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Globus Medical (GMED 0.36%)
Q4 2023 Earnings Call
Feb 20, 2024, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, and thank you for standing by. Welcome to the Globus Medical's fourth quarter and full year 2023 earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.
[Operator instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Brian Kearns, senior vice president of business development and investor relations. Please go ahead.
Brian Kearns -- Senior Vice President, Business Development and Investor Relations
Thank you, Victor, and thank you, everyone, for being with us today. Joining today's call from Globus Medical will be Dan Scavilla, president and CEO; and Keith Pfeil, chief operating and chief financial officer. This review is being made available via webcast accessible through the 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 2023 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 10K, 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'll turn the call over to Dan Scavilla, our president and CEO.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Thanks, Brian, and good afternoon, everyone. Globus finished 2023 with strong performance in the fourth quarter. Revenue for the full year was a record $1.569 billion, delivering $546 million of revenue growth, or 53% versus prior year, including four months of innovation sales. We achieve record sales while maintaining industry-leading profitability, generating a record $2.32 in non-GAAP EPS and an adjusted EBITDA of 30%, even as we continue our strong investments in enabling technology, orthopedics, and competitive recruiting.
We also achieved significant progress integrating the NuVasive merger and continue to fuel our innovation with five new products launched in 2023, positioning us well to gain momentum in 2024. In Q4, we delivered record sales of $617 million, growing 125% or $342 million. Q4 non-GAAP EPS was $0.60 and adjusted EBITDA was 28%. We also had a record free cash flow of $82 million, up 79%.
This cash will be used to fuel growth, funding innovative launches, product set expansions, and in-house manufacturing. I'll briefly comment on stand-alone Globus and stand-alone NuVasive Q4 revenues. However, as we become one company with one focus in 2024, we will not provide stand-alone company information going forward. Globus stand-alone sales for Q4.
were $304 million, increasing $30 million or 11% growth versus prior year, delivering an adjusted EBITDA of 33%. Sales were driven by the continued above market growth in U.S. spine of 11%, increasing momentum internationally with 20% growth, and strong performance in trauma with 41% gains. Enabling technology delivered 2% growth in Q4, driven by higher unit placements, offset by product mix, country mix, and financing programs.
There are over 65,000 robotic procedures performed to date and growing. The foundation remains strong, and I'm proud of the Globus team delivering solid growth and profitability as we enter 2024. NuVasive stand-alone sales for Q4 were $312 million, up 2% on a pro forma basis, primarily driven by continued market penetration in international spine with 14% growth, market reentry of key technology of NuVasive specialty orthopedics delivering 26% gains, and strengthened NuVasive clinical services, increasing 6% versus prior year. This is partially offset by slight declines in U.S.
spine, attributed to deal dissynergies and lower pull sales impacted by customers uncertainty with the merger. To date, we have seen some sales synergies in a few territories, but these fall well within our projected estimates provided in the S-4. The former NuVasive team are key growth drivers in 2024, with cross-selling and enabling tech penetration. I look forward to partnering with them.
In Q4, we launched VICTORY lumbar fixation plates and buttress plates for anterior, lateral, and anterior-lateral approaches, adding to our broad spinal fixation platform. Entering 2024, our combined product pipeline is full, setting the stage for a strong year of product introductions. Over the next few months, we will be adding to our best-in-class expandable portfolio, new INR offerings including the e-hub navigation system for seamless navigation when combined with our E3D system, and expansion of the precise trauma nailing system. Moving into integration status and starting with the deal rationale.
The merger with NuVasive created a leading world-class organization with a global scale and expanded customer reach with minimal sales force overlap. The comprehensive and innovative portfolio in spine, enabling tech, and orthopedics positions us well for long-term sustained growth. Our combined product development team will focus on rapid development of innovative solutions to address unmet clinical needs through the continuum of care as we bring procedural solutions into the marketplace. The surge in education and research programs will further define us as thought leaders shaping the marketplace while expanding our complementary operational footprint improves in-house capabilities to support commercial growth and drive cost savings.
Our financial discipline provides the ability to redirect investments into focused growth areas while improving combined profitability and cash flow. On the commercial front, we've completed the realignment of the U.S. and international sales teams and, in January 2024, implemented the new team structures to support surgeons throughout the world. We've also held several education sessions for reps for product cross-training and enabling tech education.
We remain on track for implementing common operating systems in Q1 that will allow us to work as one company and one team. I'm pleased with our work here and look forward to driving meaningful growth through the new structure. We also continue to receive significant inbound interest from competitive sales professionals who are seeking the opportunity to carry a bag second to none. Combined company will be a destination of choice for sales personnel who cherish an incredible product portfolio, financial security, and longevity.
One immediate benefit of the merger is cross-selling our existing portfolios. We made significant investments in key product sets in 2023 and are ramping up cross-selling in 2024. As mentioned, Salesforce cross-training is continuing as planned and will accelerate cross-selling opportunities throughout 2024 as more sets become available. We also made significant investments in long lead time components and manufacturing resources to scale up our enabling tech capacity, allowing for increased production output in preparation for higher demand.
We are reorganizing product development, carrying forward the rich history of rapid development to remain an industry thought leader as we work with our surgeon partners to address unmet clinical needs. From pioneering the XLIF procedure that is now the gold standard of lateral surgery, leading the market in expandable cage technology, and developing the best spinal robot with the most advanced intraoperative CT imaging, we're working to create surgical proceduralization of all key spine surgeries to create the standard of care across the spine industry. Our intellectual property portfolio has been No. 1 in the spinal industry for the last decade, and we are committed to further expanding this lead, especially in the enabling tech arenas as we continue to be at the forefront of imaging, navigation, and robotics.
To accomplish this, we remain committed to continuing existing projects and will have a strong PD presence on the West Coast focused on spine and enabling tech solutions. We're enhancing our surgeon engagement programs to increase our impact with surgeons and further strengthen how we interact with them in all aspects of our business. Our professional affairs team has been expanded, and we've added scientific affairs, marketing, and communication teams, all with talented individuals. In addition, we're increasing our research and clinical investments, expanding the coordination of education programs, and enhancing our presence in teaching institutions.
Operations remains a strength of the merger. We've begun expanding in-house capabilities of the West Carrollton production facility as part of our ongoing synergies. The Memphis distribution Center is now capable of supporting expanded distribution for the combined entity. We will continue to invest in high-tech manufacturing equipment for our implant, instrumentation, and enabling tech production capabilities.
We're also working to consolidate volumes and orders with third-party vendors to accelerate delivery times and drive cost savings. All these activities are progressing as planned. Synergy targets have been identified, focusing on out-of-pocket spending and prioritizing investments to match future growth plans. In-house organizational structures are being implemented and should reach steady state by midyear 2024.
