Globus Medical, Inc. Class A Aktie

All right. Good afternoon. My name is Ross Osborn. I'm on the medtech team here at Wells Fargo. We are joined by the management team of Globus Medical. With us is Keith Pfeil, President and CEO; as well as Brian Kearns Corporate and IR...

So let's start at a high level. How would you characterize the current hospital capital spending environment? Has customers' willingness to invest in enabling technologies changed over the past 12 months? And where do you see it going?

I think, first off, thanks for being -- or thanks for inviting us here. We're thrilled to be here today. It's been a great day. Capital environment from a hospital perspective to me seems fairly stable. I think there's been some ebbs and flows from quarter-to-quarter. But overall, I don't see a, I'd say, marked change in how hospitals have a desire to acquire capital. As I think about our business, I think our pipeline is there. I think our pipeline is being worked. It's -- the thing I spoke about on our last earnings call was really pushing and changing kind of the ways hospitals acquire capital. But I wouldn't say that there's been a hesitation on hospitals spending capital dollars.

Great. And then 340B has come up a couple of times this week. Any initial thoughts on hospitals' budgets being impacted?

I mean, at this point, as it relates specific to capital, I don't really have a view of the budgets changing, but I think that, that really speaks to more importantly, why we need to remain flexible on how capital gets out there because ultimately, we want to make sure that we're putting capital into the hospitals.

And then how about spine procedures? Just looking at volumes broadly, how they've trended since the Q2. Any thoughts on the second half of this year?

So as we think about -- we've come off 3 really strong quarters. We had a 10% growth Q3, Q4 -- I'm sorry, Q4, Q1 and then 7% in Q2. So we know we're coming up on tougher comps in the back half of the year. As I think about our overall guidance, we feel comfortable with where we're at. No specific comments though as it relates specifically to spine procedures.

What about the market broadly? You guys have obviously performed above market, but are you seeing any softness throughout the summer months and as we enter fall?

To me it's typical -- some typical softness in the summer months, but nothing that I would say calls into question how it looked versus previous years. I think the spine market has performed pretty well over the last several years. I think we've performed better than market. But as I look at our spine business, we still see -- we're extremely confident with where we're at.

Great. And then as you guys chat with investors about enabling technology, is there anything that's misunderstood at this point? Or do you feel like people understand the benefits?

I think people understand the -- our enabling tech. I would say that one of the questions that comes up is, as we've seen lumpiness in how enabling tech has performed from a revenue perspective, I think there's been questions on the overall scope of that relative to the size of Globus. I remind everyone that enabling tech is about 5% of consolidated sales. So it's not a gigantic piece, but it's a very important piece. And as we think about enabling tech and where we're going, we really want to focus more on what I would call the razor-razor blade approach to drive the implant pull-through and replenishment sale.

Replenishment sale from implants, from service revenue from things like disposables is we -- our goal here is to place the capital into the hospital and then drive that pull-through. And to do that, we need to make sure that we're launching successful programs. It's not just about, hey, making it very easy for a hospital to get the capital. It's about getting it there and then launching the program, which means that the surgeons are properly trained and the staff are properly trained. And really, what we ask of our surgeon partners and their staff is they take the time to work through a robotic case to learn how everything comes together because ultimately if they invest the time upfront, it becomes better for them as they move forward.

And then secondly, as you think about enabling tech, also as you think about our robots been in the market about 9 years now. we still feel that we have a best-in-class piece of capital. But the thing that we're also focused on is as our surgeon champions have moved from the facility that they may have started at that brought the Globus robot, we want to make sure that those facilities have another spine surgeon in there that is embracing other robots. So there's a lot more time being spent on what I would call program development on the back end because the more successful programs that you have out there, to me, number one, it drives that implant pull-through and it drives all the pull-through revenue you're looking to generate.

But then secondly, to me, it creates a better case for selling another robot. Like what I'm looking to do at a facility is have the spine surgeons fight over the robot or have a cranial surgeons also be looking to do some cranial cases, and I want to create that internal competition to generate then the second robot sale.

Great. And then, at this point, how often are you occurring pushback on your robots? You've obviously been in the market for a while. In the case where it's maybe a tougher sell, what is the pushback?

I wouldn't say -- I wouldn't call it necessarily pushback. I would call it as more competitors have entered the space, I think there's more of a requirement from the hospitals to say, okay, surgeon A, you need to go back and look at all the alternatives that are out there. And to me, what that's caused is an elongation of the pipeline. So to me, it takes longer to close a deal. Irrespective of whether you sell it, rent it, lease it, the deals still take a long time to close. And that's been something that we've noticed over the last 12 to 18 months.

Okay. Brian, anything you'd add to that?

No, that's pretty much it.

And then you recently acquired Higgs Boson Health. What does that team bring to Globus? And would you elaborate on our goal of getting to 95% good outcomes in 10 years?

Sure. So as you think about Higgs Boson, we announced that roughly 2 weeks ago. In the grand scheme of things, it's an immaterial deal, but we view it as an important deal. I spoke on the last earnings call about stepping up our R&D investment. Higgs Boson brings really software engineering talent to the business. As you think about Globus and what we've talked about getting to 95% outcomes, if you think about where spine is today, I would say best spine procedure is ACDF, 1 level, 2 level. 10-year outcomes, there was a study done in the late '90s from Hilibrand. It called out that there was about 70% favorable outcome after 10 years. There's been additional studies that have occurred since then related to IDE trials that really corroborated that assertion.

What we want to do is, aspirationally, we want to get to 95%. And how does Higgs Boson help us do that? Really starts on the front end. We want to do a better job identifying patients and helping surgeons do a better job with patient selection. So as we think about someone who has a back injury, if they're a candidate for back surgery, we want to understand more about them, their age, their demographic, smoker and nonsmoker. What are their comorbidities? Because we want to do a better job matching the patient with the surgical procedure.

So we think about all of the learnings we've had from all of our cases and all of our data. We want to be able to take that patient and match it with the right procedure that then brings together our enabling tech and then lastly, our implants and instruments because we want to basically be part of that journey. I've talked a good bit on the last several earnings calls and even in some of my prepared remarks in our press release about creating a closed-loop ecosystem. That closed-loop ecosystem to me, the very front end is where Higgs Boson comes in.

Got it. And then you alluded to this earlier, but I believe the second quarter was your fifth consecutive quarter of above-market U.S. spine growth. What's driving that at this point? Is it new product cycle, more headcount, or is it taking share?

A little bit of everything. We spoke historically, competitive recruiting, implant pull-through and new products are really the key drivers. But if I dig into that a little bit further, we've had success bringing competitive reps into the business. That's nothing new. It's something that Globus has done for the last several years. We continue to do that. But when I think about specific products, like what are some of the memorable products that are really driving some of this growth? Our line of power tools, our DuraPro drills is something that's being well received by the market. We continually see more and more uptake. We've increased manufacturing capacity of both handpieces as well as the disposable kits that go along with them. That's been a really great product for us.

Think about our expandable cages. SABLE is a cage that still continues to outperform our expectations, and we still see more and more uptake of that where the customer is switching from an older technology or a competitor's technology and going after SABLE, which drives higher ASP than maybe some of our other expandables, but also represent share gains as we take business away from competition. Procedurally, XLIF procedure is still a procedure that is very strong in our overall portfolio.

So the message here is that our growth in spine is broad-based. If I step back from spine and look at some of our other businesses, our trauma business is really to me coming into its own. I would say, at this point, I'd say we have a full bag. I'm very excited about where our trauma business is headed. And as I think about the growth in that trauma portfolio, it's not just the legacy Globus trauma portfolio, but it's also the growing rod technology that we acquired or merged with when we brought NuVasive on.

Great. And then within the spine platform, where are you in the sweet spot of their launches? Are there any new products that need to be refreshed?

So a couple of things I would say that we don't really talk about new products coming. I think what I would say to you is after a period of several years of M&A and also organic growth, right now, I feel like we're a business that's pregnant with new products. We just have to get them to market. So there's a lot of projects going on back at the home office as well as our San Diego facility of getting new spine launches out as well as trauma launches. One of the things -- one of the products that I'm excited about is our recently announced SCRIPT spacers. They were 510(k)-approved a couple of months ago. We're going to launch that later this quarter.

That really brings us into the patient-specific implant business. That -- and we feel that we are differentiated here. We're bringing to market 7 devices, spacers as well as rods. We're going to be able to pair those with our existing implant portfolio, number one. Number two, our -- these implants, patient-specific implants can be used with all of our technology, meaning they could be put in with our robot, with Hub or not. So there's a lot of flexibility there. And these implants also bring the surgeon front and center to help design the case. These implants also will be able to use our expandable technology.

So as they're placed, they'll be able to be brought in at a low angle, low height and then raised. So all of the legacy Globus technology as it relates to expandables will be included there. From a procurement perspective, the surgeon will work to design the implants. That file will then be sent to us, and we will manufacture that over, give or take, 7 to 10 days that will then ship to the facility and then the procedure can occur.

Okay. And then maybe on enabling tech, you said it's only 5% of total revenue, but still an important part of the company. Would you walk through the transition to more flexible models, how that's going? How you see it evolving this year and next?

Yes. At the end of the day, our goal is to place capital or to get capital, whether it's an outright sale with an upfront rev rec and 30-day terms or something that's over a longer term of a lease or a short-term rental. From the standpoint of doing that, the point that we want to drive here is we want to remain flexible with the account, and we want to be easy to work with. Historically, we've been focused on driving the sale, driving the sale, driving a sale. And what we've seen is that it's really slowed down the ability or the strategy of getting the capital into place because there's been such a focus on that upfront revenue when to me, we're missing the boat on what's really going to drive -- what's going to drive differentiation.

To me, differentiation is going to be getting the capital into the account, launching a successful program and then reaping the benefits on the back end of making sure that the capital is being utilized and driving that pull-through for us. So in terms of that transition, our sales team is approaching it like they always have, except that there's now more tools in their bag for us to push for the customer to be able to choose if they so wish.

Great. And when can we expect a stabilization in the growth rate of ET? I realize it's a small mix of the total revenue, but just in terms of the growth rate.

I think you're going through a transition phase here in '26. I think as you get into '27, probably still a little bit of that transition in early '27, but I would expect that to normalize as you get more into the mid and back half of next year.

And given the switch to a flexible model, like a low single-digit growth rate longer term makes sense for that?

I don't know that I would call out a specific growth rate for enabling tech in and of itself. The way I want to characterize Globus is a mid- to high single-digit grower over the long term. As we maybe slow down on some of the enabling tech business, the goal here is, again, to drive the musculoskeletal growth through the implants. So you might see a shift between musculoskeletal and enabling tech. But overall, we still want to be a mid- to high single-digit grower over the long term.

And does that shift occur in '27?

I think you're going to start to see some of that shift happen in '27. But again, if I think about some of the deals that we're out there actively working, some hospitals prefer to just buy them outright. So you're still going to see sales happening, that I would expect over time, the mix to really more gradually shift towards lease or other alternative financing models.

Makes sense. And then you discussed the competitive landscape growing earlier in our conversation. With that, are you seeing any pricing or bundling pressure in competitive capital deals?

There's more competition out there, but I wouldn't say that I'm coming at this day-to-day with price challenges. We're going to operate competitively no matter where we're at because we don't want to lose a deal necessarily when we look at our competition. But as I think about all the competitors out there, I view kind of one competitor as the one that I'm faced with the most. And really, what I want to make sure that we're doing is remaining flexible because I think a lot of our competitors have the ability to switch out from an outright sale to more of a placement approach or a volume-based approach.

I want to make sure that we're being able to respond to market and making sure that more importantly, we're having strategic discussions about the capital versus it being kind of a onetime sale where it's okay, I want to get that capital in and then forget about it. I want -- as you sell in, I want the sale to be more of a partnership between our robotic and our implant sales force because it's, again, launching that successful program.

Makes sense. And then how are you feeling about your sales force in terms of headcount?

I want to keep it growing. As we think about our approach, our approach has remained the same. We want hunters versus gatherers. Our comp models are very variable in nature because we want people to drive growth. I mentioned earlier, we have a lot of new products coming. We want to continue to expand our territories. And as we seek to drive competitive recruiting, we want to bring in those competitive recruits that want to knock down doors and really grow their share.

Great. And then again, a smaller piece of the business, but international spine put up some great numbers. Where are you guys geographically? And do you have plans to add more countries?

So we're in approximately 60 to 65 countries. If I think geographically, EMEA is our largest market, but Japan is our largest individual country in Asia Pacific. But as I think about where our growth has come more recently, I've seen growth, good growth in Spain and Italy and Portugal in the EMEA market. Asia Pacific growth has been a little bit more broad-based. And when I think about LatAm, it's heavily focused in Brazil and Colombia as where we've seen that growth. Our approach is to go deeper in the countries that we're operating in. We're not necessarily looking to add more countries. We want to be able to go deeper and really. Continue to improve service levels in the countries that we're operating in.

And I think last week, you received CE mark for Excelsius.

Yes. For E3D.

Yes. 3D. What's the game plan there?

Game plan there is to start rolling those out internationally. There's been -- as I think about some of the spine sales shows, EUROSPINE, as an example, there's been a lot of excitement about bringing that on to the market. Our view is as quickly as possible to get quotes out there and start selling it and really working to package deals with our robot as well as imaging system. So we're excited about that. It was an important milestone for us.

And is it going to be a broad-based rollout internationally?

It will be focused because the rolling out of the imaging system is a little bit different than the robot with just the ability of getting it there physically and getting it set up. But we'll take a, I would say, crawl, walk, run approach because we want to make sure the launches that we do are launched successfully because we want to drive that repeat business.

Great. And then on ASCs, what's your mix now for U.S. spine?

I would say that our mix is small relative to our overall spine business. I would say, in terms of actual percentages...

Be a little over 10%.

Yes, not a whole lot more. Do I see -- well, actually, the second part of your question? Is -- are we seeing more gravitation towards ASC? Yes, I think that you're seeing that in places for sure. But I also think they have to be cognizant of the complexity of spine cases. The more complex spine cases to me still remain in the hospital, multilevel pediatric deformity, things like that. I think you'll still see those occurring in the hospital. Our ability to continue to grow into the ASC market is there. I think we have the implant portfolio as well as the technology options to do so.

Okay. Great. And then maybe walk through your biologics business, what your attach rate looks like and what you can do to increase it?

We haven't really talked a ton about biologics attachment rates. What I would say is, from my perspective, it's an opportunity. We manufacture our own biologics, and that's something that we're continuing -- it's consistent with Globus. That's something I see us continuing to do. And the goal is to really improve your biologics attachment rate. I think that if you look across our business territory to territory, I think there's some territories that could do better than others, quite frankly. We're spending the time to build up our manufacturing base to make sure that as we push to drive more biologics in our business that we're able to respond with the product.

What are the headwinds and tailwinds to attachment rates?

Headwinds and tailwinds really is focus. As I think about many times, as I think about contracting, the contracting process, you may be on contract for implants, but you might not be on contract for biologics. There's been a focused effort territory by territory to see where those holes are and figure out when the next RFP is happening for biologics to make sure that we get our products on contract.

Okay. Great. Maybe switching gears to Nevro, latest and greatest on the integration there. Where are the largest opportunities to improve the growth profile of the Nevro business?

Yes. So Nevro, we are a little year -- about a year past from the deal. We've taken a business that was, give or take, $400 million and lost about $100 million and really have turned it into a viable business from a top and bottom line. We called out when we acquired the business that we expected some sales disruption. That sales disruption didn't occur right away. It happened actually in Q1. And really, the drivers of that, we instituted a lot of cost containment actions in that business in fixed costs as well as some of the variable spend. What we sought to do with the sales force specifically was to adopt an approach that was more consistent with our legacy Globus team where the comp model is much more variable in nature.

That created some disruption, which some folks leave. We spent the last, I would say, quarter, 1.5 quarters on backfilling those roles. I think I commented on my earnings call -- last earnings call that we filled about 75% of those roles. As I think about where we're at in 2026, what I'm looking to see as we get into the fourth quarter is improvements in our trial volumes sequentially. So as we get into 2027, you start to see the revenue growth. Trials are a great leading indicator of future revenue. That's where the focus is right now on the existing business as it stands.

Okay. And then low-hanging fruit on the synergies with Nevro?

I think we've taken significant cost actions. I think at this point, where my focus is, because, I mean in the last quarter, we were what, at $22 million or $23 million EBITDA for Nevro stand-alone? So we've really turned that business around, I think, fairly quickly. I'm not specifically calling out a synergy target. I feel that we've achieved a lot of that. The focus right now is on growing top line.

Okay. Great. And then in August, you received approval for a next-gen HFX Dynamis System. When should we expect the system to be available? What are the differentiating factors there?

So we're expecting that to come in 2027. I believe the launch will be finalized at some point then going into '27. Do you want to talk a little bit about some of the features?

Which one?

The new product from Nevro?

Well, there are several things. There's that base technology, but just to take a quick step back, the whole concept of what they do that's different is a high-frequency technology versus low. It's clinically demonstrated in a Level 1 study to be superior to low-frequency stim. It can be used in a number of different ways as we're launching next year, but it can also be used in a number of other applications like deep brain stimulation, peripheral nerve stim and several other areas.

So this is an area where you could have closed-loop technology, you could have a number of different angles that has historically been more focused on the low frequency. In most cases, to deal with paresthesia and other side effects that patients don't like with high frequency, that's not even an issue. So it's not something you generally need to do. So being able to turn off options, turn on options as patients might personally require is a very good option to have. So it's also a much smaller profile. So that helps as well.

Then within high frequency, what does the competitive landscape look like?

What is the landscape of the high frequency?

Just competitive landscape.

Right now, we have a patent protection that basically protects us from any other entrants. We have several years on that, and we're working on other technologies to extend those patents.

And the other thing to point out is when you think about Nevro and the why, it opened up a new addressable market for Globus. If you were a candidate for back surgery and you don't want back surgery, you have this option to do an implantable pain device. If you were someone who's already had back surgery and doesn't want another back surgery, but you may need one, this is another option for those patients. But it also wasn't just the business that we saw. To Brian's point on the patents, the patent portfolio we saw as opportunities for us to develop in other areas.

We talked a little bit about cranial. Right now, our robot is available for a cranial application, but we don't have that ability to drive disposables and pull-through. We see there might be opportunities with high frequency to have us enter in the cranial space. But we haven't given a ton of detail on that. But the point that I want you to leave with is that it wasn't just for the business that it was when we acquired it.

Okay. And then looking at '27, I believe consensus is modeling 6% top line growth. Do you believe that's a good place to be entering '27? And what would have to occur for you guys to be high single digits?

So we're not guiding specifically right now on next year, but I would say over the long term, we want to be a mid- to high single digits grower. As I think about going into next year, the drivers to me are really 3 areas: our spine business, both U.S. and international. Our U.S. business, we want to see continue to drive growth. We see the ability to drive more competitive recruiting. International, over the long term, we think that, that is a low double-digit grower. We'd like to see a return of growth to Nevro and then really see the benefits of our enabling tech business, not to only mention trauma continuing to grow, but trauma is still a fairly small number, but I see that business having the ability to grow exponentially as we look ahead. Overall, I feel very positive about where the business is. Once we get some more of these new products out the door, I think we're set up really well to look into the future.

Okay. And then looking at the P&L, tailwinds, headwinds on gross margin and operating margin?

So when we announced the NUVA deal a couple of years ago, we talked about returning to a mid-70s gross profit profile. I think you've seen in the last 8 or 9 quarters of continued sequential improvements in our gross margins. We still stand by our statement of getting to that mid-70s range, which 72% to 75% is where I see this business landing. How are we getting that? Through additional in-sourcing activities. The opportunities that we saw with NuVasive when we announced the deal are still there. We're working through the in-sourcing activities there.

Nevro, that business already had a fairly high gross margin, high 60s. I still see a little bit of an opportunity for incremental gross margin expansion there. And as you continue to drive that growth, you're going to get operating leverage. But the thing I do want to call out is we're going to continue to invest in our business from an R&D perspective. I spoke on the last earnings call about a specific increase in headcount related to our product development teams. We see that taking shape here in the third quarter and into the fourth quarter and as well as next year.

As you think about the business growing and gaining profitability and getting leverage, I wouldn't just say that that's going to drop to the bottom line. We always said we wanted to be a mid-70s gross profit business and mid-30s EBITDA. I think we're pretty much there at this point. We want to then take those funds and find ways to reinvest.

Great. And outside of internal investment, how are you thinking about capital allocation?

Capital allocation right now, internal investment, I would say, is number one, share repurchases, second; and then thirdly, M&A. I would think that right now, where we're at any type of M&A would have to be focused in areas where we might not have business when I think about musculoskeletal, complementary pieces of technology or as I think going into the future, taking a little bit of a slant a little bit more towards medtech. I want to think about all the things that we have coming along from an internal development standpoint.

But any deal that we do would be more of a tuck-in in nature at this point. I really -- after several years of doing deals, I think that there's a lot of product development going on that puts us on the right on the forefront of getting some of these products out. I want to get these out and drive some of our organic growth that we see coming. We think we have a lot of stuff that's in the hopper that will be exciting to talk about as time passes.

Sounds great. With the remaining time, I'll leave it to you guys for any closing remarks.

Yes. I think overall, I think Globus is really well positioned. The business -- we still have a strong balance sheet. I don't see that changing. That allows us to be flexible. We want to continue to invest in internal R&D. As we continue to grow over the next 5 years, I'd say we -- candidly, at some point, we want to double in size again. To do that, there's organic growth opportunities, but there will also be some timed M&A that will occur. We want to continue to fill out our bag along our trauma business as well as our joints business.

Not a lot to talk about there yet, but there's a lot of irons in the fire that really position us well as we move forward. We're going to -- we're still very much a spine company, but we're also working to become a more diversified musculoskeletal player and musculoskeletal medtech player. The idea of improving outcomes is a key focus of ours. The 70% to 95%, David and I have been talking about that at length. And Higgs Boson, we're very excited about bringing that into our repertoire of products because we think that really can help differentiate us as the market continues to grow and adapt as time passes.

