is generally determined using a discounted future cash flow analysis.
IPR&D has an indefinite life and is not amortized until completion of the project at which time the IPR&D becomes an amortizable asset. If the related project is not completed in a timely manner, we may have an impairment related to the IPR&D, calculated as the excess of the asset's carrying value over its fair value.
During the year ended December 31, 2025, there were no impairments in goodwill, finite-lived intangible assets, or IPR&D.
Long-Lived Assets. We periodically evaluate the recoverability of the carrying amount of long-lived assets, which include property and equipment, as well as whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. An impairment is assessed when the undiscounted future cash flows from the use and eventual disposition of an asset group are less than its carrying value. If an impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset group. Our fair value methodology is based on quoted market prices, if available. If quoted market prices are not available, an estimate of fair value is made based on prices of similar assets or other valuation techniques including present value techniques. During the years ended December 31, 2025, 2024, and 2023, we did not record any impairment charges related to long-lived assets.
Stock-Based Compensation Expense.The cost of employee and non-employee director awards is measured at the grant date fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the equity award. Compensation expense for awards includes the impact of forfeiture in the period when they occur.
We estimate the fair value of stock options utilizing the Black-Scholes option-pricing model. Inputs to the Black-Scholes model include our stock price, expected volatility, expected term, risk-free interest rate and expected dividends. Expected volatility is based on the historical volatility of the Company's Class A common stock over the most recent period commensurate with the estimated expected term of the Company's stock options offering period which is derived from historical experience. The risk-free interest rate assumption is based on observed interest rates of U.S. Treasury securities appropriate for the expected terms of the stock
options. The dividend yield assumption is based on the history and expectation of no dividend payouts. The fair value of RSUs is estimated on the day of grant based on the closing price of the Company's Class A common stock.
We assumed equity-classified awards for certain NuVasive RSUs, and performance restricted stock units ("PRSUs"), as part of the NuVasive Merger. These RSUs and PRSUs are measured at the grant date based on the estimated fair value of the award. The fair value of equity instruments that are expected to vest is recognized and amortized over the requisite service period. The Company has granted awards with up to five-year graded or cliff vesting terms (in each case, with service through the date of vesting being required). No exercise price or other monetary payment is required for receipt of the shares issued in settlement of the respective award; instead, consideration is furnished in the form of the participant's service to the Company.
We expect to continue to grant stock-based awards in the future, and to the extent that we do, our actual stock-based compensation expense recognized may increase.
Legal Proceedings.We are involved in a number of proceedings, legal actions, and claims. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. We expense legal costs related to loss contingencies as incurred. While it is not possible to predict the outcome for these matters, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows.
Income Taxes.We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the year in which such items are expected to be received or settled. We recognize the effect on deferred tax assets and liabilities of a change in tax rates in the period that includes the enactment date. We establish a valuation allowance to offset any deferred tax assets if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
While we believe that our tax positions are fully supportable, there is a risk that certain positions could be challenged successfully. In these instances, we look to establish reserves. If we determine that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that has likelihood greater than 50% of being realized upon settlement. We presume that all tax positions will be examined by a taxing authority with full knowledge of all relevant information. We regularly monitor our tax positions, tax assets and tax liabilities. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit or reverse a previously recorded tax benefit when (i) a tax audit is completed, (ii) applicable tax law, including a tax case or legislative guidance, changes or (iii) the statute of limitations expires. Significant judgment is required in accounting for tax reserves.
Results of Operations
We manage our business globally within two operating segments, which is consistent with how our management reviews our business, makes investment and resource allocation decisions and assesses operating performance. We have concluded that these operating segments are aggregated into one reportable segment, based on the aggregation criteria.
Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
Net Sales
The following table sets forth, for the periods indicated, our net sales by geography expressed as dollar amounts and the changes in net sales between the specified periods expressed in dollar amounts and as percentages:
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| U.S. | $ | 2,367,596 | $ | 2,000,067 | $ | 367,529 | 18.4 | % | |||||||||||||||
| International | 571,335 | 519,288 | 52,047 | 10.0 | % | ||||||||||||||||||
| Total net sales | $ | 2,938,931 | $ | 2,519,355 | $ | 419,576 | 16.7 | % | |||||||||||||||
In the U.S., net sales increased by $367.5 million, or 18.4%, for the year ended December 31, 2025. From a product standpoint, the increase was primarily driven by Nevro sales of $254.2 million, increased Musculoskeletal Solutions sales of $125.7 million. Further, there was a decrease in domestic Enabling Technology sales of $17.3 million compared to the same period in the prior year, primarily driven by lower unit placement.
