Globus Medical Inc

NYSE:GMED

Earnings Call Transcript 2018-Q2

[Operator]

Good afternoon. My name is Deidre and I will be your conference operator today. At this time, I would like to welcome everyone to the Globus Medical Quarterly Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Thank you.

I would now like to turn the call over to your host Mr. Brian Kearns. Sir, you may begin your conference.

[Brian Kearns, Globus Medical, Inc.]

Thank you, Deidre, and thank you everyone for being with us today. Joining today's call from Globus Medical will be Dave Demski, CEO; Dan Scavilla, CFO; Anthony Williams, President; and David Paul, Executive Chairman.

Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-Q for the 2018 second quarter and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our SEC filings, including the 10-Q, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments.

Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available on the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website.

With that, I'll now turn the call over to Dave Demski, our CEO.

[David M. Demski, Globus Medical, Inc.]

Thank you, Brian, and good afternoon, everyone. We're excited to report an outstanding second quarter. Worldwide revenue for the quarter was $173.4 million, an increase of 13.8% over Q2 2017. This is our third consecutive quarter of double-digit organic growth. Non-GAAP EPS for the second quarter was $0.44 per share, an increase of 38% over last year. Year-to-date revenue stand at $347 million and non-GAAP EPS at $0.85 per share, up 12.8% and 33%, respectively.

Our U.S. Spine business continues to take market share growing by 4.2% over last year, while our largest competitors are experiencing negative or no growth domestically. Furthermore, we believe we are poised for accelerated growth in the U.S. business in the back half of 2018 and into 2019. Our recruiting for the second quarter was very good and we are currently on pace to match our record recruiting success from last year. The majority of 2017 recruits started in the first half of last year, so, many of those individuals are rolling off non-competes and returning to their former territories. Historically, we have seen an uptick in growth as competitive reps rekindle old relationships.

Finally, as I will discuss in my remarks on Emerging Technology, we continue to see robust sales of our ExcelsiusGPS robotics and navigation system and, more significantly, rapid adoption of the technology by surgeons, many of whom are new users of Globus implants. These factors combined with an aggressive implant launch schedule for the second half of this year point to continued market share increases for our U.S. Spine business.

Our International spinal implant business grew by 7.2% in Q2 or 4.3% on a constant currency basis. The Japan business continues to be strong. Although growth in Japan was slower than in recent quarters, we are optimistic that growth will accelerate as we roll out additional Globus technology over the remainder of this year. We have also seen solid year-to-date improvement in several other key markets such as Australia, Germany, Italy and Spain, while the UK continues to lag.

Emerging Technology revenue for the second quarter was $13.8 million, driven primarily by sales of our ExcelsiusGPS System. We continue to exceed our internal sales targets and our pipeline of potential deals is expanding. More importantly, we are starting to see the promise of robotics come to fruition as the technology is being adopted enthusiastically with good early clinical results. A significant number of the procedures using ExcelsiusGPS have been performed by surgeons who have not used Globus implants before and we are seeing exceptional growth in a number of accounts utilizing the technology.

Given the early success of ExcelsiusGPS, we are making a number of investments to solidify our leadership in this strategically important area. 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 in the patient care continuum, ExcelsiusGPS must be used regularly by surgeons in more of their procedures and in order for that to happen, surgeons must feel comfortable with the system and its capabilities. To that end, we are providing world-class clinical support. We are moving surgeons through our training curriculum to enable them to perform more technically demanding and complex procedures and we are continuously enhancing our software and hardware offerings. Finally, we are working on several development initiatives to improve other aspects of the procedure beyond the placement of pedicle screws.

We continue to remain bullish on the long-term potential of our Trauma business, although we have experienced some growing pains heading into our national rollout. The magnitude of the logistical effort to launch the number of systems and SKUs we have targeted has proven to be a short-term challenge, taxing our manufacturing and supply chain resulting in some delays to our full-on schedule. We are addressing this issue by expanding internal and external capacity and expect to achieve full launches all core Trauma systems by the end of this year.

