Globus Medical, Inc. Q2 FY2026 earnings call

Overall Business Performance & Strategic Positioning

• Management reported an exceptional Q2 2026, positioning the company for a strong full-year 2026. Since 2022, the company has more than tripled its top line and earnings, built a scalable operating model, and completed transformative mergers (NuVasive) and acquisitions (Nevro) to drive long-term value creation for shareholders.

• The company has successfully integrated acquired businesses, maintained a culture of innovation, and continued to gain market share across core segments.

• Product Development & Innovation

  • Launched 3 new products in Q2: Audubon Hip Fastener (trauma), Tensure Suture Button System (trauma), and Reline One (spine)
  • Received FDA 510(k) clearance for the SCRIPT patient-specific lumbar spacer and rod system, expected to launch in Q3 2026. This system makes Globus the only company offering a full portfolio of patient-specific lumbar implants integrated with its enabling robotic technology, establishing it as a one-stop shop for lumbar patient-specific solutions
  • Over 60 product development projects are currently in process, with the in-house development team expanding to address increasing project complexity focused on unmet clinical needs
  • Management is investing in a surgical intelligence ecosystem leveraging data, analytics, and AI to improve patient selection, surgical execution, and clinical outcomes, focused on long-term market disruption rather than short-term gains

Commercial Execution

• Competitive sales rep hiring in Q2 was double Q1 levels, marking the second highest onboarding quarter in the past eight years. Competitive recruiting remains a top strategic priority to drive growth.
• Over 137,000 robotic-assisted procedures have been performed to date, with robotic utilization continuing to expand.
• Nevro integration progress: 75% of open sales roles were filled in Q2, with near-term focus on growing trial volumes with the goal of returning to historical trial levels by Q4 2026. Cost restructuring from 2025 has already driven significant margin improvement for the segment.
• International expansion strategy continues to focus on deeper penetration in existing markets, which has driven sustained double-digit growth.

Capital Allocation

• The company's capital allocation priority order is: 1) internal investment in product development and manufacturing/sales infrastructure; 2) share repurchases to reduce dilution and increase shareholder value; 3) evaluation of complementary M&A opportunities.
• In Q2 2026, the company repurchased $136.1 million (1.6 million shares), with $253.9 million remaining under the current $500 million repurchase authorization as of Q2 end. Since the NuVasive merger closing in September 2023, the company has repurchased 11.9 million shares, covering 30% of the merger-related dilution.

Total company Q2 2026 revenue was $789.6 million, growing 5.9% year-over-year (YoY), or 9% when excluding the recently acquired Nevro business.

1. Musculoskeletal: Revenue of $763.5 million, growing 7.5% YoY, representing 96.7% of total company revenue. Base business (excluding Nevro) musculoskeletal revenue grew 10.9% YoY, with the following sub-segment performance:

• U.S. Spine: Grew 7.3% YoY as reported, driven by strong procedural volumes, competitive recruiting, robotics pull-through, and new product launches, with double-digit growth across multiple core products
• International Spine: Grew 13.8% YoY as reported (12.2% constant currency), with mid-teens growth across key EMEA markets, broad-based APAC growth, and growth led by Brazil and Colombia in LATAM, representing 21.6% of total company revenue
• Trauma: Grew 31% YoY, marking the fourth consecutive quarter of double-digit growth, driven by market share gains and restored supply for the precise product line
• Nevro: Q2 sales were flat sequentially from Q1 2026, down 14.3% YoY, with standalone adjusted EBITDA margin of 22.4% in Q2 2026 compared to negative 1.4% YoY

1. Enabling Technologies: Revenue of $26.1 million, declining 25.8% YoY, representing 3.3% of total company revenue. The decline is driven by a strategic shift to flexible capital acquisition models (leasing/rental) rather than outright sales, but deployed units (across all ownership models) grew 11% sequentially and 25% YoY, demonstrating sustained demand for the company's Excelsius technology.

From a profitability perspective: GAAP gross margin was 66.8% (up 350 bps YoY), adjusted gross margin was 69.4% (up 200 bps YoY). Total company adjusted EBITDA margin was 35.4% (up 740 bps YoY), with base business adjusted EBITDA margin of 36.9% (up 460 bps YoY). Fully diluted non-GAAP EPS was $1.34, growing 55.8% YoY.