International net sales increased by $52.0 million, or 10.0%, for the year ended December 31, 2025. From a product standpoint, the increase was primarily driven by Nevro sales of $39.4 million. From a geographic standpoint, sales in the Europe and Middle East region increased by $49.9 million, and sales in the Asia Pacific region increased by $4.6 million. This increase was partially offset by a decrease in sales in the Latin America region of $2.4 million. Enabling Technology sales increased by $4.3 million compared to the same period in the prior year, primarily driven by increased unit placement.
Cost of Sales
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Cost of sales (exclusive of amortization of intangibles) | $ | 957,802 | $ | 1,035,479 | $ | (77,677) | (7.5 | %) | |||||||||||||||
| Percentage of net sales | 32.6 | % | 41.1 | % | |||||||||||||||||||
The $77.7 million, or 7.5%, decrease in cost of sales for the year ended December 31, 2025 was primarily driven by the NuVasive amortization of inventory fair value step-up of $215.4 million included within the December 31, 2024 balance as compared to the Nevro amortization of inventory fair value step-up of $19.3 million included within the year ended December 31, 2025. This was partially offset by an increase due to the cost of sales from Nevro products of $91.2 million, and an increase in depreciation of $18.3 million.
Research and Development Expenses
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Research and development | $ | 147,246 | $ | 163,754 | $ | (16,508) | (10.1 | %) | |||||||||||||||
| Percentage of net sales | 5.0 | % | 6.5 | % | |||||||||||||||||||
The $16.5 million, or 10.1%, decrease in research and development expenses for the year ended December 31, 2025 was primarily driven by a decrease of $21.9 million in employee-related expenses, excluding Nevro employee-related expenses, and a decrease of $12.6 million in acquired intellectual property research and development. This decrease was partially offset by an increase of $15.2 million for Nevro research and development expenses.
Selling, General and Administrative Expenses
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Selling, general and administrative | $ | 1,178,498 | $ | 981,362 | $ | 197,136 | 20.1 | % | |||||||||||||||
| Percentage of net sales | 40.1 | % | 39.0 | % | |||||||||||||||||||
The increase of $197.1 million, or 20.1%, in selling, general and administrative expenses for the year ended December 31, 2025 was primarily driven by an increase of $160.2 million for Nevro expenses. Additionally, there was an increase of $37.4 million in provision for litigation driven by the accrual of $43.1 million in the third quarter of the year ended December 31, 2025 related to the Pimenta Litigation (as defined in Note 15, Commitments and Contingenciesin "Item 8. Financial Statements and Supplementary Data") offset by $5.7 million of various net settlements received.
Amortization of Intangibles
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Amortization of intangibles | $ | 118,194 | $ | 119,373 | $ | (1,179) | (1.0 | %) | |||||||||||||||
| Percentage of net sales | 4.0 | % | 4.7 | % | |||||||||||||||||||
Amortization of intangibles decreased by $1.2 million, or 1.0%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Acquisition-Related Costs
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Acquisition-related costs | $ | 42,326 | $ | 29,623 | $ | 12,703 | 42.9 | % | |||||||||||||||
| Percentage of net sales | 1.4 | % | 1.2 | % | |||||||||||||||||||
The increase of $12.7 million, or 42.9%, in acquisition-related costs compared to the prior year was primarily driven by $28.9 million of costs associated with the Nevro Merger, partially offset by changes in the fair value of business acquisition liabilities. For the year ended December 31, 2025, acquisition-related costs also included $13.5 million of charges recorded from changes in the fair value of business acquisition liabilities driven by changes in market conditions and the achievement of certain performance conditions, compared to the $26.5 million recorded for the year ended December 31, 2024.
Restructuring Costs
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Restructuring costs | $ | 15,049 | $ | 23,773 | $ | (8,724) | (36.7 | %) | |||||||||||||||
| Percentage of net sales | 0.5 | % | 0.9 | % | |||||||||||||||||||
The decrease in restructuring costs of $8.7 million compared to the same period of the prior year was primarily due to lower employee termination benefit expenses from the 2024 Synergy Plan and the 2025 Strategic Integration Plan (each as defined in Note 16, Restructuring And Other Costsin "Item 8. Financial Statements and Supplementary Data") during the year ended December 31, 2025 compared to the expenses from the 2024 Synergy Plan for the year ended December 31, 2024.
