Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 01, 2023 | |
Document and Entity Information [Abstract] | ||
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2023 | |
Entity Registrant Name | GLOBUS MEDICAL, INC. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Title of 12(b) Security | Class A Common Stock, par value $.001 per share | |
Trading Symbol | GMED | |
Security Exchange Name | NYSE | |
Entity File Number | 001-35621 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-3744954 | |
Entity Address, Address Line One | 2560 General Armistead Avenue | |
Entity Address, City or Town | Audubon | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 19403-5214 | |
City Area Code | 610 | |
Local Phone Number | 930-1800 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 100,333,893 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001237831 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 217,685 | $ 150,466 |
Short-term marketable securities | 286,685 | 295,592 |
Accounts receivable, net of allowances of $5,514 and $4,724, respectively | 222,783 | 213,247 |
Inventories | 321,033 | 298,981 |
Prepaid expenses and other current assets | 19,201 | 20,997 |
Income taxes receivable | 3,042 | 4,061 |
Total current assets | 1,070,429 | 983,344 |
Property and equipment, net of accumulated depreciation of $353,868 and $343,036, respectively | 245,098 | 243,729 |
Long-term marketable securities | 480,025 | 495,852 |
Intangible assets, net | 59,194 | 63,574 |
Goodwill | 198,710 | 197,471 |
Other assets | 44,985 | 43,311 |
Deferred income taxes | 51,179 | 48,845 |
Total assets | 2,149,620 | 2,076,126 |
Current liabilities: | ||
Accounts payable | 39,835 | 36,101 |
Accrued expenses | 83,998 | 94,705 |
Income taxes payable | 16,389 | 990 |
Business acquisition liabilities | 13,784 | 13,308 |
Deferred revenue | 13,541 | 14,100 |
Total current liabilities | 167,547 | 159,204 |
Business acquisition liabilities, net of current portion | 52,486 | 54,950 |
Deferred income taxes | 1,369 | 1,779 |
Other liabilities | 13,398 | 13,820 |
Total liabilities | 234,800 | 229,753 |
Commitments and contingencies (Note 15) | ||
Equity: | ||
Additional paid-in capital | 645,062 | 630,952 |
Accumulated other comprehensive income/(loss) | (19,422) | (24,630) |
Retained earnings | 1,289,080 | 1,239,951 |
Total equity | 1,914,820 | 1,846,373 |
Total liabilities and equity | 2,149,620 | 2,076,126 |
Common Class A [Member] | ||
Equity: | ||
Common stock | 78 | 78 |
Common Class B [Member] | ||
Equity: | ||
Common stock | $ 22 | $ 22 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Accounts receivable, allowances | $ 5,514 | $ 4,724 |
Property and equipment | ||
Accumulated depreciation | $ 353,868 | $ 343,036 |
Equity: | ||
Common stock, shares authorized | 775,000,000 | |
Common Class A [Member] | ||
Equity: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 77,904,573 | 77,762,282 |
Common stock, shares outstanding | 77,904,573 | 77,762,282 |
Common Class B [Member] | ||
Equity: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 275,000,000 | 275,000,000 |
Common stock, shares issued | 22,430,097 | 22,430,097 |
Common stock, shares outstanding | 22,430,097 | 22,430,097 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME [Abstract] | ||
Net sales | $ 276,688 | $ 230,549 |
Cost of goods sold | 70,825 | 59,167 |
Gross profit | 205,863 | 171,382 |
Operating expenses: | ||
Research and development | 21,082 | 17,412 |
Selling, general and administrative | 122,416 | 100,748 |
Provision for litigation | 2,341 | |
Amortization of intangibles | 4,601 | 4,512 |
Acquisition related costs | 1,361 | (76) |
Total operating expenses | 149,460 | 124,937 |
Operating income/(loss) | 56,403 | 46,445 |
Other income/(expense), net | ||
Interest income/(expense), net | 6,497 | 2,543 |
Foreign currency transaction gain/(loss) | 212 | (391) |
Other income/(expense) | 77 | 301 |
Total other income/(expense), net | 6,786 | 2,453 |
Income/(loss) before income taxes | 63,189 | 48,898 |
Income tax provision | 14,060 | 10,814 |
Net income/(loss) | 49,129 | 38,084 |
Other comprehensive income/(loss), net of tax: | ||
Unrealized gain/(loss) on marketable securities | 4,298 | (8,828) |
Foreign currency translation gain/(loss) | 910 | (1,567) |
Total other comprehensive income/(loss), net of tax | 5,208 | (10,395) |
Comprehensive income/(loss) | $ 54,337 | $ 27,689 |
Earnings per share: | ||
Basic | $ 0.49 | $ 0.37 |
Diluted | $ 0.48 | $ 0.37 |
Weighted average shares outstanding: | ||
Basic | 100,279 | 101,600 |
Diluted | 102,196 | 104,077 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] Common Class A [Member] | Common Stock [Member] Common Class B [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income/(Loss) [Member] | Retained Earnings [Member] | Total |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 79,114 | 22,430 | ||||
Total equity, beginning of period at Dec. 31, 2021 | $ 79 | $ 22 | $ 553,787 | $ (6,772) | $ 1,194,272 | $ 1,741,388 |
Stock-based compensation | 8,353 | 8,353 | ||||
Grant of restricted stock units | 196 | 196 | ||||
Exercise of stock options (shares) | 184 | |||||
Exercise of stock options | 7,746 | 7,746 | ||||
Comprehensive income/(loss) | (10,395) | 38,084 | 27,689 | |||
Total equity, end of period at Mar. 31, 2022 | $ 79 | $ 22 | 570,082 | (17,167) | 1,232,356 | 1,785,372 |
Shares, Outstanding, Ending Balance at Mar. 31, 2022 | 79,298 | 22,430 | ||||
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 | 77,762 | 22,430 | ||||
Total equity, beginning of period at Dec. 31, 2022 | $ 78 | $ 22 | 630,952 | (24,630) | 1,239,951 | 1,846,373 |
Stock-based compensation | 9,032 | 9,032 | ||||
Grant of restricted stock units | 219 | $ 219 | ||||
Exercise of stock options (shares) | 143 | 143 | ||||
Exercise of stock options | 4,859 | $ 4,859 | ||||
Comprehensive income/(loss) | 5,208 | 49,129 | 54,337 | |||
Total equity, end of period at Mar. 31, 2023 | $ 78 | $ 22 | $ 645,062 | $ (19,422) | $ 1,289,080 | $ 1,914,820 |
Shares, Outstanding, Ending Balance at Mar. 31, 2023 | 77,905 | 22,430 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 49,129 | $ 38,084 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 18,108 | 16,837 |
Amortization of premium (discount) on marketable securities | 482 | 1,690 |
Write-down for excess and obsolete inventories, net | 2,055 | 1,834 |
Stock-based compensation expense | 8,953 | 8,152 |
Allowance for doubtful accounts | 810 | (728) |
Change in fair value of business acquisition liabilities | (446) | (263) |
Change in deferred income taxes | (3,979) | (2,994) |
(Gain)/loss on disposal of assets, net | 81 | 115 |
Payment of business acquisition related liabilities | (772) | (743) |
(Increase)/decrease in: | ||
Accounts receivable | (9,861) | (1,614) |
Inventories | (22,470) | (17,939) |
Prepaid expenses and other assets | 836 | 547 |
Increase/(decrease) in: | ||
Accounts payable | 3,916 | 4,160 |
Accrued expenses and other liabilities | (9,969) | (15,428) |
Income taxes payable/receivable | 16,440 | 12,980 |
Net cash provided by/(used in) operating activities | 53,313 | 44,690 |
Cash flows from investing activities: | ||
Purchases of marketable securities | (69,141) | (142,145) |
Maturities of marketable securities | 85,546 | 106,549 |
Sales of marketable securities | 13,240 | 42,673 |
Purchases of property and equipment | (15,991) | (19,971) |
Acquisition of businesses, net of cash acquired and purchases of intangible and other assets | (2,662) | (1,000) |
Net cash provided by/(used in) investing activities | 10,992 | (13,894) |
Cash flows from financing activities: | ||
Payment of business acquisition liabilities | (1,919) | (1,699) |
Proceeds from exercise of stock options | 4,859 | 7,746 |
Net cash provided by/(used in) financing activities | 2,940 | 6,047 |
Effect of foreign exchange rates on cash | (26) | (123) |
Net increase/(decrease) in cash and cash equivalents | 67,219 | 36,720 |
Cash and cash equivalents at beginning of period | 150,466 | 193,069 |
Cash and cash equivalents at end of period | 217,685 | 229,789 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid | 1,724 | 572 |
Purchases of property and equipment included in accounts payable and accrued expenses | $ 6,493 | $ 4,105 |
BACKGROUND
BACKGROUND | 3 Months Ended |
Mar. 31, 2023 | |
BACKGROUND [Abstract] | |
Background | NOTE 1. BACKGROUND (a) The Company Globus Medical, Inc., together with its subsidiaries, is a medical device company that develops and commercializes healthcare solutions with a mission to improve the quality of life of patients with musculoskeletal disorders. We are primarily focused on implants that promote healing in patients with musculoskeletal disorders, including the use of a robotic guidance and navigation system and products to treat patients who have experienced orthopedic traumas. We are an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures to assist surgeons in effectively treating their patients and to address new treatment options. With over 230 products launched, we offer a comprehensive portfolio of innovative and differentiated technologies that address a variety of musculoskeletal pathologies, anatomies, and surgical approaches. We are headquartered in Audubon, Pennsylvania, and market and sell our products through our exclusive sales force in the United States, as well as within North, Central & South America, Europe, Asia, Africa and Australia. The sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors. The terms the “Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc. and, where applicable, our consolidated subsidiaries. (b) NuVasive Agreement and Plan of Merger On February 8, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with NuVasive, Inc. (“NuVasive”) and Zebra Merger Sub Inc. (“Merger Sub”), a wholly owned subsidiary of the Company, pursuant to which Merger Sub will merge with and into NuVasive (the “Merger”), with NuVasive surviving as a wholly owned subsidiary of the Company. Under the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $ 0.001 per share, of NuVasive issued and outstanding immediately prior to the effective time (other than certain excluded shares as described in the Merger Agreement) will be cancelled and converted into the right to receive 0.75 fully paid and non-assessable shares of Class A common stock of Globus Medical, $ 0.001 par value per share, and the right to receive cash in lieu of fractional shares. On April 27, 2023, the Merger and related transactions were approved by stockholders of the Company and NuVasive. The Company expects that the Merger will close in the third quarter of 2023, subject to the expiration or termination of the waiting period under the HSR Act and the satisfaction or waiver of the other customary closing conditions. As previously disclosed, in connection with the Merger, the Company and NuVasive filed notification and report forms (the “HSR Filing”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) with the U.S. Federal Trade Commission (the “FTC”) and on March 31, 2023, the Company, in consultation with NuVasive, voluntarily withdrew its HSR Filing. The Company refiled on April 3, 2023 in order to restart the initial waiting period under the HSR Act and to provide the FTC additional time to review the proposed transaction. On May 3, 2023, the Company and NuVasive each received a request for additional information and documentary materials (the “Second Request”) from the FTC in connection with the FTC’s review of the Merger. The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 30 days after the Company and NuVasive have substantially complied with the Second Request, unless that period is extended voluntarily by the parties or terminated sooner by the FTC. Both parties intend to continue to work cooperatively with the FTC in its review. Completion of the Merger remains subject to the expiration or termination of the waiting period under the HSR Act and the satisfaction or waiver of the other closing conditions specified in the Merger Agreement. For more information about the Merger, please refer to our Current Reports on Form 8-K filed on February 9, 2023, April 3, 2023, April 17, 2023, April 28, 2023 and May 3, 2023. (c) COVID-19 Pandemic Impact In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. COVID-19 has significantly impacted the economic conditions in the U.S. and globally as federal, state and local governments react to the public health crisis, creating significant uncertainties in the economy. Although the Company cannot reasonably estimate the length or severity of the impact that COVID-19 will have on its financial results, the Company may experience a material adverse impact on its sales, results of operations, and cash flows in 2023 should there be a resurgence impacting hospitals, surgical facilities, our internal operations, or our suppliers. In response to these developments, the Company will continue to monitor liquidity and cash flow. The Company has the ability to borrow from its existing credit facility, if needed, although we do not expect to do so due to our cash, cash equivalents and short-term marketable securities balances. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Summary Of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, these condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position as of March 31, 2023, and results of operations for the three months ended March 31, 2023. The results of operations for any interim period may not be indicative of results for the full year. (b) Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Globus and its majority-owned or controlled subsidiaries. All intercompany balances and transactions are eliminated in consolidation. (c) Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the condensed consolidated financial statements in the period they are determined to be necessary. Significant areas that require estimates include revenue recognition, intangible assets, business acquisition liabilities, allowance for doubtful accounts, stock-based compensation, reserves for excess and obsolete inventory, useful lives of assets, the outcome of litigation, recoverability of intangible assets and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results. (d) Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. For purposes of disclosure, we disaggregate our revenue into two categories, Musculoskeletal Solutions and Enabling Technologies. Our Musculoskeletal Solutions products consist primarily of the implantable devices, disposables, and unique instruments used in an expansive range of spine, orthopedic trauma, hip, knee and extremity procedures. The majority of our Musculoskeletal Solutions contracts have a single performance obligation and revenue is recognized at a point in time. Our Enabling Technologies products are advanced hardware and software systems, and related technologies that are designed to enhance a surgeon’s capabilities and streamline surgical procedures by making them less invasive, more accurate, and more reproducible to improve patient care. The majority of our Enabling Technologies product contracts contain multiple performance obligations, including maintenance and support, and revenue is recognized as we fulfill each performance obligation. When contracts have multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold. Nature of Products and Services A significant portion of our Musculoskeletal Solutions product revenue is generated from consigned inventory maintained at hospitals or with sales representatives. Revenue from the sale of consigned musculoskeletal products is recognized when we transfer control, which occurs at the time the product is used or implanted. For all other Musculoskeletal Solutions product transactions, we recognize revenue when we transfer title to the goods, provided there are no remaining performance obligations that can affect the customer’s final acceptance of the sale. Revenue from the sale of Enabling Technologies products is generally recognized when control transfers to the customer which occurs at the time the product is shipped or delivered. Any revenue related to the provision of maintenance and support is recognized as we satisfy the performance obligation. We use an observable price to determine the stand-alone selling price for each separate performance obligation. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Deferred revenue is comprised mainly of unearned revenue related to the sales of certain Enabling Technologies products, which includes maintenance and support services. Maintenance and support services are generally invoiced annually, at the beginning of each contract period, and revenue is recognized ratably over the maintenance period. For the three months ended March 31, 2023, there was an immaterial amount of revenue recognized from previously deferred revenue. (e) Cash and Cash Equivalents The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents. Cash equivalents, which consist of money market accounts, commercial paper and corporate debt securities are stated at fair value. (f) Marketable Securities Our marketable securities include municipal bonds, corporate debt securities, commercial paper, asset-backed securities, and securities of government, federal agency, and other sovereign obligations and are classified as available-for-sale as of March 31, 2023. S hort-term and long-term marketable securities are recorded at fair value on our condensed consolidated balance sheets. Any change in fair value of our available-for-sale securities, that do not result in recognition or reversal of an allowance for credit loss or write-down, are recorded, net of taxes, as a component of accumulated other comprehensive income or loss on our condensed consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of marketable securities are determined on a specific identification basis. Realized gains and losses, interest income and the amortization/accretion of premiums/discounts are included as a component of other income/(expense), net, on our condensed consolidated statements of operations and comprehensive income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our condensed consolidated balance sheets. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review declines in the fair value of our securities to determine whether they are resulting from expected credit losses or other factors. If the assessment indicates a credit loss exists, we recognize any measured impairment as an allowance for credit loss in our condensed consolidated statements of operations. Any other impairments not recorded through allowance for credit losses is recognized in our other comprehensive income. (g) Fair Value Measurements Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories: Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques. Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the excess recorded as goodwill. We utilize Level 3 inputs in the determination of the initial fair value. Contingent consideration represents contingent milestone, performance and revenue-sharing payment obligations related to acquisitions and is measured at fair value, based on significant inputs that are not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. We assess these assumptions on an ongoing basis as additional data impacting the assumptions is obtained. The fair value of contingent consideration is recorded in business acquisition liabilities on our condensed consolidated balance sheets, and changes in the fair value of contingent consideration are recognized in acquisition related costs in the condensed consolidated statements of operations and comprehensive income. The fair value of contingent restricted stock unit (“RSU”) grants are recorded as additional paid-in capital in the consolidated balance sheet on the day of the grant due to the remote likelihood of forfeiture. (h) Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. The majority of our inventory is finished goods and we utilize both in-house manufacturing and third-party suppliers to produce our products. We periodically evaluate the carrying value of our inventories in relation to estimated forecasts of product demand, which takes into consideration the life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories. Once inventory has been written down, it creates a new cost basis for inventory that is not subsequently written up. (i) Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the fair values of the identifiable assets acquired less the liabilities assumed in the acquisition of a business. Goodwill is tested for impairment at least annually or whenever events or circumstances indicate that a carrying amount may not be recoverable. Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount to the estimated fair value of the reporting unit. Fair values are estimated using an income and discounted cash flow approach. We perform our annual impairment test of goodwill in the fourth quarter of each year. We consider qualitative indicators of the fair value of a reporting unit when it is unlikely that a reporting unit has impaired goodwill. Intangible assets consist of purchased in-process research and development (“IPR&D”), developed technology, supplier network, patents, customer relationships, re-acquired rights, and non-compete agreements. Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from 1 to 21 years. Intangible assets with finite useful lives are tested whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If an impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset. Fair value is generally determined using a discounted future cash flow analysis. IPR&D has an indefinite life and is not amortized until completion of the project at which time the IPR&D becomes an amortizable asset. Intangible assets with indefinite useful lives are tested for impairment annually or whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If the related project is not completed in a timely manner, we may have an impairment related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value. During the three months ended March 31, 2023, there were no impairments in goodwill, finite-lived intangible assets, and IPR&D. (j) Stock -Based Compensation The cost of employee and non-employee director awards is measured at the grant date fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the equity award. Compensation expense for awards includes the impact of forfeiture in the period when they occur. We estimate the fair value of stock options utilizing the Black-Scholes option-pricing model. Inputs to the Black-Scholes model include our stock price, expected volatility, expected term, risk-free interest rate and expected dividends. Expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options offering period which is derived from historical experience. The risk-free interest rate assumption is based on observed interest rates of U.S. Treasury securities appropriate for the expected terms of the stock options. The dividend yield assumption is based on the history and expectation of no dividend payouts. The fair value of restricted stock units is estimated on the day of grant based on the closing price of the Company’s common stock. (k) Recently Issued Accounting Pronouncements None applicable. (l) Recently Adopted Accounting Pronouncements On March 12, 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU became effective for all entities as of March 12, 2020, and applied through December 31, 2022. On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. This standard did not have a material impact on our financial position, results of operations and disclosures. |
ASSET ACQUISITIONS AND BUSINESS
ASSET ACQUISITIONS AND BUSINESS COMBINATIONS | 3 Months Ended |
Mar. 31, 2023 | |
ASSET ACQUISITIONS AND BUSINESS COMBINATIONS [Abstract] | |
