Globus Medical Q3 2026 Earnings Call Transcript

Globus Medical (NYSE:GMED) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Globus Medical reported Q3 2026 revenue of $763.7 million, a decline of 0.7% year-over-year, with a notable 25.7% decrease in Nevro’s revenue.

Non-GAAP EPS increased by 4% to $1.23, while free cash flow reached a record $225 million despite increased capital expenditures.

The company announced strategic initiatives, including the launch of the SCRIPT line of 3D-printed implants and the XLIF prone lateral solution, with expectations for these to drive growth in 2027.

Enabling Technologies revenue grew 24%, driven by increased sales of robots and a flexible capital acquisition model, with the FDA closure of a previous warning letter.

The trauma business grew 19%, with Globus Medical now being viewed as committed to the space, aiming for long-term growth by converting surgeon teams in trauma centers.

Two small acquisitions were completed: Higgs Boson, focusing on digital innovation in healthcare, and Synaptiv assets to expand into the cranial neurosurgery market.

Guidance for full-year 2026 revenue was adjusted downward to $3.09 billion from the previous $3.18 to $3.22 billion, citing delays in new product launches and Nevro’s recovery.

The company plans to prioritize internal investment in product development, continue share repurchases, and actively seek M&A opportunities for long-term growth.

Full Transcript

OPERATOR

Will be Keith Pfeil, President and Chief Executive Officer, and Kyle Klein, 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. As a reminder, our discussion may include forward-looking statements, and such statements are subject to risks and uncertainties that could cause actual and anticipated results to differ materially.

Please refer to the cautionary language in the earnings release and in the company’s filings with the Securities and Exchange Commission for additional information. Except as may be required by applicable law, we do not undertake to update any forward-looking statements. Additionally, we will be discussing certain non-GAAP financial measures on this conference call. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. They should not, however, be considered replacements for, or should be read together with, the most directly comparable GAAP financial measures. Additional information regarding these non-GAAP financial measures, as well as reconciliations for such non-GAAP measures, are included in the earnings release and are available 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 Chief Executive Officer.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

Thanks, Shagun, and good afternoon, everyone. Before I discuss the quarter, I’d like to formally welcome Shagun Singh to Globus Medical as our new Senior Vice President of Strategy and Investor Relations. Shagun brings more than 20 years of healthcare investment research experience with deep expertise in medical technology and the investment landscape. She will lead our investor relations function as we expand engagement with our shareholders. As our business has grown in size and complexity, we separated investor relations from corporate development so that each has dedicated leadership.

Brian Kearns, who has led both functions for the past 12 years, will continue as Senior Vice President of Corporate Development. I want to thank Brian for the work he’s done building relationships with many of you on this call. With that, let’s turn to our third quarter results and a longer-term outlook. Our third quarter results totaled $763.7 million, declining 0.7% on an as-reported basis and declining 0.5% on a constant currency basis, reflecting the continued impacts of our rightsizing of Nevro, the timing of delayed new product launches within U.S. Spine, and lower contributions from competitive recruiting. Business revenue excluding Nevro was $690 million, growing 3% as reported, while Nevro was $73.7 million, declining 25.7% compared to the prior-year quarter.

Non-GAAP EPS was $1.23, growing 4% over the prior-year quarter, while free cash flow was a record $225 million despite a 13% increase in capital expenditures. Lastly, we deployed $143 million to repurchase 1.9 million shares during the quarter, maintaining our commitment to share buybacks as part of our capital allocation strategy. Our U.S. Spine business grew 2% over the prior-year quarter, coming off of a tough comp with a slowdown attributed to timing delays around new product launches and lower contributions from competitive recruiting. We’ve experienced timing delays with new product introductions and lingering production issues. However, actions taken over the past few months are beginning to improve this globally, which will favorably impact our growth as we enter 2027.

Growth from new products has been lower than expected due to the timing of key launches. We expect these launches to drive meaningful growth as we enter 2027. On the competitive recruiting front, we need to continually increase the pace of our territory expansions and are taking steps to onboard competitive reps as well as hiring, training, and developing new territories. Looking ahead over the longer term, we remain confident in our ability to grow our U.S. Spine business above market, centered around meaningful new product launches, pull-through growth from capital attachments, and competitive recruiting.

Organic innovation still matters and becomes more powerful when you pair that with a strong core spine business, differentiated enabling technologies, and the ability to scale. We possess those core traits and will use them as an advantage as we attack the market and specifically target growth opportunities based on potential market disruptions and dislocations. Now, turning attention to key spine product launches, our SCRIPT line of patient-specific implants and rods represents a major launch for Globus Medical into the fast-growing patient-specific implant category. SCRIPT is comprised of seven new 3D-printed interbody cages and new patient-specific rods. Unlike competitive offerings in this space, SCRIPT will expand expandable and interfixated cage options in addition to static offerings across ALIF, XLIF, and TLIF categories.