That's great. Thank you for being here.

Thank you.

Welcome to Globus Medical's Second Quarter 2026 Earnings Call. [Operator Instructions].

I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Thank you, Sarah, and thank you, everyone, for being with us today. Joining today's call from Globus Medical will be Keith Pfeil, President and Chief Executive Officer; and Kyle Klin, Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical website at www.globusmedical.com.

Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2025 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today.

Our SEC filings, including the 10-K, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available on the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website.

With that, I will now turn the call over to Keith Pfeil, our President and CEO.

Thanks, Brian, and good afternoon, everyone. Thank you for joining us on today's call. We completed an exceptional second quarter, positioning us for a strong 2026 as we move into the second half of the year. At a top level, Q2 revenue was $789.6 million, growing 6% as reported. Excluding Nevro, Q2 revenue growth was 9% led by 7% U.S. spine growth and 14% growth in international spine.

Fully diluted non-GAAP earnings per share was $1.34 growing 56% compared to the prior year quarter, while Q2 adjusted EBITDA was 35.4%, growing 34% in dollars and 740 basis points over the prior year quarter. During the quarter, we also deployed $136 million to repurchase 1.6 million shares.

Looking back, since 2022, Globus has more than tripled our top line and earnings while developing a scalable working model to deliver these results over the long term. Our focus on organic growth combined with the scale from the NuVasive merger and the Nevro acquisition underscores our commitment to delivering value creation for our shareholders. We successfully demonstrated our ability to bring together the 2 best-in-class spine portfolios while expanding our commercial distribution and operating with a sense of urgency in a manner that exhibits financial discipline through earnings accretion and increasing returns on capital. Our team has launched over 25 products over the past 36 months, demonstrating our unwavering focus on organic product development. The combination of new products and our significantly expanded worldwide sales force has allowed us to continue taking market share.

The acquisition of Nevro with a clinically superior pain product opens the door for us expanding our addressable market into many exciting areas while bringing that franchise into our business model. With all the changes occurred in the past 3 years, it's easy to look past what has been accomplished while still maintaining the ethos of what Globus was founded upon.

Now let's move into sales. Musculoskeletal sales were $763.5 million, growing 8% versus the prior year quarter and 4% sequentially. The growth drivers are spine, both U.S. and international as well as trauma. U.S. Spine continues to take significant market share, growing 7% as reported on strong procedural volumes. Competitive recruiting, pull-through from robotics and product launches continue to fuel growth. Our competitive hires in the second quarter were double the amount higher in Q1, and it represents the second highest onboarding in the past 8 quarters. Strategically, competitive recruiting has and will remain at the forefront of our growth strategy. Growth remains broad across U.S. Spine with double-digit growth seen in many products such as SABLE, ELSA, HEDRON C, Reline C and Reline Open.

Power tools continue to drive uptake with ThermoPro growing over 250% in the second quarter. International Spine grew 14% as reported and 12% on a constant currency basis led by mid-teens growth across key EMEA markets, namely Italy, Spain and Poland. APAC growth was broad-based across the region, while Lat Am generated its growth mainly from Brazil and Colombia. Overall, Q2 International Spine performance reflects our strategy of going deeper in the territories in which we operate.

The focus in infrastructure are such that we can position ourselves to see continued above-market growth moving ahead. Trauma revenue grew 31% versus the prior year quarter and 18% sequentially as we continue to drive share growth in our core trauma line, while returning to normal supply in our precise product line allowing us to fully satisfy U.S. demand while also turning on numerous OUS markets. We are actively capturing market share and attracting top sales talent as our product portfolio has grown and has become differentiated.

We are also beginning to see tremendous interest from surgeons, hospitals and competitive sales reps in our product portfolio as a full portfolio of trauma alternative. We see our Trauma business as a long-term growth driver moving ahead. Enabling tech sales were $26.1 million, declining 26% in the second quarter, driven by our continued shift towards greater flexibility in our capital acquisition model.

Despite the decline in INR revenue, we are seeing early evidence of success with our new model as EGPS and e-hub units deployed where there sold, leased or rented grew 11% sequentially and 25% versus the prior year quarter. Both data points validating the demand for Excelsius technology.

Robotic utilization continues to expand with over 137,000 procedures performed. We remain steadfast and confident in the long-term strategy of our revised approach to capital deployment. Our overarching focus is to achieve above-market growth of our implant technology, disposables and service by launching successful capital programs, creating the catalyst for pull-through revenue.

Q2 sales Nevro essentially flat to Q1, consistent with our comments made last quarter and in line with our expectations as we rapidly integrate Nevro into the Globus business model of sustained share growth gains driven by new product development sales force expansion and disciplined operational execution. Recruiting has been the primary area of focus within the sales force, and we've seen success in filling open roles with roughly 75% of those roles filled during the quarter. Looking ahead, we remain active on both the recruiting and training fronts.

Our near-term goals are focused around driving trial volumes higher, where we expect to see improvement as we move through the back half of the year with the goal of returning to historical trial levels late in Q4. During the quarter, we launched 3 new products, 2 in trauma and 1 in Spine, which I will touch on quickly. The trauma products include the AUTOBAHN hip fastener and the TENSOR suture button system. Spinal product is Reline 1. The AUTOBAHN hip fastener is engineered to offer robust fixation and resistance to enhance stability with minimal disruption to workflow. This product is designed to allow surgeons to treat patients with poor bone quality with a greater level of confidence and uniquely positions our AUTOBAHN intramedullary nailing system.

The TENSOR suture button system is engineered to redefine future management in the OR. The system features a self-locking suture and an inserter with integrated tensioning handles, which provide a more streamlined approach for tensioning through a single incision. Center is compatible with Anthem ankle and 1/3 tubular plates to offer surgeons a complete ankle solution.

Reline 1 is designed to address the unmet need for true single-step screw placement in order to reduce procedural steps increase efficiency and minimize patient risk. The ratchet retraction handle, screw design and style it tip geometry work together to achieve these benefits through a differentiated procedural solution. Reline 1 is a premier solution for mass T-Lift and minimally invasive posterior fixation.

Last quarter, I had mentioned receiving FDA 510(k) clearances for both our surgeon designed patient-specific script spacer system comprising of 7 patient-specific lumbar interbody systems as well as our surgeon designed patient-specific script rods. Script lumbar spacers are static integrated and expandable thoracolumbar interbody fusion devices additively manufactured with patient-matched endplate topography for maximum stability. We are expecting to launch these systems later in Q3.

The patient-specific ship spacers may be placed using Excelsius GPS insurance for navigation with Excelsius GPS, Excelsius Hub and Excelsius XR. Scripp patient rods are precision bent to the surgeon's pedicle screw placement plan and designed to reduce time spent on intraoperative rod bending. Rod are compatible with our Creo, Reline and Revere pedicle screw systems for both open and MIS procedures. Scripps Studio screw plans can be uploaded to our Excelsius GPS and Excelsius Hub Systems for robotically navigated Scripp placement intraoperatively. Our platform keeps the position at the center of the design and planning process with an intuitive interface, allowing the surgeon to efficiently design dis cite restoration, spinal alignment and pedicle screw placement translating their precise clinical intent directly into the implant design.

Our software is treated as an advanced tool rather than a replacement for clinical judgment, ensuring the implant perfectly executes to the surgeon's operative strategy. Our expandable offering incorporates our proven technology, allowing surgeons to insert the implant at a lower height designed to minimize nerve retraction and reduce the impaction forces required to implant the spacers.

Once in the disk space, the space can be expanded to restore optimal [ discite ]. Our patient match spacers and rods are bundled with our high-quality implants and best-in-class disprep and retractor systems while integrating with our Excelsius suite, thus ensuring final placement matches a digital pre-op plan to ensure proper navigated placement. With our Scripp clearances, we will be the only company positioned to offer a complete portfolio of patient-specific lumbar interspace and rods integrated with our enabling technology truly establishing us as the one-stop shop for lumbar patient-specific implants.

Looking ahead, specific focus is centered around organic product development with well over 60 projects in process. We are committed to leading with innovation and purpose. Our in-house development team is expanding to account for greater project complexity as we work to bring new and exciting products to market that address unmet clinical needs. We are continually working to improve the efficient flow of organic product development from concept to production such that we can speed up the launch of new products moving forward.

The last few years were spent largely building a broader platform within musculoskeletal care across spine, trauma, enabling tech and neuromodulation. We've assembled a stronger globus bag that is the platform for the future. allowing us to expand our research into various new areas of unmet clinical needs. We're leaning into data, analytics and AI. It's not just about treating 1 patient. It's how we treat that patient and learn so we can help others more effectively and faster. It's how we become smarter to further assist our surgeon partners and clinicians in patient selection and surgical execution.

We are developing a surgical intelligence ecosystem that will accelerate digital solutions through strategic investments, so we can bring together intelligent patient selection enabling tech-driven proceduralization of surgical technique while constantly adding to our complementary implants and instruments to improve surgical outcomes. It's not about the next quarter rather, it's about driving long-term sustainable development to drive market disruption and differentiation. I'm thankful to all of our Globus team members for their hard work and dedication in helping us deliver upon this fantastic quarter. Your teamwork, dedication and focus are how we continually work to solve unmet clinical needs.

I'll now turn the call over to Kyle.

Thanks, Keith, and good afternoon, everyone. Our second quarter results delivered above-market top line growth, including share taking domestic and international spine sales growth, our seventh consecutive quarter of adjusted gross profit margin expansion and a quarterly record for fully diluted non-GAAP earnings per share. Sales grew 6% as reported compared to the second quarter of the prior year with 9% growth in the base business, excluding Nevro. U.S. Spine, again led the way in growth for the organization, up over 7% compared to the second quarter of the prior year, marking our fifth straight quarter of above-market growth.

Adjusted gross profit margin took another step forward matching 69.4% in the second quarter, a 200 basis point improvement over the prior year quarter as we continue to execute our supply chain initiatives. On the bottom line, we achieved record Q2 fully diluted non-GAAP earnings per share of $1.34. In today's prepared remarks, I will provide insights into our quarterly business performance, comment on share repurchases and capital allocation priorities and provide an update on guidance for 2026.

Second quarter 2026 results were highlighted by revenue of $789.6 million, growing 5.9% on an as-reported basis and 5.6% on a constant currency basis. GAAP net income was $151.6 million, resulting in $1.10 of fully diluted GAAP earnings per share. Non-GAAP net income was $184.3 million, delivering $1.34 of fully diluted non-GAAP earnings per share or 55.8% of non-GAAP EPS growth over the prior year quarter. Total company adjusted EBITDA margin was 35.4% in the second quarter of 2026 compared to 28% in the prior year quarter.

Our Q2 2026 base business Globus adjusted EBITDA margin was 36.9% compared to 32.3% in the prior year quarter, and stand-alone Nevro adjusted EBITDA margin was 22.4% for the quarter compared to negative 1.4% in the prior year quarter. Our second quarter net sales of $789.6 million reflects base business Globus sales totaling $708.6 million growing 8.9% as reported and 9% on a day adjusted basis with the same number of selling days in the U.S. and international and 1 less selling day in Japan compared to the prior year. Base business Globus sales grew 8.5% on a constant currency basis.

Sales growth was led by U.S. Spine, which achieved 7.3% as reported growth and International Spine, which grew 13.8% on an as-reported basis and 12.2% on a constant currency basis. Our trauma and neuromonitoring businesses each grew over 30% and have now had 4 straight quarters of double-digit sales growth. Sales growth across these underlying businesses were offset by a 14.3% decline in Nevro and a $9 million decline in enabling technologies.

Nevro saw a $1.7 million sequential sales decline from the first quarter to the second quarter of 2026. As mentioned previously, we enacted significant structural changes within the product development, sales and marketing and general and administrative functions of the Nevro business in 2025. We remain on track with our integration of the Nevro business and expect trial volume recovery by the end of this year.

Despite the expected decline on the top line, we feel confident in the trajectory of the Nevro business and our ability to improve top line by the end of 2026. Additionally, we continue to see the lasting and sustainable impact of cost control actions taken in 2025 on profitability. Highlighted by sequential quarterly EBITDA margin expansion from 11.8% in the first quarter to 22.4% in the second quarter of this year.

Pivoting back to overall results, Musculoskeletal revenue achieved $763.5 million, growing 7.5% over Q2 2025 despite the decline in Nevro. Base business Globus musculoskeletal revenue grew 10.9%. Enabling Technologies revenue was $26.1 million, declining 25.8% as-reported. The enabling technologies business saw a softer quarter in sales dollars when compared to Q2 2025. However, we have continued down the path laid out in the back half of 2025 of being flexible in the way we quote alternative ways of acquiring our capital. To that end, we have executed more alternative offerings in this quarter than ever before.

While the majority of our units this quarter remain cash sales, we've continued to see the shift quarter after quarter towards alternative acquisition models and expect this trend to continue as we execute our revised approach to capital deployment. U.S. revenue during the second quarter of 2026 was $619.1 million, growing 3% as reported. Growth in our domestic business was led by our U.S. Spine, neuromonitoring and trauma businesses and partially offset by declines in Nevro and enabling technologies. Q2 2026 international revenue was $170.5 million, growing 18% as reported and 16.2% on a constant currency basis. International growth was seen across the board as we focus on deeper penetration within our existing markets.

The International Spine business led the way with 13.8% as reported and 12.2% constant currency growth and double-digit gains across EMEA, Latin America and APAC regions. In the first half of 2026, we have grown the international spine business by 14.5% as-reported and 10.6% on a constant currency basis and are targeting sustained double-digit growth in the back half of the year.

Transitioning to the rest of the P&L, GAAP gross profit margin in the quarter was 66.8% compared to 63.3% in the prior year quarter. Adjusted gross profit margin was 69.4% compared to 67.4% in the prior year quarter, primarily driven by increased sales, resulting in fixed cost leverage, favorable sales mix and the impacts of synergy execution through our manufacturing and supply chain initiatives and partially offset by increased freight costs.

Manufacturing and supply chain initiatives continue to be a focal point of our operations team as we target a return to a mid-70s adjusted gross profit margin. Quarter after quarter, we are seeing consistent progress as we work towards this goal with a 200 basis point improvement over the prior year second quarter and a 20 basis point sequential improvement over the first quarter of this year. We reiterate our expectation of adjusted gross profit margin falling in the range of 69% to 70% in 2026, representing a 90 to 190 basis point improvement over 2025.

Research and development expenses in Q2 2026 were $36.3 million or 4.6% of sales compared to $40 million or 5.4% of sales in the prior year quarter. The resulting decline in R&D both in dollars and as a percent of sales is attributable to synergy capture, resulting in lower employee-related costs. timing of incremental investment in product development and leverage from higher sales volume. As Keith mentioned in his prepared remarks, we are expanding investment in our in-house product development capabilities as we work to bring new and exciting products to market.

To that end, we are ramping investment in product development in the back half of 2026. We reiterate our expectation of 2026 R&D expense to be in the range of 5% to 6% of net sales. SG&A expenses in the second quarter of 2026 were $286.8 million or 36.3% of sales compared to $303.6 million or 40.7% of sales in the prior year quarter. The decrease in spend is primarily attributable to decreased employee-related costs from synergy actions and lower employee benefit costs from the timing of claims, partially offset by increased sales compensation costs from higher volume.

Q2 2026 net interest income was $7.1 million compared to $0.7 million in the prior year quarter. The $6.4 million favorable change is being driven by an increase in interest income from cash reserves. The GAAP tax rate for the second quarter of 2026 was 20.1% compared to negative 7.8% in the prior year quarter. The prior year quarter GAAP tax rate was impacted by a $34.8 million onetime tax benefit which was primarily driven by the discrete nature of the release of a valuation allowance against previously reserved R&D credits acquired in the NuVasive merger. Our non-GAAP tax rate for the quarter was 20.9% and compared to 25% in the prior year quarter. Our GAAP and non-GAAP tax rate in the current period were favorably impacted by stock option exercise benefits. Given the favorability seen in tax rate in the first half of 2026, we are revising our expectation of non-GAAP tax rate to be in the range of 23% to 24%, down from our previous guide of 24% to 25%.

Cash, cash equivalents and marketable securities were $840.5 million at June 30, 2026, compared to $629.1 million at December 31, 2025, the increase in cash is driven by operating cash flow of $412.1 million, primarily from higher net income and partially offset by $136.1 million of share repurchases and cash spend on capital expenditures of $72.8 million or 4.7% of sales.

In Q2 2025, we announced a new share repurchase program of $500 million, under which we have purchased $110 million worth of shares in 2025. In the second quarter of 2026, we repurchased $136.1 million or 1.6 million shares and have $253.9 million of authorization remaining under this program as of June 30, 2026. Share repurchases have been and continue to be an integral part of our capital allocation strategy with repurchases in 2026, representing 40% of our year-to-date free cash flow.

Since closing the NuVasive merger in September 2023, we have invested $747 million in share repurchases, representing over 50% of our free cash flow generation in that period and buying back 11.9 million shares or 30% of the dilution from the NuVasive merger. We reiterate our capital allocation strategy which prioritizes internal investment in innovative product development efforts above all else. We focus our capital spending efforts on building sets for our worldwide sales force and investing in facilities, machinery and equipment to continue to increase our manufacturing footprint. We will continue to buy back shares through our share repurchase program, minimizing dilution and increasing shareholder value.

Finally, we will continue to evaluate complementary M&A while focusing the use of our capital on driving investment for long-term profitable growth. Pivoting to financial guidance. Globus Medical reaffirms its full year 2026 revenue guidance of $3.18 billion to $3.22 billion and we are increasing our guidance for non-GAAP fully diluted earnings per share to be in the range of $4.95 to $5.05 from the previous range of $4.70 to $4.80. The revenue guidance implies growth over 2025, ranging from 8.2% to 9.6%. The revised fully diluted non-GAAP earnings per share guidance implies growth over 2025 and ranging from 24.4% to 26.9%.

The upward revision of fully diluted non-GAAP earnings per share guidance reflects a favorable increase in expectations from the margin expansion and operating leverage seen in the first half of 2026, which we expect to have a favorable impact on our full year results.

The second quarter of 2026 has been highlighted by share-taking domestic and international spine top line growth, 200 basis points of adjusted gross margin expansion and a definitive return to mid-30s EBITDA margin. year-to-date top and bottom line performance has set us up for a record-breaking year in 2026. I'm proud of the Globus team for their execution in the first half of 2026 and their unrelenting pursuit of excellence and our drive to be the leading musculoskeletal technology company in the industry.

Operator, we will now open the call for questions.

[Operator Instructions]. To begin, we will bring Lawrence Biegelsen from Wells Fargo to the stage.

This is Ross on for Larry. So maybe starting off with your international piece of the business. You guys obviously had a strong quarter, but we are hearing from competitors of some softness in Europe due to transient headwinds such as strike and heat wave. Have you guys seen this pickup is the 2Q and you expect a more seasonally soft 3Q?

This is Keith. Thanks for the question. Generally speaking, our performance across the was pretty in line with expectations. Countries go up and down from quarter-to-quarter. But when I look at EMEA, I look at it in the aggregate and what I see is a business that's moving forward. As we look through -- look forward to the rest of the year, Kyle had mentioned earlier that we see the international business as a strong grower as we look ahead.

Yes. And the only thing to add there is back to the prepared remarks, we had noted double-digit growth across our international space, including EMEA, they grew double digits in the second quarter.

Next, we have Vik Chopra with BMO. Vik, your line is open.

Congrats on a nice quarter. Two for me. you reported, I think, U.S. buying growth of 7% in the second quarter. I think that step down from the last couple of quarters. Can you just provide an update on what's going on there? And if this is a more sustainable run rate going forward? And I had a quick follow-up, please.

This is Keith. We had -- we came off a couple of strong quarters here, we had basically 10% growth. As we get into the second half of the year, our comps get a little more difficult as we move through but that doesn't take away from our confidence in the business. We see our U.S. Spine business is performing really well, and we're confident as we look into the rest of the year. But like I said, as we get further into the second half, our comps just get a little more difficult year-over-year.

Understood. And a quick follow-up, if I could. You beat on the gross margin line. You've talked about a return to a mid-70s adjusted gross profit profile. Given the performance we've seen to date, over what time frame do you expect to achieve that?

Thanks for the question, Vik. And yes, to highlight what we talked about during the prepared remarks. This is the seventh straight quarter of gross profit margin expansion. We expect to finish the year somewhere in the 69% to 70% range and see sequential uplift quarter after quarter as we've seen over the past 7 quarters as well. we're likely into in touching 70s by the end of the year, probably very, very low in the 70s. And I think we look back to getting into that mid-70s here and in the year or 2 after that.

Yes. I think I agree with Kyle's point because if you think about what we've done over the last couple of years, we announced NuVasive, we said we want to get back to mid-70s gross margin profile.and mid-30s EBITDA by the end of the third year. We're going to touch on -- we already achieved getting back to mid-30s before we got through 3 full years. to Kyle's point, we'll get into the low 70s this year. There's a lot of other actions that have occurred with acquiring Nevro and other steps that occur within our business that may have had that been a little bit slower, but as I see the overall business and everything that's happening in manufacturing and operations from an initiative perspective, we feel confident on getting back to that in 2027.

The next question is from the line of Richard Newitter with Truist Securities.

This is Ravi on for Rich. So I guess I have 2 questions. I'll ask them upfront, please. One, can you just maybe talk about the Nevro cadence in your guidance for the rest of the year and the M&A strategy in that division? And then maybe second, this lumbar spacer launch coming into 3Q. Can you maybe talk about how quickly can you get that from the doctor designing the case to production in their hands? Just curious what the lag looks like? And are you able to kind of capitalize on some of these new DRGs that are going live in the fall?

Could you repeat your first question again?

I was just asking about Nevro cadence for the reminder of the year. And then just what do we think about M&A strategy? I didn't really hear much of that on the call in terms of Nevro.

