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Globus Medical (NYSE:GMED)
Q2 2021 Earnings Call
Aug 04, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Welcome to Globus Medical's second-quarter 2021 earnings call. [Operator instructions]. I will now turn the call over to Kelly Huller, senior vice president, general counsel. Ms.

Huller, please go ahead.

Kelly Huller -- Senior vVce President, General Counsel

Thank you for being with us today. Joining today's call from Globus Medical will be Dave Demski, president and CEO; Dan Scavilla, executive vice president, chief commercial officer; and Keith Pfeil, senior vice president and chief financial officer. This review is being made available via webcast accessible through our investor relations section of the Globus Medical website at www.globusmedical.com. 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-K for the 2020 fiscal year 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-K, 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 in the schedules accompanying the press release and on the investor relations section of the Globus Medical website. With that, I will now turn the call over to Dave Demski, our president and CEO.

Dave Demski -- President and Chief Executive Officer

Thank you, Kelly, and good afternoon, everyone. Globus had another outstanding quarter in Q2, building on the momentum we've established over the past two years as we continue to take market share. Given the impact of COVID-19, it's difficult to draw meaningful insights about the business by comparing the results to Q2 2020. So my comments will be primarily focused on comparisons to the second quarter of 2019.

Revenue for the quarter was a record $251 million, up 29% over 2Q '19. Non-GAAP EPS was $0.56 per share, a 38% increase, and adjusted EBITDA was a strong 35%. Once again, INR and U.S. Spine led the way.

INR revenue was a record $21 million, up 73% over 2Q '19 and our third consecutive quarter of strong growth. The clinical superiority of ExcelsiusGPS continues to be recognized by surgeons as reflected in our recent announcement of surpassing 20,000 procedures using Excelsius. More significantly, the average number of procedures per robot reached an all-time high in 2021, reflecting an acceleration in adoption. U.S.

spine continues to take significant market share, growing by 30% over Q2 '19. Pull-through from robotics, contributions from new product introductions, a resurgence in our biologics business and competitive recruiting were all factors driving growth. We're beginning to see several virtuous cycles emerge, all emanating from the value created by the adoption of our robotic technology. We have surgeons, who utilize Excelsius for the majority of their cases, master increasingly complex pathologies because of the technology and may even perform surgery in situations that would be considered inoperable without robotic assistance.

These surgeons wholeheartedly endorse Excelsius to their peers, leading to additional robot sales. We have surgeons who have not previously used Globus implants, but due to Excelsius, gain exposure to our entire line of innovative spinal implants and have begun to utilize Globus for non-robotic cases as well. We have surgeons who may not have initially championed the purchase of the robot, but after seeing the success of their colleagues, also adopt the technology, which has driven Globus implant usage and led to the purchase of additional robots. Finally, we have attracted successful competitive reps who, after losing a portion of their business to a robotic conversion, had decided to join the team with the best technology, bringing additional business with them.

As these scenarios increasingly play out, we are seeing what amounts to a flywheel effect on our business. At the heart of it is the utilization and value created by the Excelsius technology. It's not about merely placing robots. It's a focus on utilizing technology to improve spine surgery.

The growth we have seen in our U.S. business over the past two years is a testament to the power of the transformation taking place. On the international front, our spinal implant business grew by 5% in the quarter. Strong growth in most markets was offset by declines in Japan, a trend we identified last quarter and expect to continue throughout 2021.

Unfortunately, the transition in Japan, while necessary for the long-term health of our business, is masking a very strong performance by much of the rest of the world. We launched HEDRON L in Q2, adding a 3D-printed spacer to RISE-L, ELSA, CORBEL and TransContinental to create the most comprehensive suite of lateral inter-body solutions on the market today. This broad product portfolio gives surgeons the ability to perform lateral access surgery utilizing multiple expandable options, multiple static spacers and integrated plate-spacer solutions to address all levels of the lumbar spine through either a prone or lateral patient position. Furthermore, the Excelsius Lateral 360 procedural solution allows surgeons to safely and efficiently treat multiple interbody levels and place MIS pedicle screws while the patient remains in a single position.

Moving to INR product development. We are awaiting 510(k) clearance for the Excelsius 3D imaging system and remain cautiously optimistic regarding clearance and launch of the system late in Q3. The full launch of the Excelsius cranial module is slated for later this quarter as well. Shifting to trauma.

Revenue was up over 250% compared to the second quarter of 2019, 29% over the second quarter of last year and relatively flat sequentially. We are focused on sales force expansion and have several exciting product launches planned for the second half of this year and 2022. In summary, we're off to a fantastic start in 2021. It promises to be an amazing year if we continue to execute the way we did in the first half.