Each personalized implant is designed virtually using the new Globus SCRIPT Studio software application, allowing surgeons to customize each implant to patient specifications. Combining SCRIPT with our full line of implant offerings and market-leading Excelsius technologies positions us as a differentiator in this space. Given our full complement of product offerings, our new XLIF prone lateral solution showcases our continued ability to innovate in a category we pioneered and will continue our technology leadership in the space as it features a newly enhanced patient positioner and the Maxxis Air two-blade retractor. The overall solution brings together patient positioning, lateral access, and enabling technologies in a manner that is designed to support a connected workflow for prone lateral procedures.

These new solutions combine adaptable patient positioning with stable, controlled lateral access to establish a reproducible workflow for prone lateral procedures. The XLIF Prone Patient Positioner allows adjustments in both the sagittal and coronal planes, while the Maxxis Air Retractor provides a lightweight, rigid platform designed to support soft tissue management and stable access to the disc space. The SCRIPT line of implants and rods are currently available, while the XLIF Prone solution and two-blade retractor will be available later this quarter.

Additionally, we are in the final stages of introducing a revolutionary product suite called EIQ, which includes a next-generation pedicle fixation product comprised of implants and instruments, AI-based software, planning and execution tools, an intraoperative rod bending machine, and integrated neuromonitoring, all working seamlessly with our EGPS robot, EHUB navigation, and E3D imaging systems. We are excited about these products and expect them to be meaningful contributors to revenue in 2027 and beyond.

Our enabling technologies business delivered $34.9 million in the third quarter, growing 24% driven by increased upfront sales of robots as well as a continued increase in service revenue. In addition to the increase in upfront revenue, our overall EGPS and EHUB units deployed, whether sold, leased, or rented, grew 73% versus the prior-year quarter. Looking at the comparable year-to-date figure, our overall EGPS and EHUB units deployed are 65% higher versus the prior year-to-date, demonstrating early results of our approach to increased flexibility in how capital is acquired.

During the third quarter, the FDA notified us of the closure of the July 2024 EGPS warning letter as a result of the corrective action steps taken. As a reminder, the warning letter was focused on administrative tracking of complaint handling and was not an issue of patient safety. Appropriate notifications were shared with both our sales force and customers regarding the letter’s closure. We remain positive on the benefits of our EGPS technology, with over 145,000 robotic cases performed to date, and see this and navigation with our EHUB as key drivers to implant revenue growth in 2027 and beyond.

Our Q3 trauma business grew 19% as compared to the prior-year quarter. Reflecting on our trauma performance the past few years, the business has remained on a steady growth trajectory. We see surgeons, health systems, reps, and competition beginning to look at Globus Medical trauma differently. In the past, Globus Medical was known as a spine company dabbling in the trauma space. That narrative has shifted, where we are now being viewed as a company that is committed to the space and investing in it.

Our growth strategy remains focused on converting surgeon teams within Level 1 and Level 2 trauma centers such that we achieve set utilization, driving long-term profitable growth. As we look ahead to 2027 and beyond, we expect our trauma business to contribute incrementally higher each year to our consolidated growth going forward. Q3 Nevro revenue totaled $73.7 million, declining 26% as compared to the prior-year quarter given the earlier declines in U.S. trial volumes. Despite the revenue declines, NEVRO adjusted EBITDA margins expanded 370 basis points driven by gross margin expansion and a more disciplined approach to OPEX spending. As we work to recoup lost revenue, we are fully confident that we’ve right-sized the business, which can now operate in a sustainable manner.

We substantially completed the rehiring of sales headcount lost earlier in the year and are starting to see increased output from new associates trained. As we look ahead, we remain focused on stabilizing and getting this business back to a path of growth. The revenue recovery will be driven by increasing the execution of our sales force and growing it through competitive recruiting. In addition, we seek to bring new products to market, and I’m excited to share that we will be introducing a new IPG in 2027 named HFX Elite, which is the first innovation to the market since the acquisition of Nevro.

HFX Elite will introduce bolus therapy and expanded MRI labeling, allowing more patients access to MRI. HFX Elite is slated for a first-half 2027 commercial launch, which we see as a catalyst to drive revenue growth in the new year as we remain committed to the pain market. While NEVRO introduced a new continuum of care to Globus Medical with the introduction of pain to our spine franchise, I want to remind everyone that an entry point into pain and SCS were not the only reasons to acquire Nevro. For an acquisition price of $250 million, we’ve added a technology tuck-in to our portfolio and continue to see uses of the NEVRO technology beyond what it is today, which we see as drivers to expand the technologies and product development into new areas including cranial, next-gen spinal implants, as well as peripheral nerve stimulation.

Transitioning this business to a sustainable model of profitability was critical as we investigate the technologies for alternative uses while still working to develop and launch new and exciting products within the core pain franchise. Now that I’ve covered the quarter pertaining to our business performance, I’d like to step back and spend a few minutes on who we are, where we are going, and why we are making those decisions along the way, as it will help evaluate us over the next several years. First, our strategy and focus are to develop technologies and procedural solutions that span the continuum of care in the categories in which we operate. We want to innovate, disrupt, and develop a moat that advances patient care while driving operational excellence.