No, that's fair. So Nevro cadence, it's consistent really with what we talked about last quarter. As we move through the rest of this year, we're looking to get better as the year moves on and our early read is we're going to look at trial volumes as we get through Q3 and into Q4, our expectation of those trial volumes translate into sales starting to move higher.

Nevro as we think about it is a business that we want to return to our historical level of sales. Secondly, on M&A, I have no comments on never M&A specifically at this point. We've been very active on the M&A front the last several years. And really the focus right now is stabilizing this business and getting it to -- back to a path of returning it to growth. Your second question I just kind of more about the timing of the case planning to surgical kind of your production.

When you think about lumbar spacers and patient specific, it's about a week to 10 days. We expect to be able to turn it around. So we're working with our manufacturing team to make sure that they can deliver in that time frame, and that's our expectation at this point. And as you think about reimbursement, we think that our strong reimbursement codes are already in place. So as we think about launching this business and this product line, we're confident in the reimbursement profile that this business and products would have.

Our next question comes from the line of Matt Taylor with Jefferies.

The first question I wanted to ask was just whether you could put a finer point on revenue guidance because the range for the second half implies something like 2% to 5% growth bottom to top. Are you more comfortable anywhere within the range? Can you help us 0 on that, recognizing you have the tough comps and the Nevro dynamics?

Matt, this is Kyle. Thanks for the question. So as we think about the second half of the year, yes, we have a range of $3.18 billion to $3.22 billion. We're not going to point to a specific point in the range that we feel comfortable with. But what I would say is if you look at where we've performed so far this year, how we feel about our ability to perform in the second half. Those areas, we continue to feel very, very positive about. The 2 areas we touched on throughout the call this quarter and last quarter has been a change in strategy on enabling tech as well as the Nevro business and getting that back to a stability level so that we can start growing. Those represent the downside risk within our guide. Overall, I guess I would say we feel comfortable with where our guide is at the full range.

And can I ask a follow-up on hiring. It looks like that was really strong this quarter and kind of picked up. Was there anything specific there? Or is this more a continuation and it was a really good quarter?

Just a continuation of what we're doing. It's something that I personally want the sales team focused on and being aggressive with. When I think about our products, we have a very broad spine product portfolio. I commented how many projects we have in process in my prepared remarks. We're innovating, we're driving, and we have our exclusive direct selling force really gives us an ability to touch our accounts and provide them with a comprehensive product offering. I think it's something that strongly differentiates us. And it's something that I want our sales leaders to accentuate as they go out trying to find competitive recruits.

Our next question is with Caitlin Roberts from Canaccord Genuity.

Would love if you could provide a bit more color on the expectations for enabling tech growth in the back half, just given the growing financing flexibility dynamic that you called out.

Thanks, Caitlin, this is Keith. We don't break out our guidance into the parts and pieces. But what I would say, and it really would fall back on my prepared remarks, we're looking to get our capital in the hands of our customers to drive implant growth over the long term. I talked about that capital driving implant growth, disposables growth and service growth. So if you extrapolate that, what I think about is how that's going to drive enhanced sales in musculoskeletal.

Understood. And maybe just a quick one on the rep adds. You called out particular strength there. What do you think what's happening this quarter that was stronger versus the recent quarters for rep hiring?

I would say, keeping after the sales leaders to make sure that we're closing down deals.

Next, our question will be from Tom Stephan with Stifel.

Great. I'll start with OUS Spine. Can you guys elaborate a bit more on the strength there I know the comp was a bit easy in 2Q, and I think you said kind of sustained double-digit growth in the back half. But just wondering if you could potentially put a finer point around that. What's the level of confidence in accelerating OUS spine in the back half versus the first half? And what would be the tailwinds or -- and/or the headwinds, allowing that from happening? And then I'll have a follow-up.

This is Keith. Thanks for the question. As I think about international Spine, we did have some softer comps last year, but I would say that this year, much happier with set deliveries and inventory availability. That's been something that's been a catalyst to us to go deeper.in the countries that we're operating in.

I caution to say that our sale -- our growth is going to accelerate Overall, we think that this is a strong business that can grow double digits by going deep on where we're at. But if I think about overall, the biggest improvement I've seen year-over-year, it set deliveries in inventory availability.

Got it. That's great. And then maybe taking a step back a bit. I wanted to ask about kind of the spine market health and notably the U.S. Just curious if you can comment on trends, demand, volumes that you've seen year-to-date, any differences or changes as the year has progressed? And then what does guidance assume as it relates to market outlook.

This is Keith again. I would say that the spine market appears healthy. We haven't seen any drop off of procedural demand. It's remained pretty constant. So I think about looking ahead, my view on the market is that it's going to continue to be fairly stable. As I look across the industry, I think there's still ample competition is still a fragmented market. So I think the market is operating in a manner that it's healthy. And for us specifically, we're confident in our U.S. Spine business.

Thank you, Tom. Matt Blackman with TD Cowen, your line is open, so feel free to ask your questions.

This is Drew on for Matt. Just a couple of quick ones for me. just on the R&D spend for the year going to 5% to 6% are still keeping it at 5% to 6%. I mean it's a pretty big uptick in the back half. I was just hoping that you could touch on that a little bit more, Keith or Kyle. You kind of mentioned it on the call that you're doing a lot of in-house development, but hoping you could put a fire point on where you're putting that development? Is it just all on the software side to drive an aging technology or just building out the spine implant portfolio more?

That's a great question. This is Keith. So I would say that what we're doing, I commented that we're investing in our team, we're investing in more head count across our business. That's going to be in our core areas in spine trauma, joints -- there's going to be some in neuro and pain, but then also software. It really touches back on building out our software capabilities when you think about our enabling tech and bringing together the procedure and the procedural solution. I talked a little bit about ecosystem. The broadness of the 5% to 6% really gets back to the timing of when those heads come on board and you think about the back half of the year.

Yes. And the only thing I'd add, Drew, is from a cadence perspective as you think about it, right, we had been messaging that as we got Nevro into our business and into our process that there would be some synergy actions there. We saw that impact last year into early this year. my prepared remarks, I called out the fact that there was some delay in investment. So it's been a plan for investment. It's just a matter of how it has kind of come in through the year. But yes, to get into that 5% to 6%. I agree with you. There will be a significant ramp here in the back half of the year from a spend perspective.

Got it. And just on kind of that digital ecosystem that you're looking to build does the current Excelsius portfolio have that compute power? Or do we kind of need to see the next generation of Excelsius to really kind of push that forward? .

It's more than just Excelsius when you think about it. So what we're thinking of building is really starts with our implants and instruments. Our implants and instruments are one of the pillars, enabling tech. So GPS, that's another one of the pillars. Then is thinking about our procedural solutions. TEOFX lift deformity, that's another pillar of what we think about from an ecosystem. And then lastly, is bringing it to surgeon intelligence. I talked about learning and going along the journey with a patient. We want to improve our outcomes. So as we go through these procedures, we want to continually take that data and learn and retrain so that the next time that procedure happens with that specific type of patient we know more, and we're ultimately improving outcomes in spine procedures.

Our next question will be from Matthew O'Brien with Piper Sandler.

This is Samantha on for Matt. I guess, first I want to touch on the revenue guide for the back half of the year. Why the decision not to bump up the revenue guide given the performance this quarter?

Thanks, Samantha. This is Kyle. I'll take that. I think as we look at what consensus was versus what we actually came in with, I think we had a beat by a little under $7 million. So a beat, but not a significant beat. What I'd point to is our prepared remarks around the change in enabling tech strategy as well as Nevro and kind of fund in the bottom there and building up from there. Those 2 things have us cautious in terms of the second half where we had a strong first half, but we would just want to remain cautious and appropriate with our guidance range.

As I think about the guide in the second half, the only thing I would add is we -- we're coming off of tough comps. We have -- we still feel very confident in the spine business. But to Kyle's point, we talked about the strategy shift with enabling tech. We talked about returning never to health. Those are all things, but we don't break out the individual parts and pieces to the guide.

Okay. Just one more on Excelsius. Do you have a second-generation Excelsius robot in development? And if so, when might we see it?

I have no specific comment on that. We're always continually looking to develop and get ourselves better as a company, but no specific comment on second gen.

Our next question is from Travis Steed with Bank of America.

Congrats on the quarter. I guess one on enabling tech. And I know it's harder for us to see you with the leasing, but just kind of the momentum you're getting in underlying placements, any way to kind of help us understand that and is the flexible leasing going to drive extra placements? And any way to kind of talk about the pull-through of the spine business through the robots and how you're seeing that impact the spine growth rates?

Yes. So Travis, this is Keith. So as we think about the leasing taking hold or the more flexible options, this year, to me, I view as a transition year. We're looking -- we're still selling to Kyle's comments, we still the majority of our sales were outright purchases or majority of our units move through outright purchases. But what I see is the mix starting to shift where we're seeing more of these placements happen. When you think about the long term, the goal here is to drive the incremental implant pull-through service revenue and disposables. That comes after the capital is launched at the facility and everyone is trained on it.

So as you think about that, you put the capital out today, there'll probably -- there'll be a little bit of a lag until those sales start to kick in, but the goal here is to drive enduring musculoskeletal growth, namely in U.S. Spine and/or international spine.

That's helpful. And a follow-up. I wanted to go back and touch on Nevro. You talked about trial volumes higher historical rates by Q4. I'm curious kind of the momentum you're seeing in the sales force expansion there and kind of the confidence in that business and what it can grow next year? And anything else to say on margins, given it was such a big step-up from Q3 to Q4 and the margins for never .

So when you think about Salesforce, I commented that we talked about adding back open positions in the second quarter, and we rehired about 75% of those. There's still hiring going on that comes training. So I'm cautious to give specifics around that because we're not breaking out the guide. But as I think about the back half of the year, now that we're getting restaffed and folks are getting trained, we want them to be aggressive out in the field to drive those trial volumes those trial volumes are an early indicator of future sales. So I really fall back on my comments talking about Q4 trial volumes, starting to see that improvement translate into sales.

And you think on the margin piece?

Margin piece? Yes. And this is Kyle. On the margin piece, if you go back to last year, right, we acquired Nevro in April. We didn't really execute any synergy actions until the very, very tail end of Q2 of 2025. And so you saw the negative 1.4% EBITDA margin back in Q2. Those actions took place really across the back half of 2025. And ultimately, that's what you're seeing kind of show up in the P&L here in 2026 in terms of profitability in that 20-plus percent EBITDA margin.

Thank you, Travis. At this time, I'm showing no further questions in the queue. So this will conclude the Globus Medical Earnings Call. Thank you for your participation today. You may now disconnect.

Welcome to Globus Medical's First Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Thank you, Kathy, and thank you, everyone, for being with us today. Joining today's call from Globus Medical will be Keith Pfeil, President and CEO; and Kyle Klin, Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical website at www.globusmedical.com. .

Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2025 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our SEC filings, including the 10-K, are available on our website.

We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website.

With that, I'll now turn the call over to Keith Pfeil, our President and CEO.

Thanks, Brian. Good afternoon, everyone, and thank you for joining us on today's call. Our first quarter results demonstrate our ongoing focus as we continue to scale and capture share while maintaining operational discipline, driving margin expansion, favorably impacting Q1 and our full year results looking ahead. Overall, we are moving with purpose and in the right direction. As we progress through 2026, look for market share taking top line growth coupled with exciting product launches while increasing gross margins and driving meaningful earnings expansion. .

Stepping back for a minute, I want to give a little perspective and highlight what we've accomplished by looking at our trailing 12-month performance and the activity that's occurred since the close of fiscal 2022. Since then, revenue has more than tripled. We've generated 6x the amount of free cash flow, all while closing two significant deals, extinguishing almost $1 billion in debt while deploying over $600 million to repurchase over 10 million shares at an average price of $160 a share. That represented greater than 25% of the dilution that was created from the NuVasive merger.

We sit here today, debt-free, generating significant free cash and have launched over 30 new products during this time frame. Simply stated, we've leaned in and meaningfully scaled our business while maintaining the DNA of Globus of innovation, execution and financial prudence. I'm thrilled with our results in Q1 and look forward to what 2026 and beyond has in store for our business.

Turning attention to our top-level performance. Q1 revenue totaled $759.9 million, growing 27% as reported and 25.5% on a constant currency basis. Fully diluted non-GAAP earnings per share was $1.12 growing 64.7% over the prior year quarter. Our Q1 base business revenue totaled $677.2 million, growing 13.2% as reported versus the prior year quarter led by continued strength in U.S. Spine while also seeing improved performance across Enabling Tech and International Spine.

Digging further into U.S. Spine, this business continues to show strength and resilience as it grew 10% in Q1 versus the prior year quarter, marking the third consecutive quarter of 10% growth. Our U.S. Spine sales team remains resolute and focused operating against the backdrop of driving achievement against key objectives. We've seen this momentum continue and are now sitting at 58 weeks of consecutive growth. Cross-selling, competitive recruiting and robotics pull-through are key to this strategy as we continue to capture volume and drive meaningful share growth across the category.

Consistent with prior quarters, our growth remains broad as we continue to see double-digit growth across many categories, including standard fixation and MIS pedicle screws, expandable TLIF, ALIF posterior cervical as well as cervical plating. Categories such as power tools and products such as DuraPro continue to capture new share and drive incremental cross-selling opportunities as we seek to gain a greater share of each spine procedure.

Competitive recruiting remains a strategic priority, and the Spine leadership team is aligned from the top down to aggressively perform against this objective. The process of doing so remains a competitive moat for Globus and our execution around rep onboarding with sets and inventories continues to differentiate us as our supply chain meets the needs of the field by providing high-return capital investments which is a testament to our philosophy having the right products at the right price and being on time.

Robotics pull-through remains a key driver. And as we demonstrate greater flexibility in how customers acquire capital, we seek to more aggressively drive the recurring revenue, whether through implants, disposables, service or case coverage. Strategically, we are slightly altering our approach to capturing more accounts and expand upon surgeon and rep training, thus driving success at accounts with enabling technologies. Our first quarter saw enabling technologies post revenue of $26.9 million, growing 21% over the prior year quarter. We saw a sequential step down in Q1, consistent with history. However, we maintain momentum in closing deals while also seeing greater penetration of international markets.

Our pipeline of deals remains robust, However, the mix of pipeline deals is shifting with a greater focus on leases and rentals compared to the historical mix of outright sales, which historically resulted in higher upfront revenue recognition. This aligns with my earlier comments and the strategy of refocusing our capital approach to drive implant and other recurrent revenue product pull-through, all of which has been implied in our revenue guidance for 2026. Despite new and enhanced robotic competitors in our space, ExcelsiusGPS remains a standard for ease and simplicity with our floor-mounted navigation-based robotic approach. The ground-up design with its native platform gives surgeons the access and control they need to facilitate a spine procedure while seamlessly navigating through our workflow.

To date, we've seen almost 130,000 robotic procedures and we'll continue to penetrate the market to launch new successful programs that foster utilization. No other competitive systems, including recently introduced products, have been able to replicate their reliability, ease or accurate workflow attributes of our robot. Our International Spine business grew 16.4% as reported and 9.8% on a constant currency basis as we did not repeat the supply chain disruptions, which occurred in the first quarter of the prior year. Strength was seen mainly in the EMEA and LatAm regions and our growth was broad-based, including both direct and distributor businesses across our international markets.

On the product front, I'm pleased to announce that early in our second quarter, we received two FDA 510(k) clearances for both our patient-specific script spacer system comprising of seven patient-specific lumbar interbody systems as well as patient-specific script frauds. Both the Scripps spacers and rods are designed by surgeons using the Scripps studio design and surgical planning software application. Script lumbar spacers are static, static integrated and expandable thoracolumbar interbody fusion devices, additively manufactured with patient-matched endplate topography for maximum stability.

The patient-specific script spacers may be placed using ExcelsiusGPS instruments for navigation with ExcelsiusGPS, Excelsius Hub and Excelsius XR Script patient-specific rods are precision bent to the surgeon's pedicle screw placement plan and designed to reduce time spent on intraoperative rod bending. Rods are compatible with our Creo RELINE and Revere pedicle screw systems for both open and MIS procedures. Scripps studio screw plans can be uploaded to our ExcelsiusGPS and Excelsius Hub systems for robotically navigated screw placement intraoperatively.

Our platform keeps the position at the center of the planning process with an intuitive interface, allowing the surgeon to efficiently fine-tune distie restoration, spinal alignment and pedicle screw placement translating their precise clinical intent directly into the implant design. Our software is treated as an advanced tool rather than a replacement for clinical judgment, ensuring the implant perfectly executes to the surgeon's operative strategy. Our expandable offering incorporates our proven technology, allowing surgeons to insert the implant at a lower height designed to minimize nerve retraction and reduce the impact on forces required to implant the spacers. Once in the disc space, the space can be expanded to restore optimal disk cite.

Finally, our patient match spacers and rods are bundled with our high-quality implants and best-in-class disc prep and retractor systems while integrating with our Excelsius suite, thus ensuring final placement matches the digital preop plan to ensure proper navigated placement. With our script approvals, we will be the only company positioned to offer a complete portfolio of patient-specific lumbar interbody spacers and rods integrated with our enabling technology, truly establishing us as the one-stop shop for lumbar patient-specific implants. The team is working tirelessly to finalize the launch plan to bring these new exciting products to market shortly. We remain excited for the future as the team embarks on an enhanced focus of development and investment to bring new products to market in 2026 and beyond. I sit here today truly excited for what we have in store for 2026.

Our Trauma business posted a 30.4% increase over the prior year quarter, with growth coming from both our core trauma line through share taking as well as our precise limb-lengthening portfolio. Our Anthem Elbow plating system continues to be a standout product, exceeding our expectations as surgeons have responded to this product based on the anatomic fit of this plating system. Consistent with comments last quarter, demand on this product has continued to surpass initial expectations, such that we will be delivering additional sets to the field in the second quarter. Growth in PRECISE was driven by our ability to now fully satisfy the market after we transitioned manufacturing from the former NuVasive facilities to Globus in early 2025. Manufacturing output has now surpassed the historical output at the former facility such that we are now able to fully supply the market.

Our commercial focus will remain on Level 1 and Level 2 trauma centers as we seek to drive share growth with a smart approach to investment that balances inventory and set availability in a manner that drives high ROI. We will remain diligent in sticking to this plan as we move ahead.

First quarter net revenue finished at $82.7 million as we've adopted the Globus approach to driving profitable sales growth. Although the strategy rollout led to sales declines, we had expected lumpiness to occur with this business as we work through bringing it under the Globus umbrella in its first 24 months. The team is actively recruiting new sales personnel and mapping new product introduction plans while transitioning to our revised selling model. We are and will remain active on the recruiting front as we move through 2026 and expect to return to a more historical run rate revenue late in the second half of the year as new associates are fully trained to enter the market.

We are focused on enhanced trading protocols moving forward, and we'll stress this for all new and existing Nevro sales associates given the substantial clinical data pointing to our high-frequency technology, offering a clinically superior solution for patients suffering from chronic pain. We are committed to this business and bringing technologies to market while ensuring the business is positioned in a manner that will drive profitable sales growth over the long term as we seek to grow the existing business through improved go-to-market strategies and new product development while devising products to expand the use of Nevro's patent portfolio outside of the direct markets in which they operate today. Longer term, this continuum of care is complementary to our overall product portfolio and will help drive our strategy moving forward.

Operationally, we continue to execute on manufacturing and supply chain initiatives across our business to drive gradual and meaningful improvements to core product profitability. We reiterate our commitment to achieving a mid-70s adjusted gross margin profile over the long term, leading to expanded levels of profitability, helping drive overall returns above our cost of capital.

As we move further into 2026, our key areas of focus will remain on driving organic sales growth while continuing to internally invest and launch new products. Our modes of innovation, vertical integration, a high-touch sales force, a scalable platform and financial discipline allow us to move fast to address our long-term goals of improving outcomes and solving unmet clinical needs. Our approach to product development will remain focused on a ground-up mindset that is procedure-enabling, integrating imaging, navigation, robotics, surgical intelligence and implants in a more thoughtful way to improve 10-year surgical outcomes to 95% or better.

Surgical Intelligence will focus on bringing together patient selection, surgical techniques and complementary implants with technology to drive the proceduralization while creating a closed loop intelligent ecosystem to help surgeons continuously drive outcomes higher. Thank you to all of our Globus team members from all around the world. Your teamwork, dedication and focus are how we continually work to solve unmet clinical needs.

I will now turn the call over to Kyle.

Thanks, Keith, and good afternoon, everyone. Our first quarter delivered exceptional results on both the top and bottom line and is an impressive beginning to 2026 for the entire Globus team. Sales grew 27% as reported compared to the first quarter of the prior year, with over 13% of growth coming from the base business, including strong growth from substantially all of our underlying businesses. Our top line results were once again highlighted by the domestic spine business, which had its third straight quarter of 10% growth. We continue to see margin expansion in the quarter with adjusted gross profit margin over 69% as we remain focused on disciplined execution of manufacturing and supply chain initiatives. We also achieved record Q1 fully dilutive non-GAAP earnings per share of $1.12.

In today's prepared remarks, I will provide insights into our quarterly business performance including the impacts of Nevro and an update on guidance for 2026. First quarter 2026 results were highlighted by revenue of $759.9 million, growing 27% on an as-reported basis and 25.5% on a constant currency basis. GAAP net income was $124.3 million, resulting in $0.90 of fully diluted GAAP earnings per share. Non-GAAP net income was $154.9 million, delivering $1.12 of fully diluted non-GAAP earnings per share or 64.7% of non-GAAP EPS growth over the prior year quarter.

Adjusted EBITDA margin was 32.3% in the first quarter of 2026. Our Q1 2026 base business Globus adjusted EBITDA margin was 34.8%, and stand-alone Nevro adjusted EBITDA margin was 11.8% for the quarter. Our first quarter net sales of $759.9 million reflect base business Globus sales totaling $677.2 million, growing 13.2% as reported and 13.1% on a day-adjusted basis with the same number of selling days in the U.S. and international, and 1 more selling day in Japan compared to the prior year.