Bargain Purchase Gain
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Bargain purchase gain | $ | 117,704 | $ | - | $ | 117,704 | 100.0 | % | |||||||||||||||
| Percentage of net sales | 4.0 | % | - | % | |||||||||||||||||||
The increase of $117.7 million was due to the bargain purchase gain related to the Nevro Merger as of December 31, 2025.
Other Income/(Expense), Net
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Other income/(expense), net | $ | 7,548 | $ | (45,269) | $ | 52,817 | (116.7 | %) | |||||||||||||||
| Percentage of net sales | 0.3 | % | (1.8 | %) | |||||||||||||||||||
The increase of $52.8 million, or 116.7%, in other income/(expense), was primarily due to a $3.0 million of foreign currency loss in the current period compared to a $43.2 million loss in the prior period. Additionally, there was a $19.5 million decrease in
interest expense due to a shorter outstanding period of the 2025 Notes (as defined in "Item 7A. Quantitative and Qualitative Disclosure About Market Risk") in the current period compared to the prior period. Further, there was an increase of $2.4 million from gain on cost method investments. This was partially offset by a decrease in interest income of $8.2 million due to a lower average balance across the Company's marketable securities, cash and cash equivalents in the current period as compared to the prior period.
Income Tax Provision
| Year Ended | |||||||||||||||||||||||
| December 31, | Change | ||||||||||||||||||||||
| (In thousands, except percentages) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Income tax provision | $ | 67,200 | $ | 17,738 | $ | 49,462 | 278.9 | % | |||||||||||||||
| Effective income tax rate | 11.1 | % | 14.7 | % | |||||||||||||||||||
For the year ended December 31, 2025, the decrease in the effective tax rate was primarily due to the release of valuation allowances on certain deferred tax assets of $46.3 million and the impact of the non-taxable bargain purchase gain of $117.7 million in the second quarter of the year ended December 31, 2025, with no comparable event in the prior period.
Liquidity and Capital Resources
Our principal source of liquidity is cash flow from operating activities, as well as our cash and cash equivalents and marketable securities, which we believe will provide sufficient funding for us to meet our liquidity requirements for the foreseeable future. Our principal liquidity requirements are to fund working capital, research and development, including clinical trials, capital expenditures primarily related to investment in surgical sets required to maintain and expand our business, contingent consideration achievement obligations, potential future business or intellectual property acquisitions. We expect to continue to make investments in surgical sets as we launch new products, increase the size of our U.S. sales force, and expand into international markets. Future litigation or requirements to escrow funds could also materially impact our liquidity and our ability to invest in and operate our business on an ongoing basis.We may, require additional liquidity as we continue to execute our business strategy. To the extent that we require new sources of liquidity, we may consider incurring debt, including borrowing against our existing credit facility, convertible debt instruments, and/or raising additional funds through an equity offering. The sale of additional equity may result in dilution to our stockholders. There is no assurance that we will be able to secure such additional funding on terms acceptable to us, or at all.
Line of Credit
In September 2023, we entered into an unsecured credit agreement with U.S. Bank National Association, as administrative agent, Citizens Bank, N.A., as syndication agent, Royal Bank of Canada, as documentation agent, U.S. Bank National Association and Citizens Bank, N.A., as joint lead arrangers and joint book runners, and the other lenders referred to therein (the "September 2023 Credit Agreement"), that provides a revolving credit facility permitting borrowings up to $400.0 million and has a termination date of September 27, 2028. We may request an increase in the revolving commitments in an aggregate amount not to exceed (i) $200 million or (ii) an unlimited amount, so long as the Leverage Ratio (as defined in the September 2023 Credit Agreement) is at least 0.25 to 1.00 less than the applicable Leverage Ratio then required under the September 2023 Credit Agreement. Revolving loans under the September 2023 Credit Agreement bear interest at either a base rate or the Term SOFR Rate (as defined in the September 2023 Credit Agreement) plus, in each case, an applicable margin, as determined in accordance with the provisions of the September 2023 Credit Agreement. The Applicable Margin ranges from 0.125% to 0.625% for the Base Rate (as defined in the September 2023 Credit Agreement) and 1.125% to 1.625% for the Term SOFR Rate. We may also request Swingline Loans at either the Base Rate or the Daily Term SOFR Rate (each as defined in the September 2023 Credit Agreement). The September 2023 Credit Agreement is guaranteed by certain direct or indirect wholly owned subsidiaries of the Company. The September 2023 Credit Agreement contains financial and other customary covenants, including a funded net indebtedness to adjusted EBITDA ratio. As of December 31, 2025, we had no outstanding borrowings under the September 2023 Credit Agreement, and we were in compliance with all covenants.