Our innovation, whether organic or inorganic, is to develop or enhance a market-leading position that directly ties back to the mission of developing products that promote healing in patients. We are focused on providing our surgeon and hospital partners with a suite of products that are differentiated and meaningful for better clinical outcomes and ease of use by the surgeon. Second, in order to achieve that market-leading position, we seek to build dedicated sales teams that will bring deep knowledge and training as well as possessing deep surgeon and hospital relationships that enable us to penetrate markets and be a valuable partner in the operating room. Our success to date in spine and trauma are based on our vast experience in building those dedicated and focused sales teams.

Third is our approach to business development. As we look at opportunities, we evaluate based on consistent criteria. Does it strengthen our platform? Does it enhance a current call point, or will it introduce us to a new call point while driving a meaningful return on capital and improving our overall market growth rate over the long term? Looking ahead, we’re going to continue with that formula as we remain active on the business development front.

During the third quarter, we completed two small acquisitions, with the first being Higgs Boson in late August. This deal was about driving digital innovation with the mission of transforming the healthcare experience to better shape the patient and provider experience throughout the full episode of care. This deal centered on our goal of improving patient outcomes from the current 70% after 10 years to 95%. Our vision brings the Higgs Boson technology into our AI-based surgical intelligence layer by becoming the conduit of data and analytics paired with our class-leading implants, technologies, and procedural solutions.

The goal is positioning the surgeon to become the best version of themselves using the proper techniques and approaches for their patients through an improved process of matching the right patient with the right implants, procedures, and technologies. Our closed loop will bring that together and monitor outcomes post-op to foster the environment of continuous learning. That vision checks the box that I’ve described earlier. The second deal closed during the quarter was the acquisition of the Synaptiv assets. This deal was closed through a Canadian receivership bid process and represents a strategic opportunity for Globus Medical to expand into the cranial neurosurgery market, a faster-growing market as compared to the current markets in which we operate.

We estimate approximately 2 million cranial procedures being performed annually, and the acquisition of Synaptiv helps to establish Globus Medical as a leading cranial technology company through the development of an integrated portfolio of enabling technologies and procedural solutions built around Excelsius Cranial Solutions, MODIS Plan, MODIS X Clinical Services, and future cranial technologies using IP previously acquired or through new IP being developed.

The strategy creates a unified ecosystem, supporting the full spectrum of neurosurgical procedures. This will focus our cranial investments with the establishment of a dedicated sales team that supports capital equipment with recurring revenue from software, service, clinical support, disposables, as well as instruments and future implant offerings. This roadmap extends beyond the platform navigation into a fully connected ecosystem. Our strategy doesn’t move from quarter to quarter. Along the way there will be bumps and air pockets, but we maintain focus on the long game to live our mission of improving patients’ lives. We remain steadfast on launching new products, meaningfully growing our sales force, and stabilizing Nevro as we look forward to the future. I will now turn the call over to Kyle for additional insights into the quarter and our outlook for the remainder of the year.

Thanks Keith and good afternoon everyone. Our third quarter results were highlighted by record quarterly free cash flow generation of $225 million and an eighth straight quarter of sequential adjusted gross profit margin expansion to 69.5%. Base business Globus revenue grew 3%, including Enabling Technologies, which saw a 34% sequential and 24% quarter-over-quarter lift in sales dollars when compared to Q2 2026 and Q3 2025 respectively, on a unit basis which includes sales, rentals, and leases.

Enabling Technologies grew 23% sequentially and 45% year over year as we execute our transition to a more flexible capital acquisition model. On a consolidated basis, sales declined 1% as reported compared to the third quarter of the prior year, primarily driven by Nevro declining 26% over that time period. U.S. Spine led the way in growth for the organization, growing 2% versus a tough comp in the third quarter of the prior year and 6% on a two-year average basis in line with the first half of this year. The slowdown in the current period growth was mainly impacted by a delay in key product launches which were expected to contribute to top-line Spine growth in the second half of 2026 and lower contributions from competitive rep recruiting.

The launches of the Script line of implants, XLIF Prone Solution, two-blade retractor, and EIQ, which Keith touched on in his prepared remarks, are expected to be meaningful contributors to growth in 2027 and beyond. Adjusted gross profit margin continued to build, growing 140 basis points over the third quarter of the prior year and notching a 10 basis point improvement over the second quarter of this year. We achieved third quarter 2026 fully diluted non-GAAP earnings per share of $1.23, growing 4% over the prior year. Third quarter operating cash flow was $265 million and free cash flow was $225 million, growing 6% and 5% respectively, despite a 13% increase in capital expenditure investment.

Today I will touch on our quarterly business performance, comment on share repurchases and capital allocation, and provide an update on guidance for 2026. Turning to the quarter, third quarter 2026 revenue was $763.7 million, a decline of 0.7% on an as-reported basis and a decline of 0.5% on a constant currency basis. GAAP net income was $141.2 million, resulting in $1.04 of fully diluted GAAP earnings per share. Non-GAAP net income was $167 million, delivering $1.23 of fully diluted non-GAAP earnings per share, or growth of 4.4% over the prior year.

Total company adjusted EBITDA margin was 34.3% in the third quarter of 2026 compared to 32.8% in the prior year quarter and is 34% for the year-to-date period, growing 370 basis points over the comparable period of 2025 as we deliver lasting and sustainable bottom-line performance. Our third quarter net sales of $763.7 million reflect base business Globus sales totaling $690 million, growing 3% as reported and on a day-adjusted basis. The third quarter of 2026 had the same number of selling days in the U.S. and international and one less selling day in Japan compared to the prior year. Base business Globus sales grew 3.2% on a constant currency basis. Sales growth was led by U.S. Spine, which grew 1.8% as reported, and Enabling Technologies, which grew 24.3%, and our Trauma and Neuromonitoring businesses, with each achieving double-digit growth for the fifth straight quarter.

Sales growth across these underlying businesses were offset by a 25.7% decline in Nevro. Nevro had a 9% sequential decline in sales compared to the second quarter of 2026 as we worked through the process of hiring, training, and deploying field sales employees to impacted Nevro territories as part of the revenue recovery efforts from the significant structural changes made 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, although the recovery from lost sales volume has been delayed beyond our previous expectations. Despite this, we remain confident in our ability to grow trial volume and revenue in 2027 and in the trajectory of the Nevro business as we continue to see the lasting and sustainable impact of cost control actions taken in 2025 on profitability and cash generation, highlighted by consistent and sustaining EBITDA margin of 19.9% in Q3 2026 and 17.9% year to date 2026, up over 1000 basis points compared to year to date 2025.

Refocusing on overall results, Musculoskeletal Solutions realized $728.9 million in revenue, a decline of 1.6% compared to Q3 2025. Removing the impact of Nevro’s revenue, base business Globus Musculoskeletal revenue grew 2.1%. Enabling Technologies revenue was $34.9 million, achieving the largest sales-dollar quarter since Q4 2025. More importantly, as mentioned in my opening remarks, total capital units increased 45% versus Q3 2025 and 23% on a sequential basis compared to Q2 2026.

Despite the increase in sales dollars this quarter, we continue to expect a conversion to more rental, lease, and volume-based deal structures as we work through the transition to a more flexible way for our customers to acquire our capital under our revised approach to capital deployment. U.S. revenue during the third quarter of 2026 was $621 million, growing 0.5% as reported. Growth in our domestic business was led by our U.S. Spine, Enabling Technologies, Trauma, and Neuromonitoring businesses and partially offset by declines in Nevro. Q3 2026 international revenue was $142.7 million, declining 5.7% as reported and declining 5% on a constant currency basis. The decline in our international business was primarily driven by Nevro and Japan.

Excluding the impacts of Nevro, year-to-date growth in our international business is 11.6% versus the same period of the prior year. Transitioning to the rest of the P&L, GAAP gross profit margin in the quarter was 66.7% compared to 64.2% in the prior year quarter. Adjusted gross profit margin was 69.5% compared to 68.1% in the prior year quarter, primarily driven by the impacts of synergy execution through our manufacturing and supply chain initiatives and favorable sales mix, partially offset by increased freight costs.

We reiterate our expectation of adjusted gross profit margin landing in the range of 69% to 70% in 2026, representing a 90 to 190 basis point improvement over 2025, and are pleased with the progress of our operations team who have driven to eight straight quarters of sequential adjusted gross profit margin growth on our way to a return to a mid-70s adjusted gross profit margin. Research and development expenses in the third quarter of 2026 were $34.5 million, or 4.5% of sales, compared to $38.1 million, or 4.9% of sales, in the prior year quarter. The resulting decline in R&D, both in dollars and as a percentage of sales, is attributable to synergy capture resulting in lower employee-related costs and timing of incremental investment in product development. As mentioned in the prior quarter, we are expanding investment in our in-house product development capabilities as we work to bring new and exciting products to market.

We expect an increase in R&D dollars over the next several quarters. For this year, we expect R&D expense to be in the range of 4.5% to 5% of net sales. SG&A expenses in Q3 2026 were $288.5 million, or 37.8% of sales, compared to $313.6 million, or 40.8% of sales, in the prior year quarter. The prior period SG&A expenses included one-time net charges for estimated litigation of $28.3 million compared to $3.7 million in the current quarter. Excluding these one-time charges, which we adjust out of our results for non-GAAP reporting, our consolidated SG&A expenses were $284.8 million, or 37.3% of sales for Q3 2026, and $285.3 million, or 37.1% of sales for Q3 2025.

Spend and percentage of sales were flat period over period after removing the litigation charges, driven by lower sales compensation cost on lower sales volume and offset by higher employee benefit costs from timing of claims. Q3 2026 net interest income was $8.4 million, compared to $1.5 million in the prior year quarter. The $7 million favorable change is being driven by an increase in interest income from cash reserves. The GAAP tax rate for the third quarter of 2026 was 23% compared to 17.4% in the prior year quarter. The prior year quarter rate includes one-time favorable impacts from legal entity restructurings of NuVasive and Nevro. Our non-GAAP tax rate for the quarter was 23.2% compared to 20.8% in the prior year quarter, resulting in $0.04 of non-operational headwind to earnings in the current quarter.

Cash, cash equivalents, and marketable securities were $871.2 million at September 30, 2026, compared to $629.1 million at December 31, 2025. The increase in cash is driven by operating cash flow of $677.3 million, primarily from higher net income, and partially offset by $279 million of share repurchases and cash spend on capital expenditures of $113.2 million, or 4.9% of sales. In Q2 2025, we announced a new share repurchase program of $500 million.

