Globus Medical - BoardDocs, a Diligent Brand · 2019-10-07 · - Globus Medical/School District...
Transcript of Globus Medical - BoardDocs, a Diligent Brand · 2019-10-07 · - Globus Medical/School District...
To become the pre-eminent musculoskeletal company in the world by developing products that promote healing in patients with musculoskeletal disorders.
MISSION
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GLOBUS MEDICAL OVERVIEW
• Founded in 2003 by an experienced team to create products that enable surgeons to promote healing in patients with musculoskeletal disorders.
• Experienced leadership team with over 200 years combined in the spine and medical device industry
• Comprehensive portfolio of Innovative Spine products
• Product development engine has generated over 180 productssince inception
• Worldwide exclusive sales distribution channel
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• 4Q 2018: Sales $195.9 million, up 11.3%• 2018: Sales $713.0 million, up 12.1%; non-GAAP EPS $1.68• 2018: Gross margin 77.8%, Adjusted EBITDA margin 34.1%• 2019 Guidance: Sales $770 million; EPS $1.72• Cash $602.8 million; Debt free
LAUNCHED NEW PRODUCTS IN SPINE• ELSA AL™, ELSA ATP™, ViaCell, Rod Link Reducer
INVESTED IN EMERGING TECHNOLOGIES• Robotics R&D and commercial sales force• Orthopedic trauma R&D and senior sales force management
ROBOTICS• Launched ExcelsiusGPS™ 4Q17• Surgical Trajectory Guidance and Navigation• CE Mark and 510(k) clearance• Acquired KB Medical, Swiss base surgical robotic company• Acquired Surgimap pre-surgical planning software company
TRAUMA• Entered $6 Billion Orthopedic Trauma market• Hired senior management to build commercial sales force• As of 1Q18 secured FDA 510(k) clearance on 11 systems
– Covering 75% of orthopedic trauma market
2018 HIGHLIGHTS
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• Leverage Integrated Product Development Engine• Continued Sales Force Expansion• Drive Operational Excellence• Investment in Emerging Technologies
GLOBUS STRATEGY
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• A “full bag” with over 180 products• 30+ products in development at any time• 5-10 product launches expected each year
• new products ‘12 (15), ‘13 (15), ‘14 (15), ‘15 (14), ‘16 (17), ‘17 (11)• Broad portfolio of issued patents and new applications
• Differentiated product pricing
LEVERAGE PRODUCT DEVELOPMENT ENGINE
QUARTEX™
CREO® & CREO AMP®
UNIFY®
RISE®MONUMENT®
KINEX® PLUS
FORTIFY® I 8
COALITION MIS™ MAGNIFY™-SCALIBER®-L
2003 2005 2007 2009 2011 2013 2015
Continuous innovation: from static cages to expandable technologies
Globus Posterior Interbody Fusion
SUSTAIN®-O CALIBER®
SUSTAIN® Arch RISE ®SIGNATURE®
LATIS®
LEVERAGE PRODUCT DEVELOPMENT ENGINE
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ALTERA ®
Exclusive U.S. sales force includes direct sales representatives and distributors
• Actively recruiting experienced sales representatives• Increase sales force proportional to sales growth • Robust sales training and development programs
CONTINUED SALES FORCE EXPANSION
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• Early stages of adoption• Leverage GMED sales force/relationships
Robotics
• Lack of innovation in market• History of collaboration with clinicians to
solve unmet needs
Trauma
Other Adjacencies
EMERGING TECHNOLOGIES
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ROBOTICS
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Why Robotics?
Minimally Invasive Surgery• MIS associated with Less blood loss, less muscle damage and
faster recovery• Today MIS is skill-intensive with large time/learning curve and high
radiation exposureRobotics Advantages
• Improve accuracy Reduce complications• Pre-operative and intra-operative planning Improve outcomes• Significant reduction in radiation exposure due to fewer images
Potentially Huge Market • Spine, Orthopedics, Neurosurgery
Competitive Advantages
Multiple Imaging Technologies• Pre-op CT, intra-op CT, fluoroscopy
Robotic and Navigational Capabilities• Streamlined surgical workflow with extensive instrumentation options
Intuitive User Interface • Touchscreen monitor and tablet
Rollout Plan
Submit to FDA 4Q16
Build/Train Capital Sales ForceMeaningful Revenue
20182016 – US Team2017 – Int’l Team
• Greater than $1B in Sales (13% CAGR)
• EPS Growth to exceed Sales Growth (14% CAGR)
• Multiple Robust Franchises• Spine• Imaging, Navigation, and Robotics• Trauma
1Assumes current foreign exchange rates unless otherwise noted. Adjusted financial results exclude special items. See www.globusmedical.com for information regarding Non-GAAP financial information used throughout this presentation, including adjusted operating margin and adjusted EBITDA margin.