While some employees have been impacted by the merger and reorganization, this is not a slash and burn exercise, and the merger payback is not driven by deep employee or spending cuts. We remain focused on building an organization to support long-term sustained profitable growth. I want to conclude by sharing a recent event that reminded me of who we are. We recently held our combined U.S.
national sales meeting, coming together as one team for the first time since the merger and commercial restructuring. It was interesting to watch the hesitancy of the participants evaporate as they saw familiar faces of teammates they've worked with, worked for, or competed against. The combined and well-balanced leadership team showed our sales force that we really are bringing the best of both organizations together to support them and create a once-in-a-career opportunity. By the first evening's product fair, you could no longer tell who came from Globus or who came from NuVasive.
There was only one strong energy in the room, focused on our combined portfolio and innovation, and a genuine excitement to get back out in the field and win. This team and that meeting reconfirmed my belief that we really are more alike than different. And when combined, we're unstoppable. I cannot wait for the international sales meeting to make that feeling global.
I believe the potential for Globus has never been greater. It's up to us to harness our resources and shape the future of our markets. We have at our fingertips everything we need to realize this. In closing, I want to congratulate Keith Pfeil on his recent, well-deserved promotion to chief operating officer, CFO.
Keith is a rock-solid leader, a great partner, and is well suited for this role. I will now turn the call over to Keith.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
Dan, thank you. Good afternoon to everyone joining us on today's call. We are now more than a year past the initial February 9th merger announcement and are reporting today on our first full quarter as a merged entity. My comments today will focus on Q4 and full year 2023 results, provide insights into our views for 2024 performance, provide updates on integration and synergy tracking, as well as commenting on longer-term capital allocation priorities.
My comments on Q4 and full year 2023 will focus on our as-reported results, providing updates on the legacy Globus business performance, as well as summary comments on the contributions from NuVasive on an as-reported basis. As a reminder, all information presented is done so based on Globus accounting policies and is consistently applied in the as-reported results for both legacy Globus and legacy NuVasive. Q4 '23 revenue was $616.5 million from 124.6% on an as-reported basis and 123.8% on a constant currency basis over the prior-year quarter. Net income was $15 million, resulting in $0.11 of fully diluted GAAP earnings per share and is reflective of merger-related costs and expenses.
Q4 '23 non-GAAP net income was $83.5 million, which resulted in $0.60 of fully diluted non-GAAP earnings per share. Q4 non-GAAP net income grew 38.9% while non-GAAP EPS grew 2.1% over the prior-year quarter, driven by a higher share count as a result of the merger with NuVasive. To illustrate, Q4 '23 fully diluted shares were 139.8 million versus 102.2 million shares in the prior year quarter. Q4 '23 adjusted EBITDA was 27.6% and free cash flow generated totaled $81.8 million.
Full year 2023 revenue was $1.569 billion, growing 53.3% on an as-reported and constant currency basis. Day adjusted sales growth was 47.8% with one less selling day in 2023 as compared to 2022. Net income was $122.9 million, which resulted in $1.07 of fully diluted earnings per share as reflective of deal and integration costs associated with the NuVasive merger. Non-GAAP net income was $266.4 million, delivering $2.32 of fully diluted non-GAAP earnings per share.
Full year non-GAAP net income grew 25.9% over the prior year, while non-GAAP earnings per share grew 12.6% over the prior year. The lower growth rate on a per-share basis is driven by increased share count as a result of the stock-for-stock merger with NuVasive. Full year 2023 adjusted EBITDA was 29.6%, and we generated $165.2 million of free cash flow. Moving further into revenue, musculoskeletal sales for the fourth quarter of 2023 were $583.8 million, growing 138.3% as reported compared to the prior year quarter.
Legacy Globus musculoskeletal sales in Q4 '23 were $274 million or 11.8% higher than the prior-year quarter with growth led by our U.S. and international spine businesses, as well as continued share growth within trauma. Our Q4 2023 enabling technologies revenue was $32.7 million, growing 10.9% compared to the prior-year quarter. Legacy Globus enabling technologies revenue was $30.1 million, growing 2.1% over the prior year on record units placed.
Capital continued to see strong uptake in the quarter. However, revenue growth was tempered based on country mix and financing arrangements. Turning our attention to geographic sales, U.S. revenue in the fourth quarter of 2023 was $490.8 million, growing 110.5% over the prior-year quarter.
Legacy Globus U.S. revenue in the fourth quarter of 2023 was $256 million, growing 9.7% as reported, compared to the prior year quarter. The increase in sales was led primarily by continued U.S. spine growth.
International revenue for the fourth quarter was $125.7 million, growing 204.6% as reported compared to the prior year. Legacy Globus international revenue in Q4 '23 was $48.1 million or 16.7% higher versus the prior-year quarter, driven by strong implant growth within key focus countries, including Australia, Brazil, Italy, Japan, Spain, and United Kingdom. GAAP gross profit in the fourth quarter of 2023 was 56.9% versus 74.3% in the prior-year quarter. The decrease in GAAP gross profit was driven by the impacts of the NuVasive merger, namely step-up inventory amortization.
Adjusted gross profit, which excludes the impacts of inventory step-up amortization, was 65.5%. We expect to continue to report on a consolidated adjusted gross profit metric for the next several quarters, as step-up amortization will impact GAAP gross profit for most of fiscal 2024. Legacy Globus GAAP gross profit in the fourth quarter of 2023 was 74.7% compared to 74.3% in the prior-year quarter, driven by lower product costs as a result of a higher mix of spine and implant sales. Full year 2023 GAAP gross profit was 65.1% compared to 74.2% in the prior year, driven again by the impact of step-up amortization as a result of the NuVasive merger.
Adjusted gross profit, which excludes the impact of inventory step-up amortization, was 69.6%. Legacy Globus GAAP gross profit for the full year 2023 was 74.2%, in line to the prior year, despite legacy enabling technology sales growing over 20% to the prior year, which reflects the impacts of continued manufacturing and supply chain cost savings initiatives. Looking ahead to 2024, we expect our adjusted gross profit rate to be in the mid to upper 60s for the full year as we begin to realize supply chain savings, namely lower freight and warehousing expenses. Research and development expenses in Q4 were $52.3 million or 8.5% of sales compared to $19.5 million or 7.1% of sales in the prior-year quarter.
The increased spending, both in dollars and as a percentage of sales, is reflective primarily of the impacts of the NuVasive merger. Legacy Globus Q4 2023 R&D expense was $21 million or 6.9% of sales compared to $19.5 million or 7.1% of sales in the prior year, and is reflective of continued investments within our enabling technologies portfolio, partially offset by the leverage impact of higher sales. The full year 2023 research and development expenses were $124 million or 7.9% of sales compared to $73 million or 7.1% of sales in the prior year, with the increase being driven primarily by the impacts of the NuVasive merger. Legacy Globus 2023 R&D expense was $83.9 million or 7.3% of sales compared to $73 million or 7.1% of sales, with the increased spending driven primarily by enabling technologies investments.
