Globus Medical, Inc. (NYSE:GMED) Q4 2022 Earnings Call Transcript

Page 3 of 10

Again, we have several areas to look at. We haven’t fine-tuned those down by accounts certainly or anything like that or even department. We just realized that the abilities are there, and we’re in the early stages of working through those.

Matt Miksic: Got it. Okay. That’s helpful. And then on margins going forward, obviously, you’re looking for some EBITDA margin leverage this year. Can you talk about maybe some of the headwinds that you’re facing to sort of keep you here in kind of the low end of the mid-30s range as far as we can tell us kind of where you’re your $2.30 EPS number kind of puts you for this coming year based on the top line and how those kind of play out throughout the year, that would be helpful. Thanks.

Keith Pfeil: Sure. Thanks for the question. So as you think about going into next year on a standalone basis, the EBITDA margin does come out on the lower end of the range. But when you think about some of the things we’ve done recently, we’ve really stepped up our investment in R&D spending, that’s jumped out. We’ve invested a little bit more in Salesforce. That will show — that should show fruits as we move forward. But I talked a little bit about product mix in the quarter and the full-year. Capital sales have a little bit of a headwind on overall profitability. But stepping back to that, we still feel that we’re a mid-70s business. I mean if you look at this year, specifically 2022, the currency impact of $14 million was worth about 90 basis points to EBITDA.

So when I look at that, I look at the business and I still see that we’re healthy and we’re driving the business forward. Places that we see inflation. Obviously, I’ve talked a lot about freight this year. I think in each quarter, we’ve seen freight tick up just from fuel prices across the rest of the P&L. I think it’s fair to assume that you’re seeing some inflation in travel. Last year in 2021, the travel grew sequentially as COVID starts to dissipate. But I think as you got to the — really the Q4 and into this year, you saw inflation take hold as well, while people continue to travel. So it’s absolutely some of the drivers that you’re seeing in the increases there, which offset some of the leverage growth — or the leverage benefit you might see in SG&A.

Matt Miksic: Thanks, so much.

Keith Pfeil: Thank you.

Operator: Thank you. Our next question comes from the line of Vik Chopra of Wells Fargo. Your question, please, Vik.

Vik Chopra: Hey good afternoon and thanks for taking the questions. So two for me. First, related to the deal, I know you’ve said there’s limited customer overlap, but can you talk about where some of the product overlap is and which assets or categories you think you may have to divest? My second question is one of the large orthopedic competitors has talked about coming out with a spine robot application in 2024. Can you perhaps talk about the market and competitive landscape and whether you expect any impact in 2023 to your ability to continue to sell Excelsius systems?

Page 3 of 10