In the third quarter of 2026, we repurchased $142.9 million, or 1.9 million shares, under this program. For the full year 2026, we’ve repurchased $279 million, or 3.5 million shares, and have $110 million of authorization remaining under this program as of September 30, 2026. Today we are pleased to share that our Board of Directors has authorized an additional $500 million on this share repurchase program, reflecting our confidence in our long-term growth profile and underlying earnings and cash generation prowess.

Share repurchases under this plan will continue to be sourced from cash from operations. Share repurchases have been and continue to be an integral part of our capital allocation strategy, especially when market valuations remain depressed. Share repurchases in 2026 represent just under 50% of our year-to-date free cash flow generation. We are reiterating our capital allocation strategy, which is built on driving investment for long-term profitable growth and prioritizes internal investment in innovative product development efforts above all else. After prioritizing product development, our capital spending is focused on constructing sets for our worldwide sales force and increasing our manufacturing footprint through investment in facilities and machinery and equipment. Our next priority is to continue to buy back shares through our existing and expanded share repurchase program, minimizing dilution and increasing shareholder value.

Finally, we will continue to evaluate opportunities for acquisitions, tucking in technology and complementary businesses while focusing the use of our capital on driving investment for long-term profitable growth. Moving into guidance, the third quarter top-line results and early read on Q4 have us adjusting our top-line guidance downward. While we remain positive and upbeat regarding our growth year to date as our future trajectory, we expect short-term top-line pressure from the Nevro business and limited impact in 2026 from newly launched products. At this time, Globus Medical is adjusting its full-year 2026 revenue guidance downward to $3.09 billion compared to our previous guidance of $3.18 to $3.22 billion.

The revised revenue guidance implies growth over 2025 of 5.0. We reiterate our guidance for non-GAAP fully diluted earnings per share to be in the range of $4.95 to $5.05. The fully diluted non-GAAP earnings per share guidance implies growth over 2025 ranging from 24.4% to 26.9%. We remain resolute in our mission and strategy as we drive to be the leading musculoskeletal technology company in the industry. To that end, we will continue to execute our established initiatives across the business as we strive to deliver above-market revenue growth, best-in-class profit and cash generation, and long-term value to our shareholders. Operator, we will now open the call for questions.

OPERATOR

Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Matt Taylor of Jefferies. Your line is now open.

Matt Taylor (Analyst at Jefferies)

Great, thanks for taking the question. I guess I wanted to ask, you didn’t mention at all in your comments anything about market growth being slower. One of your competitors called that out. Do you think there’s been any market — did that impact results? And you also talked about a number of things that could help in 27, including new products, more contributions from reps, Nevro picking up with the new product there, and all this pull-through from the robotic acceleration.

So I was hoping that you could offer some thoughts on what kind of growth we could expect in 2027.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

Matt, this is Keith. Thanks for the question. As you think about the market and some other competitors mentioning softness in the market, I’m really going to shy away from that because, as I look at our third quarter, I think there’s things that we could have done better to achieve the growth that we thought we were going to get. When I think about that, it really gets back to getting our new products out. Some of these products were delayed. I called out that it’s timing, but ideally I would have liked to have had Script out earlier than what it was, as well as had this XLIF prone positioner two-blade retractor.

I would have liked to have had those products out earlier to drive growth. That’s the first piece. Second piece is competitive recruiting. You know, competitive recruiting is something that Globus has done for years, and it’s been successful for us. But as we do it, we need to continue to be aggressive and hire more and more competitive reps because you’re building off of a base that’s getting larger. That’s one piece. So you want to increase the quantity of reps, but also as you look at those reps, you want to make sure that they’re bringing over the dollars that you believe they can bring over.

So as we think about that from an execution standpoint, I feel we could have operated that a little bit better in 2026. Looking ahead to 2027, I’m happy that Script is out. We’ve done some cases with it. The XLIF prone and the two-blade retractor will be available later this quarter, but really that’s meaningfully going to drive revenue in 2027. So we’re excited about where spine is positioned. We’re excited about the products that are coming to market. Number one, we have a lot of irons in the fire with respect to development. So I think that we’re positioning a spine business that can execute in the market and still allow us to grow above the market growth rate of the spine business.

If I think about Nevro, you know, we’ve done a lot structurally to that business to make it a sustainable business. Just following back on some of my comments, and even some of Kyle’s comments, the trial volumes haven’t necessarily come back to where we wanted them yet. But as I think about the business, we see that we now have a sustainable business. But moving ahead, going into 27, we are going to be bringing a new product to market early in the first quarter, which is going to help drive some of the growth that we’re looking for while we get the sales teams that we brought over — the new sales reps that we’ve brought over — getting them more and more productive while also starting to do competitive recruiting. So I think Nevro is starting to position for a better 27.

And then lastly, our Enabling Tech, the transition that we’ve done to get a little bit more flexible, I see is bearing fruit. And when you think about how that impacts the Globus spine business, it really gets back to the three things we’ve talked about: new product launches, competitive recruiting, and implant pull-through from robots and navigation. I think that sets us up well for the future.