Looking ahead to 2024, we expect R&D expenses to be in the range of 7.5% to 8%. SG&A expenses in the fourth quarter were $242.4 million or 39.3% of sales compared to $118.1 million or 43% of sales in the prior-year quarter, reflecting the impacts of the NuVasive merger. Legacy Globus SG&A expenses in the fourth quarter were $130.6 million or 43% of sales, consistent with the prior year. Full year 2023 SG&A expenses were $641.1 million or 40.9% of sales compared to $432.1 million or 42.2% of sales in the prior year, which again reflects the impact of the NuVasive merger.
Legacy Globus SG&A expenses for 2023 were $491.9 million or 42.6% of sales and reflects slightly higher people costs driven by benefits and travel, as well as increased bad debt expense, driven by a one-time benefit in the prior year that did not repeat in the current year. Looking ahead to 2024, we expect our full year SG&A to improve 1 to 2 percentage points over the full year 2023 SG&A expense of 40.9%. Further, as we look ahead to fiscal 2024, we expect an interest expense headwind driven by two factors. First, our invested cash balance will be lower year over year, driven by the pay-down of the former NuVasive line of credit at merger close, which decreased our cash balance by $420.8 million, thus, decreasing interest income moving forward.
The second item relates to interest expense from the senior convertible note. Interest expense on this note will occur in two parts: first, the cash portion based on the 0.375% rate; and secondly, a noncash interest portion, driven by the amortization of the fair value adjustment of the note at the time of merger. We estimate interest expense to be in the range of $12 million to $15 million in fiscal 2024 versus net interest income of $20.1 million in fiscal '23. The GAAP tax rate for the quarter was 39.8% compared to 19.4% in Q4 of 2022, primarily driven by the impact of nondeductible merger costs on lower GAAP pre-tax income.
On a normalized basis, our non-GAAP effective tax rate was 22% in the fourth quarter. Our full year 2023 effective tax rate was 25.7% compared to 21.7% in the prior year, with the resulting increase driven by the impacts of merger-related costs, which you do not expect to repeat in the future. Looking ahead to 2024, we expect our full year effective tax rate to be approximately 23%. Shifting to cash and liquidity, our cash, cash equivalents, and marketable securities were $593.2 million at December 31st.
There were no short-term borrowings against our unsecured line of credit at year-end and our long-term borrowings consist of the 0.375% senior convertible notes due in 2025, which were assumed as part of the merger with NuVasive. It remains our intent for these notes to be part of our capital structure until they are due to be settled in March 2025. Turning attention to cash flow, Q4 net cash provided by operating activities was $104.7 million, and Q4 free cash flow was $81.8 million. Free cash flow grew $36.2 million over the prior-year quarter with approximately $5 million of that growth being driven by legacy Globus and the remainder driven by the contributions from the NuVasive merger.
2023 net cash provided by operating activities was $243.5 million, and 2023 free cash flow was $165.2 million. Looking ahead to 2024, we expect capex spending to be within a range of 5% to 6% of sales on a full year basis. Consistent with history, our capital allocation priorities will remain unchanged moving ahead. Our primary use of capital will be to fund internal investments for product development, inventory, and capex, while facilitating complementary M&A, which meets the needs of our strategy moving forward.
In the near term, we would expect any inorganic opportunities to be more of a tuck-in type of deal as opposed to a transformative deal, especially while we continue to integrate the NuVasive merger. Though organic and inorganic investment are our primary uses of capital, we continue to utilize share repurchases within our capital structure. Coming into the fourth quarter, we had a total of $500.8 million authorized by our board of directors to fund share repurchases. During the fourth quarter, we spent a total of $225.6 million to repurchase approximately 4.3 million shares at an average price of $52.11 per share.
The company has approximately $275.2 million remaining under its authorized share repurchase program. Shifting attention over to cost savings and synergies, we still expect to generate a total of $170 million of synergies over three years as a result of the merger with NuVasive, 40% being realized in year one, 70% by the end of year two, and 100% in year three. Since we've last shared an update, we've taken steps to begin to realize those synergy savings. The focus of these savings have been across the business and have been centered on operations, namely warehouse and contract negotiations, SG&A cost redundancies, the elimination of duplicative third-party expenses, as well as the start of systems integration activities.
As we move through 2024, we would expect synergy savings to increase sequentially each quarter as actions planned are realized. As Dan noted, we are not moving ahead with the slash and burn exercise of cost cuts. Rather, the cuts will be focused in key areas to drive greater value creation. Primary focus in fiscal 2024 is to further drive recurring cost savings in the areas of manufacturing and sourcing.
We will do so through third-party supplier contract renegotiations, product and sourcing, as well as investments in machinery and equipment, which will also drive greater manufacturing efficiencies and also drive greater fixed cost leverage within our manufacturing and supply chain. At the present time, we feel confident in achieving this energy target set forth for 2024 and beyond, and we'll continue to provide updates as the year progresses. At the present time, the company is reaffirming its previously provided financial guidance for 2024, which projects net sales to be in the range of 2.45 billion to 2.475 billion dollars and fully diluted non-GAAP earnings per share to be in the range of $2.68 to $2.70. Our net sales guidance for 2024 includes projected sales dissynergies of roughly $150 million as a result of the NuVasive merger.
Adjusting for those sales dissynergies, our projected revenue growth would have been approximately 8.5% to 9.6% based on fiscal 2023 pro forma revenue of $2.396 billion. Our non-GAAP earnings per share guidance implies 15.5% to 16.4% growth and assumes approximately 140 million fully diluted shares for the full year versus actual 2023 shares of 114.8 million fully diluted shares. As we look into 2024, our keys to success will focus on the ability to execute. In the near term, we'll continue our merger integration with the goal of moving back toward more of a steady state by midyear.
Tremendous effort has and will continue bringing new organizations together while we push forward our go-to-market strategies in key geographies. Internally, we will continue to drive synergy capture with a key focus on continued operational improvements. The focus on execution and value creation will drive shareholder value as we seek to achieve our goals set forth, creating enhanced profitability and cash flow generation. Our goal is to improve musculoskeletal care, and we will achieve that through procedural innovation.
Those innovations will be achieved by listening to our customers, which are the patients and the surgeons, to be successful, we need to listen to their needs. If we focus and execute with our customers through constant contact and active listening, we will continue to bring best-in-class innovation to market and separate ourselves from the competition. We remain excited for the future and want to thank the entire Globus team for their relentless effort in the pursuit of excellence. Operator, we'll now open the call for questions.
Questions & Answers:
Operator
[Operator instructions] Our first question comes from the line of Vik Chopra from Wells Fargo. Your line is open.
Vik Chopra -- Wells Fargo Securities -- Analyst
Hey, good afternoon, and thanks so much for taking the questions. Two for me. I appreciate all the color of the integration efforts, but maybe you can talk about what surprised you to the upside and as well to the downside. And I have a follow-up question.
Thanks.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
Thanks, Vik. This is Keith. I'll take the upside and downsize as it relates to cost. As I think about -- as we dig in and start to look at the business more and more, to me there continues to be great opportunities for operational improvements in manufacturing.
