Shares of Globus Medical (GMED) were sinking 11% at 10:34 a.m. ET on Friday. The decline came after the company announced the resignation of its CEO following market close on Thursday.
Dave Demski had been with Globus for 20 years, serving as CEO for the past four and a half years. His stated reason for leaving was to "pursue other opportunities." Globus named Daniel Scavilla as its new CEO, effective immediately. Scavilla previously served as the company's chief commercial officer and was also president of its trauma business.
Globus also provided a sneak peek at its first-quarter results. The company announced preliminary Q1 sales of $230.5 million, up 1.4% year over year. The consensus estimate is for Q1 sales of $235.9 million.
When a CEO unexpectedly resigns, it usually causes investors to wonder if there's more to the story that could be damaging to the company. It seems to be a positive sign that Demski will remain with Globus through June 30, 2022, to help with the transition.
Globus made a shrewd move by announcing its disappointing Q1 revenue at the same time that it revealed Demski's departure. The healthcare stock probably won't fall as much when Globus reports its first-quarter results now that the bad news has already been aired.
Investors won't have to wait long to hear more from Globus and its new CEO. The company is scheduled to provide its first-quarter update on May 10.
Scavilla gave a reason to be cautiously optimistic in his first comments as CEO. He said that Globus has "seen procedural volumes continue to increase" in March and April and that its "robotics pipeline is robust" as it enters the second quarter.