Matt Taylor (Analyst at Jefferies)

Great. Thank you so much.

OPERATOR

Thank you. Thank you. Our next question comes from the line of Vic Wacko of BMO Capital Markets. Your line is now open.

Vic Wacko (Analyst at BMO Capital Markets)

Hey, good afternoon, and thanks for taking the questions. I had two. Can you just talk about how much revenue did the delayed U.S. spine launches cost you in Q3, and have the underlying manufacturing and production issues been resolved now? And then I had a quick follow-up, please.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

I’m not going to break out the parts of the Q3 revenue miss. I just would articulate that it’s really driven by the timing of the new product launch and not seeing the competitive rep growth that we would have wanted. As it relates to the structural issues related to manufacturing, we’ve worked through them, and there’s little things that we’re still continuing to work through, but we feel very confident that we’re positioned to launch into 2027 from a position of strength.

Kyle Klein (Chief Financial Officer)

Yeah, Vic, this is Kyle. The only thing I would add to that too is thinking about the investment that we’re going to make in product development. Some of that is heads and other resources as we work to kind of fill out the entire team working on these product development launches.

Vic Wacko (Analyst at BMO Capital Markets)

Okay. And then my follow-up question was, you know, you had called out lower contributions from competitive rep recruiting, or from competitive recruiting of the reps. Is that a recruiting issue? Is that lower productivity from the reps that you hire, or is it increased retention efforts by competitors? Thank you.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

I would say that we want to continue to add to the number — the sheer quantity — of reps that we’re bringing over, number one. But then number two, as you look at your competitive recruits from quarter to quarter and year to year, they’re always bringing over different amounts of business. So what you’re constantly looking at is, how quickly does that business transition, number one? And number two, is it meeting your expectations? When I look at the last year, we were very successful in bringing competitive recruits over, and they brought over large dollar amounts. So that’s created a base for which I need to grow off of. And what I didn’t see in the third quarter — and you really couldn’t tell until you got to the middle of September — I didn’t see that bounce back or that bounce of growth that we would have expected from the competitive recruiting.

OPERATOR

Thank you. Our next question comes from the line of David Saxon, Needham & Company. Your line is now open.

David Saxon (Analyst at Needham & Company)

Great, good afternoon. Thanks for taking my questions. I wanted to dig a little into the guide. I mean, it implies fourth quarter is down kind of mid-single digits, call it. So can you just walk through the building blocks there? Like, does Nevro get better sequentially? And then, you know, Enabling Tech is facing a tough comp. So how are you thinking about it, maybe on a sequential trend? And then everything you talked about in U.S. Spine, kind of how do we think about fourth quarter on that piece?

Kyle Klein (Chief Financial Officer)

Yeah, David, this is Kyle. Thanks for the question. So yeah, as you think about our guide and what it implies for Q4, it does imply a mid-single-digit decline. I would say it’s kind of across three main areas. One is on the spine side of the house, as we’ve talked about in terms of those product launches. With those delays, with Script now getting out in the first few cases, we don’t expect to see any meaningful growth from Script here in 2026, as well as the prone positioner as well.

Those will be 2027 stories. So that delay has basically taken it out of the back half of the year and moved it into 2027. Number two is on the Nevro side of things and the recovery there. So what we saw was a sequential decline of 9% from Q2 to Q3. We now have a majority of the headcount kind of hired and in-house at Globus, getting trained, getting deployed, and out into the field. We’re yet to see those trial volumes kind of pop up to where we want them to be. So we’re working towards getting them out, getting them successful, seeing the trials come through. We think that will be a driver of revenue growth in 2027, but not necessarily here in 2026.

And then finally, as you called out with Enabling Tech, yes, number one, we’re coming up against a tough comp. Q4 2025 was a record from a unit perspective as well as a sales dollar perspective. So as we go up against that comp, as well as continue this transition to a more rental/lease placement-type model with our capital deployment, you’ll see less upfront revenue. It will pay dividends in the future as we think about more of our recurring implant, service, et cetera, revenue.

But that will cause some of the softness in Q4 as well.

David Saxon (Analyst at Needham & Company)

Okay, that was helpful. Thanks for that. And then maybe just thinking about the next 12 months. I mean, you’ve had a really good year on the EPS front this year. So as we kind of go back to our models, what are the areas that can drive the next leg of earnings growth? I mean, it sounds like 27 will benefit from all the things we just talked about and gross margin as well. Any framework to think about how you view Globus, its earnings growth profile, and how to think about 27?

Thanks so much.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

This is Keith. Thanks for the question. As I think about 2027, we talked about some revenue opportunities and new products that’s going to drop to the P&L. When you think about the leverage that we have, and the leverage that will be created from the volume growth, that’s one. Two, Kyle had mentioned continued success from a gross margin perspective. We still expect to see incremental gains from that. But partially offsetting that really ties back to one of the things we’ve been signaling the last couple of quarters, which is a step-up in R&D spending. That is something that we see more of happening into 2027.

So that’ll net against some of those gross margin improvements. All in all, though, the goal is to be growing mid- to high-single digits top line and having your earnings outperform your top-line growth.