I think that bringing the facilities together with our manufacturing and legacy NuVasive really allows for fixed cost leverage improvements. Those cost savings won't be generated overnight because as I commented in my prepared remarks, we're going to be looking at investing in new machinery and equipment. That's gotta get online, and then you got to start to produce the inventory. I think you'll see some of those savings more so in '25 and going into '26.
And then, on the backside, I would also say SG&A. As I look at where we're at today, I think that we're continuing to overlay kind of the Globus approach to spending. I think there's opportunities there. But in saying that, Dan commented that, you know, this isn't a slash and burn exercise.
And some of the things that he commented on are places that we're spending more money. He talked about scientific affairs, talked about more surge in outreach. Those are places where we will invest to drive the business moving forward.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, and I'll add to it, too, Vik, you know, one of my thoughts, I think with the upside was really the willingness of the teams to come together and embrace what they had in common, not what was different. And so the readiness of the field and also the in-house, the support really came together in a way that I thought was great. You know, the downside would just be some of the unsexy things, the heavy lifting you need to do of common processes and common reports and common systems. You know, just need it to go run and drive an infrastructure.
Not that they're a big surprise. This is just quite not as fun to go after when you have so much innovation and so much room to go grow.
Vik Chopra -- Wells Fargo Securities -- Analyst
Great. Thanks for the color. Just to follow up, I think you said that you have some inbounds from competitive reps. Maybe just talk about how meaningful those conversations have been, and then just broad trends in hiring in Q4, and how you see your recruiting and retention efforts shaking out in 2024.
Thank you.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, you got it. So, a couple things. Let's start with your first part. We really do have a lot of foot traffic right now with competitive people coming in, expressing interest proactively with us.
And they're meaningful, they're large in size, they're well established. And so, it certainly can be significant. And we're taking time to make sure that we're going after that. I would tell you that recruiting in general was strong in 2023.
It was lighter than it had been in the past two years just by itself. But I guess I could cheat and technically say we've hired over 350 competitive reps in the fourth quarter, meaning that our focus is obviously with our counterparts and getting that done. And so as a result, not quite as heavy as recruiting, but it is a main focus to get back to. And I'm pleased with what I see so far this quarter with traffic.
Operator
Thank you. One moment for our next question. Our next question comes from the. line of Steve Lichtman from Oppenheimer.
Your line is open.
Steve Lichtman -- Oppenheimer and Company -- Analyst
Thank you. Hi, guys. Keith, you mentioned in your prepared remarks relative to enabling technologies about financing arrangements, are you seeing more of a mix of placements versus outright sales? And is that something we should look for more from you guys, particularly as some new competitors hit the market?
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
So, great question. Thanks for it. I would say that in Q4, we saw more volume-based sales. So, you know, what's the difference here every year? Interest rates are higher.
So, when you think about the rev rec or the revenue recognition that occurred, a greater portion went to interest income that will be recognized radically over the life of the deal. So, when I talk about the 2% growth on base business, it's really driven primarily because of the interest impact. And that's really as I think about, moving forward, will we see more volume-based arrangements? I think it's going to ebb and flow quarter to quarter. I wouldn't say that this is the start of an inflection point where we're going to be driving more volume-based.
It's really going to be driven by what each customer is really looking for.
Steve Lichtman -- Oppenheimer and Company -- Analyst
Got it. Great. And then, just secondly, in terms of the ortho business, I think at AAOS you guys talked about potentially showing your knee system this year. What level of investment is going to be required to get that business off the ground? And is any of that embedded in your FY '24 earnings commentary?
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Steve, are you talking about the robot or the implants or both?
Steve Lichtman -- Oppenheimer and Company -- Analyst
Both.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
OK, that would make it tougher. No, the robot itself is actually built, but it's not yet approved. So, it isn't something we would have built in with any significance in our 2024. While we do have some great updated products for cementless or press-fit knee coming and revision updates, we've been light in building them into the forecast just because they have yet to get through and get approval.
So, I look at all of those as upsides. I would signal to you that all of them are anticipated in the second half of the year, and we've not seen anything that would take us off course. We were just conservative having not had FDA approval, not building it in as a needed plan to achieve.
Steve Lichtman -- Oppenheimer and Company -- Analyst
And relative to the level of investment required to kind of get that ortho business off the ground, is that meaningful at all, and if any of it built in this year?
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
I would say that the level investment would not be meaningful to the year. And as we think about development costs, you know, we treat our we expensive development costs as they're incurred. So, there's not some hanging expense waiting to run through the P&L. I think that we will -- you know, it'll come through the P&L and stride in 2024.
One other thing I'd add to you, Steve, is all of the stuff you need to get to market has been spent over the past couple of years anyway, and so you already have a large level of ortho investment built into 2022, 2023, as well as even earlier with that. So, you shouldn't see a blip in your model or anything that would take you off significantly from where we are.
Steve Lichtman -- Oppenheimer and Company -- Analyst
OK. Got it. Thanks, guys.
Operator
One moment for our next question. And our next question will come from the line of Matt Blackman from Stifel. Your line is open.
Mathew Blackman -- Stifel Financial Corp. -- Analyst
Good afternoon, everybody. Thanks for taking my questions. I've got a couple for Keith. Maybe just to start, just a bigger picture guidance question, I'm curious what lens we should be looking through to gauge the '24 guidance.
Historically, I think you've guided to a range where you have high conviction, but where there's also opportunity for upsides. So, first question, has anything changed in your guidance philosophy for the now combined company? And I have one follow-up.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
I would say that, you know, our top-line guidance, the 24.50 to 24.75, is something that we feel confident in. I would say that we called out some of the sales dissynergies because I wanted to get across the point that, you know, we remain extremely excited about our business and the growth prospects, but we're acknowledging that sales dissynergies could exist. As it relates to the bottom line, the range of 2.60 to 2.70, I think it's really a down-the-middle number. I mean, in my prepared remarks today, I really sought to provide a lot of color as it relates to gross profitability, R&D and SG&A expenses.
And I think that when you kind of pull that together, you know, 2.68 to 2.70 seems reasonable. Obviously you're always going to try to beat, but that's where we're standing as of now.
Mathew Blackman -- Stifel Financial Corp. -- Analyst
OK, I appreciate that. And then on that point as well, you did give us a ton of P&L stuff to work through. I'm curious, we didn't really touch on EBITDA, which is something that you certainly highlighted in the proxy. And if i recall, your commentaries have been the proxy is still the best framework for numbers.
And this is a complicated question so i apologize in advance. But if we actually look back to your EBITDA outlook in the proxy for 2024, i think it was something like 788 million, and appreciate that the synergies have shifted out so there -- there's always some changes there. But when we make some adjustments for that, the timing of the synergies, we're still coming up with an EBITDA number roughly for 2024 and call it the 7.30 to 7.50 range. Is that the right way to think about it? Or is something else perhaps change that impacts the EBITDA in 2024 and beyond that you've laid out in the proxy.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
That's a great question. I would say you're not too far off. I think that makes sense. When you think about the S-4, you know, one of the things that I would say was different is we did a little bit more investment in enabling tech during the years, so that really impacted a little bit of base business profitability.