Base business Globus sales grew 11.9% on a constant currency basis. As mentioned in my opening remarks, we saw growth across substantially all of our underlying businesses, led by U.S. Spine, which achieved 9.6% as reported growth and International Spine, which grew 16.4% on an as-reported basis and 9.8% on a constant currency basis. Trauma and our neuromonitoring businesses each grew over 30% and Enabling Technology started the year off with over 20% growth compared to Q1 2025. Nevro contributed $82.7 million of revenue during the quarter. On a sequential basis, Nevro's revenue contribution declined by $17.1 million or 17.1% compared to the fourth quarter of 2025. As mentioned over the prior few quarters, since announcing the Nevro acquisition, our goal with Nevro was to rightsize the business to drive profitable sales growth while reducing excess spending to quickly adopt the Globus approach.

In 2025, we saw positive progress in profitability through enacting significant organizational and procedural changes, culminating in an achievement of non-GAAP EPS accretion occurring in the first 3 quarters. In Q1 2026, we continue to see the lasting and sustainable impact of these cost control actions. However, in the first quarter, we also saw a decline in revenue driven by the structural changes made within sales and marketing of the Nevro business at the tail end of 2025. Although we weren't sure on exact timing, we had expected this decline to occur at some point in the early innings of owning the business, and it has been anticipated in our top and bottom line guidance for 2026.

Pivoting back to overall results, musculoskeletal revenue achieved $733 million, growing 27.3% over Q1 2025. Base business Globus musculoskeletal revenue was $650.3 million, growing 12.9% as reported. Enabling Technologies revenue was $26.9 million, growing 21.1% as reported. The Enabling Technologies business saw bounce back in both sales dollars and units when compared to a softer Q1 2025. While we remain flexible in our offerings for our customers to acquire capital as shared in Keith's comments about the pipeline earlier, we note that Q1 2026 results were primarily from cash sales, which we've seen historically in this business.

U.S. revenue during the first quarter of 2026 was $604.9 million, growing 25% as reported. Base business Globus U.S. revenue during the first quarter of 2026 was $537.7 million, growing 11.1% versus the prior year quarter. Our base business Globus U.S. growth was primarily driven by our U.S. Spine, neuromonitoring and trauma businesses, all of which have achieved double-digit growth for 3 straight quarters when comparing to the comparable quarter of the prior year.

Q1 2026 International revenue was $155 million, growing 35.6% as reported and 27.8% on a constant currency basis. Globus Base Business International revenue was $139.5 million, growing 22.1% as reported and 15.1% on a constant currency basis compared to the prior year quarter. International growth was seen across the board with our EMEA and LatAm regions achieving double-digit as-reported and constant currency growth and APAC achieving high single-digit as reported and constant currency growth. We note that the growth achieved this quarter was against a prior year comp that was negatively impacted by the timing of distributor orders and temporary supply chain disruptions. We feel positive on our international spine business prospects this year as we work to finalize international integrations in the back half of 2026.

Turning to the P&L. GAAP gross profit margin in the quarter was 66.4% compared to 63.6% in the prior year quarter. Adjusted gross profit margin was 69.2% compared to 67.3% in the prior year quarter, primarily driven by increased sales, resulting in fixed cost leverage, favorable sales mix and the impacts of synergy execution through our manufacturing and supply chain initiatives. Our Base Business Globus adjusted gross profit margin was 69.3%.

As I mentioned in our fourth quarter prepared remarks, we've leaned into manufacturing and supply chain initiatives, driving to build back to a mid-70s adjusted gross profit target. From Q3 2024 forward, we've seen improvement in adjusted gross profit metrics in each sequential quarter. Q1 2026 continued that trend maintaining a 69.2% adjusted gross profit margin from Q4 2025 despite the normal sequential step-down seen in revenue from Q4 to Q1. We reiterate our expectation of adjusted gross profit margin falling in the range of 69% to 70% in 2026 and our long-term goal for mid-70s adjusted gross profit percentage.

Research and development expenses in Q1 2026 were $36.5 million or 4.8% of sales compared to $33.1 million or 5.5% of sales in the prior year quarter. Base Business Globus R&D expenses totaled $32.7 million or 4.8% of sales. The resulting decline in legacy Globus R&D both in dollars and as a percentage of sales is attributable to synergy capture, resulting in lower head count and leverage from higher sales volume. Nevro R&D was $3.9 million or 4.7% of Nevro sales.

As we've worked through the integration of both NuVasive and Nevro, we reset the legacy business product development processes to align with the Globus approach. We expect that this will pay dividends in 2026 and beyond as we look to minimize the time line from concept to launch for our innovative technologies. In 2026, we expect R&D expense to be in the range of 5% to 6% of net sales with a ramp in spend moving methodically throughout the remainder of the year.

SG&A expenses in the first quarter of 2026 were $297.8 million, or 39.2% of sales compared to $242.8 million or 40.6% of sales in the prior year quarter. Base Business Globus SG&A expenses were $251.7 million, or 37.2% of sales. For base Business Globus SG&A, the increase in spend is attributable to increased sales compensation costs from higher volume and increased employee benefit costs, partially offset by decreased employee-related costs from synergy actions. Nevro contributed $46.1 million of SG&A expenses in the quarter or 55.7% of Nevro sales.

Q1 2026 net interest income was $5.4 million compared to $1.7 million in the prior year quarter. The $3.8 million favorable change is being driven by a decline in interest expense from the paydown of the remaining $450 million outstanding convertible debt in Q1 2025 that was assumed from the NuVasive merger. The GAAP tax rate for Q1 2026 was 20.9% compared to 27.2% in the prior year quarter. Our non-GAAP tax rate for the quarter was 21.6% compared to 26.6% in the prior year quarter. Our GAAP and non-GAAP tax rate in the current period were favorably impacted by stock option windfall benefits.

Cash, cash equivalents and marketable securities were $799.3 million as of March 31, 2026 compared to $629.1 million at December 31, 2025. The increase in cash is driven by operating cash flow of $202.4 million, primarily from higher net income and partially offset by cash spend on capital expenditures of $39.6 million or 5.2% of sales. In Q2 2025, we announced a new share repurchase program of $500 million, under which we purchased $110 million of shares in 2025. We have $390 million of authorization remaining under this program as of March 31, 2026.

Our capital allocation strategy remains unchanged. First, we will prioritize internal investment in innovative product development efforts. Second, we focus capital spending on building sets for our worldwide sales force and investing in facilities, machinery and equipment to continue to increase our manufacturing footprint. Third, we will continue to buy back shares through our share repurchase program, minimizing dilution and increasing shareholder value. And finally, we will continue to evaluate complementary M&A while focusing the use of our capital on driving investment for long-term profitable growth.

Pivoting to financial guidance, Globus Medical reaffirms its full year 2026 revenue guidance of $3.18 billion to $3.22 billion and we are increasing our guidance for non-GAAP fully diluted earnings per share to be in the range of $4.70 to $4.80 from the previous range of $4.40 to $4.50. The revenue guidance implies growth over 2025, ranging from 8.2% to 9.6%. The revised fully diluted non-GAAP earnings per share guidance implies growth over 2025, ranging from 18.1% to 20.6%. The upward revision of fully diluted non-GAAP earnings per share guidance reflects a favorable increase in expectations from the margin expansion seen in Q1, which we expect to have a favorable impact on our full year results.

We are extremely pleased with the start to 2026 and remain upbeat on the performance of our core businesses. Our efforts to drive lasting and profitable growth have taken shape over the past few quarters, and we remain excited regarding our prospects going forward. The Globus teams can do attitude, resilience and desire to win is reflected in the results that we achieve. Your everyday efforts are appreciated. And together, we drive Globus to be the leading musculoskeletal technology company in the industry.

Operator, we will now open the call for questions.

[Operator Instructions] Your first question comes from the line of Lawrence Biegelsen with Wells Fargo.

This is Ross Osborn on for Larry. So maybe starting off your guidance and the reiteration of the top line, are there any incremental headwinds to revenue we should be thinking about versus when you established guidance at the beginning of the year? Or is this conservatism at this point?

No. Thanks for the question. When we think about guidance, I guess our main point in reiterating guidance is that we feel confident in our numbers. We feel confident with what we've done and been able to achieve in Q1. And feel confident in terms of the rest of the year from a guidance perspective. As you think about our prepared remarks, we noted that the U.S. Spine business was up 10%. The International Spine business was up 10% on a constant currency basis, and we saw strength across many of our underlying businesses. But we also commented on a decline that we saw in Nevro coming from Q4 into Q1, something that was expected from the ARPS perspective.

On the lumpiness, right, and the fact that it would -- at some point, we would see some lumpiness in that revenue our overall expectation for the full year is still a strong conviction in what our guidance is. And ultimately, these numbers and our results are built into our expectation this year.

Your next question comes from the line of Shagun Singh with RBC Capital Markets.

Congratulations on a strong print here. I just wanted to kind of ask a high-level question on the performance here. I heard you say a couple of things around scale, capturing share, recurring revenue and using an alternative approach here and around enabling tech. And it seems like the base strategy is still in place, which is rep recruitment, robotic pull-through and then cross-selling here. But it seems like you're doing something else differently. So can you just talk about your strategy and how you're able to deliver such strong results here in Q1?

Shiga, this is Keith. Thank you for the question. Thank you for the comments on the strong quarter. As you think about what we're doing, the business our strategy as it relates to implants really hasn't changed with rep recruiting new product innovation, robotic pull-through. The thing that we're really slightly altering sits on the enabling tech side. We historically have been more focused on just selling the robot. And as time passed, one of the things we saw is we need to get a little bit more flexible in how robots are placed in the hospitals there's always changing CapEx environment. There's more competition in the field. And really, at the end of the day, we're looking to drive the implant and the implant procedure to make sure that we're getting more of that case. .

So as we look at a robot, what's important to us is that the robot gets placed or robot or the navigation system gets placed in the hospital, and our teams are trained, the hospital is trained, the personnel and the OR are trained and that we're really driving making sure that all the programs that we launch are successful back-end support and really working to ensure that we're driving what I would call the replenishment sale in the OR, which is the implants, the instruments, service, all the things that go along with the case. That would really be the biggest thing that I would say that we're really altering.

As I think about the strong numbers and the business performance, I really go back to some of the things I touched on in my prepared remarks. Our U.S. Spine business is performing really well. We've had several quarters here of 10% growth. And more importantly, last year, we talked about having some challenges earlier in the year with supply chain, those challenges are really behind us. We're getting sets out into the field. We're getting inventory out in the field, and that's helping the team really just be able to make sure that we can cover all the cases that they're being faced with. But as I look across the rest of the portfolio, international, -- last year, we spoke about the first quarter being a little bit soft for some supply chain reasons also. We're not seeing that same thing this year.

So as I look across our business, specifically Spine. Our Spine business is performing well, both in the U.S. and internationally, and we're continuing to see more contributions from our trauma business. Enabling Tech didn't have the rough quarter in Q1 than it did last year. We had a nice 21% growth. But again, as we think about that business moving forward, I go back to my prepared remarks, I had mentioned, as we move forward, we want to be more flexible. That mindset of being more flexible is contemplated in our guidance -- our revenue guidance for this year because in situations where there is more of a lease or a rental approach, you're not going to see all that upfront rev rec that you would historically. So we're making sure we're taking that into consideration.

That's really helpful. And then just very quickly on the mid-70s gross margin target long term. Any directional guidance of like how long it might take you to get there?

I would say, I'll start off, Kyle, you can add comments to it. As I look at the last several quarters, we've had consistent step forward in our adjusted gross profit margin. I expect to see that happening at about the same cadence. I think that there's a lot of supply chain initiatives going on to help us achieve that. .

Yes. The only thing I would add is, yes, as you think back of the 6 sequential quarters terms of improvement, we expect to continue to see improvement, something that we felt really strong about and positive as we saw results for this quarter is that we did have a 69.2% gross profit. Now with sales coming down, you typically see that gross profit come down a little bit as well historically from Q4 to Q1. The fact that we're able to maintain that, I think, sets us up positively to continue to expand our margin as we look forward through the rest of the year. .

Your next question of Matt Taylor with Jefferies.

Nice result here. So maybe I just wanted to double-click on understanding the confidence to raise earnings by so much. But even though you beat revenue in Q1 maintaining that. So really two questions in there. One is just unpacking the sources of EPS upside to make that more clear. And then why not raise the top line a little bit, too, given all the momentum.

Thanks, Matt, for the question. As I think about the top line, and Kyle mentioned earlier, we remain confident in the parts and pieces of our business. Our base -- the legacy-based Globus business is performing at a high level. As I think about revenue and why wouldn't raise the top line, it's still early in the year, number one. But number two, the couple of things we commented on. I commented on the change in approach slightly with enabling tech. That change may impact revenue as you look out the rest of the year, which, again, could impact overall top line performance.

And then secondly, we commented on some lumpiness that we saw in Nevro. As we work to further bring that business in, we're mindful of that as we move ahead. That's the good reason why we didn't take top line up. When you think about the bottom line, really touches back on the things that Kyle said in his prepared remarks. We've seen a nice step forward on gross margins. You just answered the previous question, you haven't seen that sequential step down in gross margin from Q4 to Q1, that's pointing to the manufacturing and supply chain initiatives that are happening. That to us is durable savings that should continue to happen.

So when you think about how we performed last year, we generated, what, $0.68 in Q1. This year, it's $1.12. It's a nice increase. But as you think about where we're at through the rest of the year, those incremental changes should continue to occur, I would say, in the gross margin line. And then stepping down to OpEx, there's still synergy actions that are occurring. And as the business continues to scale, you're going to see greater leverage on the bottom line, which will drive enhanced profitability. All of those things together point to us feeling confident about taking the number up.

Your next question comes from the line of Matt Miksic with Barclays. Matt, if your phone is on mute, could you please unmute your line?

So I was wondering about just robot demand, hospital investments and robot platforms.

Thanks, Matt. This is Keith. Hospital investment robot platforms, if you're thinking about the pipeline and how -- and what we're seeing, I see a healthy environment. Last year, we talked about having a soft Q1. This year, I would say, coming into the year, we came in with a fairly strong pipeline. We converted a lot of that in Q1. And as I look into the second quarter and beyond, I would say we have a large pipeline. The thing that I see in the pipeline this year is that the mix of how we're offering these robots is slightly different, where you see a higher mix of leases and rentals being quoted.

But from my perspective, I see a durable market here, and we're going to continue to aggressively go after the remainder of the year.

That's great. Sorry about the confusion there. So the other was just on what you're seeing competitively. If there's been any change, we all know some of the big moves that other companies have made in the space or maybe you're contemplating making. And any shift in competitive dynamics that you're seeing either from the smaller players in the space or from some of the traditional larger players in spine in the U.S. in particular?

Okay. So as I think about the competitive landscape, what I see is we are competing mainly against Medtronic. That's what I see routinely. Obviously, as more competitors have entered the space, I would say that the speed to closing deals has elongated a bit because what I see happening is hospitals are still -- they're now requiring everyone to go back and look at all the competitive offerings that are out there. But when I sit and look at Excelsius versus the competition, I still think we're very well positioned. When you think about the Excelsius technology, it was designed from the ground up. It's FDA cleared for cranial, cervical, sachrome,pelvic or orthopedic applications, end effector tracking.

There's just a lot of things that are still very unique to Excelsius. And even with some of the things that our competitors have come out with, they're really not just catching up to where Excelsius has been. So as we think about where the robot is positioned and even the rest of our tools, we still think we're really well positioned to compete in this market.

Your next question comes from the line of Richard Newitter with Truist Securities.

I wanted to ask on Enabling Tech. I think this is something you had mentioned the strategy shift. Actually, over the last 2 quarters, it makes kind of sense to try to get the Trojan horse, if you will, into more institutions faster. I guess just with the guidance reiterated, is there a kind of switching of components that you would kind of advise the analysts to kind of move around? I see consensus enabling tech at around $150 million for 2026, we're at $134 million. I'm just curious if there's any comment you could give on either of those two numbers just as we refine our models and get the components right to get to your guidance. .

Yes. Thanks for the question, Rich. We're not going to break out our guidance into the different parts and pieces. But what I'd point you to is in Keith's prepared remarks in my prepared remarks: a, talking about in Q1, we were still having primarily upfront cash rev rec type deals. And Keith commenting on the pipeline being a larger percentage than in the past in terms of these rentals and leases and other types of models. And I think you could use that to help guide your thoughts in the rest of the year. .

Okay. And then I guess just on Nevro, one question we've gotten. I believe final core stimulation might be captured under the pilot Weiser program that CMS has in place. I was just curious, a, is that right? And then b, is that something that you've seen in any of the pilot states so far impacting the results at all and something you think will have an impact at any point going forward?

Rich, this is Keith. I have not seen that impacting us or impacting how we go to market. And I have really no comment because I haven't seen it, I can't say that I've seen it in any specific state at this point. .

Question comes from the line of Ryan Zimmerman with BTIG.

Congrats on a nice quarter. I wanted to ask a couple of questions, if I could. A couple of things on Nevro that we didn't have last year. They actually never reported a 1Q '25. And I'm wondering -- this is kind of a 2-part question, but wondering if you have those numbers that can give them out, just so we have some basis for comparison year-over-year. And then two, given the guidance and in the context of the guidance, does Nevro get worse before it gets better and kind of implied in your comments, Kyle? And then I have a follow-up. .

Yes, Ryan, thanks for the question. This is Kyle. No, we're not going to give out that Q1 of last year number. The only comment I would make is if you looked at Nevro business historically, consistent with our business, you typically see a step down from Q4 to Q1. So that would be expected last year as well. Separately in terms of the expectation and the rest of the year, it's hard to predict because we're starting to see what happened in Q1, finally, that lumpiness that we've been talking about throughout 2025. My expectation is likely that it will probably get a little bit worse before it gets better. And then I'd point you to Keith's remarks of expecting to get back to -- in the direction of historical norms late in the back half of the year.

Okay. Appreciate that. That's helpful. And then on gross margins, I appreciate the comments, the long-term guidance. It's all very helpful. I'm wondering, I mean, is the gross margin opportunity purely a cost exercise from your seat? Or do you need price to to drive your gross margins higher? And can you do that with -- in spine in such a competitive market and so forth, and just kind of lay out kind of some of that in-sourcing opportunities in Ohio or things where you see kind of the best low-hanging fruit, I guess, on gross margins? .

This is Kyle again. So I guess I would answer that and say that, yes, it's some of each. We're obviously focusing on cost and that being something that Globus has always focused on, right, from those manufacturing and supply chain initiatives going back to whatever or NuVasive had done historically from a manufacturing perspective versus what Globus had done trying to align those sites the approach within those sites. That gets you to the point of having some efficiency on the COGS line. .

From the top line perspective, I think it points to our strategy of launching new and differentiated products and trying to identify places where we can get pricing premiums there as well to try to fight off any type of price erosion that's out there in the field and also find opportunities to sell those new and exciting products at a higher premium.

The only thing I would add is, as I think about that we've always modeled -- you're going to launch new products, but you're going to see price erosion, you might be down net 1%. But as you think about getting that mid-70s gross margin profile, majority of that really comes from our ability to drive costs. It's really getting more efficient supply chain, thinking about your contracts, thinking about how you manufacture, you're going to get leverage on your manufacturing footprint as you're continuing to drive growth. A lot of that comes from that ability to really focus on the cost side of things. .

Your next question comes from the line of David Saxon with Needham & Company.

Congrats on the strong quarter here. I wanted to ask on the EPS guidance. So you raised it just, I guess, this is your third time this year. So -- and you're starting to bump up against where the Street is for 2027. So I would love to just understand kind of how you think of Globus' go-forward EPS growth profile like with the path to mid-70s gross margin, maybe Nevro comes back and some other cost actions, like can you be a double-digit grower over the next few years? And then just Kyle, if you could just clarify what the tax assumption is for the guide as well? .

Great. Thanks, David, for the question. Yes. This is Kyle. So in response to your question, thinking about raising guidance here a couple of times. I think what we would point to is seeing the results that we have, both for the end of the year in Q4 as well as here in Q1, we've taken away a positive momentum primarily in gross profit margin expansion. And I think that's really the catalyst to why we feel good about the business. Obviously, we feel good about sales and where we're at with sales. And as you have sales and sales growth, you're going to get leverage on your bottom line as well.

So those two things kind of driving that guidance push a little bit higher. I won't comment on 2027 and specifically what we're looking out in terms of the out years. But if you think about what we've always said with Globus, we strive to be that high single-digit top line grower, and we look to go above and beyond that on the bottom line and outpace that growth in the top line.

And we feel really good about -- we feel really good about our business, and we see a lot of organic growth opportunity across our business. As we look ahead, we're going to be spending more on R&D. We're going to be doubling down in Spine R&D, Enabling Tech R&D. That's stuff that we see happening as we move forward. That will little be a bit of an offset to some of that ...

[Technical Difficulty]

Yes. Please remain on the line. Your conference will resume shortly.

Are you guys back? .

Yes, we're back. Perfect. All right. Technical difficulties, David. Sorry about that.

Yes, no problem. Yes. I mean, I think you answered my question well. So I'll just throw my second one, which is just around the competitive rep hiring. I mean, that's been a driver for a long time. So I wanted to get an update from -- around like where are you from a geographic coverage perspective in the U.S. Is it more about filling any gaps you might have? Or is it more about density at this point ?

Our competitive rep program continues like it has with history. I mean as we look to add, I'm always looking to add density. There's always always could be gaps to fill here and there. But at the end of the day, we're always looking to add quality reps to our team. That hasn't changed. .

Your next question comes from the line of Kaitlin Roberts with Canaccord.

Congrats on great quarter. Any commentary on the geopolitical risks in the Middle East, either from a revenue exposure or a cost supply perspective?