Contractual Obligations and Commitments
The following table summarizes our outstanding contractual obligations as of December 31, 2025.
| Payments Due by Period | |||||||||||||||||||||||||||||
| (In thousands) | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | ||||||||||||||||||||||||
|
Purchase obligations(1)
|
$ | 36,147 | $ | 34,756 | $ | 1,035 | $ | 356 | $ | - | |||||||||||||||||||
|
Total*
|
$ | 36,147 | $ | 34,756 | $ | 1,035 | $ | 356 | $ | - | |||||||||||||||||||
(1)Reflects minimum annual volume commitments to purchase inventory under certain of our supplier contracts.
*Excludes contributions to pension and other post-employment benefit plans, uncertain tax positions, non-current tax liabilities, lease liabilities, business acquisition liabilities and royalty obligations for which we cannot make a reliable estimate of the period of cash settlement. For further information, see Notes 6, 14, 17and 18to the consolidated financial statements in "Part II; Item 8. Financial Statements and Supplementary Data."
Cash Flows
The following table summarizes, for the periods indicated, cash flows from operating, investing and financing activities:
|
Year Ended December 31, |
2025-2024 Change |
2024-2023 Change |
|||||||||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | $ | $ | ||||||||||||||||||||||||
| Net cash provided by/(used in) operating activities | $ | 753,447 | $ | 520,638 | $ | 243,499 | $ | 232,809 | $ | 277,139 | |||||||||||||||||||
| Net cash provided by/(used in) investing activities | (355,014) | (176,051) | 302,968 | (178,963) | (479,019) | ||||||||||||||||||||||||
| Net cash provided by/(used in) financing activities | (679,160) | (27,696) | (231,821) | (651,464) | 204,125 | ||||||||||||||||||||||||
| Effect of foreign exchange rate changes on cash | 22,445 | 255 | 2,180 | 22,190 | (1,925) | ||||||||||||||||||||||||
| Increase (decrease) in cash and cash equivalents | $ | (258,282) | $ | 317,146 | $ | 316,826 | $ | (575,428) | $ | 320 | |||||||||||||||||||
Cash Provided by Operating Activities
The higher net cash provided by operating activities for the year ended December 31, 2025 was primarily the result of higher net income of $434.9 million, favorable changes in deferred income taxes of $144.5 million and favorable changes in accounts receivable of $25.9 million. This increase was partially offset by non-cash expense add backs of $358.7 million and a decrease in income taxes payable of $37.5 million. The non-cash expense was primarily a result of a decrease in amortization of inventory fair value step-up of $196.0 million, the bargain purchase gain of $117.7 million, and a $37.8 million increase in net gain from foreign currency adjustments.
Cash Used in Investing Activities
The higher cash used in investing activities for the year ended December 31, 2025 was primarily due to an increased outflow of $234.9 million in acquisition of businesses and an increase in purchases of property and equipment of $49.3 million, partially offset by increased sales of marketable securities of $103.8 million.
Cash Used in by Financing Activities
The lower net cash used in financing activities for the year ended December 31, 2025 was primarily the result of the repayment of the 2025 Notes for $450.0 million and increased repurchases of Class A common stock of $214.7 million, partially offset by decreased payments of business acquisition-related liabilities of $30.0 million.
Recently Issued Accounting Pronouncements
For further details on recently issued accounting pronouncements, please refer to "Part II; Item 8. Financial Statements and Supplementary Data; Notes to Consolidated Financial Statements; Note 2. Summary of Significant Accounting Policies; (w) Recently Issued Accounting Pronouncements."
Globus Medical Inc. published this content on February 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 24, 2026 at 22:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]