On the sales side, we are very excited to have Dan Gregoris start as VP of Sales. Dan comes to us after a 21-year career at DePuy Synthes Trauma where he was a recognized leader and a contributor to their great success. We have been very successful in attracting top competitive talent to our sales team all of whom are excited to join an organization known for bringing technology solutions to orthopedics. The cost of the Trauma sales force is reflected in our adjusted EBITDA. It's a testament to our efficiency as a company that we can carry this cost and still achieve industry-leading margins. As we deploy sets later this year and grow sales in 2019, we expect to see a positive impact on adjusted EBITDA margins. Trauma is an important investment to us and we remain fully committed to becoming a leader in the space over the coming years.

Finally, I am very pleased to announce the promotion of Dan Scavilla to the position of Executive Vice President, Chief Commercial Officer. In his role as CFO over the past three years, Dan has been a key contributor in driving our overall corporate strategy while building a first-class financial organization. Dan's business acumen, drive and commitment will serve him well in his new role in which he will be responsible for all contracting and pricing, supply chain and logistics, manufacturing operations, and continued oversight of finance. Dan will retain his CFO role as well until we complete our search for his replacement which we expect to happen in the next two to three months.

In summary, the first half of 2018 has been outstanding for Globus Medical and we remain excited by our prospects for the future.

I will now turn the call over to Dan.

[Daniel T. Scavilla, Globus Medical, Inc.]

Thanks, Dave, and good afternoon, everyone. We're pleased with the strong financials in Q2 resulting from above market gains in the U.S. business, improving growth in international markets

and strong uptake of the ExcelsiusGPS robot by hospitals throughout the country.

Q2 sales were $173.4 million, growing 13.8%, as reported, or 13.3% in constant currency with one more selling day in the quarter versus prior year. GAAP net income was $45 million and non-GAAP net income was $44.2 million, delivering $0.44 fully diluted non-GAAP earnings per share and adjusted EBITDA of 34.3% and $18.5 million of free cash flow.

Focusing on sales, U.S. sales for the quarter were $145.4 million, 15.1% higher than Q2 2017 and 13.6% on a day-adjusted basis. Our sales growth resulted from strong ExcelsiusGPS performance, coupled with competitive rep recruiting in U.S. Spine and increasing implant pull-through from hospitals using our robot.

International sales for the quarter were $28 million, growing 7.2% as reported or 4.3% in constant currency delivering a sequential growth versus 3.5% in Q1 2018. Gains were achieved through continued market penetration in Japan and other key markets, partially offset by timing of distributor orders and continued budget pressures in the UK healthcare system.

Turning to the rest of the P&L, Q2 gross profit was 78.3% compared to 75.6% in Q2 2017. The gain is primarily due to the change in depreciable lives for cases and instruments implemented in Q4 2017. The Robotic business continues to deliver strong gross profit margin in line with our Spine profitability, allowing us to scale up our capital business without experiencing margin erosion. Full year gross profit is projected to be approximately 77% reflecting full year effective pricing pressure, biologic mix and increased investments in cases and instruments.

Research and development expenses for the second quarter were $13.5 million or 7.8% of sales compared to $10.7 million or 7% in Q2 2017 resulting from increased investments in Robotics, Trauma and Spine. SG&A expenses for the second quarter were $77.1 million or 44.5% compared to $64.4 million or 42.3% in Q2 2017, reflecting our planned reinvestment of the U.S. tax reform savings to drive future growth. Expanding U.S. Spine sales force, building out the Robotic and Trauma commercial teams, growing the Japanese sales force and increasing surgeon education are the primary drivers of the investment.

GAAP net income rate for Q2 was 10.6% compared to 27.5% in Q2 2017, driven by the U.S. tax reform and higher deductions for stock compensation due to increased option exercises in the quarter. The stock option favorable impact was a 10.9% reduction to our base tax rate for the quarter. We project an effective full year tax rate for 2018 of approximately 18%.

GAAP second quarter net income was $45 million and GAAP diluted earnings per share were $0.44. Non-GAAP net income was $44.2 million and non-GAAP diluted earnings per share were $0.44. Emerging Technologies negatively impacted Q2 2018 EPS by approximately $0.02 compared to approximately negative $0.04 in Q2 2017.

Adjusted EBITDA for Q2 2018 was 34.3% reflecting gains from the strong Robotic sales, partially offset by increased investments in Emerging Technology and Spine. Our full year 2018 EBITDA margin is projected to be in the mid-30s. We ended the quarter with $516.8 million of cash, cash equivalents and marketable securities.

Net cash provided by operating activities in Q2 was $33.3 million and free cash flow was $18.5 million. Q2 cash flow was typically lower than other quarters of the year driven by two planned tax payments. We may $21.5 million of tax payments in the quarter. The company remains debt-free. The company is increasing guidance for full year 2018 sales by $5 million to approximately $700 million, and increasing non-GAAP diluted earnings per share by $0.03 to $1.55.

Finally, I want to thank Dave, David, the management team and the board of directors for giving me an opportunity through this promotion to have a larger role in realizing Globus' potential and shaping the next phases of our growth. I'm a firm believer in this organization and our long-term potential. I look forward to making a difference in the new role.

We will now open the call for questions.

[Operator]

And we do have a question from Lawrence Biegelsen.

[Larry Biegelsen, Wells Fargo Securities LLC]

Good afternoon, guys. Can you hear me, okay?

[Daniel T. Scavilla, Globus Medical, Inc.]

Yes, we can hear you.

[Larry Biegelsen, Wells Fargo Securities LLC]

Okay. Great. Great. So, let me ask one on the guidance, one on the robot. Just, Dan, on the top and bottom line guidance, I think on the top line, year-to-date growth was about 13%, the second half guidance implies about 7.5% by my math. Just any color on why you're expecting a slower second half.

And the second part of the guidance question on EPS, it looks like the guidance implies second half EPS of about $0.70 or 3% year-over-year growth I think versus the first half growth of 35% and it's also down in the second half versus the first half, the absolute number. And as far as I can tell, we haven't seen second half EPS lower than the first half in recent years at Globus. So, any color on that would be helpful. Thank you.

[Daniel T. Scavilla, Globus Medical, Inc.]

Thanks, Larry. So, first thing is let's start with the top line. We're being appropriately conservative with this. We certainly look to outperform this, but again not having done a full year of Robotics, not really gone through a cycle and seen that normalize. We just want to make sure we're taking this growth one quarter at a time before we raise guidance and not let that get ahead of us until we have a stronger look that way. So, that's really what the top line is. It's just nothing but just making sure we are able to meet and, if possible, certainly beat what that is.

On the bottom line, some similar things, two things you want to factor in. As we talk both in Q1 and Q2 about the stock comp benefit that's occurred in the taxation. So, I don't model those out in Q3 or Q4 not having happened yet. I think again that's an appropriate move to take. In addition, you do have some favorableness due to the timing of spend and keep in mind we continue to want to invest and ramp up and look towards expenditures in the third quarter primarily pre revenue with Trauma. And so, it's really those two factors that I'm coming up with when we come out with the full year guidance of what I think is in front of us or what I don't expect to repeat from the windfall impacts.

[Larry Biegelsen, Wells Fargo Securities LLC]

That's helpful. And then NASS is obviously going to be a pretty important meeting for you and your competitors, a lot of your competitors are talking about new systems that they're going to be unveiling at NASS. Dave, you've talked about some enhancements to the robot, four or five different things, what can we expect from Globus in the second half of this year? What can you share with us on timing of enhancements to Excelsius? Thanks for taking the questions, guys.

[David M. Demski, Globus Medical, Inc.]

Sure, Larry. Thank you. Yes, we're working on a few things right now and probably going to go to the FDA late in the year is our internal plan. So, potentially be launched at the end of the year, it's probably more like first quarter of next year before we'd see some enhancements.

[Larry Biegelsen, Wells Fargo Securities LLC]

Any color on those enhancements, Dave, I mean you have touched on some on prior calls?

[David M. Demski, Globus Medical, Inc.]

Yes. As we alluded to in the past, the next thing that we're working on is a way to improve the, say, the inner-body aspect of the case.

[Larry Biegelsen, Wells Fargo Securities LLC]

All right. Thanks for taking the questions, guys, and congrats on a good quarter. And Dan, congratulations.

[Daniel T. Scavilla, Globus Medical, Inc.]

Thank you.

[Operator]

And our next question comes from Jonathan Demchick with Morgan Stanley.

[Jonathan Demchick, Morgan Stanley & Co. LLC]

Hello. Thanks for taking the questions. Wanted to, I guess, start off with I guess a question about Dan and the new role. So, first off, congrats on the new role but I mean I was wondering, Dave, perhaps if you could kind of let us know like why is this the right time for a Chief Commercial Officer? Does this signal any change in strategy and how you plan to contract with customers or using Excelsius in more of a bundled way?

[David M. Demski, Globus Medical, Inc.]

No, I don't think it signals a change in strategy. As a company, as we grow and move into new areas we need to expand our talent pool, if you will, and Dan's done an outstanding job in what he's done for us as CFO and also demonstrated a lot of capability from a general management standpoint. So, we want to give him that opportunity, utilize his skills in that area and allow us to bring in new folks into the CFO role to build out our bench, if you will.

[Jonathan Demchick, Morgan Stanley & Co. LLC]

Understood. And then just a quick follow-up on Excelsius. For the first three quarters, I guess it's been – in what you'd think would be a relatively lumpy capital market especially with Robotics. Early on it's been relatively stable for the first three quarters. I was curious to kind of how you guys see this market progressing going forward? Are you expecting there to be more, I guess, larger variations either up or down from quarter-to-quarter? How's the order flow coming and any clarity you can give there would be great. Thank you.

[David M. Demski, Globus Medical, Inc.]

Yes. Sure. I don't know what to expect. I mean, I would assume over a long period of time we would see some lumpiness like the other providers of capital have experienced. I do feel like the early signs that we're seeing going from enthusiasm for the technology to translating that into sales of units to utilization of the technology, all of those factors lead me to believe this is an area for our industry that's going to be really important in the next 3, 4, 5, to 10 years. So, everything I'm seeing early on makes me extremely bullish about where we are and where our industry is going in terms of computer assisted technology.

[Jonathan Demchick, Morgan Stanley & Co. LLC]

Understood. Thank you.

[Operator]

And our next question comes from Craig Bijou with Cantor Fitzgerald.

[Craig William Bijou, Cantor Fitzgerald Securities]

Hi, guys. Thanks for taking the question. I want to start with Emerging Technologies. I think, Dan, on the last call you might have warned about not extrapolating from the Q1 number that was pretty strong and there might be some pent-up demand kind of built in the Q1. But I guess I wanted – in terms of the full-year 2018 just wanted to get your thoughts now that you've got over $26 million in Emerging Technologies for the first half. How should we think about that number in the second half? And then kind of, well, I guess what's implied in your guidance for Emerging Technologies?

[Daniel T. Scavilla, Globus Medical, Inc.]

Thanks, Craig. So, as you know, we don't tend to break out each individual line item and we're certainly pleased with both Q1 and Q2 results to-date. Again having not yet even had a full annual cycle. It's really hard to call out and say what do we think Q3 will be or would we see the same kind of historical lift, things that occur normally in Q4. It's just truthfully an unknown. So, again I would kind of cater folks to kind of go through and not run ahead of this and we've talked to several people about what's in their models to-date. I wouldn't go that far off path just yet. I think going through a full year we'll have a little more understanding. We can understand a more stable pipeline and be able to make better calls into the future.

[Craig William Bijou, Cantor Fitzgerald Securities]

Okay. That's helpful. And then a follow-up on the robot. I think on the last call that you guys talked about competitive versus your accounts was maybe a 50-50 split with your robot placements. So, just wanted to see if there's any update to that number if you see that trending in a certain way. And then also, if the pull-through that you're seeing at the competitive accounts, is that greater than you had anticipated?

[Daniel T. Scavilla, Globus Medical, Inc.]

So, a couple of things with that. I still think it's approximately 50% – it's not perfectly 50% but it really just depends, but it's not really tracking that far off from everything we've looked at so far through the first three quarters of launch with this. And with all hospitals whether they are competitive and we weren't in there before or if they're an existing Globus hospital, we're seeing some strong lifts in those areas. Certainly, both of them are something we're pleased with right now.

[Craig William Bijou, Cantor Fitzgerald Securities]

Okay. Thanks for taking the questions, guys.