Thank you, Kaitlin, it's a great question. From geopolitical risk, I don't see any material risk from a revenue perspective based on sales in the Middle East or other places. From a cost perspective, also, we see little to no risk there as it relates to geopolitical events. .

Great. And then just any commentary on the progress in Ortho and then EFlex rollout?

No comments at this point. The business -- we're continuing to develop implants. As that becomes more, I would say, prominent, we will update on that in the future. .

Your next call comes from the line of Tom Stefan with Stifel.

Great. First one just on the revenue guide. I wanted to ask about kind of fees in comps, a little wonky in 2Q versus 2H this year. So can you help us think about just kind of revenue cadence rest of the year? And then I'll have a follow-up. .

Yes. Thanks for the question. This is Kyle. I would say your typical you would see in the past, pre any of the acquisitions and the noise that came in from having an acquisition in and during the year. As you typically see a step down from Q4 to Q1 like we saw here and then a step-up in the Q2 roughly leveling off in Q3 and then an increase again for harvest season in Q4. I think I would point you to those kind of historical norms directionally about how revenue will kind of have a cadence throughout the year. .

Got it. That's great. I appreciate that. And then just my follow-up on OUS Spine already back to double-digit growth no supply issues were a dynamic last year. But mentioned finalizing some integrations in the back half. Can you talk about expectations rest of year in OUS Spine? Is there a path to that business potentially accelerating as 2026 progresses? Or is around this kind of 10% range, more reasonable for constant currency growth?

This is Kyle. So good question with that. Now what I would point you to is we saw double-digit growth in the mid-teens on the International Spine business from an as-reported basis. Now if you looked at it from a constant currency basis, it's just under 10%. So we did see some favorability from currency in Q1. And I'd also point you back to last -- last year, first quarter of last year where we had some supply chain disruption and some movement in terms of stocking orders as well, which made it a little bit of a softer comp.

If you go back to what we talked about in Q4 and what I'll reiterate here is that our expectation for that business is to pick back up as we move throughout the year. So despite the fact that we had a strong Q1, I still think as you work your way throughout the year, there's not a massive revenue acceleration in terms of growth year-over-year. But as we look to exit the year and get back to consistently in that low double-digit growth pattern.

I think that we're going to grow into this. Long term, we still think the international business grows low to mid-double-digit 12% to 15%, but we're going to grow into that over time. Our approach is to go deeper in the markets that we're operating in, we're not looking to suddenly add more countries because we want to drive density where we're operating. .

Your next question comes from the line of Matthew O'Brien with Piper Sandler.

This is Anna. I'm on for Matt this afternoon. I'll just keep it to one in the interest of time here. I wanted to ask on U.S. Spine. You commented to 10% U.S. Spine growth, strong run rate in the past few quarters. Wondering if you could provide any more detail on how much of that growth comes from market share gains versus underlying market growth? And then just any comments you could provide on the health of the market in general?

This is Keith. I'll take that question. I would say that the majority of our growth is really coming from share gains. We don't spend a lot of time talking or looking into research in terms of how the market is performing, but I would say that the market probably growing 3%, give or take. From my perspective, the majority of growth you're seeing from us is obviously in excess of that, and that's because of us taking share. .

Your next question comes from the line of Matthew Blackman with TD Cowen.

It's [indiscernible] on for Matt tonight. Keith, maybe just a question to go back on enabling technology. But we've seen like soft tissue robotic companies have a pretty regular cadence of launching their next-generation systems. I was just thinking, as you're looking at ExcelsiusGPS development road map, how are you kind of thinking about the system evolving since you're stepping up on R&D spend? I mean, is the focus still to broaden applications or end effectors or are you focused more on efficiencies? And maybe as the next generation comes, does that bring more surgeons into the fold about using robotics in spine surgery?

It's going to be -- it's a great question. I'm a little more limited into my comments. But as I think about the evolvement evolution of Excelsius, it's really coming down to more refined software and how the software performs in the OR, interbody fusion. I think about DuraPro, integrating DuraPro and additional cranial procedures. That's what we're thinking about as we move forward in terms of enhancing the software. There's lots of unpack there, but those are my comments that I would leave for now. .

Okay. Maybe if I can just squeeze one in. Sorry, for the time. But we've heard other ortho and spine companies talk about weather and the Kaiser strike, but was that any drag for you in the quarter? And would you get those procedures back in the second or throughout the year?

I would say there's maybe a small impact. But given the performance of the business, I don't want to say that we could have finished higher. I'm comfortable with our prepared comments. As we think about the rest of the year, we're thinking about growing wherever we can and driving smart growth across our business. .

Thank you. With no further questions, this concludes the Globus Medical earnings call. Thank you for participating. You may now disconnect.

Welcome to Globus Medical's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Thank you, Dana, and thank you, everyone, for being with us today. Joining today's call from Globus Medical will be Keith Pfeil, President and CEO; and Kyle Kline, Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical website at www.globusmedical.com.

Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2025 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our SEC filings, including the 10-K, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should be -- should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available on the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website.

With that, I will now turn the call over to Keith Pfeil, our President and CEO.

Thanks, Brian, and good afternoon, everyone. Momentum seen coming out of our second quarter continued and accelerated as we progressed through 2025, resulting in a record Q4 performance. Our team delivered, showing great poised and determination during a period of growth and change. I'm proud of our team, and I'm thrilled to be here today discussing these results as well as provide insights into the future. Focusing first on our top level financial performance for the full year 2025, Globus delivered $2.939 billion of revenue and $3.98 of fully diluted non-GAAP earnings per share, growing 16.7% and 30.8% as reported, respectively. Full year 2025 base business revenue, excluding the contributions from Nevro, grew 5% as reported, with Nevro adding $293.6 million in revenue for the full year.

Shifting into Q4. Revenue totaled $826.4 million, growing 25.7% versus the prior year quarter, while non-GAAP EPS finished at $1.28, growing 52.1% versus Q4 2024. Digging into this further, our base business revenue of $726.7 million grew 10.6% versus the prior year quarter and included double-digit U.S. spine growth as well as record enabling technologies revenue for the quarter. This performance serves to underscore my opening comments on the growing momentum in our business.

Looking at the second half of 2025 versus the second half of 2024, our consolidated base business grew organically at 8.8%. This, coupled with continued back-end execution, helps propel us to our sixth consecutive quarter of adjusted gross margin rate expansion as well as returning the base business to a mid-30s adjusted EBITDA finishing at 35.7% in Q4 '25 and 33.4% for the full year. When we announced an evasive merger, we emphasized its compelling financial profile for shareholders and specifically cited our focus on delivering mid- to high single-digit sales growth as well as a mid-30s adjusted EBITDA profile by the end of the third year. Our Q4 and full year 2025 results demonstrates our performance against those objectives. Our U.S. Spine business grew 10% in Q4 as compared to the prior year quarter, coming off a third quarter where U.S. Spine also grew 10% versus the prior year third quarter. We see this trend continue and now sit at 48 weeks of consecutive growth with this momentum continuing thus far into our first quarter of 2026. We remain encouraged by this early look into the new year.

Top to bottom, our Spine business is executing. Commercially, we are meeting the needs of our customers while remaining aggressive on the recruiting front. Operationally, we've leaned into inventory and set production to feed this growth instilling confidence in the sales force while ensuring we can meet the needs of our customers and the patients they serve.

Looking across our U.S. Spine product portfolio, growth was seen in the quarter across substantially all of our product categories, demonstrating the broad nature of this momentum. However, I do want to highlight the continued success for our expandable TLIF products, including products such as SABLE, RISE, Altera, TLX, Modulus and Caliber, our MIS pedicle screws, including CREO MIS, Relin MAS, CREO 1, Reline O and REVOLVE and our line of power tools, including DuraPro. Surgeons continue to provide positive feedback on DuraPro, specifically highlighting the ability to cut and remove bone around the neural elements allowing them to feel more confident in the safety for their patients. Features such as proprietary brushes are helping to facilitate the removal of degenerated disks and a safer more controlled fashion compared to the traditional methods and allowing them to perform these removals in less time.

Overall, our investment in sets and inventory around these key products has fostered their continued growth and positions us well to use these products to springboard additional growth in 2026. We launched a total of six products in spine during 2026 with four of those launches occurring in Q4, which are CREO traction, Reline 3D towers, AMS Freehand Instruments and HEDRON C MIS. CREO traction is a reduction instrument system used with CREO Screws and deformity correction. Reline 3D towers are part of the Reline 3D pedicle screw system and our use for deformity and MIS fixation cases and enable MIS rod placement. AMS Freehand is a software and instrumentation systems to use all of our AMS spacer portfolio with the EGPS and e-hub systems. This completes the core NUVA products to be used with our EGPS,e-Hub and E3D ecosystem. HEDRON C MIS is a 3D printed cervical fusion spacer designed to stabilize cervical vertebra and promote bone growth infusion, which uses a biomimetic lattice designed to promote bone growth on to and through the implant.

Spine product development remains a focal point moving forward as we step up our investment to bring new and exciting products to market aligning with our reputation of leading with innovation. Q4 enabling technology sales were $55.6 million, growing 18.5% versus the prior year quarter driven by increased sales of EGPS systems. We saw pipeline deals closed during the quarter, which has been part of the elongation that we had experienced during the year. Examining further, the deal composition of capital sales during the quarter were primarily cash deals with immediate revenue recognition. Consistent with my comments last quarter, we remain nimble in how capital deals are structured and [indiscernible] new pipeline deals with greater flexibility. We are positioned well and remain positive on this business as we enter 2026.

The Excelsius platform, which delivers a single vendor spine ecosystem across capital, implants and software provides for consistent workflow, data continuity and training across the OR. When stepping back and looking at the broadening competitive INR landscape, Globus continues to stand alone when it comes to effortlessly pairing imaging, navigation and robotics together. Recent competitive offerings cleared only served to reinforce the workflow of ExcelsiusGPS, which was introduced in 2017 as a floor-mounted navigation-based robotic approach. If a surgeon desires robotic navigation imaging, they compare an an AGPS within E3D, bringing together best-in-class robotic functionality and state-of-the-art intra-op imaging capabilities working seamlessly together. If the surgeon desires freehand navigation, they can combine the ExcelsiusHub and the [ Exar ] augmented reality headset with the E3D imaging system. The features and benefits of these products working seamlessly together is second to none.

In a continually evolving market, ExcelsiusGPS remains one of a kind. As a reminder, ExcelsiusGPS is on mobile unit with all of its technologies contained within a native unified platform. In addition to Spine, the EGPS robot has cranial applications and other orthopedic indications, utilizing IP-protected advanced navigation features essential for safety, including surveillance markers, deflection and offset meters as well as a track and defector. EGPS remain stand-alone, and that it is a surgeon controlled system via our Drapes Touch screen monitor, which is in the surgical field. All of this pairs with our industry-leading and continually refreshed implant portfolio. Pairing the features of the Excelsius suite of technologies, along with pricing and deal flexibility, our team is unbridled to aggressively go after market share and drive adoption.

A key focal point in 2026 is to penetrate and launch new programs and foster utilization and service excellence across the info base. To date, we've seen over 120,000 procedures and will continue to drive adoption as we move forward. Enabling technologies have and will remain a vital part of our ecosystem as we view it as execution layer helping to achieve improved surgical outcomes. We will continue to innovate with focus, speed and execution, leveraging our resources to efficiently deliver solutions to address unmet clinical needs.

Our trauma business delivered approximately 27% growth in Q4 versus the prior year quarter, driven by continued uptake of our legacy trauma line as well as our precise limb-lengthening products. Looking back on 2025, our strategy of focusing on Level 1 and Level 2 trauma centers has shown results coupled with meaningful product launches, including our Anthem Elbow plating system, which was launched in the third quarter of 2025. This product has exceeded our expectations thus far in both revenue and sheer demand. While this helps to further fill our bag, increasing our ability to bid on primary or preferred vendor contracts, it is also a perfect example of Globus driving innovation in an established category.

We will capitalize on this demand and continue to launch new products as we enter into 2026. The Nevro business delivered $99.7 million of revenue during the quarter and adjusted EBITDA of 21.2%. Looking ahead, we remain positive on this business as we finalize its integration to ultimately drive profitable sales growth. This path to growth may not be lean in the short term, but our expectations are high over the long term.

We will focus on developing new SCS products provide mechanical solutions, cross-sell with legacy Globus products while researching other types of neuromodulation devices. This, coupled with our new focus on competitive recruiting are steps that will be taken over the medium to long term. Overall, we are thrilled to have this technology in our portfolio as it provides us with the ability to enter a market adjacency while expanding our continuum of care. As I reflect on Globus, I looked at 2025 and [indiscernible] as well as what I see ahead. What started as a small company focused on spine, gradually morphed into a broader muscular skeletal company, and now is leaning with deliberate intensity into a broadening technology platform a leading spinal implant portfolio and adjacent orthopedic implant solutions.

We are moving past the M&A digestion of the past several years and see a path to meaningful and expanded product development investment continued above-market sales growth and sustainable operating leverage. Our adjacency expansion with the Nevro acquisition gives us a proof point into pain while continuing to drive differentiation in our legacy businesses. Our moats of innovation, vertical integration, a high-touch sales force, a scalable platform and financial discipline allow us to move fast to address our long-term goals of improving outcomes and solving unmet clinical needs.

We sit here today with the ability to focus and invest where we see fit to expand our core Spine business while growing others and see ourselves as a procedure-enabling med tech platform that integrates imaging, navigation, robotics and implants in a more thoughtful way to foster continuous learning and continuous improvement for ourselves as well as our surgeons. How do we get there, you ask? It's bringing together patient selection, surgical techniques and complementary implants with technology to drive the proceduralization while creating a closed loop system. Simply stated, it's an exciting time to be at Globus. We want to bring meaningful improvements to patient care and win in the marketplace, and we have the team to do it.

Thank you to all the Globus team members for successful 2025 and for our prospects looking into the new year. I will now turn the call over to Kyle for his prepared remarks.

Thanks, Keith, and good afternoon, everyone. To expand on Keith's comments, we've had a truly exceptional finish to 2025 with a record-setting quarter in both top and bottom line results. Operationally, we continue to execute our integrations of the recent merger and acquisition of both NuVasive and Nevro. Our revenue growth was driven by our domestic Spine business growing 10% over the fourth quarter of 2024 and continuing to build upon the trend of above-market growth seen in Q2 and Q3 of this year. Our enabling technologies business also saw record growth, achieving over $55 million of revenue in the quarter while posting record sales in terms of dollars and units. As we've mentioned in our Q3 earnings call, we updated our guidance to indicate our expectation was that Nevro would be accretive to earnings in the first 9 months post acquisition, and today, I'm affirming that the Nevro business was EPS accretive within the first 9 months post acquisition. This is a phenomenal achievement by the Broad Globus and Nevro teams, beating initial guidance by 15 months.

Today's discussion will focus on providing insights into our quarterly and annual business performance, including the impacts of Nevro, a look back on synergy execution against our two most recent acquisitions and an update on guidance for 2026. Full year 2025 revenue was $2.939 billion, growing 16.7% on an as-reported basis and 16.2% on a constant currency basis. Net income was $537.9 million, resulting in $3.92 of fully diluted earnings per share. Non-GAAP net income was $545.6 million, delivering $3.98 of fully diluted non-GAAP earnings per share or 30.8% of non-GAAP EPS growth over the prior year. Full year adjusted EBITDA was 31.3%.

Focusing on our fourth quarter results, revenue was $826.4 million growing 25.7% on an as-reported basis and 24.7% on a constant currency basis as compared to the fourth quarter of 2024. GAAP net income in the fourth quarter of '25 was $140.6 million, and GAAP fully diluted earnings per share was $1.03. Non-GAAP net income was $174.6 million compared to $117.4 million in the prior year quarter, growing 48.7%. Our fully diluted non-GAAP earnings per share were $1.28, growing 52.1% over the prior year quarter and consolidated adjusted EBITDA margin was 33.9%. Our Q4 2025 base business Globus adjusted EBITDA margin was 35.7%. Stand-alone Nevro adjusted EBITDA margin was 21.2% for the quarter, further expanding from the 16.2% adjusted EBITDA margin achieved in the third quarter of this year.

Our fourth quarter net sales of $826.4 million reflect base business Globus sales totaling $726.7 million, growing 10.6% as reported and on a day adjusted basis with the same number of selling days in the U.S. and International and Japan compared to the prior year. The growth in our legacy Globe sales was primarily driven by U.S. Spine, which achieved 9.7% as reported growth, enabling technologies, which achieved 18.5% as reported growth and trauma, which achieved 26.8% as reported growth. Nevro contributed $99.7 million of revenue during the quarter. Musculoskeletal revenue was $770.8 million growing 26.3% over Q4 2024.

Legacy Globus Musculoskeletal revenue was $671.1 million, growing 9.9% as reported. Enabling technologies revenue was $55.6 million, growing 18.5% as reported. As mentioned in my opening statements, enabling technologies achieved record sales in terms of dollars and units for both the total capital portfolio and our ExcelsiusGPS robotic system. U.S. revenue during the fourth quarter of 2025 was $665.3 million, growing 27.5% as reported. Legacy Globus U.S. revenue during the fourth quarter of 2025 was $576.6 million, growing 10.5% versus the prior year quarter. Our legacy Globus U.S. growth was primarily driven by our U.S. Spine, Neuromonitoring, Trauma and enabling tech businesses. Our U.S. Spine business continued the trend of above-market growth for the third straight quarter, achieving 9.7% as reported growth after notching 9.6% as reported growth in the third quarter and 7.4% day adjusted growth in the second quarter of this year.

Q4 2025 International revenue was $161.1 million, growing 19% as reported and 14.2% on a constant currency basis. International revenue for the legacy Globus business was $150.1 million, growing 10.9% as reported and 6.5% on a constant currency basis compared to the prior year quarter. International growth was seen across the board, led by our enabling technologies and international spine businesses, headlined by United Kingdom, Australia, Germany, Brazil, Mexico and Poland. As previously mentioned in 2025, our International Spine business was impacted by supply chain shortages early in the year. Despite these challenges and the above market growth in the U.S., which was prioritized from a supply chain perspective, we saw incremental improvement in each sequential quarter within the Legacy Globus International Spine business, culminating with a record sales quarter in the fourth quarter of 2025.

GAAP gross profit margin in the quarter was 65.7% compared to 57.2% in the prior year quarter, with the resulting improvement driven primarily by lower inventory step-up amortization. Adjusted gross profit margin was 69.2% compared to 67.1% in the prior year quarter, primarily driven by favorable sales mix, sales leverage and the impacts of synergy execution. Our Legacy Globus adjusted gross profit margin was 68.7%. Full year GAAP gross profit margin was 64.3% compared to 55.6% in 2024. Full year adjusted gross profit margin was 68.1% compared to 67.4% in 2024. We've seen improvement in adjusted gross profit metrics over each of the prior six sequential quarters as we've leaned into manufacturing initiatives, driving improvement quarter after quarter as we build back to a mid-70 adjusted gross profit target. We've seen impacts in cash [indiscernible] and lower inventory on our balance sheet and have steadily seen the impacts in our adjusted gross profit margin.

As we look ahead to 2026, we expect at least a 100 basis point improvement on adjusted gross profit with our full year adjusted gross margin landing in the range of 69% to 70% as we continue to benefit from actioning manufacturing initiatives. We reiterate our long-term goal for mid-70s adjusted gross profit percentage, noting that the foundation has been laid over the past year to achieve this goal.

Research and development expenses in Q4 2025 were $36.2 million, or 4.4% of sales compared to $33.4 million or 5.1% of sales in the prior year quarter. Legacy Globus R&D expenses totaled $32.1 million or 4.4% of sales. The resulting decline in legacy Globus R&D, both in dollars and as a percentage of sales is attributable to synergy capture, resulting in lower headcount and leverage from higher sales volume. Nevro R&D was $4.1 million or 4.1% of Nevro sales.

Full year research and development expenses in 2025 were $147.2 million or 5% of sales compared to $163.8 million or 6.5% of sales in 2024. Recall that 2024 R&D costs included an acquisition of in-process research and development worth $12.6 million. Without this charge, research and development expenses were $151.1 million or 6% of sales. As we look ahead to 2026, we expect R&D expense to be in the range of 5% to 6% of net sales as we ramp spend to further invest in innovation and technological advances in the spine, orthopedic, robotic and the broader musculoskeletal market.

SG&A expenses in the fourth quarter of 2025 were $318.5 million or 38.5% of sales compared to $253.2 million or 38.5% of sales in the prior year quarter. Legacy Globus SG&A expenses were $268.7 million or 37% of sales. Current period SG&A expenses included onetime net charges for estimated litigation of $13.4 million. Excluding these onetime charges, which we adjust out of our non-GAAP reporting, our consolidated SG&A expenses were $305.1 million or 36.9% of sales, and our Legacy Globus SG&A expenses were $255.3 million, or 35.1% of sales. For Legacy Globus SG&A, the slight increase in spend after removing the onetime estimated litigation charge is attributable to increased sales compensation costs from higher volume, partially offset by decreased employee-related costs from synergy actions and lower employee benefit costs. Nevro contributed $49.8 million of SG&A expenses in the quarter or 49.9% of Nevro sales.

Full year 2025 SG&A expenses were $1.178 billion or 40% of sales compared to $981.4 million or 39% of sales in 2024. Excluding the impacts of onetime net charges for estimated litigation in 2025, our consolidated SG&A expenses were $1.141 billion or 38.8% of sales. As we look ahead to 2026, we expect SG&A expense to be in the range of 38% to 39% of net sales.

Q4 2025 net interest income was $3.3 million compared to $0.8 million of net interest income in the prior year quarter. The $2.5 million favorable change is being driven by a decline in interest expense from the paydown of the remaining $450 million outstanding convertible debt in Q1 of 2025 that was assumed from the NuVasive merger. The GAAP tax rate for Q4 2025 was 16.9% compared to negative 7.4% in the prior year quarter. The prior year rate was impacted by stock option windfall benefit and favorable tax credits. The current period rate includes impacts from a valuation allowance release for R&D credits. Our non-GAAP tax rate for the quarter was 26.6% compared to 20.5% in the prior year quarter. Full year 2025 non-GAAP tax rate was 24%, compared to 23.4% in 2024.