All parts of the company are performing well, and we're working together as a team. I'm grateful for the dedication, ability and effort of our worldwide Globus team members as they serve our customers and patients. I will now turn the call over to Keith.

Keith Pfeil -- Senior Vice President and Chief Financial Officer

Thanks, Dave, and good afternoon, everyone. Globus is coming off a fantastic second quarter and continues to build momentum through ongoing market penetration of our implant business and further adoption of our robotics technology. Q2 continues a trend of strong revenue, profit and free cash flow growth. Before I jump into my discussions on the quarter, I want to highlight that I will focus the majority of my comparative comments in the second quarter of 2019.

However, there are a few areas where I will provide comparisons against both Q2 of 2019 and Q2 of 2020. This will provide the most meaningful insights into our business. Our second-quarter revenue was $251 million, growing 29% as reported versus Q2 of 2019 and 28.9% on a constant-currency basis. On a day-adjusted basis, sales were higher again by 28.9%, the same number of selling days in the U.S.

and two more selling days in Japan when compared to Q2 of 2019. Q2 net income was $41.5 million and non-GAAP net income was $57.9 million driving $0.56 of fully diluted non-GAAP earnings per share. Adjusted EBITDA was 35%, and we generated $50.8 million of free cash flow. Our second quarter U.S.

revenue was $215.1 million or 34.5% higher versus the second quarter of 2019, reflective of continued share growth across our implant business and the increasing adoption of robotics technology within INR, which is inclusive of Dave's earlier comments. International revenue for the second quarter was $35.9 million growing 3.9% compared to Q2 of 2019. We experienced strong growth in most international markets, which was dampened by lower sales in Japan based on our previously discussed sales transition. As mentioned in Q1, we expect Japan to be a headwind as we progress through 2021.

However, this will strengthen our position in Japan over the longer term. Q2 gross profit was 74.6% compared to 77.4% in Q2 of 2019. The primary drivers of the decline were higher planned depreciation expense related to instruments and cases, slightly higher product costs driven by the mix of sales, and additional inventory reserve expenses associated with the nonrecurring write-off of raw materials. Research and development expenses for the quarter were $15.5 million or 6.2% of sales, essentially in line to Q2 of 2019, but lower as a percentage of revenue driven by the impact of higher sales.

The planned increases in spend we outlined last quarter have not materialized yet as labor markets remain tight. However, we remain committed to expanding our R&D team as we continue to develop new and innovative products across our portfolio. SG&A expenses for the second quarter were $107.3 million or 42.7% of sales compared to $88.4 million or 45.4% of sales in the second quarter of 2019. The higher spending in Q2 of 2021 was mainly a result of higher sales compensation costs.

However, SG&A is lower as a percentage of revenue due to the leverage impact of higher sales. The effective income tax rate for the quarter was 15.1% as compared to 19% in the second quarter of 2019. The lower tax rate was driven primarily by tax benefits associated with stock option exercises. As a reminder, Q2 of 2020 results include the large charge to R&D expenses associated with the Synoste acquisition, which also impacted our effective tax rate.

We concluded Q2 with $914.2 million of cash, cash equivalents and marketable securities. Net cash provided by operating activities was $59.2 million, and free cash flow was $50.8 million. Year to date, free cash flow is $100.7 million. And on a rolling four-quarter basis, the company has generated a record $202.7 million of free cash flow, reflective of higher earnings in the business, lower capital expenditures, as well as working capital improvements.

At this time, the company is increasing its 2021 guidance to $950 million in net sales and $2 in fully diluted non-GAAP earnings per share. The industry is experiencing a decline in case volume early in the third quarter as surgeons take extended vacations and regional shutdowns of elective procedures emerge due to the delta variant of COVID-19. We expect the impact from vacations to reverse in September and October once kids go back to school. While it is hard to predict the impact of the recent increases in COVID cases, I will remind everyone that the spine market has shown great resilience in dealing with COVID-19, and Globus specifically, has been able to take market share through the previous outbreaks.

While we expect the situation to be transitory, we do project a sequential decline in revenue in Q3 associated with the procedural slowdown. Our second-quarter results continued a strong start to 2021. Year to date, we've generated $478.4 million in revenue, 35.1% in adjusted EBITDA and $1.05 in non-GAAP diluted earnings per share. As we look ahead to the back half of the year, we are focused on our continued push to take implant share and drive the adaptation of our robotics technology while continuing to launch new and exciting products.

We will do all of this while maintaining our strong operational focus on execution and discipline in our approach to managing the business. We are committed to expanding our investment and will continue to pursue complementary acquisitions, all of which will drive long-term shareholder value. I'm thankful to our Globus team and their pursuit of excellence as we continue to serve our customers and patients. We will now open the call for questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from the line of Shagun Singh from Wells Fargo. Your line is open.

