Globus Medical Stock Plummets 23% After Missing Earnings and Lowering EPS Guidance

Globus Medical's stock fell 23% after the company missed Q1 earnings expectations and lowered its EPS guidance for 2025. The medical device manufacturer reported weaker-than-expected revenue and earnings per share. The decline in stock value reflects investors' concerns about the company's financial performance and future prospects.

Globus Medical Inc. (NYSE: GMED) reported its Q1 2025 earnings, revealing a miss on both revenue and earnings per share (EPS) forecasts. The company reported revenue of $598.1 million, down 1.4% year-over-year, and EPS of $0.68, which fell short of the expected $0.75. This miss led to a 17.9% drop in the company's stock price in aftermarket trading [2].

Despite the revenue decline, Globus Medical achieved a record free cash flow of $141.2 million, up 493% year-over-year. The company also returned to a debt-free status by paying off $450 million in convertible debt and repurchased 2.4 million shares for $190.3 million. Additionally, Globus Medical launched two new products and acquired Nevro for $250 million to expand into the neuromodulation market [2].

The company's Q1 performance was impacted by supply chain disruptions and elongated selling cycles, particularly in enabling technologies. These issues led to a decline in US spine growth and enabling technology sales. However, Globus Medical expects improvements in Q2, driven by the integration of Nevro and the resolution of supply chain issues [1].

Globus Medical reaffirmed its 2025 net sales guidance of $2.8 to $2.9 billion but reduced its non-GAAP EPS guidance to $3.0 to $3.3 from the previous $3.1 to $3.4. The company anticipates achieving margins in the high 20s this year, considering the timing of the Nevro acquisition [1].

Executives expressed optimism for the future, stating that they view many of the Q1 impacts as short-term and are encouraged by the good start seen across the business in Q2. CEO Dan Scavilla emphasized the company's long-term potential and strategy, noting that they are playing the game for the next five to ten years [2].

Investors' concerns over the company's ability to meet forecasts amid operational challenges led to the significant drop in stock value. However, the stock appears undervalued at current levels, with strong fundamentals supported by an Altman Z-Score of 7.78 and a current ratio of 2.54, indicating robust financial health [2].

References:
[1] https://finance.yahoo.com/news/globus-medical-inc-gmed-q1-073956209.html
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-globus-medical-q1-2025-miss-leads-to-stock-drop-93CH-4034688