As we look ahead to 2026, we expect our non-GAAP tax rate to be in the range of 24% to 25%. Cash, cash equivalents and marketable securities were $629.1 million at December 31, 2025, compared to $956.2 million at December 31, 2024. The decline in cash is driven by three main factors. One, as mentioned previously, in March, we fully repaid in cash, the remaining $450 million outstanding convertible debt assumed from the NuVasive merger. Two, in April, we acquired Nevro for a purchase price of $252.5 million. And three, during 2025, we've spent $300.5 million to repurchase approximately 4.3 million shares. In Q2 2025, we announced a new share repurchase program of $500 million. During the fourth quarter, we repurchased $45 million or 0.8 million shares and have $390 million of authorization remaining under this program at December 31, 2025.

While share repurchases remain a part of our capital allocation strategy, we continue to first prioritize internal investment in innovative product development efforts, build sets for our sales personnel across the globe and increase our manufacturing footprint through CapEx. As we look ahead to 2026, we expect CapEx to be in the range of 5% to 6% of net sales. As a final priority, we will continue to evaluate complementary M&A while focusing the use of our capital on driving investment for long-term profitable growth.

As a segue from some of Keith's prepared remarks, I wanted to take a moment to highlight the success of our recent acquisitions and integrations of both NuVasive and Nevro. First and foremost, in order for both of these deals to be successful, it was imperative that we grow revenue. 2024 was a year focused on sales retention for the Legacy Globus and NuVasive businesses. As we enter 2025, we pivoted our attention to sales growth with 2025 showing an acceleration between the middle and late quarters of the year. Our focus for the Nevro business in 2025 was retaining sales and stabilizing the business through changes that come with an acquisition. To date, we've been successful in the first three quarters. While we are not ready to put integration risk behind us for Nevro, we do believe that a strong first 12 to 18 months will set us up to capitalize on future growth opportunities.

From a synergy execution standpoint, starting with NuVasive, in Q4 2023, we communicated an expectation of achieving $170 million of synergies over a 3-year period with 40% being recognized in the first full year post merger close, another 30% being realized in year 2, and the final 30% being realized in year 3. Through December 31, 2025, 2 years, 1 quarter into our 3-year time line, we have actioned $200 million of NuVasive synergies, beating our target by $30 million and nearly an entire year ahead of plan.

Turning to Nevro. In our Q4 2024 earnings call, we announced our plan to have Nevro be accretive to earnings in the second year of operations, meaning that we expected to achieve $0.01 or more of non-GAAP fully diluted earnings per share accretion by the end of Q1 2027. Recall that Nevro had generated a $113 million net loss on $409 million of revenue in fiscal year 2024.

As I mentioned in my opening remarks, the business is accretive to earnings in fiscal year 2025, 15 months sooner than initially expected. Synergy actions related to both the NuVasive and Nevro acquisitions have primarily impacted SG&A expenses and cost of goods sold, with a smaller amount impacting R&D costs. These synergy actions have been seen throughout the P&L and cash spending with adjusted gross profit margin improving from 65.5% in Q4 of 2023, the first full quarter post merger to 69.2% in the recently completed Q4 2025. Selling, general and administrative costs improving from 39.7% of sales in Q4 2023 to 38.5% of sales in Q4 2025. And free cash flow generation increasing nearly 150% from $81.8 million in Q4 of 2023 to $202.4 million in Q4 2025.

Pivoting to financial guidance. Globus Medical reaffirms its full year 2026 revenue guidance of $3.18 billion to $3.22 billion, and we are increasing our guidance for non-GAAP fully diluted earnings per share to be in the range of $4.40 to $4.50 from a previous range of $4.30 to $4.40. The revenue guidance implies growth over 2025, ranging from 8.2% to 9.6%. The revised fully diluted non-GAAP earnings per share guidance implies growth over 2025, ranging from 10.6% to 13.1%. The upward revision of fully diluted non-GAAP earnings per share guidance reflects our confidence in sustained margin expansion as we seek to drive above-market profitable growth.

In closing, I'd like to extend my thanks and appreciation to the entire Globus team for another year of exceptional execution. Together, we've reached milestones above and beyond our initial expectations. The momentum seen in revenue, earnings and cash flow generation in the back half of 2025 has set the stage for 2026. We are well positioned to further penetrate our markets, expand margins and accelerate innovation in the upcoming years, while we continue to drive long-term profitable growth and value for our shareholders as the leading musculoskeletal technology company in the industry.

Operator, we will now open the call for questions.

[Operator Instructions] Our first question comes from the line of Shagun Singh of RBC Capital Markets.

Congratulations on a great end to the year. I guess just two sets of questions from me. First, on the base business, can you bridge us from your 9% second half 2025 and 9.4% [indiscernible] growth, exiting the year to, I guess, mid- to high single digits in '26. Is that conservative? And then can you maybe put a final point on margins. It seems like you delivered a really strong quarter you're talking about long-term mid-70s outlook and above-market profitable growth. So how should we think about margins over time?

Thanks, Shagun. This is Keith. Thanks for giving us the call or sending these questions over. So I think, first of all, when I think about our sales growth, really, when I think about 2025, it was really a tale of two halves. The first half of the year, we got off to a slow start. We had a really a disappointing Q1 that really moved forward in Q2, led by some disappointing results in enabling tech. But one of the things that we start to see in Q2, which carry forward into Q3 and Q4 was U.S. Spine come back to life. As I look at the year, we did a really nice job growing our sales force with competitive rep conversions. We think about the products that we've launched. We launched nine products in Spine in 2024 and another six in 2025, those really helped drive some of that growth. And on top of that, like I said in my prepared remarks, really leaned into inventory and set production, all of that start to come online as we go through the year, which allowed our momentum to continue. As I think about how we close the year, we saw a normal seasonal bump in Spine. And as you get into Q1, the thing I'm encouraged by, and really ties back to my prepared remarks, is that we're still seeing momentum in our U.S. spine business. Our trauma business, again, that performed better as we go throughout the year. I was very encouraged by that. As it relates to margins, Kyle will give you a couple of brief comments on margins.

Yes. From a margin perspective, obviously, we ended the year here at 69.2% from a gross profit perspective. Next year, what I said in my prepared remarks is we expect at least a 100 basis point improvement in gross profit, somewhere ranging from the 69% to 70% for the full year, compare that back to the 68.1% we did for full year 2025. As you step through the year. I think as Keith commented on the Q4 results from a revenue perspective, we always have that seasonal lift in Q4 and then you typically see a sequential slowdown as you go from Q4 into Q1. We feel positive on what we're seeing in terms of U.S. Spine, but we tend to still see from a base business perspective, a little bit of step down in Q1, building up into a little bit higher of a Q2 and Q3 and then stepping up again seasonally into Q4. We think that our gross profit margin will follow that similar cadence that we've seen in the past.

Our next question comes from the line of Vik Chopra of Wells Fargo.

This is Namrita on for Vik. Could you please share your thoughts on how you paint your debt from a market share perspective? And also talk about the general strength of the Spine market?

This is Keith. Thank you for the question. As I think about our U.S. Spine business, I continue to believe that we're growing above market. I think that's evidenced in basically achieving 10% growth in Q3 and Q4 and really seeing some of that momentum continue as we get into the first quarter. We don't really comment a ton on the overall market. But I guess from my standpoint, I view this in my market as being relatively healthy.

Our next question comes from the line of Richard Newitter of Truist Securities.

Maybe just for me, look at the congrats on a lot of aspects to your performance. But one of the things that really struck me outside of the margin was the enabling technologies performance, and how that bounced back. Just wondering if you can characterize the environment a little bit what changed, if anything, from earlier in the year, clearly something I think got better for you guys or maybe it's just lumpy and it played out the way you thought. And then as you're answering that, if you could talk a little bit about an operating lease strategy or more of a placement strategy as you go forward, I think you had alluded to more of those types of situations on a go-forward basis. What's contemplated in your guidance for '26 on that front? And how should we think about that?

Rich, this is Keith. Thanks for the question. So enabling tech was, I would say, a very lumpy year. As I commented earlier, with Sagun's earlier question, we saw a disappointing Q1, a nice bounce back in Q2, again, a disappointing third quarter. And really when we got to the fourth quarter, the thing that we saw is our pipeline -- I spoke a lot about during the year about an elongation of pipeline deals taking longer to actually just close. We saw those deals come to fruition in the fourth quarter. And it really ties back to what I was saying throughout the year is that I didn't see us losing deals, but the deals were taking longer to close for one reason or another. And as I look into 2026, I still see a pipeline that I feel is robust. And as I look at where we're at in the quarter, I'm pleased with where we are thus far. Obviously, there's still more work to do in the quarter, but I'm pleased with what I see. And as it relates to getting more flexible with our deals, yes, operating leases are one of the things or one of the options that we could provide to our customers. As I noted in my prepared remarks, we're absolutely going to be more aggressive because really what we're trying to drive is placement of that capital to drive really the implant pull-through. That's the focus and really ties back to saying that, look, we want to make sure these capital units get placed, and we're driving successful launches of the programs to generate strong implant pull-through. You should expect us to be aggressive in the marketplace as we get into 2026.

Yes. The only comment that I would add, Rich, from a guidance perspective, is right, our contemplation in terms of where we have our guidance is based on some mix of sales as well as fair market value leases, placements, et cetera. we're going to continue to make every single 1 of those options available, and we do think that there will be some mix in 2026.

I guess just higher mix than 25%. Is that fair?

Yes. I would say that the mix of lease approaches will be higher this year -- in 2026 and in 2025. Because we really got more aggressive quoting them as we got to the back half of the year.

Our next question comes from the line of Travis Steed of BoA Securities.

A couple of questions for me. One, over the last couple of quarters, U.S. Spine growth has really accelerated. And a question we get from investors a lot is how sustainable is that U.S. buying growth? And so I just would love to kind of get a sense on your ability to kind of understand how sustainable this kind of growth rate is in U.S. Spine and then your competitors recently launched a new enabling tech robot navigation system, if you will. I'm just kind of curious how you're contemplating that if you see that as a competitive portion of the market or not.

So thanks, Travis. This is Keith. So number one, as I think about spine and the growth, we see that growth for our business is durable and something that we look to sustain as we move forward. I think back to some of the things I spoke about, continued to launch products in spine. We've continued to grow our sales force. It is fair to assume that we are aggressive in bringing competitive reps into the business. And more importantly, like I said in my prepared remarks, we're really looking to get some of the M&A noise behind us and get back to focusing on really what make Globus great, that's launching new products driving competitive rep conversions and driving implant pull-through. As I think about the leadership team, we're all focused around those specific areas to drive the business as we get into 2026. And do you want to repeat your second part of your question, please?

One of your large spine competitors just got approval for a new robot navigation system, and I didn't know if you -- how you're looking at that in the marketplace?

Yes. No, I mean, competition is continuing to evolve, and we still view that Excelsius is a great option for us and for our customers. I commented in my prepared remarks, what we brought to market in 2017 was a floor-mounted navigated based robotic system. I think some of the competitive offerings that have recently come out only served to reinforce what we came out with back in 2017. As I think about the features that we have providing best-in-class features and technology, I believe we are well positioned to really weather any competitive threats that we see. I think that combining the technology along with us getting more aggressive in how we get robots into the accounts, positions us well for 2026.

Our next question comes from the line of Matthew Blackman of TD Cowen.

Can you hear me okay?

Yes.

A couple of questions, and I apologize, I was bouncing around calls. So you may have touched on this a little bit. But just thinking about Nevro and really think bigger picture beyond 2026. Just help us think through when that business drop starts recalibrating to at least sort of corporate type levels of growth. And to get there, do you need more stuff in the bag portfolio enhancements, whether they're organic or inorganic? And then I just got one follow-up.

Okay. It's a great question. I mean as I commented earlier, Nevro allowed us have a pain point in our portfolio. We are excited to bring that business in. And as we see it in 2026, we'll work through some lumpiness as we recast our go-to-market approach. But I think as you look at the business, one of the things that we want to drive is consistency, and we want folks to get back to the basics. I just came back from the Nevro sales meeting this past weekend. And I was really encouraged by the team, the team getting fired up, understanding that we're going to market as one company. And from my perspective, getting that mindset across the team is infectious, number one. But number two, the team knows that they're with a company that's going to drive investment and really look to foster continued product development. Your comment on do we need new products, we're going to continue to evolve and bring new products to market. I think over time, you're going to see us look at other neuromod options such as peripheral nerve. But as time passes, we want to drive to cross-sell with legacy GMED products. We want to develop new spinal cord stimulation products. We want to look at mechanical solutions. And like I said earlier, we want to get back to the basics of running that business. And lastly, but most importantly, we want to drive competitive recruiting. I think that is something that we think will be a catalyst for this business as we move forward.

Okay. I appreciate all that. And then my follow-up question is International. It's been a heavy lift in International even before the NuVasive initiation and some supply constraints you're working through today. So could you maybe just take a step back and what the headwinds [Audio gap] are in the International I think about that business returning to. I think you've talked about double-digit growth. How do we get there? And I guess the last piece of that is, are there specific geographies where there's a heavier lift ahead Japan, Latin America, Europe, or do those sort of extra attention to get you back to sort of that double-digit type growth rate? Or is it more broad-based than that?

Yes. Thanks for the question. So as we talked about our international business historically, we think that, that is something that can grow 12% to 15% over the long term. When I look back the last 12 months, International was a bit more of a challenge. But what we've sought to do is go deeper in the countries that we operate in. We're not looking to suddenly add more countries to drive growth rate because we see ample ways to grow deeper where we're at. As I think about geographically, when I look at 2025, EMEA, specifically Western Europe and also some of the countries that Kyle commented on, we're really integral to helping drive growth. We saw some more challenges, it was in the APAC region. You mentioned Japan. We have to get -- drive some continued growth there and drive some sustainability. LatAm, as I think about the LatAm region, there was some choppiness there. But I think as we exited 2025, looking at the International business overall. I think we're well poised going into 2026 to start to get back on track of that business. As I look ahead in 2026, I see that we have the ability to grow, but I think our growth will get better as we get further into the year.

Our next question comes from the line of Matt Miksic with Barclays.

Congrats again on a really strong finish to this year and strong guide. So one question on some of the leverage that you've been delivering. Maybe if you could talk a little bit about where that's coming from? Helping us understand that a little bit better. And then second, just on competition and some of the strategic moves that other companies have made in the space. Anything you're feeling yet in terms of changing momentum around the Stryker divestiture or the planned J&J divestiture or anything you call out that tells you that sort of the tenor of competition is changing a little bit. But thanks so much for the questions, and congrats again.

Thanks, Matt. This is Kyle. I'll take the first question and then pass it over to Keith for the second one. But just thinking about leverage and thinking about how our businesses are structured, we've historically said that or U.S. Spine, right, as that business goes the rest of the business and down through the bottom line goes as well, and what we've seen as we've accelerated growth starting in Q2 and then Q3 and Q4, you've seen that business grow, and you've been able to see the margins come along with it. If you've gone back, and you take a look at what we're seeing from a gross profit perspective, what we're seeing from an EBITDA and from an earnings per share perspective, you'll see it go as the base spine business grows. We have fixed cost leverage that we can get throughout COGS. You also see some of that within our G&A and then some of our non-variable commercial-type structures, et cetera. But you really see it top to bottom across the board, and it really kind of follows as that U.S. Spine business grows.

Matt, the second part of the question, really the competitive landscape. I mean we've seen the competitive landscape evolved over the last year, you commented Stryker and some of the recent news with J&J and [indiscernible]. As I think about that, we remain aware. But what's important to me is that our team stays focused on our internal objectives. When you think about Globus, we're continuing to invest in our Spine portfolio, that's first and foremost. We still think we have best-in-class technology, and we want to drive successful robotic programs. Those things, I believe, make us hugely marketable as we go out and try to bring in competitive reps. And as I think about some of the changes that have occurred or are occurring, that, to me, creates opportunity for us to drive our business. But as I think about the leadership team and where we are, I want the team focused on the things that we need to accomplish because I believe if we accomplish them, the results will speak for themselves. I'm not seeing any, I would say, challenges as it relates to some of the competitive threats that are out there or competitive changes, but we continue to monitor it. But again, I want us to stay focused on the things that we need to do to drive our business because I believe that we're well positioned looking ahead.

Our next question comes from the line of Matt O'Brien of Piper Sandler.

This is Ana here for Matt. Wanted to touch on never again. I mean really impressed with the cost reductions we've seen. I'm just wondering how much more wood there is left to chop there? And how much more, I guess, optimization there is from a synergy perspective, and if it's possible that we see more synergies than originally anticipated like we did with NuVasive.

Thanks for the question. This is Kyle. So as we think about the Nevro business, and where we expect to take it from here, right? We've been very active here over the first 3 quarters, 9 months or so from a synergy perspective. We focused mainly on the G&A bucket removing those redundant costs that we could identify, whether through headcount or non-headcount-related costs. Those actions largely have taken place over a 9-month period here. As we move forward into 2026 and beyond, we're really pivoting towards how do we maintain the sales force and ultimately grow our sales volume as we're able to grow the sales volume, we expect to get incremental leverage and see that profitability grow further. Something we have not focused on yet, but it is something that we want to continue to evaluate is just the manufacturing aspects of the business as well. Their COGS are about 68%, 69%, or gross profit 68% to 69% on average here over the past nine months. That's somewhere where we think we can get some improvement on, not dramatic as making little tweaks here and there, but I don't see any large synergies really that we have out there to execute on the Nevro side.

Our next question comes from the line of Caitlin Cronin of Canacchurn ratord Genuity.

Just starting with Enable and tech, you already touched on it, but just wondering if you're still seeing elongated deals or time lines compressing there? And then just thinking about Nevro, which gives you access to the pain call point, how are you really thinking about your broader strategy to access lower acuity settings as more spine procedures move into these sites of care?

This is Keith. I appreciate the questions. So I think about -- I'll answer the second part of your question first, Nevro and really the expansion. So Nevro brings us into smaller centers, more pain. I commented earlier that one of the things that we're going to focus on is driving the cross-sell of Legacy Globus products with Nevro and pain. As we think about surgeons, pain surgeons that we've had come through Globus and really learned the business and really learned Nevro. There's been a lot of excitement to see that Nevro was paired with us because there's excitement on driving that cross-sell. I think that only bodes well for us as procedures migrate out of the hospital setting more into an ASC setting or as procedures morph into a pain center. So we think that we're well positioned there. But as we think about 2026, the first point is really getting the business further stabilized and allowing us to drive the business forward with the products that they have in their core bag. Do you want to repeat the first part of your question, again, enabling tech.

Yes, sure. Just on enabling tech, are you still seeing long-dated deals, or are the time lines contracting there?

I would say as we got to the back end of the year, especially in Q4, some of those deals are out there from a pipeline perspective closed and starting to rebuild that pipeline going into Q1. The deals that we've started to work through from a quoting perspective in Q3 and Q4 is still there. As I look at Q1 where we're at, I'm encouraged by where we're at in the quarter. But consistent with history, the majority of capital deals closed towards the last couple of weeks of the month. I'm not hearing some of the concerns that I heard last year regarding spending. But I remain cautiously optimistic that we won't see quite a long of elongation as we did last year, especially given the fact that we're getting more flexible in how we're quoting the deals.

Our Next question comes from the line of David Saxon of Needham & Company.

Congrats on the quarter. I wanted to ask about gross margins. You talked about the path to mid-70s in '26 round numbers, you're looking at 1 to 2 points of gross margin expansion. So is that a good annual run rate to get to mid-70s or any dynamics in that's driving more of an accelerated benefit? And then just a question or two ago, you talked about Nevro manufacturing. Do you need to do anything to that footprint to get to the mid-70s or would that be side?

Thanks, David. This is Kyle. I'll take your question. As we think about what we kind of stepped out and messaged back in 2024 into 2025, and what our expectation was in terms of growing that margin. We thought by working through some of our manufacturing initiatives, we place the order for CapEx. We'd bring in and in-source some of our manufacturing and we'd see a bump here at the tail end of 2025 and through 2026 from a gross profit perspective. What we've actually seen is that, that that process has been sequentially better quarter after quarter, and you go back to our prepared remarks, we both touched on six sequential quarters in terms of gross profit improvement. And you can see it's kind of steady as you go, as you work your way through quarter after quarter. We're seeing those improvements come through. We're seeing different things that we're attacking and driving in order to make those improvements. But I think 2026 is going to be more of the same where we see a little bit of incremental benefit as you kind of work through the year. Ultimately, working your way into that 69% to 70% range for the full year. My expectation is as you get to the back half of the year, you'll touch that 70 range and get into the low 70s. And then I think it's beyond that when you see the step into that mid-70s, which we've always kind of classified as starting at the 72% range.

As it relates to Nevro and manufacturing, I don't see any large-scale changes that we need to make specifically as you think about bringing them into the fold with Globus, really, we're focused #1 on spending. So it gets back to very basic things of how you're doing your four-wall spending? Are there ways to drive efficiencies on the manufacturing footprint how do you really monitor output? How do you monitor efficiency. Those are ways to get better fixed cost coverage. And then secondly, how are we buying? You think about making sure that you're bringing raw materials into the business, are we buying smart in a way that allows us to produce most effectively in our production facilities. We see opportunity to expand the gross margin, which touches on some of what Kyle said earlier, but I wouldn't say that you need a massive scale change on that business to get that improved profitability.

Great. And then my second question, just on ExcelsiusFlex, I would love to get an update there. how replacements going if you've made any? And then how are you thinking about the StelKast implant portfolio and potential growth of that part of the business?