Shagun Singh -- Wells Fargo Securities -- Analyst

Thanks for taking my question. I guess just two from me. The first one on capital. Obviously, it was a very strong quarter, and it appears that you approached an inflection probably exiting 2020.

So if you can just touch on the outlook of the business in the second half, just given seasonality, and then even beyond that in 2022 and beyond, that would be helpful. And then, I have a follow-up.

Keith Pfeil -- Senior Vice President and Chief Financial Officer

Yeah. Shagun, this is Keith. Thanks for the question. Generally speaking, I mean, we feel extremely positive about our business.

As we look to the back half of the year, everything that we've done in the first half has shown that we've executed well, and we're taking share. As we look to the back half, we remain positive across our entire business. As it relates to 2022, I think it's a little early to give comments on 2022. But as we look at our last several quarters, we feel that we're well positioned to drive to the future for sales growth.

Shagun Singh -- Wells Fargo Securities -- Analyst

I got it. The question was just a little bit focused on capital. So just ExcelsiusGPS, can you talk to us a little bit about the outlook of that business, just given that it seems like it's at an inflection point. So how should we think about it in the back half, just given seasonality and then beyond that? So just specific to capital.

Dave Demski -- President and Chief Executive Officer

Thanks, Shagun. I think the third quarter is typically a slower quarter relative to some of the other ones in capital. Usually, the fourth quarter is at the end of the budget cycle for a lot of accounts. So that tends to be the strongest, and then there's a little second wave at the second quarter.

So you might see a little dip there. But generally speaking, we're very bullish about the adoption of Excelsius, and I think that's creating additional demand. So our pipeline continues to be very strong, and we're very bullish about the technology for the rest of this year and into next year as well.

Shagun Singh -- Wells Fargo Securities -- Analyst

I got it. And then, just with respect to your guidance, if you look at it over 2019, can you just help us understand what you've included in there for backlog? We are hearing that the spine backlog was substantially realized during the first half. So what are you including in the back half for backlog? And then anything on the impact of the coronavirus variants? That would be helpful. Thank you.

Keith Pfeil -- Senior Vice President and Chief Financial Officer

I think as we look to the back half of the year, Shagun, again, we remain positive. When I go back to 2019 and I look at our business, our current guidance of 950 implies 10% compounded annual growth from 2019 to 2020 to 2021. As we look -- and I would also comment that that growth is organic. That growth is coming across all facets of our business, and to drive that level of organic growth shows that we feel very positive about where we're going.

Shagun Singh -- Wells Fargo Securities -- Analyst

Thank you.

Operator

Our next question comes from the line of Matt Miksic from Credit Suisse. Your line is open.

Matt Miksic -- Credit Suisse -- Analyst

Hey, thanks. Thanks so much for taking the questions and congrats on another really strong quarter. I'm sure everyone on the line would love to hear if you're willing to share that average procedures per robot number that you mentioned hitting a high mark this quarter. But I'm guessing that you would have said it if you were going to share it, but we'd love to hear it.

But two questions for me. I guess, if I could follow up on your comment on vacations, I suspect that will get some folks' attention just because that had been kind of a hypothesis heading into Q3, potentially, that we may see something like that. If you could just, if possible, maybe sketch out what has the historical -- Dave, you mentioned the historical revenue trend in Q3 is down. How much more of an impact are you expecting if it's down three historically? Should we expect down five? Just some sense of what the increment is? And then I have one follow-up, if I could.

Dave Demski -- President and Chief Executive Officer

Well, thank you, Matt. As you expected, we're not going to disclose that average number for robot, but really excited about that. I think that's just a validation of what we've been doing. And to see the technology being utilized is really a bellwether for what's for the future.

So super excited about that trend. In terms of vacations, I think the situation this year is we really didn't have much in the spring, I would say. We started to see a little bit after school was over in June, but they just seem more pronounced and prolonged at this point. Obviously, I mean, there's a pent-up demand among our society for travel.

We're seeing the surgeons take that. But I fully expect that they'll be back in -- once school starts again in September. So we're expecting a strong September, October, clearly, given the dramatic change in the COVID situation. But I think that will be transitory.

But from a sequential standpoint, it's going to cause us to dip a little bit here in the third quarter.

Matt Miksic -- Credit Suisse -- Analyst

Fair enough. And then, the follow-up is a question I get often about some of the growth rates you've been putting up over the past several quarters, is on how to parse the various kind of growth drivers that are causing it to grow so much faster than market. And I know there's many, but if you could zero in on a couple. Like how much of a factor is the movement to 3D-printed implants? And how much of a factor, at this point, do you feel like the robot is in sort of closing the distance between, call it, I don't know, 2% underlying growth and 30% to your stack growth that you put up?

Dave Demski -- President and Chief Executive Officer

Yeah. I'm not going to drill down into real granular numbers, but I will tell you that the robotic technology or the computer-assisted technology is transformational. So we've always been an innovative company that's attracted new surgeons through some great technologies, through great implant technology. So we're still seeing that.

But on top of that, we have this transformation in the way surgery is being done. And I think we're leading the way in terms of robotics. So that's got a big impact at the top level, but it also helps us bring in over reps. Sales reps in this business want to sell what is going to be most effective for them.

So we're trying to convey that a little bit with some of the situations that we described, but there's a synergistic effect. So it's really challenging to parse it out and say which one is more important. Clearly, from a long-term standpoint, the computer-assisted segment is something that we're seeing a lot of growth from. And the trend is up.

So we're excited about where we're going with that.

Matt Miksic -- Credit Suisse -- Analyst

That's great. Thank you.

Operator

Your next question comes from the line of Richard Newitter from SVB Leerink. Your line is open.

Richard Newitter -- SVB Leerink -- Analyst

Hi. Thanks for taking the questions and congrats on another very strong performance. Wanted to maybe just start off on the imaging system that you guys have, I think, with the FDA right now. Any updates on the timeline there.

If I missed it, I apologize. And then, I'd also just love to hear kind of your views of kind of a year one launch and contribution potential for that product, especially with some other imaging modalities recently FDA approved and/or turning commercial from some of your competitors. So thoughts there, and then, I have a follow-up. Thanks.

Dave Demski -- President and Chief Executive Officer

Sure, Rich. Thank you. We're with the FDA now. We responded to some questions and it's back with them, and we're hopeful they'll approve it this quarter.

And then, we're planning on a commercial launch. It's going to be the end of the quarter or right early in the fourth quarter now as it looks. In terms of our projections. It's really challenging to come up with a number, but I will tell you that every surgeon we show it to is excited about getting the technology.

We obviously have to work through the contracting process with their hospitals. But just anecdotally, we had several who have stopped the planned purchase of other competitive systems until ours is ready. So the benefits this technology is going to bring are significant versus what's out there today. So we're excited about the impact.

And we just need to, at this point, I think, make enough of them next year to satisfy the demand.

Richard Newitter -- SVB Leerink -- Analyst

OK. That's helpful. Just on the cadence here. I appreciate the comments around 3Q seasonality maybe being a little more pronounced, vacations.

But just on the capital side, what is implied in your guidance for the seasonal kind of cadence of Enabling Technologies. Is 2Q the high watermark in your guidance and 4Q, which is typically a seasonally stronger quarter, higher than 3Q but not necessarily as high as 2Q? Or are you assuming a typical kind of -- the 4Q is the strongest quarter in your updated guidance?

Keith Pfeil -- Senior Vice President and Chief Financial Officer

I think -- thanks for the question. I think the way I look at that is, Q3 is typically a slowdown quarter, followed by Q4 picking up. In terms of high watermark for Q2 versus Q4, I wouldn't say that it's necessarily going to be a whole lot different than history. Again, we remain positive about where we're going, but we do see that slowdown coming sequentially in Q3 across the entire business, some of which will include the slowdown in robotics as we enter the third quarter.

Richard Newitter -- SVB Leerink -- Analyst

If I could squeeze one more in. Dave, you mentioned, I think, in your opening remarks, international spinal implants growing 5% year over year. Was that a comment off of 2019 or 2020?

Dave Demski -- President and Chief Executive Officer

Yes. Off '19.

Richard Newitter -- SVB Leerink -- Analyst

Thank you.

Dave Demski -- President and Chief Executive Officer

Yup.

Operator

Your next question comes from the line of Kyle Rose from Canaccord. Your line is open.

Kyle Rose -- Canaccord Genuity -- Analyst

Great. Thank you so much. And I reiterate the comments on the strong quarter. Wondered if you could just talk maybe from a bigger-picture perspective, what you're seeing as far as capital demand with respect to how customers want to order or pay for the robotics.

And then, kind of maybe your expectation on a go-forward basis where you have robots placed. Are you seeing any difference in interest from the imaging modality as far as installing upgrades and things of that sort with the installed base that you have within the robotics field as it stands now? And then I have one follow-up.

Dave Demski -- President and Chief Executive Officer

Sure, Kyle. And thank you. In terms of how customers will want to pay for it, I think there's really no change in that over time. Everybody has their own capital constraints or willingness to make other arrangements.

We're not seeing a big change there. I would say that people who are familiar with our technology and how Excelsius works are probably more prone to have interest in the imaging system just because they have experience with us and with our technology. They know the value that it brings. But it really opens up for us a competitive segment that we're currently challenged to address.

So if someone's already adopted computer-assisted technology and that they're doing freehand navigation, they've achieved some benefit from the computer at that point. So it's probably a little more challenging to get them to make the next step to robotics. So by having Excelsius 3D, we're going to be able to have a comparable product to what exists today to compete for that business along with moving people up to robotics.

Kyle Rose -- Canaccord Genuity -- Analyst

Great. That's very helpful. And then, just from a bigger-picture perspective, I mean, we've seen over the last several years, you go from spine and extend yourself into trauma. Obviously, you're launching more Enabling Technologies.

You acquired StelKast. Just kind of trying to understand where are you in the life cycle of going -- merging into a broader orthopedic organization when we think about hips and knees and potentially extremities and things of that sort from a long term. What's next?

Dave Demski -- President and Chief Executive Officer

Well, I think we have a lot of work to do with the starts that we've made, particularly in the total joint area. We really think the particular advantage we can bring there is, again, the computer-assisted aspect. So we're still in development of our robotics solution there. And that's where we're going to be able to differentiate ourselves from the competition.

So it's early innings there. And then, trauma is making great progress as we've walked you through over the last couple of years. And we continue to expand that portfolio and expand our footprint. And as Keith has alluded to, we're active and considering other ways to grow the business through acquisitions.

But at this point, we don't have much more to discuss on that area.

Kyle Rose -- Canaccord Genuity -- Analyst

Thank you.

Operator

Our next question comes from the line of Matt Taylor from UBS. Your line is open.

Young Li -- UBS -- Analyst

Hi, everyone. This is Young Li in for Matt. Thanks for taking our questions. I guess, maybe just wanted to follow up on, I think you mentioned you're seeing some early impacts from Delta in Q3.

What are some of the areas in the U.S. or OUS that you're seeing some of that impact, areas that you're paying more attention to given the increase in hospitalizations?

Dave Demski -- President and Chief Executive Officer

Well, I think it just mirrors where the outbreaks are most significant. So Florida has had a lot of it. We've seen Arkansas, Louisiana at this point. Internationally, I don't have -- I'm not as close to that personally to comment on.

Young Li -- UBS -- Analyst

OK. Great. That's helpful. I guess maybe one on trauma.

I think it was flat sequentially. You're focused on launching some new products and expanding the sales force. I was just wondering, maybe from a product portfolio perspective, where do you think you are relative to the competition? How much more product families and types do you need to include in the portfolio?

Dan Scavilla -- Executive Vice President and Chief Commercial Officer

Thanks for the question. This is Dan Scavilla. So just a couple of things. We've always said trauma is a long-term play, and we look at it over the long-term horizon.

So while it's relatively flat sequentially, that's not something we're hung up on so much as just along the journey. Q2 was compared to a record high with several of our territories actually breaking records in Q1. So the fact that they maintain that is a very good positive trend for us as we go forward to do this. That said, and as Dave mentioned, we've got several key launches that we plan to come out in the second half of the year.

That will get us further up into the procedural coverage. We think at that point, we should have the ability to cover about 70% to 75% of the procedures. With our expansion of our R&D resources that we have planned, when hired, will accelerate further into 2022 with the ability to actually cover off more of that gap. So I feel very bullish on where we are, the traction we've made and what the next steps are to really get out there and be a complete trauma portfolio.

Young Li -- UBS -- Analyst

All right. Thank you.

Operator

Your next question comes from the line of Drew Ranieri from Morgan Stanley. Your line is open.

Drew Ranieri -- Morgan Stanley -- Analyst

Hi, everyone. Thanks for taking the question tonight. Just on the seasonality factor and the sequential decline in the third quarter, you came off the record sales in second quarter. I think consensus has you at 230 million for the third quarter.

Is that kind of the right way to think about the sequential decline, just given the momentum in the business? And it's just kind of difficult to look back at history and see underlying trends just given that the portfolio has changed and robotics has entered the picture. But any help in kind of framing what the seasonality and sequential decline will look like in the third quarter?

Keith Pfeil -- Senior Vice President and Chief Financial Officer

Thanks for the question. This is Keith. I think that you said roughly around 230 million. I think that makes sense.

I mean, when you look back at history, typically from Q2 to Q3, we're kind of flattish. But with our strong second quarter here and the comments that we raised about seeing a sequential decline, when I look at it, I feel like Q3 is going to look at and feel a little bit more like Q1. So I think that your comment there is reasonable.

Drew Ranieri -- Morgan Stanley -- Analyst

OK. Got it. And just on the spend not materializing as the labor market remains tight comments. Was that solely directed at R&D? Or was that kind of broadly across SG&A also? Just kind of want to better understand that dynamic as we're moving into the back half of the year.

And how your guidance is built around that comment?

Keith Pfeil -- Senior Vice President and Chief Financial Officer

Yeah. My comment was really focused on R&D, because as I look at the spending, the spending is really flattish compared to 2019. I wanted to raise that because we had talked previously about being more aggressive in investing. I wanted to point that out.

Yes, the labor market is tight. It doesn't change our view. But the one thing I do want to call out is with our Q2 number of about 15.5 million in R&D, there is a higher people investment in there. One of the things that we've done is we've gone back and looked at our R&D last year during COVID and identified previous acquisition costs that were what I would call stranded.

We've worked to take those costs out of the P&L. So there are savings there, which is kind of masking some of the growth. And the last thing I would add is from a -- coming back from COVID, our spending is coming back. And things like travel, you'll still see a little bit of a tailwind in R&D as it relates to travel.

Drew Ranieri -- Morgan Stanley -- Analyst

Great. Thanks for taking the questions.

Operator

Your next question comes from the line of David Saxon from Needham & Company. Your line is open.

David Saxon -- Needham & Company -- Analyst

Yeah. Good morning -- or good afternoon, and thanks for taking my questions. Yes. Just one on the imaging launch.

I mean, correct me if I'm off, but I guess you just passed 150 Excelsius placements. So with the imaging launch, do you feel like you can get into a majority of those accounts over the next 12 to 18 months? And then I think you mentioned supply could be an issue. Did I hear that right? Or is that just kind of dependent on how the launch goes?

Dave Demski -- President and Chief Executive Officer

Yeah. Thanks, David. The comment on supply was really more anecdotal in that there's been a lot of interest expressed by surgeons as we've previewed the technology to them. it's really -- it's challenging to translate their enthusiasm to what the hospital is willing to spend.

So just on your other point about where the -- selling it to current robotics users, that is a value for us. But I really think the more significant value for us is to go after other users of other technology today and not just to sell to our same customers. So I really see this as, again, an ability to take market share in the computer-assisted side.

David Saxon -- Needham & Company -- Analyst

OK. And then, just a follow-up on the R&D and the labor markets. I mean, trauma and ortho, I think, has been a focus and is a focus. So is there any impact on those initiatives? And then also, could you just give an update on the total joint robot? I think it was 2022 last I heard.

Dan Scavilla -- Executive Vice President and Chief Commercial Officer

This is Dan Scavilla. So earlier on in the year, we had talked about our willingness to invest and expand resources in R&D, and Keith just went into some details on that. That was with the intent of pulling forward and accelerating future launches. So while the entire world, and especially the U.S., is currently looking at some labor shortages, we're not signaling that having an impact on any of our in-process launches at this point.

Only what we could bring forward at a faster pace when we do staff up. That's really the intent of those comments. As far as the joint robot is progressing, very -- we've gone through designs and some of the design freezes to the point where we've had several surgeon trials on it. Gaining positive feedback.

And we do believe that it is on track for the second half, possibly later part of the second half of 2022 to become marketable based on all the information we currently have.

Operator

Your next question comes from the line of Matt Henriksson from Citi. Your line is open.

Matt Henriksson -- Citi -- Analyst

Yeah, hi. Thanks for taking the questions. First, turning back to robotics, and you talked about a record-high average procedures. That is interesting given the fact that you have a lot of new Excelsius adopters in the market and normally, new adopters would water down the average.

Are you seeing those new adopters get up to speed faster? Or are you seeing kind of your legacy users kind of reach an inflection point and get even -- utilize the robot even more?

Dave Demski -- President and Chief Executive Officer

Yes. Matt, I'm not sure I have the granularity to answer that. My data is more at the top level. So I think it's probably more the legacy users are utilizing the technology greater at amounts.

Because to your point, it does take a lot for new users to kind of get up to speed and go.

Matt Henriksson -- Citi -- Analyst

OK. No, that's helpful. And then, just turning to the international market. Could you just provide a little more color on the progress you're making in Japan? The timeline still seems in line but just any additional commentary.

And then, with the Japan headwind, you guys are still up over second-quarter '19. Could you just comment on which markets or which countries were driving that growth?

Dave Demski -- President and Chief Executive Officer

Sure. The worst is behind us in Japan. But as we're looking back to last year, we still have -- we've got to get through a full cycle, right, a full year and then we'll kind of reset the numbers there, and I believe we'll be back to strong growth in that market. In terms of the rest of the world, we're strong in a number of countries, historically for us: Australia, U.K., Germany and in kind of where the major populations are where -- and good medical care is.

We track pretty directly with that.

Matt Henriksson -- Citi -- Analyst

Great. Thanks for taking the questions.

Operator

Your next question comes from the line of Jason Wittes from Northland. Your line is open.

Jason Wittes -- Northland Securities -- Analyst

Hi. Thanks for taking the question. So maybe -- you mentioned earlier in the commentary that you're doing new types of procedures that haven't been done before with robotics. Can you elaborate in terms of how the robot is being used, and particularly those newer procedures that haven't been done in the past?

