Executive Summary / Key Takeaways

• Globus Medical (NYSE:GMED) demonstrates robust financial performance, driven by strong U.S. Spine growth and significant profitability expansion, with Q3 2025 sales reaching $769 million and non-GAAP diluted EPS of $1.18.
• The strategic acquisitions of NuVasive, Inc. and Nevro Corp. are proving successful, with Nevro Corp. now expected to be accretive to non-GAAP earnings per share in fiscal year 2025, significantly ahead of initial projections.
• The company's core investment thesis is underpinned by its engineering-driven innovation, comprehensive product portfolio, and differentiated Enabling Technologies, including the ExcelsiusGPS platform and the newly launched ExcelsiusXR headset.
• Operational excellence and synergy capture from the NuVasive, Inc. merger are driving adjusted gross margin improvements, with a long-term goal of reaching mid-70s adjusted gross profit.
• Despite competitive pressures and evolving capital procurement models, Globus Medical is well-positioned for sustained profitable growth, backed by a strong balance sheet, record free cash flow, and a disciplined capital allocation strategy.

The Foundation of Musculoskeletal Innovation

Globus Medical, Inc. stands as a prominent force in the medical device industry, dedicated to enhancing the quality of life for patients suffering from musculoskeletal disorders. Founded in 2003, the company has carved out a distinct identity as an engineering-driven innovator, consistently delivering advanced products and procedures. Its core business spans Musculoskeletal Solutions, encompassing a wide array of implantable devices, biologics, and neuromonitoring services for spine, orthopedic trauma, hip, knee, and extremity procedures. Complementing this is its Enabling Technologies segment, which provides advanced imaging, navigation, and robotics (INR) solutions designed to make surgeries safer, less invasive, and more accurate.

The company's strategic journey has been marked by significant expansion, notably through transformative mergers and acquisitions. The 2023 merger with NuVasive, Inc. (NUVA) and the 2025 acquisition of Nevro Corp. have fundamentally reshaped Globus Medical's market footprint and capabilities. These moves were designed to scale the business, broaden commercial reach, and leverage innovation across spine and orthopedics, positioning Globus Medical as a comprehensive musculoskeletal technology company. The company’s primary market has historically been the United States, but it maintains a growing international presence across numerous countries.

Technological Edge: Driving Surgical Advancement

Globus Medical's competitive advantage is deeply rooted in its technological differentiation and relentless innovation. The ExcelsiusGPS platform exemplifies this, serving as a robotic guidance and navigation system for both minimally invasive and open procedures. This core technology offers tangible benefits by enhancing surgical accuracy and streamlining workflows. Robotic procedures leveraging this platform have surpassed 115,000 cases, demonstrating significant adoption and implant pull-through.

The company continues to push the boundaries of surgical technology. The recently launched ExcelsiusXR, a wearable extended reality navigation headset, seamlessly blends visualization and control for surgeons. It projects 2D data and 3D models, allowing real-time surgical visualization while maintaining focus on the patient through enhanced ergonomics and uninterrupted workflows. This system also incorporates instrument tracking and sterile hand-tracking capabilities. The strategic intent behind such innovations is to create a single-vendor spine ecosystem across capital, implants, and software, ensuring consistent workflow, data continuity, and training in the operating room.

Further enhancing its portfolio, Globus Medical received FDA 510(k) clearance for additional ExcelsiusGPS instruments, expanding compatibility with a range of interbody fusion devices including Modulus XLIF, Modulus TLIF-O, Cohere XLIF, Cohere TLIF-O, HEDRON L, and HEDRON P. The DuraPro drill system, launched in 2024, features oscillating technology designed to be soft tissue sparing, a critical benefit for procedures near delicate neurovascular anatomy. These technological advancements contribute directly to Globus Medical's competitive moat, enabling higher average selling prices, potentially lower costs through improved efficiency, and stronger market positioning as a leader in advanced surgical solutions.

Financial Strength and Operational Momentum

Globus Medical reported an exceptional third quarter in 2025, underscoring its operational effectiveness and strategic execution. Net sales reached $769 million, marking a 22.9% increase over the prior year quarter. Non-GAAP diluted earnings per share surged by 42.6% to $1.18. The company also generated a record $213.9 million in free cash flow for the quarter, reflecting robust cash generation capabilities.

The base Globus business, excluding recent acquisitions, contributed $669.8 million in revenue, growing 7% as reported and 7.1% on a day-adjusted basis. This growth was significantly propelled by the U.S. Spine business, which demonstrated a 9.6% increase in Q3 2025, extending a streak of 32 consecutive weeks of growth. This broad-based strength across the spine portfolio, including expandables, pedicle screws, and new product uptake, highlights effective market penetration and competitive recruitment efforts. The International Spine business also showed solid performance, growing 5.6% as reported, with strong contributions from EMEA and Asia Pacific regions. The Trauma business achieved its highest quarterly revenue since inception, growing 17.2%, as manufacturing challenges were resolved and its portfolio breadth expanded to over 80% of competitors' offerings.

Profitability saw a meaningful expansion, with the base Globus business achieving adjusted EBITDA margins of 35.3% in Q3 2025, a 435 basis point improvement year-over-year. This was driven by improved adjusted gross margins and operating leverage, alongside ongoing synergy realization from cost actions. The company's adjusted gross profit for Q3 2025 was 68.1%, with management targeting a return to mid-70s adjusted gross profit in the long term, primarily through manufacturing in-sourcing initiatives expected to yield substantial benefits in 2026.