Thank you. So as I think about 2026, I'm not expecting EFlex to be a major contributor to revenue. As I think about the portfolio from a joint perspective. We have the knee and the Uni as it relates to primary joints. We have a hip except for tritaper. I want to think about revision joints, we're expecting to have hip and knee at the end of 2026. So we're still continuing to modernize the portfolio. But as we modernize that the portfolios, we're coming to market with the robot, and I think that will bode well really as we get later into the year.

[Operator Instructions] Our next question comes from the line of Ryan Zimmerman of BTIG.

Congrats, guys, on a strong end of the year. Maybe when we think about the composition of guidance, I'm wondering if you could speak a little bit to, Keith and Kyle. I mean if I think about Nevro kind of being in a similar vein to the way it was running and enabling tech doing the way it's been going, which has been stronger in the back half of 2025, it does suggest kind of a slowdown in kind of legacy muscoskeletal growth. Relative to what we've seen so far in 2025, I think implied around mid-single digits. And I think Shagun was asking this question as well. But why would it slow down if you're not seeing necessarily that slowdown anecdotally into Q1, or why guide to that extent? Because I guess by my math, it implies kind of a mid-single-digit growth rate on Legacy [indiscernible], ex Nevro and enabling tech.

Thanks, Ryan. This is Keith. So as I think about the Nevro business, I commented that in the short term, you could see additional lumpiness in that business. So I don't expect that business just to suddenly drive growth in a linear fashion as we move forward. I'm still expecting choppiness as we get into 2026. As it relates to enabling tech, Kyle commented on earlier, as you think about us getting more aggressive with how we place capital. Some of those deals may be an operating lease in nature, which might not have the immediate rev rec pop right upfront. So you might be moving units but not seeing the same sales dollars if you're trying to look at this apples-to-apples. So that's something that we will -- that we contemplated and guide for 2026. As you think about the core business, the core spine business, I remain very optimistic about where this business is. We've had really two strong quarters coming off the back half of 2025. I'm encouraged by what I see in 2026. International, I think, is a story that gets better throughout the year, and our trauma business continues to perform. So as I think about how the business came together from an overall guide, I'm comfortable. I believe our numbers are achievable. We maintain global conservatism, but I feel that our numbers are achievable given what we see coming at us.

Yes. Okay. And then maybe for Kyle, we've talked you guys Legacy Globus EBITDA margins are second to none, right? They're very strong. When I think about that, though, in the context of the need to invest more in R&D, I appreciate that gross margins are moving higher, which helped to offset some of that. But maybe, Kyle, you can speak to kind of how you think about potentially taking those adjusted EBITDA margins higher, if you can, or is this kind of the steady state where we should think about adjusted EBITDA margins and some of the components are moving around to get you to that point going forward?

Yes. And I think it's in our prepared remarks where we were calling out the plan to invest heavier in R&D. So we see the benefit in terms of what's come through from an EBITDA perspective, working our way back to that mid-30s EBITDA that Globus has always been known for. But as you saw in our prepared remarks, R&D for the year is down to 5%. We want to ramp up spend there, get back into that 5% into the 6% in terms of range of spend. And really, we want to invest kind of across the board, all of our businesses, whether that's spine, whether that's capital, et cetera, really invest back into the business. That's really the main reason that we've always prided ourselves on those margins is so that we could take that cash and invest it back in ourselves.

Our next question comes from the line of Keith Hinton of Freedom Captioning Markets.

Just one high-level question and then kind of a housekeeping one. Starting off with enabling tech, when we think about more leases or pay per use or kind of creative financing, maybe this year, that results in somewhat of a hiccup. But as we start to think more longer term, do you see an increase in those leases or pay-per-use contracts, resulting in that revenue starting to smooth out, become less lumpy, start to track seasonality more in line with the MSK business, or would you expect that to still continue to be a business that is quite lumpy?

Thanks for the question, Keith. So as I think about that, the first year that you're really pushing operating leases, you're going to definitely see lumpiness until you get a base underneath you. But as that business looks to move forward, you should expect to see some of that smoothing out, number one. But number two, as I commented on earlier, I expect to see the flywheel effect because when we have greater robots out there in an operating lease format, the offset to that is really driving spine implant pull-through. So it's important that as we increase the volume of placements out there of robots, it's important those programs get launched and that we're continually driving and sustaining those programs because the offshoot should be stronger implant growth.

Great. That's helpful. And then more on housekeeping side. Just any -- and apologies if I missed this in the prepared remarks, any expected changes in any working capital metrics, CapEx, things like that, that might meaningfully sort of changed the relationship between EBITDA and free cash flow over the next couple of years? And any thoughts on plans to deploy the increase in cash balance.

Yes, no changes to what we've been historically be in the range of 5% to 6% of sales that's right in line with what we did this year. We continue to prioritize cash spend on product development as well as inventory in sets for our field. and manufacturing in terms of being able to continue to vertically integrate within the business. We'll continue to look at share repurchases when the time is right, and we'll also continue to look at tuck-in M&A here and there if we find the right technology out there, but no changes to that.

Our next question comes from the line of Tom Stephen of Stifel.

Apologies if these have been asked jumping around calls, but I wanted to ask about the call it, U.S. Spine surgery environment, a lot of changes with CMS, reimbursement side of care, et cetera, that may or may not impact surgical volumes here in the U.S. So Keith, can you maybe flesh out for us the main, call it, market-related headwinds and tailwinds that we should be cognizant of? And how would you characterize your general outlook on U.S. surgical volumes in this year in this year, in '26?

Thanks for the question. As I think about the overall market, I think the market is growing low single digits. So I still continue to believe that we're growing well above the market. dynamics of the competitive dynamics, obviously, are out there. We still feel that we have the ability to address and find ways to grow. As I think about just the general landscape of the market and how the market continues to evolve. I believe that we're really well positioned as I think about some of the initiatives that are out there. I see some of them, but I don't really see them having an impact on the business longer term. And as we think about as the business starts to migrate maybe further out of the hospital into the ASC setting, I think we have the portfolio to be able to respond to that and really come at this really with a complete suite of products, not only just the Spine implants, but also the enabling technologies. So all in all, I think we're well positioned, and I still think we're well positioned to grow above market.

With no further questions, that concludes the Globus Medical earnings call. Thank you for participating. You may now disconnect.

Welcome to Globus Medical Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Thank you, Stephanie, and thank you, everyone, for being with us today. Joining today's call from Globus Medical will be Keith Pfeil, President and CEO; and Kyle Kline, Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical website at www.globusmedical.com.

Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2024 fiscal year in our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our SEC filings, including the 10-K, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments.

Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website.

With that, I will now turn the call over to Keith Pfeil, our President and CEO.

Thank you, Brian, and good afternoon, everyone. We are extremely pleased with our overall Q3 performance, delivering sales of $769 million in non-GAAP diluted earnings per share of $1.18, growing 22.9% and 42.6%, respectively, over the prior year quarter. In addition, free cash flow was a record for the third quarter, delivering $213.9 million. Digging in a bit further, our base business delivered revenue of $669.8 million, growing 7% as reported and 7.1% day adjusted versus the prior year quarter. With the same number of selling days in the U.S. and one fewer selling day in Japan. The recently acquired Nevro business delivered $99.3 million of revenue during the quarter. .

Overall, the Globus business saw a meaningful expansion in profitability driven by improvements to adjusted gross margins, operating leverage and the continued realization of synergies from cost actions taken resulting in the base Globus business delivering adjusted EBITDA margins of 35.3%, growing 435 basis points over the prior year quarter. The Nevro business also delivered a positive adjusted EBITDA margin finishing at 16.2%. We remained active with share repurchases, spending $40 million during the quarter bringing our year-to-date repurchases to $256 million, which Kyle will expand on later with his remarks. Our overall results reflect continued market penetration and earnings expansion that is sustainable and enduring. In short, the business delivered on nearly all of its objectives during the quarter, driving results and establishing confidence as evidenced in our ability to revise upward our full year financial guidance, which Kyle again will discuss later in his prepared remarks.

Before I turn it over to him, let me first go a little deeper into the business. Consistent with our U.S. -- consistent with last quarter, our U.S. Spine business led the way, growing 9.6% as reported. We continue to see growth in U.S. Spine during every week in Q3, which is carried forward into Q4 as we now sit at 32 weeks of consecutive growth. Competitive recruiting remains a bright spot for U.S. Spine as we continue our relentless focus on hiring top talent. Whether we look at competitive rep visits, new reps onboarded or business converted all signs point to strength within this core objective. The expansive product portfolio, team approach and financial strength creates stickiness within our business. We remain laser-focused on attracting and retaining the best long-term sales talent who will help us drive sustainable growth.

2025 is setting up to be a record competitive recruiting year. Overall, our team has doubled down its collective cross-functional efforts to ensure we are beating internal goals set for U.S. spine revenue, product development projects, sets and inventory deliveries recruiting as well as enabling tech placements. Q3 Enabling Technologies revenue was $28 million, declining 27% to the prior year quarter driven primarily by lower sales of EGPS systems. While our view of the pipeline and its strength remains positive, we have not closed sales at the same pace and cadence as we have in years past. While a significant portion of this relates to fewer full revenue cash deals, we have increased our flexibility of capital deal structures as our overarching goal remains focused on achieving increased spinal implant growth.

Our installed base continues to drive strong recurring revenue growth with implant pull-through service contracts and disposal revenue with robotic procedures now surpassing 115,000 cases. The Globus robot remains a pinnacle of robotic technology in spine based on customer feedback. We launched Excelsius XR during the quarter, which is a wearable extended reality navigation headset designed to seamlessly blend visualization and control for the surgeon, increasing their focus on patient -- on the patient through enhanced ergonomics and uninterrupted workflows. Earlier in Q4, we received FDA 510(k) clearance for additional ExcelsiusGPS instruments for use with additional interbody fusion devices, including Modulus XLIF, Modulus TLIF-O, Cohere XLIF, Cohere TLIF-O, Hedron L and Hedron P. The new ExcelsiusGPS instruments consists of verification adapters and various surgical instruments including interbody inserters and trials for use with Excelsius, GPS or ExcelsiusHub. Thinking back to the evasive merger and revenue synergies, we can now offer to use pedicle screws and interbody solutions to those customers who are using NuVasive products. The Excelsius platform, which delivers a single vendor spine ecosystem across capital, implants and software provides for consistent workflow, data continuity and training across the [ VOR ]. When stepping back and looking at the broadening competitive INR landscape, Globus continues to be a standalone when it comes to pairing imaging, navigation and robotics together.

If a surgeon desires robotic navigation and imaging, they can pair an EGPs with an E3D, bringing together best-in-class robotic functionality and state-of-the-art intra-op imaging capabilities working seamlessly together. If the surgeon desires freehand navigation, they can combine the ExcelsiusHub and the XR augmented reality headset with the E3D imaging system. The features and benefits of these products working seamlessly together is second to none. Looking ahead, we will continue to expand on our ways to sell capital as well as driving greater attention to operationalizing how capital is acquired versus the traditional CapEx model of procurement by hospitals. Q4 is typically our strongest quarter for capital, and we continue to act with urgency in converting pipeline deals. Over time, the mix of revenue may change.

However, the overarching goal remains focused on driving capital placement and launching successful durable capital programs that enable implant sales growth. Our international spine business grew 5.6% as reported and 6% on a day-adjusted basis, driven by one fewer selling day in Japan, which I had mentioned earlier. The EMEA geography continues to be led by our largest markets, including the U.K., Italy, Germany and Spain, as we go deeper, however, smaller countries within these geographies are beginning to contribute meaningfully as we continue to emphasize the broadness of our portfolio, innovation and service quality. The Asia Pacific region saw an uptick in revenue growth led by Australia and Japan. Australia delivered its strongest Q3 performance with a growing share of fixation sales while Japan realized growth within cervical, expandables and bio. Our LatAm region saw growth primarily within Brazil and Colombia, while we refocused our commercial efforts in targeting higher volume categories where we maintain a low share position, which ties back to our larger strategy of driving further penetration in the countries in which we operate.

Our cadence of inventory and set deliveries has continued to improve across our international locations, and we'll continue to do so as we move through Q4. Longer term, we still see our international markets as having the ability to grow revenue in the 10% to 15% range. The trauma business delivered a strong third quarter, growing 17.2% with the highest quarterly revenue figure since its inception. Challenges experienced with precise manufacturing are now behind us, which will drive continued growth looking ahead, both in the U.S. as well as our international markets. Our continued investment in the manufacturing of the full line of NSO products will further accelerate growth moving ahead as we bring these online over the next several quarters. Reviewing our legacy Trauma portfolio, we added to our Anthem plating line with the Q3 launch of our comprehensive Elbow plating system. With this launch, we have now reached the milestone of 80% plus of matching our competitors' portfolios. The significance of this is that we are now able to bid on primary or preferred vendor contracts when surgeons request our products in their health system. Shifting to joints, we've been working closely with several large institutions to secure our first eFlex deal. We have shown and demoed the robot to numerous surgeons and many have commented on the ease and use our ease of use and its ability to accurately perform TKA procedures in both imageless and image guided workflows.

Surgeons have come away impressed with the ease of auto registration between eFlex and E3D. We've made great strides with product development and are seeking to complete the modernization of the primary procedure portfolio by early 2026, and then use 2026 to complete our revision portfolio, while adding procedural applications to eFlex namely hip. As noted earlier, Nevro revenue totaled $99.3 million, growing 4.9% sequentially and representing the strongest quarter of 2025 for this business on a pro forma basis. We are seeing the uncertainty subside from the preacquisition Nevro financial condition as well as post acquisition changes that have been implemented since we closed the deal on April 3 earlier this year.

While integration activities still continue, we've seen positive progress since making significant organizational and procedural changes. And this business has rolled into the larger Globus organization. We believe the positive results seen thus far sets us up well as we look ahead. Operationally, the team is focused on fully digging into the supply chain and production activities while we work to centralize shipping, driving additional scale and efficiencies. Commercially, we've seen an ability to drive growth within Nevro as we focus on surgeon conversions and competitive rep recruiting to expand our footprint. Shifting our attention to strategy. We remain focused on partnering with surgeons and helping to solve unmet clinical needs with a focus from our product development engine to improve outcomes.

Our sales force will penetrate markets through surgeon conversions and continued sales force expansions. We remain laser-focused on driving operational excellence while maintaining prudent financial discipline. Our investment thesis shows a business with an ability to grow in the mid- to high single digits with revenue stickiness. Our capital structure and lack of debt maintains maximum flexibility to organically invest in R&D and disciplined CapEx to self-fund growth. We've demonstrated a belief in our business while providing a return to shareholders through our share repurchase program, and we've deployed capital for complementary M&A without creating balance sheet stress. The earnings profile and free cash flow profile suggests strong conversion and high-quality cash generation. Simply stated, we are a compelling business focused on innovation, operational excellence and execution.

Thank you to our people for another successful quarter. We look forward to closing 2025 strong and moving into 2026.

I will now turn the call over to Kyle.

Thanks, Keith, and good afternoon, everyone. The third quarter of 2025 for Globus was exceptional. We posted record results this quarter in revenue, earnings and cash flow generation. The stellar results were driven by revenue growth in our domestic spine business, growing 10% over the third quarter of 2024 and accelerating from the 7% day adjusted growth we saw in the second quarter of this year. As we move into the final quarter of the year, Globus is in great position to close out a record setting 2025 and capitalize on the acceleration we've seen in the middle 2 quarters of the year. Today's prepared commentary will focus on providing insights into our quarterly business performance, including the impacts of Nevro, reiterate our capital allocation priorities and update our guidance for the remainder of the year. .

Consistent with last quarter, I will first comment on our as-reported results, providing insights into the legacy Globus business as well as high-level comments on the contributions from Nevro on an as-reported basis. Moving into the quarter. Our third quarter revenue was $769 million, growing 22.9% on an as-reported basis and 22.3% on a constant currency basis as compared to the third quarter of 2024. GAAP net income in the third quarter of 2025 was $119 million, and GAAP fully diluted earnings per share was $0.88. Non-GAAP net income was $159.4 million compared to $114 million in the prior year quarter, growing 39.8%. Our fully diluted non-GAAP earnings per share were $1.18, growing 42.6% over the prior year quarter.

Consolidated adjusted EBITDA was 32.8%, and we generated $249.7 million of operating cash flow and $213.9 million of free cash flow during the quarter. The growth in both earnings and cash flow generation was primarily driven by: one, the overarching sales growth in the quarter across the majority of our businesses, led by U.S. Spine, international spine, trauma and neuro monitoring. Two, execution of our operational goals to drive synergies across the businesses; and three, the impact of the recently acquired Nevro business which achieved sequential sales growth and will now be accretive to non-GAAP earnings per share in fiscal year 2025. Our legacy Globus adjusted EBITDA margin was 35.3% and while legacy Globus operating cash flow was $238.3 million and free cash flow was $205.4 million. Stand-alone Nevro adjusted EBITDA margin was 16.2% for the quarter, growing from negative 1.4% in the second quarter of this year and generating operating cash flow of $11.4 million and $8.5 million of free cash flow.

By comparison, in the second quarter of this year, stand-alone Nevro represented an operating and free cash burn of $26.3 million and $29 million, respectively. Our third quarter net sales of $769 million reflect legacy Globus sales totaling $669.8 million, growing 7% as reported and 7.1% on a day adjusted basis. With the same number of selling days in the U.S. and international and 1 fewer day in Japan compared to the prior year. The growth in our legacy Globus sales was primarily driven by U.S. Spine, which achieved 9.6% as reported growth. International Spine, which achieved 5.6% as reported and 2.9% constant currency growth, trauma, which achieved 17.2% as as reported growth and neuro monitoring, which achieved 15.8% as reported growth, partially offset by lower enabling technology sales of $10.3 million.

Nevro contributed $99.3 million of revenue during the quarter, growing sequentially over the second quarter of this year by 4.9%, inclusive of $83.3 million of domestic revenue and $15.9 million of international revenue. Musculoskeletal revenue was $741 million, growing 26.2% over Q3 of 2024 legacy Globus musculoskeletal revenue was $641.8 million, growing 9.3% as reported. Enabling Technologies revenue was $28 million, declining 26.8% as reported. We continue to remain optimistic on the overall Enabling Tech business as our pipeline remains strong, and we believe we have the best capital portfolio in the industry. U.S. revenue during the third quarter of 2025 was $617.6 million, growing 24.6% as reported.

Legacy Globus U.S. revenue during the third quarter of 2025 was $534.3 million, growing 7.8% versus the prior year quarter. Our legacy Globus U.S. growth was primarily driven by our U.S. spine, trauma and neuromonitoring businesses, partially offset by declines in Enabling Technologies. Our U.S. Spine business took another step forward this quarter. Growing 9.6% as reported after posting 5.7% as reported and 7.4% day adjusted growth in the second quarter of this year. We continue to see the strong momentum in October and early November as we seek to stabilize as a high single-digit above-market grower. Trauma saw an acceleration in domestic growth with both our core trauma and NSO portfolios achieving 27.6% growth. Our neuromonitoring business grew 15.8%. As we anniversaried the reimbursement headwinds that occurred in mid-2024. Q3 2025 international revenue was $151.4 million, growing 16.5% as reported and 13.5% on a constant currency basis.

International revenue for the legacy Globus business was $135.5 million, growing 4.3% as reported and 1.6% on a constant currency basis compared to the prior year quarter. And we saw growth across EMEA, Latin America and Asia Pacific markets. As mentioned previously, our supply chain strategy ensures that the U.S. is prioritized for inventory, which had an impact on the international supply in the quarter. Despite strong U.S. demand, we saw incremental improvement in international supply as we move through the quarter, and we continue to experience momentum in the legacy Globus International Spine business as we have seen sequential growth each quarter throughout 2025. GAAP gross profit in the quarter was 64.2% compared to 53% in the prior year quarter with the resulting improvement driven primarily by lower inventory step-up amortization. Consolidated and legacy Globus adjusted gross profit was 68.1% compared to 66.5% in the prior year quarter. Primarily driven by favorable sales mix and the impacts of synergy execution.

Nevro adjusted gross profit was 67.6%. Manufacturing initiatives remain a key focus for us as we close the back half of the year. We continue to see the benefits of our efforts in adjusted gross profit percentage with 4 straight quarters of sequential improvement and a 70 basis point boost between Q2 and Q3. This endeavor continues to pay dividends and cash spending on inventory and will ultimately drive a return to mid-70s adjusted gross profit. For 2025, we expect total adjusted gross profit to be in the range of 67% to 68% of consolidated revenue. Research and development expenses in Q3 2025 were $38.1 million or 4.9% of sales compared to $35.4 million or 5% of sales in the prior year quarter.

Legacy Global's R&D expenses totaled $33.9 million or 5.1% of sales. The resulting decline in legacy Globus R&D, both in dollars and as a percentage of sales is attributable to synergy capture, resulting in lower head count and leverage from higher sales volume. Nevro R&D was $4.2 million or 4.2% of Nevro sales. For 2025, we now expect total research and development expenses to be in the range of 5% to 5.5% of consolidated revenue. SG&A expenses in the third quarter of 2025 were $313.6 million or 40.8% of sales compared to $240.1 million or 38.4% of sales in the prior year quarter.

Legacy Globus SG&A expenses were $264.5 million or 39.5% of sales. Current period SG&A expenses included onetime net charges for estimated litigation of $28.3 million. Excluding these onetime charges, which we adjust out of our results for non-GAAP reporting, our consolidated SG&A expenses were $285.3 million or 37.1% of sales, and our legacy Globus SG&A expenses were $236.2 million or 35.3% of sales. The decrease in spend after removing the onetime estimated litigation charges is attributable to decreased employee-related costs from synergy actions lower employee benefit costs and lower bad debt expenses, partially offset by increased sales compensation costs from higher volume. Nevro contributed $49.1 million of SG&A expenses in the quarter or 49.5% of Nevro sales. Q3 2025 net interest income was $1.5 million compared to $0.8 million of net interest expense in the prior year quarter. The $2.2 million favorable change is driven by a decline in interest expense from the paydown of the remaining $450 million outstanding convertible debt in Q1 2025 that was assumed from the NuVasive merger. The GAAP tax rate for Q3 2025 was 17.4% compared to 9.1% in the prior year quarter. The prior year rate was impacted by a reserve reversal, which favorably impacted the rate by approximately 11%.