Asset Acquisitions And Business Combinations | NOTE 3. ASSET ACQUISITIONS AND BUSINESS COMBINATIONS Asset Acquisitions During the fourth quarter of 2021, the Company acquired substantially all the assets of Capstone Surgical Technologies, LLC, which engages in the business of advanced drill and robotic surgery platforms. The purchase price consisted of $ 24.5 million of cash paid at closing, subject to net working capital and other post-closing adjustments, if applicable. The transaction also provides for additional consideration contingent upon the developed products obtaining approval from the U.S. Food and Drug Administration (the “FDA”) of up to $ 15.0 million, and additional consideration contingent upon the achievement of certain performance obligations of up to $ 10.0 million. Contingent consideration is not recorded in an asset acquisition until the milestone is met. Also during the fourth quarter of 2021, the Company acquired substantially all the assets of a company that engages in the development of technology for use in robotic surgery platforms which was not considered material to the consolidated financial statements during the periods presented. The purchase price consisted of $ 10.0 million of cash paid at closing and also provides for additional consideration contingent upon the achievement of certain performance obligations of $ 5.0 million. Contingent consideration is not recorded in an asset acquisition until the milestone is met. The Company accounted for both of these transactions as asset acquisitions as substantially all of the fair value of the assets acquired in each transaction was concentrated in a single identified asset, in-process research and development (“IPR&D”) of the acquired technology, thus satisfying the requirements of the screen test in ASU 2017-1. At the date of the acquisitions, the Company determined that the development of the projects underway had not yet reached technological feasibility and that the research in process had no alternative future use. Accordingly, the acquired IPR&D of $ 34.3 million was charged to research and development expense in the condensed consolidated statements of operations and comprehensive income for the year ended 2021. Business Combinations During the first quarter of 2023, the Company completed one acquisition that was not considered material to the condensed consolidated financial statements and has been included in our financial statements from the date of acquisition. The purchase price consisted of approximately $ 1.4 million of cash. The Company recorded identifiable assets of $ 0.4 million of instruments and $ 1.0 million of inventory. During the fourth quarter of 2022, the Company acquired the membership interests of Harvest Biologics LLC, which engages in the business of selling systems that produce autologous biologics. The purchase price consisted of approximately $ 30.0 million of cash paid at closing, plus $ 1.4 million of preliminary post-closing adjustments. The Company recorded identifiable net assets, based on their estimated fair values, for inventory of $ 3.4 million, goodwill of $ 15.1 million, customer relationships and other intangibles of $ 10.5 million with a weighted average useful life of 20 years, and developed technology of $ 2.4 million with a weighted average useful life of 8 years. The Company will finalize the purchase price allocation of the assets and liabilities acquired within one year from the date of acquisition. During the second quarter of 2022, the Company completed one acquisition that was not considered material to the overall condensed consolidated financial statements during the periods presented. This acquisition has been included in the condensed consolidated financial statements from the date of acquisition. The purchase price consisted of approximately $ 0.2 million of cash paid at closing and $ 4.4 million of contingent consideration payments, resulting in goodwill of $ 4.6 million based on the estimated fair values. The contingent payments for this acquisition are based upon achieving various performance milestones over a period of 10 years and are payable in a combination of cash and RSUs. During 2021, the Company completed three acquisitions that were not considered material, individually or collectively, to the condensed consolidated financial statements during the periods presented. Two acquisitions were completed in the third quarter, while the third acquisition was completed in the fourth quarter. These acquisitions have been included in the condensed consolidated financial statements from the date of acquisition. The purchase price of the acquisition in the fourth quarter consisted of approximately $ 0.3 million of cash paid at closing and $ 13.0 million of contingent consideration payments, resulting in goodwill of $ 13.3 million based on the estimated fair values. The combined purchase price of the two acquisitions in the third quarter consisted of approximately $ 12.6 million of contingent consideration payments. The Company recorded other intangible assets of $ 1.6 million, with a weighted average useful life of 3.8 years, and goodwill of $ 11.0 million based on their estimated fair values. The contingent payments for all three acquisitions are based upon achieving various performance obligations over a period of 10 years and are payable in a combination of cash and RSUs. |
NET SALES
NET SALES | 3 Months Ended |
Mar. 31, 2023 | |
NET SALES [Abstract] | |
Net Sales | NOTE 4. NET SALES The following table represents net sales by product category: Three Months Ended March 31, (In thousands) 2023 2022 Musculoskeletal Solutions $ 251,607 $ 217,402 Enabling Technologies 25,081 13,147 Total net sales $ 276,688 $ 230,549 |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 3 Months Ended |
Mar. 31, 2023 | |
MARKETABLE SECURITIES [Abstract] | |
Marketable Securities | NOTE 5. MARKETABLE SECURITIES The composition of our short-term and long-term marketable securities was as follows: March 31, 2023 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds $ 94,854 $ 4 $ ( 1,381 ) $ 93,477 Corporate debt securities 159,167 — ( 3,415 ) 155,752 Asset-backed securities 4,727 — ( 142 ) 4,585 Government, federal agency, and other sovereign obligations 33,360 1 ( 490 ) 32,871 Total short-term marketable securities $ 292,108 $ 5 $ ( 5,428 ) $ 286,685 Long-term: Municipal bonds $ 52,949 $ 134 $ ( 884 ) $ 52,199 Corporate debt securities 264,149 406 ( 6,089 ) 258,466 Asset-backed securities 119,361 301 ( 2,235 ) 117,427 Government, federal agency, and other sovereign obligations 52,400 133 ( 600 ) 51,933 Total long-term marketable securities $ 488,859 $ 974 $ ( 9,808 ) $ 480,025 December 31, 2022 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds $ 83,279 $ 9 $ ( 1,680 ) $ 81,608 Corporate debt securities 187,174 2 ( 3,438 ) 183,738 Commercial paper 5,583 — ( 1 ) 5,582 Asset-backed securities 4,200 — ( 181 ) 4,019 Government, federal agency, and other sovereign obligations 21,102 1 ( 458 ) 20,645 Total short-term marketable securities $ 301,338 $ 12 $ ( 5,758 ) $ 295,592 Long-term: Municipal bonds $ 61,986 $ 44 $ ( 1,549 ) $ 60,481 Corporate debt securities 268,524 72 ( 8,947 ) 259,649 Asset-backed securities 120,929 217 ( 2,795 ) 118,351 Government, federal agency, and other sovereign obligations 58,453 18 ( 1,100 ) 57,371 Total long-term marketable securities $ 509,892 $ 351 $ ( 14,391 ) $ 495,852 The short-term marketable securities have effective maturity dates of less than one year and the long-term marketable securities have effective maturity dates ranging from one to three years as of March 31, 2023 and December 31, 2022, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2023 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
Fair Value Measurements | NOTE 6. FAIR VALUE MEASUREMENTS Assets and liabilities measured at fair value on a recurring basis included the following: (In thousands) Balance at March 31, 2023 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 45,921 $ 12,013 $ 33,908 $ — Municipal bonds 145,676 — 145,676 — Corporate debt securities 414,218 — 414,218 — Commercial paper — — — — Asset-backed securities 122,012 — 122,012 — Government, federal agency, and other sovereign obligations 84,804 39,452 45,352 — Liabilities: Business acquisition liabilities 64,882 — — 64,882 (In thousands) Balance at December 31, 2022 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 17,655 $ 17,655 $ — $ — Municipal bonds 142,089 — 142,089 — Corporate debt securities 443,387 — 443,387 — Commercial paper 5,582 — 5,582 — Asset-backed securities 122,370 — 122,369 — Government, federal agency, and other sovereign obligations 78,016 — 78,016 — Liabilities: Business acquisition liabilities 68,258 — — 68,258 Our marketable securities are classified as Level 2 within the fair value hierarchy, as we measure their fair value using market prices for similar instruments and inputs such as actual trade data, benchmark yields, broker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors. Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis Fair value of the revenue-based business acquisition liabilities was determined using a discounted cash flow model and an option pricing methodology. The significant inputs of such models are not observable in the market, such as certain financial metric growth rates, volatility and discount rates, market price risk adjustment, projections associated with the applicable milestone, the interest rate, and the related probabilities and payment structure in the contingent consideration arrangement. The following are the significant unobservable inputs used in the two valuation techniques: Unobservable input Range Weighted Average* Revenue risk premium 2.2 % - 4.7 % 2.8 % Revenue volatility 14.0 % - 15.8 % 14.8 % Discount rate 5.9 % - 8.5 % 6.7 % Projected year of payment 2023 - 2032 * The weighted average rates were calculated based on the relative fair value of each business acquisition liability. The change in the carrying value of the business acquisition liabilities during the three months ended March 31, 2023 and 2022, respectively included the following: Three Months Ended March 31, (In thousands) 2023 2022 Beginning balance $ 68,258 $ 70,525 Contingent cash payments ( 2,691 ) ( 2,412 ) Contingent RSU grants ( 219 ) ( 196 ) Changes in fair value of business acquisition liabilities ( 446 ) ( 263 ) Contractual payable reclassification ( 20 ) 382 Ending balance $ 64,882 $ 68,036 Changes in the fair value of business acquisition liabilities are driven by changes in market conditions and the achievement of certain performance conditions. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2023 | |
INVENTORIES [Abstract] | |
Inventories | NOTE 7. INVENTORIES Inventories included the following: March 31, December 31, (In thousands) 2023 2022 Raw materials $ 65,418 $ 60,324 Work in process 18,237 18,699 Finished goods 237,378 219,958 Total inventories $ 321,033 $ 298,981 During the three months ended March 31, 2023 and 2022, net adjustments to cost of sales related to excess and obsolete inventory were $ 2.1 million and $ 1.8 million, respectively. The net adjustments for the three months ended March 31, 2023 and 2022 reflect a combination of additional expense for excess and obsolete related provisions ($ 3.5 million and $ 3.4 million, respectively) offset by sales and disposals ($ 1.4 million and $ 1.6 million, respectively) of inventory for which an excess and obsolete provision was provided previously through expense recognized in prior periods. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Property And Equipment | NOTE 8. PROPERTY AND EQUIPMENT Property and equipment included the following: Useful March 31, December 31, (In thousands) Life 2023 2022 Land — $ 8,282 $ 8,277 Buildings and improvements 31.5 54,945 51,510 Equipment 5 - 15 151,965 148,803 Instruments 5 320,982 312,055 Modules and cases 5 49,091 48,023 Other property and equipment 3 - 5 13,701 18,097 598,966 586,765 Less: accumulated depreciation ( 353,868 ) ( 343,036 ) Total $ 245,098 $ 243,729 Instruments are hand-held devices used by surgeons to install implants during surgery. Modules and cases are used to store and transport the instruments and implants. Depreciation expense related to property and equipment was as follows: Three Months Ended March 31, (In thousands) 2023 2022 Depreciation $ 13,507 $ 12,325 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
GOODWILL AND INTANGIBLE ASSETS [Abstract] | |
Goodwill And Intangible Assets | NOTE 9. GOODWILL AND INTANGIBLE ASSETS The change in the carrying amount of goodwill during the twelve months ended December 31, 2022 and the three months ended March 31 , 2023, respectively included the following: (In thousands) December 31, 2021 $ 179,708 Additions and adjustments 18,799 Foreign exchange ( 1,036 ) December 31, 2022 197,471 Additions and adjustments 912 Foreign exchange 327 March 31, 2023 $ 198,710 Intangible assets as of March 31, 2023 included the following: March 31, 2023 (In thousands) Weighted Average Amortization Period (in years) Gross Carrying Amount Accumulated Amortization Intangible Assets, net Supplier network 10.0 $ 4,000 $ ( 3,367 ) $ 633 Customer relationships & other intangibles 8.7 62,816 ( 44,011 ) 18,805 Developed technology 8.0 75,367 ( 40,565 ) 34,802 Patents 16.1 8,943 ( 3,989 ) 4,954 Total intangible assets $ 151,126 $ ( 91,932 ) $ 59,194 Intangible assets as of December 31, 2022 included the following: December 31, 2022 (In thousands) Weighted Average Amortization Period (in years) Gross Carrying Amount Accumulated Amortization Intangible Assets, net Supplier network 10.0 $ 4,000 $ ( 3,267 ) $ 733 Customer relationships & other intangibles 8.7 62,324 ( 41,651 ) 20,673 Developed technology 8.0 75,087 ( 37,984 ) 37,103 Patents 16.1 8,885 ( 3,820 ) 5,065 Total intangible assets $ 150,296 $ ( 86,722 ) $ 63,574 The following table summarizes amortization of intangible assets for future periods as of March 31, 2023: (In thousands) Annual Amortization 2023 $ 12,241 2024 13,988 2025 9,703 2026 6,259 2027 5,178 Thereafter 11,825 Total $ 59,194 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2023 | |
ACCRUED EXPENSES [Abstract] | |
Accrued Expenses | NOTE 10. ACCRUED EXPENSES Accrued expenses as of March 31, 2023 and December 31, 2022, respectively included the following: March 31, December 31, (In thousands) 2023 2022 Compensation and other employee-related costs $ 42,641 $ 53,352 Legal and other settlements and expenses 5,077 5,564 Accrued non-income taxes 8,592 10,029 Royalties 4,245 4,375 Rebates 10,219 10,501 Other 13,224 10,884 Total accrued expenses $ 83,998 $ 94,705 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
DEBT [Abstract] | |
Debt | NOTE 11. DEBT Line of Credit In August 2020, we entered into a credit agreement with Citizens Bank, N.A. (the “Credit Agreement”) that provides a revolving credit facility permitting borrowings up to $ 125.0 million (as amended, the “Revolving Credit Facility”), and has a termination date of August 2, 2023 . The Revolving Credit Facility includes up to a $ 25.0 million sub limit for letters of credit. Revolving loans under the Credit Agreement will bear interest, at the Company’s option, at either a base rate or the Bloomberg Short-Term Bank Yield Index Rate (the “Daily BSBY Rate”) (as defined in the Revolving Credit Facility), plus, in each case, an applicable margin, as determined in accordance with the provisions of the Credit Agreement. The base rate will be the highest of: the rate of interest announced publicly by Citizens Bank, N.A. from time to time as its “prime rate”; the federal funds effective rate plus 1/2 of 1 %; and the Daily BSBY Rate plus 1 %. The applicable margin is subject to adjustment as provided in the Credit Agreement. The Credit Agreement contains financial and other customary covenants, including a maximum leverage ratio. As of March 31 , 2023, we have no t borrowed under the Revolving Credit Facility. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
EQUITY [Abstract] | |
Equity | NOTE 12. EQUITY Share Repurchases On March 11, 2020, the Company announced a share repurchase program, which authorized the Company to repurchase up to $ 200.0 million of the Company’s Class A common stock (“Class A Common”). On March 4, 2022, the share repurchase program was expanded by authorizing the Company to repurchase an additional $ 200.0 million of the Company’s Class A Common. The repurchase program has no time limit and may be suspended for periods or discontinued at any time. The Company did no t repurchase any Class A Common during the three months ended March 31, 2023. As of March 31, 2023, the Company has remaining authorization to repurchase a total of $ 150.8 million of Class A common stock. The timing and actual number of shares repurchased will depend on various factors including price, corporate and regulatory requirements, debt covenant requirements, alternative investment opportunities and other market conditions. F unding of share repurchases is expected to come from operating cash flows and excess cash. Shares repurchased by the Company are accounted for under the constructive retirement method, in which the shares repurchased, are immediately retired, as there is no plan to reissue the shares. The Company made an accounting policy election to charge the excess of repurchase price over par value entirely to retained earnings. Common Stock Our amended and restated Certificate of Incorporation provides for a total of 775,000,000 authorized shares of common stock. Of the authorized number of shares of common stock, 500,000,000 shares are designated as Class A Common, and 275,000,000 shares are designated as Class B common stock (“Class B Common”). The holders of Class A Common are entitled to one vote for each share of Class A Common held. Each share of our Class B Common is convertible at any time at the option of the holder into one share of our Class A Common. In addition, each share of our Class B Common will convert automatically into one share of our Class A Common upon any transfer, whether or not for value, except for permitted transfers. For more details relating to the conversion of our Class B Common please see “Exhibit 4.2, Description of Securities of the Registrant” filed with our Annual Report on Form 10-K on February 21, 2023. The holders of Class B Common are entitled to 10 votes for each share of Class B Common held. The holders of Class A Common and Class B Common vote together as one class of common stock. Except for voting rights, the Class A Common and Class B Common have the same rights and privileges. Accumulated Other Comprehensive Income (Loss) The tables below present the changes in each component of accumulated other comprehensive income/(loss), including current period other comprehensive income/(loss) and reclassifications out of accumulated other comprehensive income/(loss) for the three months ended March 31 , 2023 and 2022, respectively: (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive income/(loss), net of tax, at December 31, 2022 $ ( 15,093 ) $ ( 9,537 ) $ ( 24,630 ) Other comprehensive income/(loss) before reclassifications 5,603 910 6,513 Amounts reclassified from accumulated other comprehensive income/(loss), net of tax ( 1,305 ) — ( 1,305 ) Other comprehensive income/(loss), net of tax 4,298 910 5,208 Accumulated other comprehensive income/(loss), net of tax, at March 31, 2023 $ ( 10,795 ) $ ( 8,627 ) $ ( 19,422 ) (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive income/(loss), net of tax, at December 31, 2021 $ ( 1,053 ) $ ( 5,719 ) $ ( 6,772 ) Other comprehensive income/(loss) before reclassifications ( 11,596 ) ( 1,567 ) ( 13,163 ) Amounts reclassified from accumulated other comprehensive income/(loss), net of tax 2,768 — 2,768 Other comprehensive income/(loss), net of tax ( 8,828 ) ( 1,567 ) ( 10,395 ) Accumulated other comprehensive income/(loss), net of tax, at March 31, 2022 $ ( 9,881 ) $ ( 7,286 ) $ ( 17,167 ) Amounts reclassified from accumulated other comprehensive loss, net of tax, related to unrealized gains/losses on marketable securities were released to other income, net in our condensed consolidated statements of operations and comprehensive income. Earnings Per Common Share The Company computes basic earnings per share using the weighted-average number of common shares outstanding during the period. Diluted earnings per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options and unvested RSUs. The contingently issuable shares are included in basic net income per share as of the date that all necessary conditions have been satisfied and are included in the denominator for dilutive calculation for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended March 31, (In thousands, except per share amounts) 2023 2022 Numerator: Net income/(loss) 49,129 $ 38,084 Denominator for basic and diluted net income per share: Weighted average shares outstanding for basic 100,279 101,600 Dilutive stock options and RSUs 1,917 2,477 Weighted average shares outstanding for diluted 102,196 104,077 Earnings per share: Basic 0.49 $ 0.37 Diluted 0.48 $ 0.37 Anti-dilutive stock options and RSUs excluded from the calculation 5,383 3,378 |
STOCK-BASED AWARDS
STOCK-BASED AWARDS | 3 Months Ended |
Mar. 31, 2023 | |
STOCK-BASED AWARDS [Abstract] | |
Stock-Based Awards | NOTE 13. STOCK-BASED AWARDS We have two stock plans: our 2012 Equity Incentive Plan (the “2012 Plan”) and our 2021 Equity Incentive Plan (the “2021 Plan”), together with the 2012 Plan, the “Plans”. The 2021 Plan is the only active stock plan. The purpose of the 2012 Plan was, and of the 2021 Plan is, to provide incentive to employees, directors, and consultants of Globus. The Plans are administered by the Board of Directors of Globus (the “Board”) or its delegates. The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans. The options granted expire on a date specified by the Board, which is ten years from the grant date. Options granted to employees vest in varying installments over a four-year period. The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012. The 2012 Plan terminated as to new awards pursuant to its terms in 2022. Following effectiveness of the 2021 Plan, we have not issued any additional awards under the 2012 Plan; however, awards previously granted under the 2012 Plan remain outstanding and are administered by our Board under the terms and conditions of the 2012 Plan. Under the 2012 Plan, the aggregate number of shares of Class A Common that were able to be issued subject to options and other awards is equal to the sum of (i) 3,076,923 shares, (ii) any shares available for issuance under the 2008 Equity Incentive Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3 % of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board. The number of shares that were able to be issued or transferred pursuant to incentive stock options under the 2012 Plan was limited to 10,769,230 shares. The shares of Class A Common covered by the 2012 Plan included authorized but unissued shares, treasury shares or shares of common stock purchased on the open market. The 2021 Plan was approved by our Board in March 2021, and by our stockholders in June 2021. Under the 2021 Plan, amended to date, the aggregate number of shares of Class A Common that were able to be issued subject to options and other awards is equal to the sum of (i) 4,000,000 shares, (ii) any shares available for issuance under the 2012 Plan as of June 3, 2021 and (iii) any shares underlying awards outstanding under the 2012 Plan or 2021 Plan as of June 3, 2021 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares. The number of shares that could be issued or transferred pursuant to incentive stock options under the 2021 Plan is limited to 4,000,000 shares. The shares of Class A Common covered by the 2021 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market. As of March 31, 2023, pursuant to the 2021 Plan, there were 5,716,708 shares of Class A Common reserved and 1,526,833 shares of Class A Common available for future grants. Stock Options Stock option activity during the three months ended March 31, 2023 is summarized as follows: Option Shares (thousands) Weighted average exercise price Weighted average remaining contractual life (years) Aggregate intrinsic value (thousands) Outstanding at December 31, 2022 10,338 $ 51.86 Granted 1,197 60.60 Exercised ( 143 ) 34.12 Forfeited ( 93 ) 66.54 Outstanding at March 31, 2023 11,299 $ 52.89 6.9 $ 87,079 Exercisable at March 31, 2023 6,229 $ 46.29 5.6 $ 74,076 Expected to vest at March 31, 2023 5,070 $ 61.00 8.6 $ 13,003 The total intrinsic value of stock options exercised was $ 5.3 million and $ 4.7 million during the three months ended March 31, 2023, and 2022, respectively. The fair value of the options was estimated on the date of the grant using a Black-Scholes option pricing model with the following assumptions: Three Months Ended March 31, 2023 2022 Risk-free interest rate 3.45 % - 4.10 % 1.46 % - 1.95 % Expected term (years) 4.7 - 4.7 4.8 Expected volatility 35.0 % - 38.0 % 34.0 % Expected dividend yield —% —% The weighted average grant date fair value of stock options granted during the three months ended March 31, 2023, and 2022 was $ 22.31 and $ 20.48 per share, respectively. Restricted Stock Units Restricted stock unit activity during the three months ended March 31, 2023 is summarized as follows: Restricted Stock Units (thousands) Weighted average grant date fair value per share Weighted average remaining contractual life (years) Outstanding at December 31, 2022 60 $ 67.40 Granted 4 62.33 Vested — — Forfeited — — Outstanding at March 31, 2023 64 $ 67.12 7.6 Stock-Based Compensation Compensation expense related to stock options granted to employees and non-employees under the Plans was as follows: Three Months Ended March 31, (In thousands) 2023 2022 Stock-based compensation expense $ 8,953 $ 8,152 Net stock-based compensation capitalized into inventory 79 201 Total stock-based compensation cost $ 9,032 $ 8,353 As of March 31, 2023, there was $ 91.9 million of unrecognized compensation expense related to unvested employee stock options that vest over a weighted average period of three years . |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES [Abstract] | |
Income Taxes | NOTE 14. INCOME TAXES In computing our income tax provision, we make certain estimates and judgments, such as estimated annual taxable income or loss, annual effective tax rate, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets. Our estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. Should facts and circumstances change during a quarter causing a material change to the estimated effective income tax rate, a cumulative adjustment is recorded. The following table provides a summary of our effective tax rate for the three months ended March 31, 2023 and 2022, respectively: Three Months Ended March 31, 2023 2022 Effective income tax rate 22.3 % 22.1 % |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Commitments And Contingencies | NOTE 15. COMMITMENTS AND CONTINGENCIES We are involved in a number of proceedings, legal actions, and claims arising in the ordinary course of business. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the condensed consolidated financial statements for these actions when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount in the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible, but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows. Moskowitz Family LLC Litigation On November 20, 2019, Moskowitz Family LLC filed suit against us in the U.S. District Court for the Western District of Texas for patent infringement. Moskowitz, a non-practicing entity, alleges that Globus willfully infringes one or more claims of six patents by making, using, offering for sale or selling the COALITION ® , COALITION MIS ® , COALITION AGX ® , CORBEL ® , MONUMENT ® , MAGNIFY ® -S, HEDRON IA TM , HEDRON IC ® , INDEPENDENCE ® , INDEPENDENCE MIS ® , INDEPENDENCE MIS AGX ® , FORTIFY ® and XPAND ® families, SABLE ® , RISE ® , RISE ® INTRALIF, RISE ® -L, ELSA ® , ELSA ® ATP, ALTERA ® , ARIEL ® , CALIBER ® and CALIBER ® -L products. Moskowitz seeks monetary damages and injunctive relief. On July 2, 2020, this suit was transferred from the U.S. District Court for the Western District of Texas to the U.S. District Court for the Eastern District of Pennsylvania. The outcome of this litigation cannot be determined, nor can we estimate a range of potential loss, therefore, we have no t recorded a liability related to this litigation as of March 31, 2023. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 3 Months Ended |
Mar. 31, 2023 | |
SEGMENT AND GEOGRAPHIC INFORMATION [Abstract] | |
Segment And Geographic Information | NOTE 16. SEGMENT AND GEOGRAPHIC INFORMATION Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We manage our business globally within one operating segment, and segment information is consistent with how the chief operating decision makers review the business, make investing and resource allocation decisions and assess operating performance. The following table represents total net sales by geographic area, based on the location of the customer: Three Months Ended March 31, (In thousands) 2023 2022 United States $ 234,120 $ 196,403 International 42,568 34,146 Total net sales $ 276,688 $ 230,549 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy) | 3 Months Ended |
Mar. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, these condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position as of March 31, 2023, and results of operations for the three months ended March 31, 2023. The results of operations for any interim period may not be indicative of results for the full year. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Globus and its majority-owned or controlled subsidiaries. All intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the condensed consolidated financial statements in the period they are determined to be necessary. Significant areas that require estimates include revenue recognition, intangible assets, business acquisition liabilities, allowance for doubtful accounts, stock-based compensation, reserves for excess and obsolete inventory, useful lives of assets, the outcome of litigation, recoverability of intangible assets and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results. |
Revenue Recognition | Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. For purposes of disclosure, we disaggregate our revenue into two categories, Musculoskeletal Solutions and Enabling Technologies. Our Musculoskeletal Solutions products consist primarily of the implantable devices, disposables, and unique instruments used in an expansive range of spine, orthopedic trauma, hip, knee and extremity procedures. The majority of our Musculoskeletal Solutions contracts have a single performance obligation and revenue is recognized at a point in time. Our Enabling Technologies products are advanced hardware and software systems, and related technologies that are designed to enhance a surgeon’s capabilities and streamline surgical procedures by making them less invasive, more accurate, and more reproducible to improve patient care. The majority of our Enabling Technologies product contracts contain multiple performance obligations, including maintenance and support, and revenue is recognized as we fulfill each performance obligation. When contracts have multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold. Nature of Products and Services A significant portion of our Musculoskeletal Solutions product revenue is generated from consigned inventory maintained at hospitals or with sales representatives. Revenue from the sale of consigned musculoskeletal products is recognized when we transfer control, which occurs at the time the product is used or implanted. For all other Musculoskeletal Solutions product transactions, we recognize revenue when we transfer title to the goods, provided there are no remaining performance obligations that can affect the customer’s final acceptance of the sale. Revenue from the sale of Enabling Technologies products is generally recognized when control transfers to the customer which occurs at the time the product is shipped or delivered. Any revenue related to the provision of maintenance and support is recognized as we satisfy the performance obligation. We use an observable price to determine the stand-alone selling price for each separate performance obligation. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Deferred revenue is comprised mainly of unearned revenue related to the sales of certain Enabling Technologies products, which includes maintenance and support services. Maintenance and support services are generally invoiced annually, at the beginning of each contract period, and revenue is recognized ratably over the maintenance period. For the three months ended March 31, 2023, there was an immaterial amount of revenue recognized from previously deferred revenue. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents. Cash equivalents, which consist of money market accounts, commercial paper and corporate debt securities are stated at fair value. |
Marketable Securities | Marketable Securities Our marketable securities include municipal bonds, corporate debt securities, commercial paper, asset-backed securities, and securities of government, federal agency, and other sovereign obligations and are classified as available-for-sale as of March 31, 2023. S hort-term and long-term marketable securities are recorded at fair value on our condensed consolidated balance sheets. Any change in fair value of our available-for-sale securities, that do not result in recognition or reversal of an allowance for credit loss or write-down, are recorded, net of taxes, as a component of accumulated other comprehensive income or loss on our condensed consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of marketable securities are determined on a specific identification basis. Realized gains and losses, interest income and the amortization/accretion of premiums/discounts are included as a component of other income/(expense), net, on our condensed consolidated statements of operations and comprehensive income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our condensed consolidated balance sheets. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review declines in the fair value of our securities to determine whether they are resulting from expected credit losses or other factors. If the assessment indicates a credit loss exists, we recognize any measured impairment as an allowance for credit loss in our condensed consolidated statements of operations. Any other impairments not recorded through allowance for credit losses is recognized in our other comprehensive income. |
Fair Value Measurements | Fair Value Measurements Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories: Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques. Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the excess recorded as goodwill. We utilize Level 3 inputs in the determination of the initial fair value. Contingent consideration represents contingent milestone, performance and revenue-sharing payment obligations related to acquisitions and is measured at fair value, based on significant inputs that are not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. We assess these assumptions on an ongoing basis as additional data impacting the assumptions is obtained. The fair value of contingent consideration is recorded in business acquisition liabilities on our condensed consolidated balance sheets, and changes in the fair value of contingent consideration are recognized in acquisition related costs in the condensed consolidated statements of operations and comprehensive income. The fair value of contingent restricted stock unit (“RSU”) grants are recorded as additional paid-in capital in the consolidated balance sheet on the day of the grant due to the remote likelihood of forfeiture. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. The majority of our inventory is finished goods and we utilize both in-house manufacturing and third-party suppliers to produce our products. We periodically evaluate the carrying value of our inventories in relation to estimated forecasts of product demand, which takes into consideration the life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories. Once inventory has been written down, it creates a new cost basis for inventory that is not subsequently written up. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the fair values of the identifiable assets acquired less the liabilities assumed in the acquisition of a business. Goodwill is tested for impairment at least annually or whenever events or circumstances indicate that a carrying amount may not be recoverable. Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount to the estimated fair value of the reporting unit. Fair values are estimated using an income and discounted cash flow approach. We perform our annual impairment test of goodwill in the fourth quarter of each year. We consider qualitative indicators of the fair value of a reporting unit when it is unlikely that a reporting unit has impaired goodwill. Intangible assets consist of purchased in-process research and development (“IPR&D”), developed technology, supplier network, patents, customer relationships, re-acquired rights, and non-compete agreements. Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from 1 to 21 years. Intangible assets with finite useful lives are tested whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If an impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset. Fair value is generally determined using a discounted future cash flow analysis. IPR&D has an indefinite life and is not amortized until completion of the project at which time the IPR&D becomes an amortizable asset. Intangible assets with indefinite useful lives are tested for impairment annually or whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If the related project is not completed in a timely manner, we may have an impairment related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value. During the three months ended March 31, 2023, there were no impairments in goodwill, finite-lived intangible assets, and IPR&D. |