Dave Demski -- President and Chief Executive Officer

I think it just comes down to sort of complex deformities, challenging entry ways where they just don't have a lot of room and would not necessarily kind of trust themselves with a manual procedure. They can rely on the precision of the robot to get into -- to really difficult angles for them in tight spots. So it would come in deformity corrections or sometimes like a tumor resection, those kinds of procedures.

Jason Wittes -- Northland Securities -- Analyst

OK. That's helpful. And on the trauma business, I don't know if we could get an update in terms of kind of what the run rate is for that business at this point. Just as a sanity check, I know that you kind of talked about growth rates.

Curious to know kind of what the run rate is at the current moment for that business.

Keith Pfeil -- Senior Vice President and Chief Financial Officer

So we don't tend to break out our sections of the business or comment on them or project them forward with that. And especially with trauma given its size, can really swing depending on how we hire reps when we launch a product, how we enter new accounts. So it's very difficult to lay that out. But just in general, we stay away and just do our forecasting at the top for total Globus.

Dan Scavilla -- Executive Vice President and Chief Commercial Officer

And when trauma becomes a larger part of our business, we'll break it out at the appropriate time. But right now, we tend to really not focus on that from a dollars and cents perspective.

Jason Wittes -- Northland Securities -- Analyst

That's all very fair. Can I ask kind of where the threshold might be?

Dan Scavilla -- Executive Vice President and Chief Commercial Officer

Threshold. I think we're several years away from that, I believe. I mean, we have a lot of things planned. But I think we're still a little while away from that.

Jason Wittes -- Northland Securities -- Analyst

OK. And just last question related to trauma, if I could. It sounds like you'll be about 70% coverage in terms of product portfolio by the end of this year, and it sounds like you -- you'll probably round out the rest to the end of -- in sometime into next year, at least from the commentary you had on this call. I'm just curious in terms of the products you're putting out there, are these sort of filling up portfolio products? Or are you kind of beginning to also add in some differentiated products that might really move the needle?

Keith Pfeil -- Senior Vice President and Chief Financial Officer

The answer is a little of both. So certainly, you need the basic bag, which we focus on. But with that, it's going to be some plus additional features that have gotten the attention of the market in usage and are allowing us to penetrate the market. What we'll do, though, as we fill that bag and get complete, is accelerate some of those innovations and fast follow-on innovations that we want to do just like we did in spine, that's the intent.

But we're, for now, getting the basic, getting it tested, adding in some strong features and then looking to accelerate that as we go forward.

Jason Wittes -- Northland Securities -- Analyst

Great, guys. Thank you very much. I'll jump out.

Operator

[Operator instructions] Your next question comes from the line of Sam Brodovsky from Truist. Your line is open.

Sam Brodovsky -- Truist Securities-- Analyst

Thanks for taking the question. Just quickly, to jump back to the sequential comp. You talked about revenue from surgeon vacations potentially coming back in September, October. Should we read that as maybe a little bit more revenue or a better sequential comp into the fourth quarter then, or as a percentage of the total year, a little bit more revenue in the fourth quarter than typical given that delay of revenue there?

Keith Pfeil -- Senior Vice President and Chief Financial Officer

Thanks, Sam, for the question. I don't know that I would draw any strong conclusions from that. I think that as we look to the back half, we comment on the sequential slowdown in -- from Q2 to Q3. I had a question earlier that asked, what does that feel like relative to a consensus.

And I commented that really it's going to be -- I feel that right now, we're going to be a little bit closer to Q1 versus obviously Q2. As I look to the spread, I mean, typically, if I go back several years, we're typically roughly 25% of our sales in Q3 to 27% in Q4. I don't see that being a whole lot different as we look to the back half of the year.

Sam Brodovsky -- Truist Securities-- Analyst

Great. That's really helpful. And then, as we get closer to the launch -- excuse me, the imaging system, can you give us how is the company thinking about selling the systems to driving greater deployments for robotics? Or how can we think about the imaging system maybe even potentially helping to drive greater share and then plans going forward?

Dave Demski -- President and Chief Executive Officer

Thanks, Sam. I think it will have the same sort of impact robotics has. I mean, there's going to be -- it's going to work better with our implants, and there's a natural tendency to utilize the implants on the enabling technology. So I think that they'll have a very similar impact of what we're seeing in robotics in terms of pulling through implants with it.

Sam Brodovsky -- Truist Securities-- Analyst

Thanks for taking the questions.

Operator

Your next question comes from the line of Matt O'Brien from Piper Sandler. Your line is open.