2020 GMED OBJECTIVES1
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• Right, On Time in-house manufacturing
• Precision, timely and cost-effective manufacturing
• More collaboration earlier in the product development process
• In-house manufacturing of roughly 50% of products
• Counter lever to industry-wide pricing pressure
DRIVE OPERATIONAL EXCELLENCE
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Geographical Diversification
• Looking to move and expand to separate location outside of Audubon, PA.
• Exhausted available workforce in current geographical region.
• Rapid growth due to recent launch of Robotics and Trauma divisions.
• Open to expanding/relocating other areas of the business (operations, product development, etc.) over time.
Facility Expansion
425 Stump Road Location – Approx 170K sqft
• Looking to make this location a full manufacturing facility
• Immediate and future renovations of approx. $5M which will include: – Electrical upgrades to run specialized machinery – Ventilation/HVAC upgrades which may include roof
support and upgrades– Parking lot expansion and improvements– Upgrades and improvement to existing office space
Workforce Expansion
• Immediate move of 150 skilled machinists• 150-250 additional jobs in 3 years. • Starting salary’s range from $30-$150k• Benefits include; health, dental/vision, 401k,
annual bonus & stock options, life insurance.
Estimated Employment & Compensation Impact
Relocating
Created
NPSD Residents (3)
Notes:
(1) Number of jobs upon full employment at project site (anticipated by Jan. 2023) per Globus Medical internal projections.
(2) Source of Multiplier – US Bureau of Economic Analysis, RIMS II, for Medical Device Manufacturing (Greater Memphis Medical Device Council, Economic Impact Analysis prepared by Younger Associates, November 2015).
(3) Assumes 15% of average-salaried campus employees will reside in the North Penn School District.
Direct Jobs (1) Indirect Jobs (2) Total Jobs
15024059
25040098
400640156
DirectCompensation (1)
Indirect Compensation (2)
Total Compensation
$7.5 Million
$12.2 Million
$3.0 Million
$12.5 Million
$20.4 Million
$4.9 Million
$20.0 Million
$32.6 Million
$7.9 Milliion
Relocating
Created
NPSD Residents (3)
Projected New School Tax Revenues
Notes:
(1) Projection based on (a) current School District millage rate (26.096) unchanged during entire period and (b) taxpayer pays tax within the 2% discount period.
(2) Projection based on Globus Medical employees only, excluding any construction jobs and any ongoing indirect jobs generated from the project.
Globus Medical: The project would generate substantial tax revenues for the North Penn School District – far more than alternative use of the proposed site
Property Taxes: The proposed Project is estimated to generate an additional $1.1 million of total school property tax revenue (1) during the construction period and the first 20 years of operation, if the proposed LERTA is approved by North Penn School District.
Earned Income Taxes: School District EIT would be an estimated $300 thousand over 20 years should 15% of average-salaried campus employees (2) reside in the District.
Realty Transfer Tax: The District would also receive Transfer Tax of $40 thousand.
Total Recurring Annual School Tax Revenue by 11th year: $480 thousand
Estimated School Tax Revenue Scenarios: Alternative Uses for Proposed Site
Over a 22 year period (2020-2041), Globus Medical would provide the highest tax revenues of various alternative uses for the proposed site
Current Use: If continued, would generate $117 thousand per year, or approximately $2.4 million over 22 years
Alternative Use 1: Globus Medical with 10-Year, 10% declining LERTA The project would generate an estimated $9.5 million in tax revenues ($3.5 million in
property taxes and $6.0 million in earned income taxes) This use would provide a return nearly 4 times greater than the current use
Alternative Use 2: Warehouse/Retail (same as before but new owner): Little or no new property tax revenue: About same as current use. Much lower EIT revenue: Fewer jobs, lower pay
Alternative Use 3: Convert to Another Housing Development?- School expenditures would potentially exceed new tax revenues…
LERTA Provides Key Economic Incentive Assistance
Goal: encouraging economic development in targeted areas
Property tax exemptions on improvements:- Up to 10 years- Up to 100% (may vary by year)
Improvements on vacant and economically underutilized areas qualify
Approval Process:- Step 1: School Board support indicated by Memorandum of
Understanding (“MOU”)- