Globus Medical: Strong Execution and Strategic Moves Signal Buy Opportunity Post-Q4 Earnings

Globus Medical (GMED) delivered another quarter of robust financial performance, with full-year 2024 revenue soaring 61% to $2.519 billion and non-GAAP EPS rising 31% to $3.04. The company’s Q4 results and 2025 guidance underscore its ability to execute post-merger integration and capitalize on innovation, positioning it for sustained growth. Here’s why investors should consider a buy despite near-term headwinds.

Revenue Growth: Momentum Across Markets

Globus’s Q4 revenue of $657.3 million marked a 6.6% year-over-year increase, with U.S. sales up 6.3% and international revenue climbing 8.9% on a constant-currency basis. The U.S. spine and trauma segments drove growth, while enabling technology (robotic systems and imaging tools) shone with a 43.5% revenue jump to $47 million. International markets, including Japan and the U.K., also expanded, reflecting strong demand for Globus’s differentiated products.

Profitability and Cash Flow: A Solid Foundation

The company’s non-GAAP EPS for Q4 reached $0.84, a 40% increase from the prior year, while free cash flow hit a record $405.2 million for the full year—up 145% year-over-year. This liquidity buffer supports strategic moves like the $250 million acquisition of Nevro Corp., which is expected to close in Q2 2025. With $956 million in cash and equivalents, Globus has ample flexibility to navigate debt repayments and invest in R&D.

2025 Guidance: Prudent Targets with Upside Potential

Globus provided two sets of 2025 guidance:
- Standalone (without Nevro): Revenue of $2.66–2.69 billion and non-GAAP EPS of $3.40–3.50.
- Including Nevro: Revenue of $2.8–2.9 billion and non-GAAP EPS of $3.10–3.40.

While the Nevro deal may dilute EPS in 2025, management expects it to become accretive by 2026. The acquisition adds Nevro’s high-frequency spinal cord stimulation (SCS) technology, expanding Globus’s addressable market into a $2 billion opportunity. Additionally, synergies from the NuVasive merger, including cost savings and cross-selling, are already materializing: $170 million in three-year targets were exceeded in Year 1, with 55% realized in 2024 alone.

Key Drivers of Long-Term Growth

1. Enabling Tech Dominance:
   Robotic procedures using the Excelsius platform surpassed 94,000 since launch, and new products like the ExcelsiusHub XR (an AR headset for surgical navigation, expected to gain FDA clearance in Q1 2025) will further boost this segment.

2. Product Pipeline:
   Eighteen new products launched in 2024, including the Cortex MIS system and Allegiance retractor, set the stage for 2025. The ExcelsiusFlex robotic navigation platform and Modulus ALIF anchor are already driving procedural adoption.

3. International Expansion:
   Combining Globus’s spine portfolio with NuVasive’s international footprint opens doors in underpenetrated markets like Japan and Europe.

Risks and Considerations

• Debt Repayment: A $450 million convertible note matures in March 2025, requiring cash or equity issuance.
• Nevro Integration: While synergies are expected, execution risks remain.
• Regulatory and Competitive Pressures: SCS and robotic surgery markets face scrutiny and competition.

Conclusion: Buy with a Long-Term Lens

Globus Medical’s Q4 results and guidance paint a compelling picture of a company primed for growth. With a 61% revenue jump in 2024, record free cash flow, and a pipeline of innovative products, the stock appears undervalued relative to its potential. The Nevro acquisition, though dilutive in 2025, offers long-term upside in a high-margin SCS market.

While investors should monitor debt repayment and integration progress, the strategic moves and execution to date justify a buy rating. Key catalysts include FDA clearance for the ExcelsiusHub XR (Q1 2025), synergies from Nevro, and continued enabling tech adoption. At current valuations, GMED offers a rare blend of near-term stability and long-term growth, making it a standout play in medtech.

Final Note: Globus’s ability to leverage its innovation engine and global footprint sets it apart in a competitive space. Investors willing to look beyond 2025’s modest EPS targets may find significant rewards ahead.