Korinne Wolfmeyer -- Piper Sandler -- Analyst

Hi. This is Korinne on for Matt. Thanks for taking the questions and congrats on the quarter. So first for us, with the new competitive navigation systems coming to market, such as Pulse and Holo, how do you foresee this impacting your ability to sell robots in the future? And how are you positioning the company to withstand these eventual competitive pressures?

Dave Demski -- President and Chief Executive Officer

Thanks, Korinne. I think robotics is a step up from navigation. I mean, we've seen that in the success we've had so far. It's the next evolution in computer-assisted surgery.

So I don't think the newer navigation systems are going to have an impact on us at all in terms of our robotic sales. It's another competitor from a navigation standpoint. So with the imaging system, there'll be other competitors. I haven't seen everything that everyone has to offer, but I certainly know that we stack up very favorably against the competitors are -- that are in the market today, and we've got some significant advantages over them.

Korinne Wolfmeyer -- Piper Sandler -- Analyst

Helpful. And just lastly, from a modeling standpoint, on the margins with the -- it seems like the top line and the EPS guide does suggest you're probably going to stay in that mid-30% EBITDA range that you've suggested in the past. But can you just confirm that's kind of where you're going to shake out for the end of the year? And where that can go into 2022?

Keith Pfeil -- Senior Vice President and Chief Financial Officer

Korinne, thanks for the question. I can confirm that, yes, we still feel like we're a mid-30s EBITDA business as we look to the back half of the year. Going ahead, I think it's still a little early to talk about 2022 from our perspective. But what I would say is that we've had a history of being a mid-30s EBITDA business, and I expect that to continue.

Korinne Wolfmeyer -- Piper Sandler -- Analyst

Thank you.

Operator

Our last question comes from the line of Craig Bijou from Bank of America. Your line is open.

Craig Bijou -- Bank of America Merrill Lynch -- Analyst

Good afternoon, guys. Thanks for taking the questions. Just a couple on robotics. Dave, I want to go back to one of your comments that you made, that you're seeing, within the accounts that you've placed Excelsius, you're seeing use expand beyond the surgeon champion.

So on that comment, I found that pretty interesting. So wanted to see if that's relatively a new phenomenon or if you're just starting to see that now for maybe systems that were placed a couple of years ago. And if you haven't seen it, is it potentially accelerating from what you saw over the last couple of years?

Dave Demski -- President and Chief Executive Officer

Thanks, Craig. It's been there from the beginning. I would say robotics in general, the interest in that by surgeons has grown. So I think it is accelerating.

I don't think it's anything particular to us. I just -- I think that there's just more interest in robotics. So more surgeons are interested in getting trained. And the ones where they're in the hospitals where we've already sold it, that's kind of a layup for us if they're interested.

But we've seen it from the beginning. Some of our early sales were to accounts that have now multiple systems because of the growth in the usage among the surgeons across the board.

Craig Bijou -- Bank of America Merrill Lynch -- Analyst

Got it. Understood. And then, just -- I mean, how would you characterize your growth in the systems where you -- or in the accounts where you do have an Excelsius installed? I mean is it a multiple on top of kind of what you're growing otherwise?

Dave Demski -- President and Chief Executive Officer

If I understand your question, we grow faster in robotics accounts than we do in nonrobotic accounts.

Craig Bijou -- Bank of America Merrill Lynch -- Analyst

Yeah. I was -- yeah. No, that's -- yes, Dave. That's what I was asking.

I was hoping that you might quantify that to some extent.

Dave Demski -- President and Chief Executive Officer

Yeah. Just that's competitive information from my standpoint. I'm just not comfortable sharing it.

Craig Bijou -- Bank of America Merrill Lynch -- Analyst

OK. Fair. Thanks for taking the questions, guys.

Dave Demski -- President and Chief Executive Officer

Sure.Thank you.

Operator

[Operator signoff]

Duration: 49 minutes

Call participants:

Kelly Huller -- Senior vVce President, General Counsel

Dave Demski -- President and Chief Executive Officer

Keith Pfeil -- Senior Vice President and Chief Financial Officer

Shagun Singh -- Wells Fargo Securities -- Analyst

Matt Miksic -- Credit Suisse -- Analyst

Richard Newitter -- SVB Leerink -- Analyst

Kyle Rose -- Canaccord Genuity -- Analyst

Young Li -- UBS -- Analyst

Dan Scavilla -- Executive Vice President and Chief Commercial Officer

Drew Ranieri -- Morgan Stanley -- Analyst

David Saxon -- Needham & Company -- Analyst

Matt Henriksson -- Citi -- Analyst

Jason Wittes -- Northland Securities -- Analyst

Sam Brodovsky -- Truist Securities-- Analyst

Korinne Wolfmeyer -- Piper Sandler -- Analyst

Craig Bijou -- Bank of America Merrill Lynch -- Analyst

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