[Daniel T. Scavilla, Globus Medical, Inc.]

You're welcome.

[David M. Demski, Globus Medical, Inc.]

Thanks, Craig.

[Operator]

And your next question comes from Ryan Zimmerman with BTIG.

[Ryan Zimmerman, BTIG LLC]

...the question. So, I just want to follow up on Larry's earlier question around the guidance and you gave some commentary around gross margins specifically recognizing that you're going to continue to build out Trauma, but you did mention pricing. And so, just curious to hear your thoughts on what kind of pricing headwinds you expect in the back half of the year, given your guidance and given the performance we've seen in the first half of the year thus far?

[Daniel T. Scavilla, Globus Medical, Inc.]

Hey, Ryan. Thanks. It's a couple things. So, remember we always look at pricing on an SKU basis, not on a procedural basis. So, we call it out a little bit differently than some of our competitors that way. But we have not seen any marked difference in pricing yet through this year or anything even different from the last few years. So, we always say mid-single digits and that's truly what we see and anticipate. So, I'm just saying I would expect to carry that forward through the second half of the year. We're having great biologic growth and again they always tend have a slightly lower margins, so that's what I'm referring to there. And then as we're building our cases and our instrumentation, not only for Trauma launch, both the Japan conversion, the Alphatec conversions as well, those things will have a heavier impact as we get those more active in the second half of the year.

[Ryan Zimmerman, BTIG LLC]

That's very helpful, Dan. And then just a follow-up on the robot, not to ask too many questions about it, but you did say the pipeline is filling up and just your thoughts around how the sales cycle has changed, has it sped up in anyway, are you noticing better from lead to conversion times in your pipeline? Thank you for taking the questions.

[David M. Demski, Globus Medical, Inc.]

Yes. Thanks. I don't think we've seen a material change. It's a pretty competitive market right now even though there aren't many choices. I think we and our competitors are going after some of the same accounts. So, to that extent it may be taking a little bit longer to work through deals. But we're seeing the pipeline fill up from the other side of it very quickly in terms of interest. So, that enthusiasm and interest among surgeons continues to grow.

[Ryan Zimmerman, BTIG LLC]

Very helpful, Dave. Congrats on the quarter, guys.

[David M. Demski, Globus Medical, Inc.]

Thank you.

[Daniel T. Scavilla, Globus Medical, Inc.]

Thank you.

[Operator]

And our next question comes from Matthew O'Brien with Piper Jaffrey.

[William G. Inglis, Piper Jaffray & Co.]

This is Will on for Matt. Thanks for taking the questions. I guess the first question I have is regards to your o-U.S. growth. I understand there was some softness in the quarter, but just looking out just curious about what you expect in Japan going forward? And specific to Japan if you have any sense of what percent of their product mix is legacy versus kind of newer technologies? And then I have a quick follow-up. Thanks.

[Anthony L. Williams, Globus Medical, Inc.]

Hey, Will. This is Anthony. So, we are just now starting to launch many of our newer technologies in Japan. The process of going through the PMDA is – you're probably aware is lengthier even than what we face in the U.S. So, still a majority of their business is sort of legacy Alphatec. We do have probably four or five products, pedicle screws being the key one that are launched there and they're doing, our systems, and they're doing quite well. And so, as we continue to launch the newer technologies through the second half of the year and into the early 2019 we expect to see significant conversion onto Globus products from there.

[William G. Inglis, Piper Jaffray & Co.]

Great. Thanks for that. And then as far as gross margins in the back half, I assume that the softness would just be driven by Trauma, if you could just talk a little bit more about that given your 77% guidance? Thanks.

[Daniel T. Scavilla, Globus Medical, Inc.]

Thanks. So, I certainly wouldn't call it softness. I think anything that is in the 76% to 78% range is market beating by any stretch. All I'm saying is, as we go out and we're conservative and we look at what these rollouts will be, we think we're looking to balance back into a more normal range. We've always called ourselves a mid-70%s company for gross profit. We're looking to achieve that, not drive it much higher than that. And so, we're going to do the right investments, the right approach just to put it back in line and I just think it's really timing that created some favorability in the first half.

[William G. Inglis, Piper Jaffray & Co.]