David Saxon (Analyst at Needham & Company)

Great. Thanks so much.

OPERATOR

Thank you. Thank you. Our next question comes in the line of Caitlin Roberts of Canaccord Genuity.

Caitlin Roberts (Analyst at Canaccord Genuity)

Hi, thanks so much for taking the questions. Just regarding the new product delays, is there a backlog of orders or maybe some insight into the demand that could return as supply comes back online for those?

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

I wouldn’t call it a backlog. I would call it anticipation. Script — there’s a ton of excitement from our surgeon partners. They want to get their hands on it. We’re working to get that out as quickly as possible. As you think about the prone positioner and two-blade retractor, that to me is a product that can drive ancillary implant pull-through in the future, plus also I think help us as our sales team looks to competitively recruit. So I think that there’s a lot of excitement built up for those products.

We just want to get them to market.

Caitlin Roberts (Analyst at Canaccord Genuity)

Got it. And then just a quick one — you called out Nevro, but also Japan in terms of the OUS decline. Any color on the weakness in Japan there? Got it. Thank you.

OPERATOR

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

Matthew Blackman (Analyst at TD Cowen)

Hi, thanks, Jerome. For Matt tonight. Keith or Kyle, maybe just on that last point on international, could you just maybe detail a little bit more on what’s happening in the international spine market? And maybe I missed what the growth rate was in the quarter. And just with Japan, I thought those kind of issues were behind the company. So is there something new popping up, or is this just some minor thing that you’re taking care of?

Kyle Klein (Chief Financial Officer)

Drew, I’ll take that. This is Kyle. So on an international perspective, if you took out Nevro, the rest of the international business was somewhere around flat to slightly down. What we saw was Q2. We had a really, really strong growth quarter. Some of that was due to refilling of orders from a backlog perspective and some one-time items that didn’t recur in Q3. As you look through the full year-to-date number for international, I called out in my prepared remarks that we’re growing around 12%, so still positivity overall, and we feel good about where we’re at from that perspective.

The second part, we’re not seeing any new issues in Japan, but Japan has been a country that’s been a slower grower for us over the last several years. If you think about how we framed conversation of international spine growth, the last several quarters really focused on EMEA, LATAM and APAC. We’ve seen growth across all those regions, but we do still see softness in Japan.

Drew

Got it. And then just also as a follow-up, Keith, you mentioned mid single digit to high single digit growth. Is that more of an aspirational goal or is that how investors should be thinking about revenue growth for 2027? And you talked about EPS growing faster, but anything we should be thinking about with free cash flow as you’re continuing to invest in more growth initiatives?

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

I think we’re not guiding on ’27 just yet, but as I think about revenue, mid to high single digits is where we’d like to be. We commented on some of the new products that are coming. We commented on starting to enter new markets that may have higher growth rates than what we’re currently in. And as you think about earnings, I commented on an earlier question where I thought how revenue growth would drive some P&L and P&L leverage. We’re not guiding the free cash flow, but it’s something that we continually pay attention to and really look to reinvest that cash in the manner that Kyle described through internal investment.

Timely, we think about M&A tuck-ins as well as through share repurchases.

OPERATOR

Thank you. Our next question comes from the line of Keith Hinton of Freedom Capital Markets.

Nakul (Analyst at Freedom Capital Markets)

Hey guys, this is Nakul on for Keith. Thanks for taking our questions. So I have one on Trauma. You saw a slight slowdown in Trauma growth this quarter. Other than a tougher comp, anything to call out there? And is Trauma a focal point for potential M&A?

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

This is Keith. Thanks for the question. Nothing to call out as it relates to Trauma. They did have a tougher comp, but as I think about some of the products we’ve come to market with over the last several quarters, there’s still been great uptake of those products. Trauma is a focal point of us going forward, but as I think about that business, we view our bag as full in that business. We want to continue to grow and develop organically. So I would say that we never say never, but Trauma and looking at M&A for Trauma is not our near-term priority.

Nakul (Analyst at Freedom Capital Markets)

I think that’s it for us. Thanks. Thanks so much.

OPERATOR

Thank you. As a reminder, to ask a question, you will need to press star-11. Our next question comes from the line of Travis Steed of Bank of America.

Travis Steed (Analyst at Bank of America)

Hey, maybe just a question on your broader M&A strategy. I’d love to hear kind of how that’s changing, especially Keith spending more time doing M&A. And I don’t know if the deals that you’ve done already, if they’re contributing any revenue that we should add in or not, or if those are still at zero.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

This is Keith. Thanks for the question. So I wouldn’t say that there’s a broader change in our M&A strategy. It’s, you know, as we grow, you would expect to do deals as time passes, but we still see plenty of organic growth opportunity in our business. The two small tuck-ins that we just did, they are not revenue contributing yet to this point, and I, to be clear, don’t expect them to be meaningful contributors in 2027. But, you know, as you think about these deals that we just did, they’re small, they’re smaller, you know, and from my perspective, I see a lot of value sometimes in doing smaller deals, a little bit less risk, but you have really an ability to drive an outsized return on capital. So as we look, Brian’s heavily focused on trying to identify what are those deals that are out there that can provide that strong return on capital. But the idea of how we approach and look at a deal, that hasn’t changed.