But when you look going forward, I think your range you provided makes a lot of sense.
Mathew Blackman -- Stifel Financial Corp. -- Analyst
All right. Thanks so much.
Operator
Thank you. One moment for our next question. Our next question will come to the line of Shagun Singh from RBC. Your line is open.
Shagun Singh -- RBC Capital Markets -- Analyst
Great. Thank you so much for taking the question. Just to follow up on 2024 guidance, can you provide us -- give us any help on the cadence of what you did call out, 150 million, in potential dissynergies? How should we think about that? And then, is there any cross-selling opportunity included in that? And then, I have a follow-up.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
I would say the 150 million, we're really looking at that throughout the year. throughout the entire year and the continuum across all our businesses. As it relates to cross-selling, we would have assumed cross-selling in our guidance number this year, the 24.5 to 24.75. Dan, anything you'd add to that?
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, Shagun, what I would just tell you is the 150 that Keith referenced is the gross number. We would look to offset that through cross-selling and other growth and things like that. It's just a natural one that we've built in, but it's not been netted down for the cross-selling. We're going to do that as a way to soften it from that point.
Shagun Singh -- RBC Capital Markets -- Analyst
Understood. And then, you potentially have two new competitive spine robots coming to market from larger market players, including one that has been a major share donor for the last several years. So, I guess a two-part question, how do you expect the new robotic systems to compete in the market relative to your offering? And how do you think of the implant share dynamics as these companies may have better ability to kind of defend their own position in the market? Thank you for taking the question.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, it's a great question. It's one really to be defined further. We've got to see the actions that are taken there. At the end of the day, you have a large unmet clinical need.
We've got a robot that is superior. And we think that even with competition, which we've called will be coming for years, may arrive over the next 24 months, that's OK. You know, we're set to poised in and compete this way. Part of doing this merger was to create the size and the reach in order to also not only penetrate faster but compete in this fashion.
And so, I think we're well poised to go head to head with anybody in this sense. And while I would think about it, there may be more choices over the long term for our customers. And that's why you have to focus on driving innovation and putting products out that make meaningful differences.
Shagun Singh -- RBC Capital Markets -- Analyst
Thank you.
Operator
One moment for our next question. And our next question comes from David Saxon from Needham. Your line is open.
David Saxon -- Needham and Company -- Analyst
Great. Thanks for taking my questions, and congrats on the quarter. Maybe to start on the integration, I'd love to hear the feedback you're getting from the sales reps following the territory integration that you guys completed in November. I know you're saying attrition is kind of in line with expectations, but the attrition that you are seeing, is it in territories that were kind of most disrupted? And then, how are you thinking about filling those vacancies with some of these competitive reps you've called out?
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Thanks, David. You know, obviously, it becomes a personal matter for reps and you're going in and making changes. And most people as human nature don't adapt well or appreciate change in the state of uncertainty. So, going through that quickly or as quick as we can is meaningful.
I'll be honest with you, the teams that I've worked with throughout the world have been fantastic. And the vast majority have been willing to roll up their sleeves and figure out where to work and how to cut up the spaces. Remember, the thing we've called out clearly is we had very low overlap. In fact, by the time we were on blinded, it was in the neighborhood of 3% in the US.
So, it wasn't a major amount of untangling so much as just reorganizing for the most efficient thing. Areas that have departed that we may attribute to this change, I think they're sporadic. I don't think it was a density in certain areas that I would call out here. Again, and probably just more of the personal comfort, are they comfortable with this change or would they like to go somewhere else? And, you know, we're working through that.
Filling it, we have a lot of reps and we need all of our reps. So, we're looking where we spread out, and we will keep our eye focused on competitive recruiting as we have in past years and use that as a growth mechanism.
David Saxon -- Needham and Company -- Analyst
OK, great. Thanks so much for that. And then, I wanted to ask on the knee robot launch. I'd love to hear your strategy around the launch.
Like what type of accounts are you going to target initially? What's your confidence in supply and manufacturing capacity? And then, how should we think about this StelKast implant ramp as you kind of build the robotics install base? Thanks so much.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
You're welcome. I would tell you we certainly have ordered the long lead time components and we've expanded our capacity not only to handle the merger but also for this. So, I feel like we're set to do that way. We've been scaling up implant sets as well, slowly right now because we need to get through and get the approvals before we go bigger with it.
You know, the truth is the strategy will come together a little bit more into the second quarter and early third quarter as we get through and understand when we can launch this and where we'll go. I would tell you, it's an open strategy right now. Of course the need to be in ASCs is prominent given where those procedures take place. But by all means, we'll take advantage of hospitals as well.
So, you are going to be, what we do as Globus, covering all these areas versus being hyper-focused. And what we'll do is we'll start with concentric circles, establish ourselves, invest more, and continue until we build up the momentum like we've done in spine over the years.
David Saxon -- Needham and Company -- Analyst
Great. Thanks so much.
Operator
Thank you. One moment for our next question. Our next question will come from the line of Matt Miksic from Barclays. Your line is open.
Matt Miksic -- Barclays -- Analyst
Hey, great. Thanks so much for taking the question, and congrats on the progress and all the great color. Maybe, Dan, just diving into one of the things that you just mentioned about the ASC as it pertains to ortho, curious if you could maybe talk a little bit about how that's shaking out as an opportunity for the combined business, you know, how big that was or is for Globus legacy or NuVasive or both in terms of, you know, the percentage of your business going through the ASC and what you're doing to participate in that growth opportunity on the spine side. And then, I had one follow-up, if you could.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, you got it, Matt. So, we won't disclose a certain business segment, obviously. So, I'll leave that one out. What we are looking at and what we recognize is, of course, there is a migration at a certain cadence of procedures that go out into the ASC.
And so, as appropriate, we're looking to understand the best way to place enabling tech versus free-hand navigation versus just free hand. Period. And we're working through that as well. To date, we're still putting together what we wanna do as an ASC strategy in that particular area as the new combined organization.
But again, it won't be any significant deviation. I can't imagine calling it out to any size in 2024. I think it's one that as we fine tune and get better feel for the stabilized sales force, we'll bring this together probably be stronger at that push later in the year into 2025.
Matt Miksic -- Barclays -- Analyst
OK. And then, just maybe a follow up on some of the integration and dynamics of, you know, working through the combination of the field forces and everything that you've talked about. We were pretty happy with the way that the new basis numbers came in Q4, but I think if I could speak for investors that we talked to about the opportunity here is there's still some apprehension about when do we start to feel like things are on the tail end or they're on the downward slope of the risk of maybe the dissynergies getting bigger than we were expecting. Is Q1 that transitional period, do you think? Do we have to wait until Q2? Another way, what are some of the signals and data points that we can look for or think about that will help to finally put all that sort of concern from last year to bed? I appreciate it.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, it's a great question, Matt. And I'm guessing here, I would think that we would see activity in the first quarter and be able to understand where that is and what it is. My thought would be exiting first quarter in the second quarter, I would think it should be a touch more stable. But this is just me guessing based on really only having one month's actual data for the year that way.