Great. Thank you.

[Operator]

And our next question comes from Richard Newitter with Leerink.

[Jaime L. Morgan, Leerink Partners LLC]

Hi. This is Jamie on for Rich. Thanks for taking my question. The first one I have I guess is on the international business. So, I was just wondering how we should be thinking about this growth trending over the second half? And if you feel like you can still exit the year in that high-single digit territory or possibly even better?

[Daniel T. Scavilla, Globus Medical, Inc.]

Yes. Hey, Jamie. It's Dan. Thanks for the question. And I think that's an appropriate way to look at this, we're actually pretty pleased with our international business. We'll never be satisfied with the growth that's there. But truthfully some timing of distributors that I called out or really the UK healthcare system. They had a fairly big impact on the quarter. I think when they stabilize, we continue our investments in surgeon education. We look to continue our transitions into Globus products outside of Alphatec. I would think that looking at that upper single-digit exit point for international is probable.

[Jaime L. Morgan, Leerink Partners LLC]

Okay. And then just one follow-up that I have on the competitive robot landscape, how are you guys thinking about that given that Mazor initiated an upgrade on their robot in the fourth quarter? And NuVasive just recently announced their new plans for their surgical automation platform and as well Zimmer coming online with the ROSA Spine platform. I'm just trying to get a sense of how you guys are thinking about that and competing in the market? Thanks for taking my questions.

[David M. Demski, Globus Medical, Inc.]

Thanks, Jamie. It's not surprising at all that the competitors are taking this seriously and we've always anticipated it would be highly competitive and I think it's a affirmation that we're – kind of we're onto something here that folks are interested in improving. And it's incumbent on us to continue to develop the technology and make it more useful to surgeons and make it more available for patients. So, that's how we're looking at it. It's going to be a dynamic game and not a static situation. That's why we are investing more into technology development now than we have really ever in the past to try to continue and improve and maintain our leadership.

[Jaime L. Morgan, Leerink Partners LLC]

Great. Thanks.

[Operator]

And our next question comes from Mike Matson with Needham Company.

[Mike Matson, Needham & Co. LLC]

Hi. Thanks for taking my questions. Just curious if you could give us an update on where things stand with the Trauma rollout. And specifically with regard to the sales force there how many or what portion of that sales force is still under non-competes and is that really the gating factor for the growth to really take off there? Thanks.

[David M. Demski, Globus Medical, Inc.]

Hey, Mike. The sales force now, almost everyone is under non-compete still. I think our field sales management was hired early on and they're starting to roll off, but the reps that we've hired are all under the non-competes. But the gating factor is really availability of equipment. We've got about four partial launches at this point. We wanted to do up to 11 core systems and we do anticipate having full launches of those systems, all those systems by the end of the year. But at this point, it's a matter of availability of inventory more than anything.

[Mike Matson, Needham & Co. LLC]

Okay. Thanks. And then I apologize if someone's already asked this question. I joined the call a little late. But just your primary competitor now in the robotics area Medtronic, (29:53) their M.O. with regard to selling their capital equipment, their imaging and their robotics and all that stuff is to kind of try to come in and offer these contracts and bundle it with their implants, and do you feel that you're able to compete with those types of deals either by just having a better product offering, or by actually matching what they're able to do with their balance sheet?

[David M. Demski, Globus Medical, Inc.]

Well, we don't have really any limitations on our balance sheet when it comes to financing a robotic deal with a hospital or a chain. So, it's a business decision on our part. We can certainly compete that we've been winning from a technology standpoint, and we have not had to match anything out there. We've been able to achieve higher level of pricing. And I think we're winning the majority of the head to heads that we're going against. But like I said to an earlier caller, this is going to be a competitive environment and we have to continue to evolve the technology and be a better product as we move forward.

[Mike Matson, Needham & Co. LLC]

Okay. Thanks. That's all I have.

[Operator]

And we have no further questions.

[Brian Kearns, Globus Medical, Inc.]

Okay. With no further questions, we can wrap up the call. Thanks to everyone for calling in and have a good night.

[Operator]

With no further questions, we will now conclude the Globus Medical quarterly earnings release conference call. Thank you all for joining us. You may now disconnect.