The integration of Nevro Corp. , acquired on April 3, 2025, has rapidly exceeded expectations. Nevro Corp. contributed $99.3 million in revenue in Q3 2025, a 4.9% sequential increase, and achieved a positive adjusted EBITDA margin of 16.2%, a significant turnaround from a negative 1.4% in Q2 2025. This swift improvement, driven by aggressive cost actions and organizational changes, has led management to project Nevro Corp. will be accretive to non-GAAP earnings per share in fiscal year 2025, much sooner than the initial expectation of its second year of operation. The bargain purchase gain of $114.361 million recognized in Q3 2025, primarily from deferred tax assets, further enhances the company's financial position by generating long-term cash tax savings.

Strategic Outlook and Future Growth

Globus Medical's forward-looking strategy is built on accelerating innovation, driving organic growth, and maintaining operational excellence. The company has revised its full-year 2025 net sales guidance upward to a range of $2.86 billion to $2.9 billion, implying 13.5% to 15.1% growth over 2024. Non-GAAP diluted EPS guidance has also been raised to $3.75 to $3.85, representing 23.2% to 26.5% growth over 2024. This optimistic outlook is supported by the sustained momentum in U.S. Spine, the improving performance of Nevro Corp. , and the resolution of prior supply chain disruptions.

While Enabling Technologies revenue declined in Q3 2025, management remains confident in its robust pipeline. The company acknowledges a shift in hospital procurement preferences towards more flexible capital deal structures, such as operating leases and pay-per-click models, moving away from traditional outright purchases. Globus Medical is adapting its sales strategies to accommodate these evolving dynamics, with the overarching goal of driving capital placement to foster long-term implant sales growth, recurring service contracts, and disposable revenue. Q4 is historically the strongest quarter for capital sales, and the company is actively working to convert its pipeline.

Research and development expenses for 2025 are projected to be in the range of 5% to 5.5% of consolidated revenue, reflecting a continued commitment to product development while capturing synergies. The company's long-term vision for international markets anticipates revenue growth in the 10% to 15% range, driven by deeper penetration in key geographies. In the joints segment, the company aims to complete the modernization of its primary procedure portfolio by early 2026, followed by its revision portfolio and the addition of hip applications to the ExcelsiusFlex platform.

Competitive Landscape and Positioning

Globus Medical operates in a highly competitive medical device market, contending with industry giants such as Medtronic plc , Stryker Corporation (SYK), Zimmer Biomet Holdings, Inc. (ZBH), and Johnson & Johnson (JNJ) through its DePuy Synthes subsidiary. These competitors possess extensive portfolios, broad distribution networks, and substantial financial resources.

Globus Medical differentiates itself through its specialized focus and technological agility. Its ExcelsiusGPS platform is considered a pinnacle of robotic technology in spine, offering best-in-class functionality that, when paired with the E3D imaging system, provides a comprehensive robotic navigation and imaging solution. This integrated approach positions Globus Medical as a stand-alone in combining imaging, navigation, and robotics. While Medtronic plc (MDT) is a primary competitor in robotics, Globus Medical asserts the superiority of its technology. In neuromodulation, Nevro Corp.’s high-frequency technology is highlighted as uniquely differentiated, supported by Level 1 clinical data demonstrating superiority for pain treatment. This provides a strong competitive edge against other neuromodulation players.

However, Globus Medical's smaller scale compared to its larger rivals can present vulnerabilities, potentially leading to higher operational costs and challenges in achieving the same economies of scale. Its strong U.S.-based manufacturing and sourcing, with approximately 95% of products being U.S.-based, significantly limits tariff exposure, a notable advantage in a globalized and often tariff-impacted industry. The company's strategy of aggressive competitive sales representative recruitment is also a key differentiator, attracting top talent who are drawn to Globus Medical's innovative portfolio and growth prospects. While direct quantitative market share figures for all niche competitors are not publicly detailed, the company's consistent growth in U.S. Spine and its expanding portfolio suggest effective market share capture in targeted segments.

Risks and Challenges

Despite its strong performance and strategic initiatives, Globus Medical faces several risks. Litigation remains a concern, as evidenced by the $29.4 million liability recorded for the Pimenta litigation verdict. Such legal proceedings can incur significant costs and divert management attention. The integration of acquired businesses, particularly Nevro Corp. , carries inherent risks, including the challenge of fully assessing internal controls and ensuring seamless operational alignment. While management has made significant progress, the full impact of changes on sales and profitability requires ongoing monitoring.

The company's exposure to credit losses could increase if healthcare customers are adversely affected by changes in healthcare laws, reimbursement policies, or macroeconomic pressures. Furthermore, the shift in capital purchasing preferences towards flexible deal structures for Enabling Technologies could impact near-term revenue recognition, even as the long-term goal of implant pull-through remains. The medical device industry is also subject to stringent regulatory oversight and rapid technological advancements, requiring continuous R&D investment and successful product launches to maintain competitiveness.

Conclusion

Globus Medical is executing a compelling investment narrative defined by its unwavering commitment to innovation, strategic acquisitions, and operational discipline. The company's strong Q3 2025 financial results, marked by significant revenue growth and expanding profitability, underscore the effectiveness of its integration efforts and core business momentum. The accelerated accretion of the Nevro Corp. (NVRO) acquisition and the sustained strength in U.S. Spine are powerful indicators of its ability to generate value.

With a differentiated technology portfolio, particularly in robotic and augmented reality-assisted surgery, Globus Medical is well-positioned to drive market penetration and enhance patient outcomes. While competitive pressures and evolving market dynamics necessitate strategic adaptability, the company's robust balance sheet, record free cash flow, and disciplined capital allocation provide the financial flexibility to pursue its growth objectives. Investors should recognize Globus Medical's trajectory as a story of continuous evolution and technological leadership, poised to capitalize on the expanding musculoskeletal market through innovation and strategic execution.