The current year rate includes favorable impacts from legal entity restructurings of both NuVasive and Nevro. Our non-GAAP tax rate for the quarter was 20.8%, lower than our projected rate of approximately 25% resulting from a discrete benefit in the quarter related to certain NuVasive restructuring activities. The favorability in tax resulted in $0.07 of nonrecurring non-GAAP fully diluted earnings per share favorability in the quarter. We expect our full year non-GAAP tax rate to be approximately 24% to 25%. Cash, cash equivalents and marketable securities were $407.2 million at September 30, 2025, compared to $956.2 million at December 31, 2024. The decline in cash is driven primarily by 3 main factors: one, as mentioned previously, in March, we fully repaid in cash the remaining $450 million outstanding convertible debt assumed from the NuVasive merger; two, in April, we acquired Nevro for a purchase price of $252.5 million; and three, during the past 3 quarters, we spent $255.5 million to repurchase approximately 3.5 million shares. In Q2 2025, we announced that our share repurchase program was expanded by an additional $500 million. During the third quarter, we repurchased $40 million or 0.7 million shares and have $435 million of authorization remaining under this program at September 30, 2025.

Since 2020, share repurchases have been an important part of the Globus capital allocation strategy as we strive to balance internal and external investment for future growth with creating value for our shareholders. From 2020 through the third quarter of 2025, we've spent $815 million to repurchase 14.5 million shares at an average price of $56 and on average, we've spent $136 million per year to repurchase 2.4 million shares. Upon closure of the NuVasive merger, we sought to drive an increased use of our share repurchase program. And since Q3 2023, we repurchased $566 million or 9.5 million shares, representing approximately 1/4 of the deal dilution. Share repurchases remain an integral part of our capital allocation strategy. As we seek to first prioritize internal investment in innovative product development efforts, build sets for our sales personnel across the globe and increase our manufacturing footprint through CapEx. Secondarily, we seek to opportunistically repurchase shares as we demonstrate our confidence in the business and our commitment to creating long-term value for our shareholders.

Finally, we will continue to evaluate complementary M&A while focusing the use of our capital on driving investment for long-term profitable growth. Q3 net cash provided by operating activities was $249.7 million, and free cash flow was $213.9 million, this quarter's free cash flow generation represents over 50% of all free cash generation in the record-setting fiscal year 2024. On a trailing 12-month basis, we've generated $715.2 million of operating cash flow and $579.6 million of free cash flow. This strong cash flow generation is driven by continued sales growth execution of synergy actions and working capital improvements, specifically in accounts receivable. Turning our attention to integration. Our goal with Nevro is to aggressively target steady state as soon as possible, and the team has performed tremendously in making decisive and meaningful impact to the cost structure within the legacy Nevro business. Given the synergy actions taken in operating expenses and the sequential sales growth seen in the business in Q3, we are updating our initial comments in relation to Nevro as we now expect the business to be accretive to earnings in fiscal year 2025 versus our previous expectation of being accretive to earnings in the second year of operations.

Pivoting the financial guidance, we are adjusting our 2025 net sales guide to be in the range of $2.86 billion to $2.9 billion compared to our previous range of $2.8 billion to $2.9 billion. The revised revenue guidance implies growth over 2024, ranging from 13.5% to 15.1%. We are also adjusting our 2025 fully diluted non-GAAP earnings per share guide to between $3.75 and $3.85, an increase to our previous range of $3 to $3.30. The revised fully diluted non-GAAP earnings per share guidance implies growth over 2024, ranging from 23.2% to 26.5%. We feel confident that our guidance represents our best estimate of anticipated results for 2025. We also want to reiterate that the Q3 2025 results included $0.07 of tax favorability that we do not expect to recur in the remainder of 2025. The Globus team has done an exceptional job of executing our vision and strategy this quarter, and our results reflect our collective effort. We posted record-breaking results in top line revenue, non-GAAP fully diluted earnings per share and free cash flow. We look ahead, well positioned to further drive long-term profitable growth and value for our shareholders in the remainder of 2025 and into the future. As we strive to build the leading musculoskeletal technology company in the industry.

We will now open the call for questions.

[Operator Instructions] Our first question comes from Richard Newitter from Truist Securities.

So I just was hoping to get a little bit more color on the strength and the acceleration in U.S. correspond in particular. Anything specific going on there, tend to be seasonally weaker quarter. Would love to just get a feel for what's driving that? How sustainable it is? Is that pull-through from robotics kind of showing up in NuVasive accounts? Any color there? And I have a follow-up.

Sure. Thanks, Rich. This is Keith. Like I said earlier in my prepared remarks, we're running at about 32 weeks of consecutive sales growth. And the one thing that I see is that our strength is broad, meaning that in subs -- in basically all of our categories that we track, we're seeing growth in spine. So it's not just kind of expandable, it's not just pedicle screws, we see it broadly across the entire portfolio. Within that, we're also seeing good uptake on our DuraPro drills. But still, when I think about where the growth is coming from, it's coming from the core implant business. I think it points to a healthy market, but I think that as you look at our business and the steps we've taken, where it's coming from or the how, yet you have the robotic pull-through. We launched a bunch of new products last year, but also competitive reps. When I think about the last several quarters, we've been really leaning into that aggressively, and we've been starting to see the results of that come through. Since assuming the role a couple of months ago, that's something that I personally want to make sure that we're focused on both myself as well as the rest of the leadership team because I really think that we have an opportunity to continue to drive growth and differentiate ourselves in spine.

Got it. And then maybe -- just on the enabling tech. I was jumping around calls, but I think you mentioned that was a little weak, but obviously, more than mid up for that elsewhere in the business. But I'm just curious, you mentioned operating leases what does that mean as we think about our models into the future period? Should we be dialing down near-term revenue, but obviously, the the longer-term cash flow is there. We just kind of smoothed out and increase it into the out years? Or is it too early for that? And then what is the strategy change there that you referenced on the call?

Yes. So it's a great question. So as I think about Globus historically, most times, we're selling robots, they're straight cash sales. What we've seen more recently is our pipeline is strong. It's still strong. We're not seeing that we're losing material deals to competition. But what I see is an increase in the ask of how a hospital may acquire the capital. There are some hospitals where we've seen a propensity to not spend capital and they've come back and asked for other ways to acquire that capital. In those situations where your model changes to maybe more pay-per-click models or fair market value leases in those situations, you're not going to get that full revenue recognition upfront and it'll go over a period of 3 years, 5 years whatever turns you enter into.

So as you think about modeling, I don't want to get ahead of myself and call out kind of how you should guide. But note that over time, we see the model changing a little bit more aggressively away from outright purchases upfront.

Our next question is coming up from the line of Vik Chopra of Wells Fargo.

Congrats on a nice quarter. Two for me, maybe just starting off on the Nevro business. I think you said 16.2% EBITDA margin this quarter. I'm just curious if you can talk about your expectations for margin progression over the next 12 to 18 months, perhaps and how you're driving future profitability. And then I had a quick follow-up.

Yes. So Vik, this is Keith. You are correct. The 16.2% was the EBITDA margin for Nevro in Q3. As you think about kind of the -- what we've done so far, we want to drive basically getting this business integrated into the globus umbrella. So Kyle commented on moving aggressively. As you think about some of the near-term impacts that have occurred already, really was around redundant spending, trying to find ways to reduce spending. We've done that, but we haven't touched sales and manufacturing operations because we want to make sure the continuity of that business continues forward. As you look to move into next year, it's really getting a better hold on driving new product development, but more importantly, making sure that the sales force is set to grow.

We want to make sure that they move from the standpoint of maybe more of their traditional model they had prior to the merger, but getting more aggressive with things like surgeon rep conversions -- or I'm sorry, rep conversions and really driving more and more outreach to the surgeon partners. As we brought them in under the Globus umbrella, we really want to seek ways to drive growth, to drive top line growth, which should hopefully expand margin as we move further out. But secondly, we're going to continue to work to find ways to make the business more efficient. As you look up and down the P&L, Nevro had about 67%, 68% gross margin. Our goal is to continue to try to find ways to advance that to make it more profitable. And then Kyle commented that our SG&A OpEx was still running at about 49% of sales. That's something that we still want to continue to look at as time passes.

Great. Appreciate the color. And then another follow-up question that I had was with Q4 typically being strong for capital -- just curious how you're thinking about Q4 growth in your Enabling tech business, especially as you talked about evolving your capital sales strategy around flexible deal structures?

That's a great question. I don't want to get into kind of calling out the parts and pieces of our Q4 numbers. We're confident in the overall guide that Kyle presented. There's puts and takes everywhere. But as we look into the fourth quarter specifically, like I said earlier, to Richard's earlier question, we feel really good about the pipeline. The year so far, we haven't sold quite as many as we have in years past. But as I look at the revenue that we've generated, and the deals that we place, there's still strong ability for us to close more deals. But again, the overarching goal is to drive the long-term ability to get the implant growth, the service revenue and disposal for revenue.

Our next question comes from Matt Miksic of Barclays.

Congrats on a really impressive quarter. So I had one on Nevro and then a follow-up on robots. So on Nevro and the sort of interventional spine business, the sort of the platform that you've established there and are starting to sort of build and and and reinforce. Can you talk a little bit about the other types of things that -- because Nero reps and other reps in neuromod and pain, have more than one thing in their bag. I'm just wondering what types of things and when we might start hearing about products getting dropped into that bag? And as I mentioned one follow-up on the robot side.

Thanks, Matt. This is Keith. So as you think about Nevro, first and foremost, Nevro is a spinal cord stimulation business, that's the majority of the market. As we -- or the majority of the business, as you think about adding to the portfolio as time advances, I think peripheral nerve would be an area that we could continue or start to look at but also step back and look at other areas of the business. Like when we looked at acquiring Nevro, just wasn't for the business that it was today, there was great interest in the patent portfolio and the freedom to operate. So as we think about other areas, it's looking at diabetic neuropathy, ways to potentially treat Parkinson's tremors. Those are the areas that you would think we're going to work to develop as time passes. But that's not going to happen overnight. That's going to take some development. But that's -- those are some of the areas that we're focused on.

Got it. And then on the robot side and enabling technology, I appreciate the comments around like the shifting preference for more flexible payment models. Can you talk -- and that's consistent with obviously what most of the other robot manufacturers and competitors have done over time is just increasing mix of leases and things like that. Can you -- have you seen a step-up in leases in Q3? Can you quantify that? And any color that you have on sort of maybe does that follow some of the same -- more than 50% of leases over time, which is kind of where some of your other competitors, both in musculoskeletal and elsewhere have gotten to. Any color there would be great?

Yes, I would say that I'll keep my comments brief here. I would say that we're definitely not approaching over 50%. But I will say that when I look at 2025, the mix of rentals in leases, is significantly higher than it was in previous years. As we look to move the business forward, we look to get more flexible in how those deals happen. But I would say that as you think about some of the customer asks and offerings that we've presented throughout the quarter. I think the -- having additional ways for them to acquire the capital may have slowed some deals down here and there. But by and large, the key takeaway, though, is that our pipeline still remains very strong.

Yes. And Matt, the only thing -- this is Kyle. The only thing I would add is the fact that while the deals that we have closed are primarily cash deals. We continue to really make all those offers out there in terms of leasing rentals per click, et cetera. So the options that we put out there to the customer base are all across the board.

Our next question is from Matt Taylor of Jefferies.

So I wanted to dig in a little bit more on the progress you made with the Nevro margins. It was really impressive sequentially. Could you talk about where you've been able to get the cost out and drive synergies so far and what's yet to come just qualitatively?

Yes. Yes, Matt, this is Kyle. So I think one of the first places we started was really in R&D and we took a look at the Nevro approach to R&D and our approach to R&D. And a lot of it was really just kind of focusing the team on specific projects, how do we run a project et cetera, pretty much bring it under our specific approach to R&D. So from that, there was ancillary and redundant costs that we were able to take out of the R&D line. And then separately, SG&A is the other Large one. That one is really, as you think about back office staffing, right, where do we need head count in terms of finance, HR, legal, et cetera. There's opportunity there. as well as thinking about some of those ancillary spends in terms of software, consultants, et cetera, those are some of the big focus areas right out of the gate.

As we look to try to move through the rest of 2025 and into 2026, as Keith mentioned, we want to start focusing on the cost of goods sold, how do we bring that gross profit up the mid-60s up into the 70s as well as taking further looks at SG&A to say where do we have further redundancies. I would say with kind of started here in the back half of 2025, but we still have opportunity there when you think about that 50% SG&A margin.

Can I ask one follow-up on gross margin. I mean you've talked about getting back into the [ 70s ] for a while here and making good progress. Is it still right to think you're going to have kind of gradual progress was maybe a bigger step up towards the end of '26 when you start to see some of the manufacturing improvements come in?

Yes. Ultimately, we won't guide to a 2026 number, Matt, but I think that's the right way to think about it in terms of the smaller sequential improvement my prepared remarks, I commented that for 4 sequential quarters, you've seen kind of that uptick in margin. I think the same thing continues as we move through 2025 and into 2026, ultimately, with that goal of getting back to [ mid-70s ] gross profit.

Our next question is from Shagun Singh of RBC.

Congratulations on all the business momentum here. I'm hoping you can give us some directional color on '26. Maybe just walk us through the puts and takes -- as I look at [indiscernible] Spine, really solid quarter this year, very solid performance this quarter. And how does that translate into the upcoming quarters into '26 Nevro looks like it's improving. How do you think about growth for that business, Trauma recon as there are opportunities into next year. And then EBITDA margin, you guys are already close to that [ mid-30s ] EBITDA margin that you guys have guided to longer term. So how does that translate into next year? So any puts and takes would be helpful.

Thank you, Shagun. This is Keith. I'm not going to give you too much color going into 2026. I think the comments and feedback I would provide to you is, right now, the spine market looks strong in the U.S. our business is performing well, and we feel very positive about our Spine business. Our international business, we've talked earlier in the year, having some challenges which we feel that the worst of that is behind us. So we think -- I had said in my prepared remarks that I can see that business growing back to the 10% to 15% as we move forward. And when I say move forward, that's looking into the outside of '25 and into '26 and beyond. Our trauma business -- we commented earlier in the year that we had some challenges with our precise manufacturing. I commented today that I see a lot of that behind us. And we're really getting back to fully supplying the U.S. as well as international. That, coupled with our legacy trauma portfolio, really getting to that point of having 80-plus percent of our competition's portfolio.

That positions us well to grow our model still is going to be a density model, we focus on Level I and Level II centers. I had some previous comments on joints. So think about the structure of the business, we feel positive going into next year. And that's even more why we want to focus on closing down all the integration activities because we think that we have a lot of organic growth opportunities to drive this business forward. As it relates to Nevro, I don't want to get too far ahead of myself because the reality is, is that we're only a couple of quarters into owning the business. We have -- still have a lot of work to do, but early signs are positive.

Great. Anything on the EBITDA margin, the [ mid-30s ] looks like you're already tracking that, and there's more improvement ahead?

I would say that I'm encouraged where we landed. Because if you remember, when we announced the NUVA deal and the reasons back in February 2023, we talked about scaling the business, driving commercial outreach having -- and I think that we've done that. Innovation in spine and ortho between both of the legacy portfolios as well as both in spine and ortho with their growing rods. I think we've done that. there's still been an enduring commitment to product development, and we want to be known as innovators. We've expanded our operational capabilities. We're continuing to in-source. Kyle touched on the 4 sequential quarters of adjusted gross profit growth. and really getting back to the value creation.

Synergies, we talked about $170 million. We have no reason to move off of that and [ mid-30s ] EBITDA, we said over 3 years -- we've gotten the base business, the base Globus business ex Nevro to [ 35% ] here in the third quarter. Some of the parts and pieces are different. But from a profitability standpoint, we feel that where we're at as a business points us to a solid future because there's still more work to do. But I -- our goal long term is to be in that [ mid-30s ] range. I'm not going to guide to that, though, for 2026.

Our next question is from Caitlin Roberts of Canaccord Genuity.

Congrats on a great quarter. So touching again on enabling technologies. I mean what has hospitals really given as the reason for the slower decision-making? And then as you launch more nimble solutions, you noted the navigation capability with the new XR headset. Do customers be receptive to these lower cost options to purchase instead of higher cost full robotic solution?

This is Keith. So the first part of your question was focused on -- can you repeat the first part again?

It was really just what a hospitals given as reasons... Yes.

Yes. A couple of things I would say is, one, we're at a place now where our robot solution is now for several years. There's more competition that's hit the market. One of the things that we see is that hospitals are requiring surgeons to go through the review of all the offerings that are out there. I commented earlier that we still view our technology as best-in-class. But I think that, that has kind of elongated some of the deals, number one. Number two, as we think about how the year has progressed with the things like the big beautiful bill and how Medicare, Medicaid funding may change. That also to me earlier in the year, caused maybe a slowdown in how hospitals spend.

But as I think about what I've seen from hospitals, what I've seen publicly disclosed and just what I've heard anecdotally, hospitals are spending money on things like growing out ASCs or building new facilities that might not always be focused on surgical robotics. So if a hospital is devoting their money to other things, we want to be able to make sure that we're able to address the goal of getting our capital out there, getting it placed. So that's where we see things like operational leases taking a bigger portion of our business as we move ahead.

Your second question related to XR. XR is just -- it's a goggles or a headset. That needs to be coupled with our ExcelsiusHub. I had said in my previous remarks, if a surgeon is looking for freehand navigation, a great offering is our ExcelsiusHub with XR as well as our E3D.

Great. And then just a quick one. As you move into further improvements for Metro, I mean how much of a risk do you think these changes could bring to the top line moving forward?

Like I said earlier to the previous question that was asked, I don't want to get too far ahead of myself with projecting out never into 2026 and beyond. We're still early in -- we're still in early innings of the acquisition and work on integration. We're obviously mindful of the changes that we make to the business and how it may impact the business. But as we move forward into next year, we've taken a lot of the uncertainty out of the business, just simply alone on the financial condition of the consolidated Globus and we want to get the business more focused on adding competitive reps. Those signs point to positives. But as we think about the changes that have occurred and the changes that still may occur, we want to be cautious with our comments.

Our next question is from Matthew O'Brien of Piper Sandler.

This is Samantha on for Matt. If we also wanted to touch on the profitability this quarter was really impressive, both, I guess, in the base business and Nevro. Can you speak to the sustainability of that? And it never specifically had a nice step up this quarter. And I guess, what's the outlook or runway look like for that improvement going forward?

Yes. Thanks for the question, Samantha. This is Kyle. When you think about the profitability this quarter, right? It's really driven by a handful of things. One is U.S. Spine growth, so it's growing 10% this quarter. That is a our most profitable business. So as that business grows and becomes a bigger part of the entire company, right, that ultimately will drive a higher level of profitability that we saw that helped lead to that 32% EBITDA and ultimately the $1.18 of EPS. The other was the synergy execution, both in base business as well as Nevro as we brought them online. Ultimately, right, we're trying to set up the business in a way where we operate efficiently under our Globus practice and are able to drive and continue with the sales growth on top of that. So I think this is a good jumping off point for us as we move throughout the rest of the year.

And just one thing I would add to that, going back to your question on Nevro, the EBITDA margin is impressive, but I think the thing that I focus on, and it goes back to some of Kyle's earlier prepared remarks, is free cash. When you think about where we were Q2 we commented that the free cash burn was $29 million in Q2 to get this Q3 and having free cash flow of $8.5 million, that quarter-over-quarter change to me is more telling than necessary EBITDA margin because we're driving the business to generate cash because at the end of the day, you take dollars to the bank, not rate.

Our next question is from David Saxon of Needham & Company.

Maybe I'll start with trauma, at least the legacy trauma. So I think in one of the responses to a question earlier, you talked about that portfolio being around 80% of kind of the competition, I guess, portfolio breadth. So do you think that's critical mass? Or do you need to be at parity and get to the full 100%? And kind of if so, like when should we expect you to get to 100%?

I would say that we're at critical mass at this point. I think that at this point, when you think about our sales force and the products that we have, we can go effectively pretty much anywhere. So we feel good about that in the legacy portfolio and our ability to drive the business forward. As we grow, we want to be focused on where we're growing because as you think about trauma and the set deployments, that's different than spine, so when you think about where your invested capital sits, you want to get yourself into the density model, like I had mentioned earlier, focused on Level 1 and Level 2 trauma centers that it's going to turn your assets.

Okay. Yes. That's helpful. And then just on Simplify, so I think one of your competitors got a 2-level approval over the last couple of months. So just thoughts on that approval, what is a competitive 2-level approval due to simplify. And then generally, for the simplified growth that you're seeing, I mean, is that disk share? Or is that expanding the market and maybe getting into ACDF?

Well, I would say that, as I think about Simplify and kind of share gains, I'd say that the share gains are -- there's definitely some share gain in there. But as they think about 2 level, we -- I believe we do have 2-level approval, yes. Yes, we do have 2-level approval, but I don't really have any further comments on that at this point.

Our next question is from Tom Stefan of Stifel.

Great. Apologies if any of this has been asked, just jumping between calls tonight. But just on Nevro, already returned to on the top line, positive year-over-year growth in 3Q on a pro forma basis. So I guess as we're updating our models, I mean, is it fair to think about positive year-over-year growth as durable moving forward?

I would say that it's early to comment on that. Kyle commented on sequential growth, sequential positive growth between the second and third quarters. I think it would be early to comment on full year-over-year growth on a pro forma basis.

At this time, we're showing no further questions. If there are any additional questions, on your telephone and wait for your name to be announced. With no further questions, that concludes the Globus Medical earnings call. Thank you for participating. You may now disconnect.