But, you know, when we call out steady state by June, we're doing that intentionally saying that we think that sales force has settled in getting through the learning curves. You get the bumps out of your system implementations. And you work into a cadence really what I think is through the first quarter into the second. But you exit the second quarter going back to doing what you do best, which is innovate, take share, and grow.
Matt Miksic -- Barclays -- Analyst
Thanks so much.
Operator
Thank you. One moment for our next question. And our next question comes from Matthew O'Brien from Piper Sandler. Your line is open.
Matt O'Brien -- Piper Sandler -- Analyst
Great. Thanks for taking the questions. I guess just for starters, as I think about -- when you put the stand-alone NUVA, stand-alone GMED together, and I know there's moving parts here, but if you do that, you take the dissynergy out, I'm getting like, you know, $50 million of cross-selling benefit here this year. Is that number about right? And then, the 150 million in dissynergies, you know, that seems like a lot in one year.
I'm just wondering what exactly that's baking in. I know we've heard about Texas maybe turning over, but that just seems like a lot in one year. So, what's being baked in there? And then, I do have a follow-up.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Thanks, Matt. Well, again, remember, we're Globus so we're conservative in what we look at and what we estimate and we're putting numbers out that we would look to control or beat where possible. Not saying it's a slam dunk. We're just being realistic that we have created a market disruption as we become No.
1 in the market, and so we expect folks to react to that. And I think it would be unrealistic not to think you would lose stuff. So, it's an estimate but not really based on any factors. You're calling out certain geographies that I wouldn't comment on just because like I said we did it more from a top-side number as an area to build from and look to go to from that way.
Matt O'Brien -- Piper Sandler -- Analyst
OK, but even with the low overlap, I mean, that 150 seems like a big number.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
I mean, I'd say that it is a large number, but when I step back and look at sales, when you look at the combined sales from 2022, that's about 7%. But to Dan's point earlier, the gross number before you consider cross-selling opportunities to offset that. Bringing the portfolios together, again, you're going to be looking at the -- the legacy NuVasive team is going to be looking at Globus expendable cages. They're going to be looking at Globus enabling technologies.
And you look at the NuVasive products, the legacy Globus reps is going to be looking at the NuVasive lateral procedures. So, there's cross-selling in there. There's cross-selling that's not in that 150. And at the end of the day, it's an imprecise size, but we're basing this on what we see.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, if you saw -- say between 5% to 10% of sales could be disrupted. We're right in the middle when we came up with that number. And then we say, OK, that's, again, the gross number. Then how do you beat that? Through cost-selling, through growth, through natural accounts, through competitive hiring.
That's where we're saying, but we're just putting out saying based on our formulas, if you picked a historical norm, that would be the number we'd put out and then go to beat by outgrowing it.
Matt O'Brien -- Piper Sandler -- Analyst
Got it. OK. Appreciate that. And then, Keith, as far as, back to Matt Blackman's question on EBITDA, I think you guys said when you did the deal, you know, year three, post the closing, you'd be back in kind of the mid-30s as far as EBITDA goes.
I mean, this guidance is more like kind of low 30s. It's a lot of leverage that we're expecting over the next, I guess, three years even to get to 33%. So, just talk about, you know, the confidence in getting back to that mid-30s and kind of where that comes from up and down the P&L. Thanks.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
So, we're confident we're confident in that. When you think about the 170 that we called out, 40% this year is about $68 million. You're going to get 70% and then 100%. As you think about the cadence, it's important to think about some of my prepared comments.
Talk about manufacturing and operations. Those are longer lead time items. Things in SG&A and R&D, those will happen more quickly. So, when you think about the 68 million, I would say give or take 20% of that's going to be in COGS, the other 80% is going to come through R&D and SG&A in 2024.
But we have to plant the seeds for the future manufacturing improvements to drive improved P&L profitability. So, what does that mean? What that means is that, the thing I'm going to pay attention to this year, especially as we get into the back half of the year, the cashflow. Because if I'm renegotiating contracts, I just see improvements in working capital because of inventory. I'm buying raw materials cheaper.
I'm buying things. I'm bringing them in-house. 2025, the equipment that I'm investing in is coming online, and I'm producing inventory. I'm building an inventory for that, which I will sell later in 2025 and '26.
That's where you're going to see a lot of that benefit, and that's going to be really in 2025 and '26. So, from my perspective, our view of getting back to mid-30s right now, I feel good about that.
Operator
Thank you. One moment for our next question. And our next question will come from Matt Taylor from Jefferies. Your line is open.
Matt Taylor -- Jefferies -- Analyst
Hi, guys. Thanks for taking the question. So, I just wanted to ask about two kind of side items. One was I thought it was interesting that you bought back stock in Q4.
So, maybe you could talk about your decision to do that, whether that was opportunistic, because I know you said talking M&A was a priority. And then, just at AAOS and you were talking about the ortho robot, I know we could see some of that more later this year. And I guess my question would be, do you expect the contributions from that to be material, not this year but maybe next year?
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Hey, Matt. This is Dan. I'll actually answer and then hand it over to Keith. So, you know, look, we think that the market has overreacted and the stock price has actually had a deal.
And we're going to take the opportunity to use our strong cash and buy that back to reduce dilution and actually set it up for other reasons. So, yeah, it's opportunistic, but it's also the plan of we'll keep doing that because we believe strongly in where this is going to go. We play for the long term, but we'll use it to our advantage now. That'd be the first one.
You know, for AAOS and the robot, we're really happy with it. As I said, we haven't filed yet. It hasn't been approved. We think it's going to be in the second half of the year.
I would tell you, I would not expect material moves of that in 2024. I think that's going to be more of a 2025 story.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
I don't really have -- I don't really have a lot to add to Dan's comment. I think he hit it head on there.
Matt Taylor -- Jefferies -- Analyst
Thanks.
Operator
Thank you. One moment for our next question. Our next question comes from Ryan Zimmerman from BTIG. Your line is open.
Ryan Zimmerman -- BTIG -- Analyst
Hey, guys. Thanks for taking the question. Want to follow up maybe on Matt's question in a different way. You know, if you take kind of the prior numbers, Keith, I think you called out 2.396 billion, you know, when I look at where the guidance lands, and again, backing out dissynergies, it come out to about three percent or so for FY '24.
And so, I guess I'm curious kind of what your view of the market is relative to that number. You know, is the market growing at that rate? Is the market growing faster than the other rate? It feels like, you know, coming out of AAOS and the, you know, early part of the year, market's been pretty healthy. And so, you know, are you suggesting that you guys are growing at market, growing maybe slightly below market? And then, you know, the second point to that question is when you think about the guidance of the 2.45 to 2.475, now we all have these old models from all the different segments and I know that's now one company, but maybe help us piece together kind of where you see that growth coming from. Is it within cervical? Is it within, you know, support and neuro-monitoring and international? Some of those components, beyond maybe musculoskeletal enabling tech, if you're willing to comment on those would be helpful.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
Yeah, so thanks, Ryan, for the question. So, as I think about the 2.45 to the 2.75 from a growth perspective, I commented earlier on a previous question about what each legacy sales team would be looking for, you know, on the legacy NuVasive side, they'll be excited to sell Globus expendable cages, Globus enabling technologies. Legacy Globus will be focused on lateral procedures, things of that nature. When I think about the where, internationally, I think if you go back and look at historical NuVasive and Globus numbers, I think we've both been on a pretty good clip of growing share internationally.