Travis Steed (Analyst at Bank of America)

Okay, thank you. And there’s been a lot of questions on ’27. I think that’s such an important topic. I just want to ask it in a different way. The Street’s at 6% organic growth next year. It seems like everything you said on this call, there’s nothing wrong with that 6% that the Street’s modeling at this point, right? I just wanted to confirm that.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

Not guiding on ’27 yet. I will fall back on my comments related to the new products and the positioning for next year. I feel that our business is healthy as we move ahead.

Travis Steed (Analyst at Bank of America)

Okay, thank you.

OPERATOR

Thank you. Our next question comes from the line of Lawrence Beagleson of Wells Fargo. Your line is now open.

Ross Osborne (Analyst at Wells Fargo)

Hi, this is Ross Osborne for Larry. Thanks for taking our questions. Maybe one on biologics. As you pursue additional biologics contracts, what are you seeing on pricing and competitive intensity in the market?

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

Biologics pricing, it’s a competitive market. Many times it’s on, you know, you think about RFPs. Many times biologics are kept separate from implant contracts. And, you know, really what you’re trying to do is I would say that we want to continue to increase our indexing of biologics. So if I think about a procedure, you want to find ways to continue to drive biologic attachment rate. Pricing is still very competitive. I don’t see that necessarily changing.

But from our perspective, what we’re looking to do is figure out ways to grow our attachment of biologics in a given procedure.

Ross Osborne (Analyst at Wells Fargo)

Great. And then maybe would you just walk through the XLIF go-to-market strategy and how do you plan to differentiate yourself there?

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

Yeah, sure. So XLIF, as we think about it, we’ve been in XLIF prone, but we didn’t really have a positioner or a retractor that provided for what I would call three pillars. We really focused those three pillars on having alignment, control and visualization. So when you think about the products that we just developed, the retractor, the positioner, then coming along with our implants, enabling tech, we feel that our approach around alignment, control and visualization are all met with those products and sub-products.

When I think about the positioner, we think it’s going to hold more completely and provide greater surface area. There’s two planes of correction, like I commented on in my prepared remarks, and it’ll give sagittal tilt if the surgeon wants to do lordosis correction. From a retractor perspective, we see improved visualization there for setup as well as soft tissue as they do the retraction for soft tissue. And those are all things that we feel are improvements and will continue to have us be what I would call best in class.

Ross Osborne (Analyst at Wells Fargo)

Thank you.

OPERATOR

Thank you. Our next question comes from the line of Richard Neuwater of Truist Securities. Your line is now open.

Kunal (Analyst at Truist Securities)

Hey, this is Kunal on for Rich. Just wanted to ask a little bit on one of the acquisitions that you touched on for Higgs Boson. Why don’t you just get a little bit more detail, if possible, about how it fits with the portfolio and how you guys are thinking about that kind of complementing 2027, 2028 and so on.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

Right. Like I said earlier, this is not going to necessarily be a big contributor to revenue in 2027, but it’s really getting back to identifying and improving the episodes of care. When we think about what do we have, we have complementary implants, we have best-in-class technology, we understand the procedures, but the thing that we wanted to improve on was our surgical intelligence, or what I would call the surgical intelligence layer. The Higgs Boson technology will help us do that—understanding the patient from the beginning as well as post procedure to really get a closed-loop feedback on what happened for a given patient and a given procedure.

We want that to basically work over the longer term to develop our own knowledge, but then put it in the hands of the surgeon to really make them the best version of themselves as they operate. It’s a longer-term strategy, but the Higgs Boson technology we thought was a good fit for what we wanted to do.

Kunal (Analyst at Truist Securities)

Thank you. I’ll just keep it to one.

OPERATOR

Thank you. Our next question comes in the line of Tom Steffen of Stifel. Your line is now open.

Tom Steffen (Analyst at Stifel)

Great. Hey guys, thanks for taking questions. Apologies if this has been asked, but jumping between calls. Just on SCRYPT, exciting to see that at NASS. Would be great if you can talk about initial surgeon feedback, perhaps potential revenue contribution next year, or even just more qualitatively what the magnitude of the incremental impact from SCRYPT could look like. And then obviously there are some key competitors in this area, so it would be great if you can talk a little bit more on, call it, your level of confidence in your ability to differentiate and compete.

Keith Pfeil (Chief Operating Officer and Chief Financial Officer)

Thanks. This is Keith. I would say our surgeon feedback—there’s been a lot of excitement to the product thus far. You know, questions that have been raised have been around reimbursements. There were some concerns about that. Our team has really gone back and looked at the DRG codes and really focused on making sure that there’s reimbursement there. We see that we qualify from a DRG perspective to a custom-made, anatomical, designed interbody fusion device.

And when we think about that, we think about our products. What the surgeons are excited for is their ability to control what they’re creating with the actual patient-specific implant. As I think about the product in and of itself, we’ve done a few cases, we’re learning as we go, but we’re really happy with what we’ve seen thus far. We want to really work to scale that up as we get into 2027.

OPERATOR

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

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