Globus Medical Inc. (NYSE:GMED) shareholders had to love the first half of 2017. The musculoskeletal-solutions company saw its stock price soar more than 30% by late June. Since then, Globus Medical has lost its momentum, despite announcing strong second-quarter results in August.

The company had an opportunity to get investors excited once again when it reported third-quarter results after the market closed on Wednesday. Those results were solid, but probably didn't stir a tremendous amount of enthusiasm. Here are the highlights.

Finger pointing at image of a spine on a laptop screen

Image source: Getty Images.

Globus Medical results: The raw numbers


Q3 2017

Q3 2016

Year-Over-Year Change


$151.7 million $135.7 million


Net income from continuing operations

$25.6 million $26.2 million


Adjusted earnings per share (EPS)

$0.30 $0.29


Data source: Globus Medical.

What happened with Globus Medical this quarter?

Two-thirds of Globus Medical's year-over-year revenue increase stemmed from international sales. And those international sales were driven primarily by the company's acquisition of Alphatec's international business, which closed in September 2016.

Globus Medical still makes most of its money in the U.S., though. The company reported U.S. sales of $125.9 million, up 4.5% from the prior-year period.

But while revenue was up both at home and overseas, Globus Medical's bottom line wasn't quite as strong as it was in the third quarter last year. There were several key factors behind the year-over-year earnings decline. The company spent significantly more on selling, general, and administrative (SG&A) expenses in the third quarter of 2017, with SG&A costs rising 17.4% to $63.4 million. Globus Medical set aside $2.5 million in the third quarter in provision for litigation that wasn't on the books in the same quarter last year. The company also had a higher amortization of intangibles in the third quarter of 2017 than it had in the prior-year period.

Globus Medical's adjusted earnings looked better, though. In its adjusted numbers, the company excluded the negative impact of the provision for litigation, and had higher stock-based compensation expense that made a difference.

The company reported net cash provided by operating activities in the third quarter of $35.3 million. It also generated non-GAAP free cash flow of $22 million in the quarter. Globus Medical ended the third quarter with cash, cash equivalents, and marketable securities totaling $396.5 million.

What management had to say

Globus Medical CEO Dave Demski said in a press release:

We are very pleased with our third quarter performance. We saw further acceleration in our U.S. spinal implant business, continued growth in the Japan market, and industry leading profitability, even as we invested heavily in Emerging Technologies. ...

As previously announced, we received FDA [U.S. Food and Drug Administration] clearance during the quarter for the Excelsius GPS robotic and navigation system. While still in the early stages of our commercial launch of this game-changing technology, we are thrilled about the unprecedented level of interest we have received so far from surgeons and hospital systems.

Looking forward

The company still expects full-year 2017 sales of $625 million, which would reflect an increase of 10.8% over 2016 sales. Globus Medical also anticipates non-GAAP fully diluted earnings per share of $1.27.

In his comments on the third-quarter results, Dave Demski pointed out one item that should be important to Globus Medical in the future. The launch of the Excelsius GPS system, designed for minimally invasive and open orthopedic and neurosurgical procedures, is definitely good news for the company. The FDA had previously rejected the company's 510(k) filing for the system. Outside of further acquisitions, the robotic surgical market potentially presents Globus Medical's best opportunity for significant revenue growth in the coming years.