I would expect to see spinal implants continue to see that growth moving forward. Trauma, you know, our trauma -- legacy trauma business continues to perform well. NuVasive has some products from that portfolio that we think, together, we're going to be better together and drive share growth. As I think about enabling tech, again, that gets back to the cross-selling opportunity.
That brings you back to U.S. spine and really your initial question. You talked a little bit about, you know, the growth that you've seen being 2% or 3% of where we're growing. So, you know, early on, we're going to have the dissynergies.
We called out the 150 million gross dissynergy. Our growth rate clearly is slowing down here for the first portion of the year. But to Dan's point, you're getting into the first second quarter, you're really working to move toward a steady state, getting into the second half of year and moving this forward. We still fully believe that we can provide mid to high single-digit growth, but we're acknowledging that this first year there's going to be dissynergies.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, I think too, Ryan, the fun thing with this, back to your point, the growth, I'm going to say it's everywhere because you're right, you've got a great cervical disc that we can leverage. You've got EGPS and E3D. You have the neuro, you know, monitoring systems that we can go apply to our business and the cross-selling. There's a lot out there that we could go on and on.
So, I think what we're looking to do is healthy growth throughout all of the portfolio and really showing it that way versus focused in on one or two areas of concentration.
Ryan Zimmerman -- BTIG -- Analyst
OK. I appreciate you answering that multi-part question. Then I'm going to squeeze in one more and I appreciate taking the questions here. But I was late to the party at AAOS, but I did see -- I did have a chance to go by the booth, see some of the new, you know, components that you have.
And it feels like you and your largest competitor within robotics are moving a little bit more in terms of cranial clickability in terms of your ability to maybe move into things like bone cutting, right? I'm just curious kind of how you think about, you know, where robotics is going, particularly within spine? And do you feel like you're hitting a ceiling within your applicability within maybe a core spinal robotics application and having to venture beyond into areas like cranial or, you know, joint reconstruction, etc., and that's what we're seeing in kind of the pipeline, if you will, of products that you're offering now.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
So, it's a great question. A couple things. We've been in cranial for a long time with the robot and have great capabilities there. There's absolutely room to expand.
And I think, as you've said, and one of the things I've called out that I'm most excited about, the array of power solutions that we're bringing forward in the near term will also work well with all of that enabling technology and further enhance a surgeon experience by all means. But if you really talk about the spinal robots, they are in their infancy not only in penetration but capabilities. And so, you can have a very long journey of increasing the entire procedural application from bone, soft tissue removal, inner body placement, on and on planning. All of that's there for years to come with a lot of space.
And like I said, even combined -- all of us combined are just really touching the robotics, and there's a lot of room for growth to come for many years. So, I don't think we're anywhere near hitting the top or flattening out. I think this is the start of some amazing changing technology.
Ryan Zimmerman -- BTIG -- Analyst
Thank you, Dan.
Operator
One moment for our next question. Our next question will come from the line of Jason Wittes from Roth. Your line is open.
Jason Wittes -- ROTH MKM -- Analyst
Hi. Thanks for taking the questions. If I could just revisit the synergy number. Based on your earlier comments, it sounds like you kind of just took the midpoint of 5% to 10% dissynergies.
And I think that's partly due to the fact that based on what you see now but also, you know, you have to see what happens in the next two quarters. Is that the right way to think about it, or is that how you came to that number? I'm just trying to understand, you know, your thought process behind that.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
Yes.
Jason Wittes -- ROTH MKM -- Analyst
OK. That's fair. And then, in terms of quarterly cadence, can you help us out in terms of how we should think about revenues and also just how expenditures kind of flow through for the year?
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
We're not going to break out and provide quarterly guidance at this point.
Jason Wittes -- ROTH MKM -- Analyst
OK, but then, just from a general standpoint, I think you kind of implied that, you know, the first half, it sounds, based on your comments that you made, I guess, throughout this call, it does sound like it's somewhat back-end loaded, meaning there's going to be a fair amount of still reorganization in the first half. A lot of it, I guess, already occurred. And then in terms of your ability to start picking up or gaining market share, it sounds like you kind of anticipate that by the end of the year, you're going to be positioned to start, you know, growing sort of above market and as the market leader. Is that a fair way to think about it?
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
That's a fair way to think about it. But as it relates to cost energy specifically, we would expect to see that improve sequentially as we get throughout the year.
Jason Wittes -- ROTH MKM -- Analyst
OK, that's helpful. Thank you very much.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
Welcome.
Operator
[Operator instructions] One moment for our next question. Our next question comes from Craig Bijou from Bank of America Securities. Your line is open.
Craig Bijou -- Bank of America Merrill Lynch -- Analyst
Great. Thanks for taking the questions, guys. Wanted to ask first on the 150 million revenue dissynergies and appreciate that you gave us that number. But I think in the S-4 you were expecting roughly 200 and maybe 50% of that in year one.
So I just wanted to kind of reconcile that 150 for '24 and could there still be some incremental synergies in year two, year three post-deal?
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
So, I would say, yes, there could be some incremental synergies in year two, year three post-deal. The 150 was really just taking a more refreshed look. I mean, when we commented on the S-4, at that point in time, we thought it was a good number. And we still think generally speaking overall, the S-4 is a good document.
But as we looked at building our plan for 2024 with more current information, 150 felt like it was a more reasonable number based on what we were seeing from a gross perspective.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Craig, I would add, too, that one of the thoughts here is that type of activity occurs upfront in the early years. And then as you cross-sale and you gain traction, you offset that more in year two and probably by the time you exit year three. So, put the bat out in the S-4 that way upfront and the cross-selling and the growth and the offsets in the outer years coming out neutral by the time you enter into the fourth year.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
And timing also of when the deal actually closes a little bit later.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
That's also having a little bit of an impact.
Craig Bijou -- Bank of America Merrill Lynch -- Analyst
OK. That's helpful, guys. And just to follow up specifically on what's embedded in the EPS guidance, I just, you know, I heard your comments to -- or on EBITDA before, but I wanted to see -- I mean, my math, it makes it look like it's 29%, 30%, EBITDA margin for '24. And then, I also wanted to see if there's any assumption of share buyback in your EPS guidance.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
The 29%, 30%, I think makes a lot of sense, 140 million shares is what we projected for the year. I'll leave it at that.
Craig Bijou -- Bank of America Merrill Lynch -- Analyst
OK. Thanks, guys.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
Thank you.
Operator
One moment for our next question. And our next question comes from Caitlin Cronin from Canaccord. Your line is open.
Caitlin Cronin -- Canaccord Genuity -- Analyst
Hi. Thanks for taking the questions. Just regarding your AR headset, any updates to the timing there? And secondly, what do you think of the current competition in that space? And how is your product going to be competitive with these offerings?
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Caitlin, we expect our augmented reality headset, the XR, to get out by midyear based on everything that we're tracking toward right now. I'm pretty excited to do that as well. Working to make sure that it really works seamlessly with some of our enabling tech activities as well to actually create a stronger offering out to the surgeons.
Caitlin Cronin -- Canaccord Genuity -- Analyst
Great, thank you.
Operator
Thank you. One moment for our next question. And our next question will come from the line of Richard Newitter from Truist. Your line is open.
Richard Newitter -- Truist Securities -- Analyst
All right, thanks for taking the questions. Was hoping just to go back to the comment that you made on -- it sounds like going a little bit more heavy on offense on rep hiring and nutrition. I think you had said something about, you know, not hiring as many reps as normal in 2023, but then in the fourth quarter, you hired 350 reps or net reps. I guess, just help me understand what that 350 means.
What is that relative to a good quarter of net hiring and how we're supposed to kind of interpret that relative to the dissynergies that are starting to unfold. And then, I have a follow-up.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
You got it, Rich. So, let's start this way. We've had great recruiting years. And in 2023, I would tell you, it was an OK recruiting year.
The reason why it was an OK is we had all of our focus shifted into making this merger happen. So, naturally, your level of recruiting and your focus on recruiting wasn't quite as heavy. Now, it doesn't mean it was dismal. I mean, it was really not that different from the last five years.
It just wasn't the strongest or record year like we normally call out. I was being me when I was replying to the fact that we closed the deal in September. And so, Globus actually then inherited or took over through the merger roughly 350 sales reps from the NuVasive business. That was my comment.
Richard Newitter -- Truist Securities -- Analyst
OK, thanks. I figured there was something tongue in cheek there. OK. And then -- sorry, I just lost my train of thought for a second.
And then, wanted to also get a sense for what kind of information you're going to provide on a go-forward basis. Is this -- what we've seen in the press release from here, is it the divisional breakout we're going to see? Or are there going to be, you know, more historical that you provide on segment detail? How should we think about that? And one last one, just product rationalization. Has any of that effort begun?
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
So, thanks, Rich. This is Keith. So, what we've put out there from a reporting perspective is what we're going to continue to provide, breakout of musculoskeletal and enabling, as well as U.S. versus international.
We will continue to provide color each quarter about some of the businesses like we've always done historically. As it relates to product rationalization, that is not something we've really looked at this point. You know, some of my earlier comments focused on the need for us to listen to our customer. Right now, the thing that we're focused on is bringing the sales forces together, listening to the surgeons, listening to the patient, and really selling the products of both companies.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, Rich, I would just add on that we don't have planned rationalization. We thought that over time, our surgeons and our customers will select what they want, and we'll migrate toward that. But we don't have a product rationalization in as a way to reach or achieve our synergies or anything in our financials.
Richard Newitter -- Truist Securities -- Analyst
Thank you.
Operator
One moment for our next question. And our next question will come from the line of Drew Ranieri from Morgan Stanley. Your line is open.
Drew Ranieri -- Morgan Stanley -- Analyst
Hi, guys. Thanks for taking the questions. Just to piggyback off of some that have been already asked, but on Rich's last question about product rationalization, can you maybe just hit upon what you're thinking about for free cash flow generation over the next two or three years into 2026 and just how investors should think about that? Cash generation, I think, was one of the kind of hallmarks of the deal when you initially proposed it. And then, has anything changed about how you're thinking about tracking or driving instrument set utilization between kind of the two -- well, not the two companies anymore, but between legacy GMED and NuVasive looking ahead? And I how a follow-up.
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Drew, I'll go first. This is Dan, and I'll hand it off to Keith for that. So, just for clarity, in our cash flow or our estimates, we don't have anything built in related to rationalization. So, I just want to make sure, building off Rich's, you agree we're not pursuing a product rationalization.
It's not built into our finances that way. So, it won't have any effect financially or cash flow-wise. However, we do have in place ways to utilize our field assets, our sets efficiently. We've been working on that and ever improving that through our Globus legacy.
And we intend to do the same with our NuVasive team as we get in and get up to speed. What that's going to allow us to do is get more surgeries, more turns, more output with those investments, which, to your point, will generate a figureable cash flow by generating the sales, not having the current level of investment needed to get those sales.
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
And a couple of comments I'd add to that is, when you think about Globus, yes, we're going to focus on driving the business and managing for cash. And I think about that 170 million, you know, that's predominantly cash savings which should translate into cash flows and move forward. That's part one. Part two is really the control of capex.
So, if you go back and look and compare legacy Globus and NuVasive, you'll see that legacy NUVA carried a capex that was probably closer to 8% or 9% of sales; Globus, give or take, 6% or 7%. I commented on where we're going to land this year in my prepared remarks. That is also going to help drive cash flow, free cash flow generation. And it's not going to impact our ability to invest in R&D.
Really, what it's going to come back to from our perspective or from my perspective is better control of the assets and driving improved return on invested capital.
Drew Ranieri -- Morgan Stanley -- Analyst
Got it, thanks. And just as a quick follow-up, just anything on getting NuVasive products registered and approved on Excelsius looking ahead. Thanks for taking the --
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Yeah, definitely. That's one of the key things. So, of course, we're going to be doing that and doing that in an ever growing way, starting with the Reline system and then we'll certainly look for [Inaudible] and different activities that way. That's going to be one of the events, we think, by midyear or within third quarter we should be capable of going and pushing forward on.
Operator
Thank you. And with no further questions, that concludes the Globus Medical earnings call. Thank you for participating. [Operator signoff]
Duration: 0 minutes
Call participants:
Brian Kearns -- Senior Vice President, Business Development and Investor Relations
Dan Scavilla -- Executive Vice President, Chief Commercial Officer, President of Trauma
Keith Pfeil -- Chief Operating Officer and Chief Financial Officer
Vik Chopra -- Wells Fargo Securities -- Analyst
Steve Lichtman -- Oppenheimer and Company -- Analyst
Mathew Blackman -- Stifel Financial Corp. -- Analyst
Shagun Singh -- RBC Capital Markets -- Analyst
David Saxon -- Needham and Company -- Analyst
Matt Miksic -- Barclays -- Analyst
Matt O'Brien -- Piper Sandler -- Analyst
Matt Taylor -- Jefferies -- Analyst
Ryan Zimmerman -- BTIG -- Analyst
Jason Wittes -- ROTH MKM -- Analyst
Craig Bijou -- Bank of America Merrill Lynch -- Analyst
Caitlin Cronin -- Canaccord Genuity -- Analyst
Richard Newitter -- Truist Securities -- Analyst
Drew Ranieri -- Morgan Stanley -- Analyst