Stock-Based Compensation | Stock -Based Compensation The cost of employee and non-employee director awards is measured at the grant date fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the equity award. Compensation expense for awards includes the impact of forfeiture in the period when they occur. We estimate the fair value of stock options utilizing the Black-Scholes option-pricing model. Inputs to the Black-Scholes model include our stock price, expected volatility, expected term, risk-free interest rate and expected dividends. Expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options offering period which is derived from historical experience. The risk-free interest rate assumption is based on observed interest rates of U.S. Treasury securities appropriate for the expected terms of the stock options. The dividend yield assumption is based on the history and expectation of no dividend payouts. The fair value of restricted stock units is estimated on the day of grant based on the closing price of the Company’s common stock. |
Recently Issued Accounting Pronouncements & Recently Adopted Accounting Pronouncements | (k) Recently Issued Accounting Pronouncements None applicable. (l) Recently Adopted Accounting Pronouncements On March 12, 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU became effective for all entities as of March 12, 2020, and applied through December 31, 2022. On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. This standard did not have a material impact on our financial position, results of operations and disclosures. |
NET SALES (Tables)
NET SALES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
NET SALES [Abstract] | |
Schedule of Net Sales by Product Category | Three Months Ended March 31, (In thousands) 2023 2022 Musculoskeletal Solutions $ 251,607 $ 217,402 Enabling Technologies 25,081 13,147 Total net sales $ 276,688 $ 230,549 |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
MARKETABLE SECURITIES [Abstract] | |
Composition of Marketable Securities | The composition of our short-term and long-term marketable securities was as follows: March 31, 2023 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds $ 94,854 $ 4 $ ( 1,381 ) $ 93,477 Corporate debt securities 159,167 — ( 3,415 ) 155,752 Asset-backed securities 4,727 — ( 142 ) 4,585 Government, federal agency, and other sovereign obligations 33,360 1 ( 490 ) 32,871 Total short-term marketable securities $ 292,108 $ 5 $ ( 5,428 ) $ 286,685 Long-term: Municipal bonds $ 52,949 $ 134 $ ( 884 ) $ 52,199 Corporate debt securities 264,149 406 ( 6,089 ) 258,466 Asset-backed securities 119,361 301 ( 2,235 ) 117,427 Government, federal agency, and other sovereign obligations 52,400 133 ( 600 ) 51,933 Total long-term marketable securities $ 488,859 $ 974 $ ( 9,808 ) $ 480,025 December 31, 2022 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds $ 83,279 $ 9 $ ( 1,680 ) $ 81,608 Corporate debt securities 187,174 2 ( 3,438 ) 183,738 Commercial paper 5,583 — ( 1 ) 5,582 Asset-backed securities 4,200 — ( 181 ) 4,019 Government, federal agency, and other sovereign obligations 21,102 1 ( 458 ) 20,645 Total short-term marketable securities $ 301,338 $ 12 $ ( 5,758 ) $ 295,592 Long-term: Municipal bonds $ 61,986 $ 44 $ ( 1,549 ) $ 60,481 Corporate debt securities 268,524 72 ( 8,947 ) 259,649 Asset-backed securities 120,929 217 ( 2,795 ) 118,351 Government, federal agency, and other sovereign obligations 58,453 18 ( 1,100 ) 57,371 Total long-term marketable securities $ 509,892 $ 351 $ ( 14,391 ) $ 495,852 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | (In thousands) Balance at March 31, 2023 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 45,921 $ 12,013 $ 33,908 $ — Municipal bonds 145,676 — 145,676 — Corporate debt securities 414,218 — 414,218 — Commercial paper — — — — Asset-backed securities 122,012 — 122,012 — Government, federal agency, and other sovereign obligations 84,804 39,452 45,352 — Liabilities: Business acquisition liabilities 64,882 — — 64,882 (In thousands) Balance at December 31, 2022 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 17,655 $ 17,655 $ — $ — Municipal bonds 142,089 — 142,089 — Corporate debt securities 443,387 — 443,387 — Commercial paper 5,582 — 5,582 — Asset-backed securities 122,370 — 122,369 — Government, federal agency, and other sovereign obligations 78,016 — 78,016 — Liabilities: Business acquisition liabilities 68,258 — — 68,258 |
Significant Unobservable Inputs in Valuation Techniques | Unobservable input Range Weighted Average* Revenue risk premium 2.2 % - 4.7 % 2.8 % Revenue volatility 14.0 % - 15.8 % 14.8 % Discount rate 5.9 % - 8.5 % 6.7 % Projected year of payment 2023 - 2032 * The weighted average rates were calculated based on the relative fair value of each business acquisition liability. |
Changes in Carrying Value of Business Acquisition Liabilities | Three Months Ended March 31, (In thousands) 2023 2022 Beginning balance $ 68,258 $ 70,525 Contingent cash payments ( 2,691 ) ( 2,412 ) Contingent RSU grants ( 219 ) ( 196 ) Changes in fair value of business acquisition liabilities ( 446 ) ( 263 ) Contractual payable reclassification ( 20 ) 382 Ending balance $ 64,882 $ 68,036 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
INVENTORIES [Abstract] | |
Schedule of Inventory | March 31, December 31, (In thousands) 2023 2022 Raw materials $ 65,418 $ 60,324 Work in process 18,237 18,699 Finished goods 237,378 219,958 Total inventories $ 321,033 $ 298,981 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Schedule of Property and Equipment | Useful March 31, December 31, (In thousands) Life 2023 2022 Land — $ 8,282 $ 8,277 Buildings and improvements 31.5 54,945 51,510 Equipment 5 - 15 151,965 148,803 Instruments 5 320,982 312,055 Modules and cases 5 49,091 48,023 Other property and equipment 3 - 5 13,701 18,097 598,966 586,765 Less: accumulated depreciation ( 353,868 ) ( 343,036 ) Total $ 245,098 $ 243,729 |
Schedule of Depreciation Related to Property and Equipment | Three Months Ended March 31, (In thousands) 2023 2022 Depreciation $ 13,507 $ 12,325 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
GOODWILL AND INTANGIBLE ASSETS [Abstract] | |
Summary of Goodwill | (In thousands) December 31, 2021 $ 179,708 Additions and adjustments 18,799 Foreign exchange ( 1,036 ) December 31, 2022 197,471 Additions and adjustments 912 Foreign exchange 327 March 31, 2023 $ 198,710 |
Summary of Intangible Assets | March 31, 2023 (In thousands) Weighted Average Amortization Period (in years) Gross Carrying Amount Accumulated Amortization Intangible Assets, net Supplier network 10.0 $ 4,000 $ ( 3,367 ) $ 633 Customer relationships & other intangibles 8.7 62,816 ( 44,011 ) 18,805 Developed technology 8.0 75,367 ( 40,565 ) 34,802 Patents 16.1 8,943 ( 3,989 ) 4,954 Total intangible assets $ 151,126 $ ( 91,932 ) $ 59,194 Intangible assets as of December 31, 2022 included the following: December 31, 2022 (In thousands) Weighted Average Amortization Period (in years) Gross Carrying Amount Accumulated Amortization Intangible Assets, net Supplier network 10.0 $ 4,000 $ ( 3,267 ) $ 733 Customer relationships & other intangibles 8.7 62,324 ( 41,651 ) 20,673 Developed technology 8.0 75,087 ( 37,984 ) 37,103 Patents 16.1 8,885 ( 3,820 ) 5,065 Total intangible assets $ 150,296 $ ( 86,722 ) $ 63,574 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table summarizes amortization of intangible assets for future periods as of March 31, 2023: (In thousands) Annual Amortization 2023 $ 12,241 2024 13,988 2025 9,703 2026 6,259 2027 5,178 Thereafter 11,825 Total $ 59,194 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
ACCRUED EXPENSES [Abstract] | |
Schedule of Accrued Expenses | March 31, December 31, (In thousands) 2023 2022 Compensation and other employee-related costs $ 42,641 $ 53,352 Legal and other settlements and expenses 5,077 5,564 Accrued non-income taxes 8,592 10,029 Royalties 4,245 4,375 Rebates 10,219 10,501 Other 13,224 10,884 Total accrued expenses $ 83,998 $ 94,705 |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
EQUITY [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive income/(loss), net of tax, at December 31, 2022 $ ( 15,093 ) $ ( 9,537 ) $ ( 24,630 ) Other comprehensive income/(loss) before reclassifications 5,603 910 6,513 Amounts reclassified from accumulated other comprehensive income/(loss), net of tax ( 1,305 ) — ( 1,305 ) Other comprehensive income/(loss), net of tax 4,298 910 5,208 Accumulated other comprehensive income/(loss), net of tax, at March 31, 2023 $ ( 10,795 ) $ ( 8,627 ) $ ( 19,422 ) (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive income/(loss), net of tax, at December 31, 2021 $ ( 1,053 ) $ ( 5,719 ) $ ( 6,772 ) Other comprehensive income/(loss) before reclassifications ( 11,596 ) ( 1,567 ) ( 13,163 ) Amounts reclassified from accumulated other comprehensive income/(loss), net of tax 2,768 — 2,768 Other comprehensive income/(loss), net of tax ( 8,828 ) ( 1,567 ) ( 10,395 ) Accumulated other comprehensive income/(loss), net of tax, at March 31, 2022 $ ( 9,881 ) $ ( 7,286 ) $ ( 17,167 ) |
Schedule of Computation of Basic and Diluted Earnings | Three Months Ended March 31, (In thousands, except per share amounts) 2023 2022 Numerator: Net income/(loss) 49,129 $ 38,084 Denominator for basic and diluted net income per share: Weighted average shares outstanding for basic 100,279 101,600 Dilutive stock options and RSUs 1,917 2,477 Weighted average shares outstanding for diluted 102,196 104,077 Earnings per share: Basic 0.49 $ 0.37 Diluted 0.48 $ 0.37 Anti-dilutive stock options and RSUs excluded from the calculation 5,383 3,378 |
STOCK-BASED AWARDS (Tables)
STOCK-BASED AWARDS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
STOCK-BASED AWARDS [Abstract] | |
Summary of Stock Option Activity | Stock option activity during the three months ended March 31, 2023 is summarized as follows: Option Shares (thousands) Weighted average exercise price Weighted average remaining contractual life (years) Aggregate intrinsic value (thousands) Outstanding at December 31, 2022 10,338 $ 51.86 Granted 1,197 60.60 Exercised ( 143 ) 34.12 Forfeited ( 93 ) 66.54 Outstanding at March 31, 2023 11,299 $ 52.89 6.9 $ 87,079 Exercisable at March 31, 2023 6,229 $ 46.29 5.6 $ 74,076 Expected to vest at March 31, 2023 5,070 $ 61.00 8.6 $ 13,003 |
Fair Value of Options Using Black Scholes Option Pricing Model | The fair value of the options was estimated on the date of the grant using a Black-Scholes option pricing model with the following assumptions: Three Months Ended March 31, 2023 2022 Risk-free interest rate 3.45 % - 4.10 % 1.46 % - 1.95 % Expected term (years) 4.7 - 4.7 4.8 Expected volatility 35.0 % - 38.0 % 34.0 % Expected dividend yield —% —% |
Summary of Restricted Stock Unit Activity | Restricted Stock Units (thousands) Weighted average grant date fair value per share Weighted average remaining contractual life (years) Outstanding at December 31, 2022 60 $ 67.40 Granted 4 62.33 Vested — — Forfeited — — Outstanding at March 31, 2023 64 $ 67.12 7.6 |
Stock-based Compensation Schedule | Three Months Ended March 31, (In thousands) 2023 2022 Stock-based compensation expense $ 8,953 $ 8,152 Net stock-based compensation capitalized into inventory 79 201 Total stock-based compensation cost $ 9,032 $ 8,353 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES [Abstract] | |
Summary of Effective Tax Rate | Three Months Ended March 31, 2023 2022 Effective income tax rate 22.3 % 22.1 % |
SEGMENT AND GEOGRAPHIC INFORM_2
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
SEGMENT AND GEOGRAPHIC INFORMATION [Abstract] | |
Schedule of Total Sales by Geographical Area | Three Months Ended March 31, (In thousands) 2023 2022 United States $ 234,120 $ 196,403 International 42,568 34,146 Total net sales $ 276,688 $ 230,549 |
BACKGROUND (Narrative) (Details
BACKGROUND (Narrative) (Details) | 3 Months Ended | ||
Feb. 08, 2023 $ / shares shares | Mar. 31, 2023 item $ / shares shares | Dec. 31, 2022 $ / shares | |
Minimum [Member] | |||
Number of products launched | item | 230 | ||
NuVasive [Member] | Merger Agreement [Member] | |||
Common stock, par value | $ 0.001 | ||
Common Class A [Member] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Conversion ratio of common stock | shares | 1 | ||
Common Class A [Member] | Merger Agreement [Member] | |||
Common stock, par value | $ 0.001 | ||
Conversion ratio of common stock | shares | 0.75 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |
Goodwill impairment | $ 0 |
Impairment of finite-lived intangible assets | 0 |
Impairment of intangible assets | $ 0 |
Minimum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Intangible assets, estimated useful lives | 1 year |
Maximum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Intangible assets, estimated useful lives | 21 years |
ASSET ACQUISITIONS AND BUSINE_2
ASSET ACQUISITIONS AND BUSINESS COMBINATIONS (Narrative) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 USD ($) item | Dec. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) item | Dec. 31, 2021 USD ($) | Sep. 30, 2021 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) item | |
Business Acquisition [Line Items] | |||||||
Contingent consideration liability | $ 64,882 | $ 68,258 | $ 68,258 | ||||
Goodwill | $ 198,710 | 197,471 | $ 179,708 | $ 197,471 | $ 179,708 | ||
Customer Relationships & Other Intangibles [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Weighted average amortization period | 8 years 8 months 12 days | 8 years 8 months 12 days | |||||
Developed Technology [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Weighted average amortization period | 8 years | 8 years | |||||
Capstone Surgical Technologies, LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Asset Acquisition, Consideration Transferred | 24,500 | ||||||
Synoste Acquisition [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Acquired in-process research and development | $ 34,300 | ||||||
Development Of Technology, Robotic Surgery Platforms [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price of assets | 10,000 | ||||||
Additional contingent consideration | 5,000 | ||||||
Approval Of FDA [Member] | Capstone Surgical Technologies, LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Asset Acquisition, Consideration Transferred | 15,000 | ||||||
Achievement Of Certain Performance Obligation [Member] | Capstone Surgical Technologies, LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Additional contingent consideration | 10,000 | ||||||
Harvest Biologics, LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price, preliminary post-closing adjustments | 1,400 | $ 1,400 | |||||
Inventory acquired | 3,400 | 3,400 | |||||
Business combination, consideration transferred | 30,000 | ||||||
Goodwill | 15,100 | 15,100 | |||||
Harvest Biologics, LLC [Member] | Customer Relationships & Other Intangibles [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets acquired | $ 10,500 | 10,500 | |||||
Weighted average amortization period | 20 years | ||||||
Harvest Biologics, LLC [Member] | Developed Technology [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets acquired | $ 2,400 | $ 2,400 | |||||
Series of Individually Immaterial Business Acquisitions [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of acquisitions | item | 1 | 1 | 2 | 3 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | $ 1,600 | ||||||
Identifiable Assets | $ 400 | ||||||
Inventory acquired | 1,000 | ||||||
Weighted average amortization period | 3 years 9 months 18 days | ||||||
Payments to Acquire Businesses, Gross | $ 1,400 | 300 | |||||
Business combination, consideration transferred | $ 200 | ||||||
Contingent consideration liability | 13,000 | $ 13,000 | |||||
Contingent payments, performance period | 10 years | ||||||
Goodwill | $ 4,600 | $ 13,300 | $ 11,000 | $ 13,300 | |||
Contingent consideration payment | $ 4,400 | $ 12,600 | |||||
Business Acquisitions, Contractual Holdback Obligation Payable Period | 10 years |
NET SALES (Schedule of Net Sale
NET SALES (Schedule of Net Sales by Product Category) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 276,688 | $ 230,549 |
Musculoskeletal Solutions [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 251,607 | 217,402 |
Enabling Technologies [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 25,081 | $ 13,147 |
MARKETABLE SECURITIES (Narrativ
MARKETABLE SECURITIES (Narrative) (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Short-term Investments [Member] | Maximum [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Contractual Maturity | 1 year | 1 year |
Long-term Investments [Member] | Minimum [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Contractual Maturity | 1 year | 1 year |
Long-term Investments [Member] | Maximum [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Contractual Maturity | 3 years | 3 years |
MARKETABLE SECURITIES (Composit
MARKETABLE SECURITIES (Composition of Marketable Securities) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost, Short-term | $ 292,108 | $ 301,338 |
Gross Unrealized Gains, Short-term | 5 | 12 |
Gross Unrealized Losses, Short-term | (5,428) | (5,758) |
Fair Value, Short-term | 286,685 | 295,592 |
Amortized Cost, Long-term | 488,859 | 509,892 |
Gross Unrealized Gains, Long-term | 974 | 351 |
Gross Unrealized Losses, Long-term | (9,808) | (14,391) |
Fair Value, Long-term | 480,025 | 495,852 |
Municipal Bonds [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost, Short-term | 94,854 | 83,279 |
Gross Unrealized Gains, Short-term | 4 | 9 |
Gross Unrealized Losses, Short-term | (1,381) | (1,680) |
Fair Value, Short-term | 93,477 | 81,608 |
Municipal Bonds [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost, Long-term | 52,949 | 61,986 |
Gross Unrealized Gains, Long-term | 134 | 44 |
Gross Unrealized Losses, Long-term | (884) | (1,549) |
Fair Value, Long-term | 52,199 | 60,481 |
Corporate Debt Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost, Short-term | 159,167 | 187,174 |
Gross Unrealized Gains, Short-term | 2 | |
Gross Unrealized Losses, Short-term | (3,415) | (3,438) |
Fair Value, Short-term | 155,752 | 183,738 |
Amortized Cost, Long-term | 264,149 | 268,524 |
Gross Unrealized Gains, Long-term | 406 | 72 |
Gross Unrealized Losses, Long-term | (6,089) | (8,947) |
Fair Value, Long-term | 258,466 | 259,649 |
Commercial Paper [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost, Short-term | 5,583 | |
Gross Unrealized Losses, Short-term | (1) | |
Fair Value, Short-term | 5,582 | |
Asset-backed Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost, Short-term | 4,727 | 4,200 |
Gross Unrealized Losses, Short-term | (142) | (181) |
Fair Value, Short-term | 4,585 | 4,019 |
Amortized Cost, Long-term | 119,361 | 120,929 |
Gross Unrealized Gains, Long-term | 301 | 217 |
Gross Unrealized Losses, Long-term | (2,235) | (2,795) |
Fair Value, Long-term | 117,427 | 118,351 |
Government, Federal Agency, And Other Sovereign Obligations [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost, Short-term | 33,360 | 21,102 |
Gross Unrealized Gains, Short-term | 1 | 1 |
Gross Unrealized Losses, Short-term | (490) | (458) |
Fair Value, Short-term | 32,871 | 20,645 |
Amortized Cost, Long-term | 52,400 | 58,453 |
Gross Unrealized Gains, Long-term | 133 | 18 |
Gross Unrealized Losses, Long-term | (600) | (1,100) |
Fair Value, Long-term | $ 51,933 | $ 57,371 |
FAIR VALUE MEASUREMENTS (Fair V
FAIR VALUE MEASUREMENTS (Fair Value of Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | $ 45,921 | $ 17,655 | ||
Business acquisition liabilities | 64,882 | 68,258 | ||
Municipal Bonds [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 145,676 | 142,089 | ||
Corporate Debt Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 414,218 | 443,387 | ||
Commercial Paper [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 5,582 | |||
Asset-backed Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 122,012 | 122,370 | ||
Government, Federal Agency, And Other Sovereign Obligations [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 84,804 | 78,016 | ||
Fair Value, Inputs, Level 1 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 12,013 | 17,655 | ||
Fair Value, Inputs, Level 1 [Member] | Government, Federal Agency, And Other Sovereign Obligations [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 39,452 | |||
Fair Value, Inputs, Level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 33,908 | |||
Fair Value, Inputs, Level 2 [Member] | Municipal Bonds [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 145,676 | 142,089 | ||
Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 414,218 | 443,387 | ||
Fair Value, Inputs, Level 2 [Member] | Commercial Paper [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 5,582 | |||
Fair Value, Inputs, Level 2 [Member] | Asset-backed Securities [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 122,012 | 122,369 | ||
Fair Value, Inputs, Level 2 [Member] | Government, Federal Agency, And Other Sovereign Obligations [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Securities | 45,352 | 78,016 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Business acquisition liabilities | $ 64,882 | $ 68,258 | $ 68,036 | $ 70,525 |
FAIR VALUE MEASUREMENTS (Signif
FAIR VALUE MEASUREMENTS (Significant Unobservable Inputs in Valuation Techniques) (Details) - Fair Value, Inputs, Level 3 [Member] | 3 Months Ended | |
Mar. 31, 2023 | ||
Revenue Risk Premium [Member] | Maximum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.047 | |
Revenue Risk Premium [Member] | Minimum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.022 | |
Revenue Risk Premium [Member] | Weighted Average [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.028 | [1] |
Revenue Volatility [Member] | Maximum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.158 | |
Revenue Volatility [Member] | Minimum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.140 | |
Revenue Volatility [Member] | Weighted Average [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.148 | [1] |
Discount Rate [Member] | Maximum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.085 | |
Discount Rate [Member] | Minimum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.059 | |
Discount Rate [Member] | Weighted Average [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business acquisition liabilities, measurement input | 0.067 | [1] |
Probability Of Payment [Member] | Maximum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Projected year of payment | 2032 | |
Probability Of Payment [Member] | Minimum [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Projected year of payment | 2023 | |
[1] The weighted average rates were calculated based on the relative fair value of each business acquisition liability. |
FAIR VALUE MEASUREMENTS (Change
FAIR VALUE MEASUREMENTS (Changes in Carrying Value of Business Acquisition Liabilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value measurement, beginning balance | $ 68,258 | |
Fair value measurement, ending balance | 64,882 | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value measurement, beginning balance | 68,258 | $ 70,525 |
Contingent cash payments | (2,691) | (2,412) |
Contingent RSU grants | (219) | (196) |
Changes in fair value of business acquisition liabilities | (446) | (263) |
Contractual payable reclassification | (20) | 382 |
Fair value measurement, ending balance | $ 64,882 | $ 68,036 |
INVENTORIES (Narrative) (Detail
INVENTORIES (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INVENTORIES [Abstract] | ||
Net adjustment to cost of sales related to excess and obsolete inventory | $ 2.1 | $ 1.8 |
Excess and obsolete related provisions | 3.5 | 3.4 |
Inventory sales and disposals related provisions | $ 1.4 | $ 1.6 |
INVENTORIES (Schedule of Invent
INVENTORIES (Schedule of Inventory) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
INVENTORIES [Abstract] | ||
Raw materials | $ 65,418 | $ 60,324 |
Work in process | 18,237 | 18,699 |
Finished goods | 237,378 | 219,958 |
Total inventories | $ 321,033 | $ 298,981 |
PROPERTY AND EQUIPMENT (Schedul
PROPERTY AND EQUIPMENT (Schedule of Property and Equipment) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 598,966 | $ 586,765 |
Less: accumulated depreciation | (353,868) | (343,036) |
Total | 245,098 | 243,729 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 8,282 | 8,277 |
Building And Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 54,945 | 51,510 |
Useful Life | 31 years 6 months | |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 151,965 | 148,803 |
Instruments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 320,982 | 312,055 |
Useful Life | 5 years | |
Modules And Cases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 49,091 | 48,023 |
Useful Life | 5 years | |
Other Property And Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 13,701 | $ 18,097 |