• Full-year 2026 revenue guidance is maintained at $3.18 billion to $3.22 billion, implying 8.2% to 9.6% YoY growth. Management remains comfortable with the full range, citing limited first half beat and ongoing uncertainty from the Enabling Technologies strategy shift and Nevro integration as rationale for holding the range steady.
• Full-year 2026 non-GAAP fully diluted EPS guidance is upwardly revised to $4.95 to $5.05, from the prior range of $4.70 to $4.80. This revision reflects stronger than expected first half margin expansion and operating leverage, implying 24.4% to 26.9% YoY EPS growth.
• Adjusted gross profit margin guidance for 2026 is maintained at 69% to 70%, representing 90 to 190 bps improvement over 2025. Management expects to reach low 70% adjusted gross margin by the end of 2026, and target mid-70% adjusted gross margin by early 2027.
• Full-year 2026 R&D expense guidance is maintained at 5% to 6% of net sales, with a significant ramp in spending expected in the second half of 2026.
• The non-GAAP tax rate guidance for 2026 is downwardly revised to 23% to 24%, from the prior range of 24% to 25%, driven by favorable impacts from stock option exercise benefits in the first half.

• The shift to flexible capital acquisition models for Enabling Technologies creates near-term revenue downside risk as the business transitions from outright capital sales to a model focused on long-term recurring pull-through of implant, disposable, and service revenue.
• The integration of Nevro creates near-term top-line uncertainty, as the company works to rebuild trial volumes and return the business to sustainable growth.
• U.S. Spine faces more difficult year-over-year comparables in the second half of 2026 following several quarters of very strong double-digit growth, which may slow reported growth rates relative to prior quarters.
• Transient regional headwinds (such as labor strikes and extreme heat in Europe) could impact international growth performance in the second half of 2026, even as aggregate regional growth remains on track.

Q: Analysts noted strong Q2 international spine growth despite reports of transient headwinds (strikes, heat) in Europe, and asked if Q3 is expected to be seasonally softer. / A: Management stated aggregate EMEA performance was in line with expectations in Q2, with the region delivering double-digit growth overall. The company remains confident international spine will deliver strong double-digit growth in the back half of 2026, in line with prior guidance.

Q: U.S. Spine Q2 growth stepped down from the prior two quarters of 10% growth — is this new growth rate sustainable? Also, when will the company hit its target mid-70s adjusted gross profit margin? / A: Management noted the step-down reflects more difficult year-over-year comparables in the second half, but the business is performing well and management remains confident in its outlook. The company has achieved seven straight quarters of margin expansion, and expects to exit 2026 at low 70% adjusted gross margin, hitting the mid-70s target by early 2027, slightly slower than originally planned due to the incremental impact of the Nevro acquisition.

Q: What is the expected sales cadence for Nevro in the back half of 2026, and what is the company's M&A strategy for the segment? Also, what is the production lead time for the upcoming Q3 launch of SCRIPT patient-specific lumbar spacers, and is the product compatible with the new fall DRG reimbursement changes? / A: Management stated the Nevro growth cadence is consistent with prior guidance: trial volumes are expected to improve through the second half, returning to historical levels by Q4 2026, with sales growth following trial volume improvements. The current focus is entirely on stabilizing and growing the existing Nevro business, with no updates to M&A strategy for the segment. The expected lead time from surgeon case design to implant delivery is 1-10 days, and existing strong reimbursement codes are already in place for the product line.

Q: R&D spending is expected to ramp significantly in the second half of 2026 to hit the 5-6% of sales target — where is this incremental investment being directed? Is it mostly for AI and software development for the planned surgical intelligence ecosystem? / A: Management explained the spending ramp was planned, with timing delayed by synergy capture from the Nevro acquisition in the first half. Incremental investment will go to increased headcount across all core business areas (spine, trauma, neuro/pain) as well as software development for the surgical intelligence ecosystem. The ecosystem combines implants, enabling technology, procedural solutions, and data analytics to continuously improve clinical outcomes, building on the existing Excelsius platform capability.

Q: Why was revenue guidance not raised after a strong Q2 beat, given solid first half performance? / A: Management noted the Q2 beat was relatively small (less than $7 million). The company maintains the existing guidance range to account for remaining uncertainty from the Enabling Technologies strategy shift and the Nevro integration process, both of which present moderate downside risk to second half results. Management remains confident in the overall performance of the core spine business.