Maximum [Member] | Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 15 years | |
Maximum [Member] | Other Property And Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 5 years | |
Minimum [Member] | Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 5 years | |
Minimum [Member] | Other Property And Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 3 years |
PROPERTY AND EQUIPMENT (Sched_2
PROPERTY AND EQUIPMENT (Schedule of Depreciation Related to Property and Equipment) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT [Abstract] | ||
Depreciation | $ 13,507 | $ 12,325 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Summary of Goodwill) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS [Abstract] | ||
Goodwill, Beginning Balance | $ 197,471 | $ 179,708 |
Additions and adjustments | 912 | 18,799 |
Foreign exchange | 327 | (1,036) |
Goodwill, Ending Balance | $ 198,710 | $ 197,471 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS (Summary of Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 151,126 | $ 150,296 |
Accumulated amortization | (91,932) | (86,722) |
Intangible Assets, net | $ 59,194 | $ 63,574 |
Supplier Network [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period | 10 years | 10 years |
Gross Carrying Amount | $ 4,000 | $ 4,000 |
Accumulated amortization | (3,367) | (3,267) |
Intangible Assets, net | $ 633 | $ 733 |
Customer Relationships & Other Intangibles [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period | 8 years 8 months 12 days | 8 years 8 months 12 days |
Gross Carrying Amount | $ 62,816 | $ 62,324 |
Accumulated amortization | (44,011) | (41,651) |
Intangible Assets, net | $ 18,805 | $ 20,673 |
Developed Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period | 8 years | 8 years |
Gross Carrying Amount | $ 75,367 | $ 75,087 |
Accumulated amortization | (40,565) | (37,984) |
Intangible Assets, net | $ 34,802 | $ 37,103 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period | 16 years 1 month 6 days | 16 years 1 month 6 days |
Gross Carrying Amount | $ 8,943 | $ 8,885 |
Accumulated amortization | (3,989) | (3,820) |
Intangible Assets, net | $ 4,954 | $ 5,065 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS (Schedule of Finite-Lived Intangible Assets, Future Amortization Expense) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
GOODWILL AND INTANGIBLE ASSETS [Abstract] | ||
2023 | $ 12,241 | |
2024 | 13,988 | |
2025 | 9,703 | |
2026 | 6,259 | |
2027 | 5,178 | |
Thereafter | 11,825 | |
Intangible Assets, net | $ 59,194 | $ 63,574 |
ACCRUED EXPENSES (Schedule of A
ACCRUED EXPENSES (Schedule of Accrued Expenses) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
ACCRUED EXPENSES [Abstract] | ||
Compensation and other employee-related costs | $ 42,641 | $ 53,352 |
Legal and other settlements and expenses | 5,077 | 5,564 |
Accrued non-income taxes | 8,592 | 10,029 |
Royalties | 4,245 | 4,375 |
Rebates | 10,219 | 10,501 |
Other | 13,224 | 10,884 |
Total accrued expenses | $ 83,998 | $ 94,705 |
DEBT (Narrative) (Details)
DEBT (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Aug. 31, 2021 | Mar. 31, 2023 | Aug. 31, 2020 | |
Citizens Bank [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 125,000,000 | ||
Line of credit facility, expiration date | Aug. 02, 2023 | ||
Line of credit, borrowed amount | $ 0 | ||
Daily BSBY Rate [Member] | Citizens Bank [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, basis spread on variable rate | 1% | ||
Federal Funds Effective Rate [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, basis spread on variable rate | 0.50% | ||
Letter of Credit [Member] | Citizens Bank [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 25,000,000 |
EQUITY (Narrative) (Details)
EQUITY (Narrative) (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2023 USD ($) item item / shares shares | Dec. 31, 2022 shares | Mar. 04, 2022 USD ($) | Mar. 11, 2020 USD ($) | |
Class of Stock [Line Items] | ||||
Stock repurchase plan, authorized amount | $ | $ 200 | |||
Stock repurchase plan, remaining authorized amount | $ | $ 150.8 | |||
Common stock, shares authorized | 775,000,000 | |||
Common Class A [Member] | ||||
Class of Stock [Line Items] | ||||
Additional stock repurchase plan, authorized amount | $ | $ 200 | |||
Total number of shares repurchased | 0 | |||
Common stock, shares authorized | 500,000,000 | 500,000,000 | ||
Number of votes per share | item / shares | 1 | |||
Shares converted from other class | 1 | |||
Common Class B [Member] | ||||
Class of Stock [Line Items] | ||||
Common stock, shares authorized | 275,000,000 | 275,000,000 | ||
Number of votes per share | item | 10 |
EQUITY (Schedule of Shares Repu
EQUITY (Schedule of Shares Repurchased) (Details) $ in Millions | Mar. 31, 2023 USD ($) |
EQUITY [Abstract] | |
Approximate dollar value of shares that may yet be purchased under the plan | $ 150.8 |
EQUITY (Accumulated Other Compr
EQUITY (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Total equity, beginning of period | $ 1,846,373 | $ 1,741,388 |
Total other comprehensive income/(loss), net of tax | 5,208 | (10,395) |
Total equity, end of period | 1,914,820 | 1,785,372 |
Accumulated Other Comprehensive Income/(Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Total equity, beginning of period | (24,630) | (6,772) |
Other comprehensive (loss)/income before reclassifications | 6,513 | (13,163) |
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax | (1,305) | 2,768 |
Total other comprehensive income/(loss), net of tax | 5,208 | (10,395) |
Total equity, end of period | (19,422) | (17,167) |
Unrealized Loss On Marketable Securities, Net Of Tax [Member] | Accumulated Other Comprehensive Income/(Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Total equity, beginning of period | (15,093) | (1,053) |
Other comprehensive (loss)/income before reclassifications | 5,603 | (11,596) |
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax | (1,305) | 2,768 |
Total other comprehensive income/(loss), net of tax | 4,298 | (8,828) |
Total equity, end of period | (10,795) | (9,881) |
Foreign Currency Translation Adjustments [Member] | Accumulated Other Comprehensive Income/(Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Total equity, beginning of period | (9,537) | (5,719) |
Other comprehensive (loss)/income before reclassifications | 910 | (1,567) |
Total other comprehensive income/(loss), net of tax | 910 | (1,567) |
Total equity, end of period | $ (8,627) | $ (7,286) |
EQUITY (Schedule of Computation
EQUITY (Schedule of Computation of Basic and Diluted Earnings) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
EQUITY [Abstract] | ||
Net income/(loss) | $ 49,129 | $ 38,084 |
Weighted average shares outstanding for basic | 100,279 | 101,600 |
Dilutive stock options and RSUs | 1,917 | 2,477 |
Weighted average shares outstanding for diluted | 102,196 | 104,077 |
Basic | $ 0.49 | $ 0.37 |
Diluted | $ 0.48 | $ 0.37 |
Anti-dilutive stock options and RSUs excluded from the calculation | 5,383 | 3,378 |
STOCK-BASED AWARDS (Narrative)
STOCK-BASED AWARDS (Narrative) (Details) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) ShareBasedCompensationPlan $ / shares shares | Mar. 31, 2022 USD ($) $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of stock plans | ShareBasedCompensationPlan | 2 | |
Intrinsic value of stock options exercised | $ | $ 5.3 | $ 4.7 |
Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 4 years | |
Unrecognized compensation expense, unvested stock options | $ | $ 91.9 | |
Weighted average period of recognition, unvested stock options | 3 years | |
Maximum contractual term | 10 years | |
Weighted average grant date fair value per share | $ / shares | $ 22.31 | $ 20.48 |
2012 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Base number of shares that may be issuable under stock plan | 3,076,923 | |
2012 Plan [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 10,769,230 | |
Annual percentage limit for incremental shares that may be issued | 3% | |
2021 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Base number of shares that may be issuable under stock plan | 4,000,000 | |
Class A reserved under the 2012 Equity Incentive Plan | 5,716,708 | |
Class A number of shares available for grant under the 2012 Equity Incentive Plan | 1,526,833 | |
2021 Plan [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Base number of shares that may be issuable under stock plan | 4,000,000 |
STOCK-BASED AWARDS (Summary of
STOCK-BASED AWARDS (Summary of Stock Option Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Option shares outstanding beginning balance | shares | 10,338 |
Option shares granted | shares | 1,197 |
Option shares exercised | shares | (143) |
Option shares forfeited | shares | (93) |
Option shares outstanding ending balance | shares | 11,299 |
Option shares exercisable | shares | 6,229 |
Option shares expected to vest | shares | 5,070 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | |
Weighted average exercise price per share outstanding beginning balance | $ / shares | $ 51.86 |
Weighted average exercise price per share granted | $ / shares | 60.60 |
Weighted average exercise price per share exercised | $ / shares | 34.12 |
Weighted average exercise price per share forfeited | $ / shares | 66.54 |
Weighted average exercise price per share outstanding ending balance | $ / shares | 52.89 |
Weighted average exercise price per share exercisable | $ / shares | 46.29 |
Weighted average exercise price per share expected to vest | $ / shares | $ 61 |
Weighted average remaining contractual life outstanding | 6 years 10 months 24 days |
Weighted average remaining contractual life exercisable | 5 years 7 months 6 days |
Weighted average remaining contractual life expected to vest | 8 years 7 months 6 days |
Aggregate intrinsic value outstanding | $ | $ 87,079 |
Aggregate intrinsic value exercisable | $ | 74,076 |
Aggregate intrinsic value expected to vest | $ | $ 13,003 |
STOCK-BASED AWARDS (Fair Value
STOCK-BASED AWARDS (Fair Value of Options Using Black Scholes Option Pricing Model) (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate, minimum | 3.45% | 1.46% |
Risk-free interest rate, maximum | 4.10% | 1.95% |
Expected term (years) | 4 years 9 months 18 days | |
Expected volatility, minimum | 35% | |
Expected volatility, maximum | 38% | |
Expected volatility | 34% | |
Expected dividend yield | ||
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 4 years 8 months 12 days | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 4 years 8 months 12 days |
STOCK-BASED AWARDS (Summary o_2
STOCK-BASED AWARDS (Summary of Restricted Stock Unit Activity) (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding, Beginning Balance | shares | 60 |
Granted | shares | 4 |
Outstanding, Ending Balance | shares | 64 |
Weighted average grant date fair value per share, Beginning Balance | $ / shares | $ 67.40 |
Weighted average grant date fair value per share, Granted | $ / shares | 62.33 |
Weighted average grant date fair value per share, Ending Balance | $ / shares | $ 67.12 |
Weighted average remaining contractual life (years) | 7 years 7 months 6 days |
STOCK-BASED AWARDS (Stock-based
STOCK-BASED AWARDS (Stock-based Compensation Schedule) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
STOCK-BASED AWARDS [Abstract] | ||
Stock-based compensation expense | $ 8,953 | $ 8,152 |
Net stock-based compensation capitalized into inventory | 79 | 201 |
Total stock-based compensation cost | $ 9,032 | $ 8,353 |
INCOME TAXES (Summary of Effect
INCOME TAXES (Summary of Effective Tax Rate) (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INCOME TAXES [Abstract] | ||
Effective income tax rate | 22.30% | 22.10% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) | Mar. 31, 2023 USD ($) |
Moskowitz Family LLC Litigation [Member] | |
Estimated Litigation Liability | $ 0 |
SEGMENT AND GEOGRAPHIC INFORM_3
SEGMENT AND GEOGRAPHIC INFORMATION (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
SEGMENT AND GEOGRAPHIC INFORMATION [Abstract] | |
Number of operating segments | 1 |
SEGMENT AND GEOGRAPHIC INFORM_4
SEGMENT AND GEOGRAPHIC INFORMATION (Schedule of Total Sales by Geographical Area) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total net sales | $ 276,688 | $ 230,549 |
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total net sales | 234,120 | 196,403 |
International [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total net sales | $ 42,568 | $ 34,146 |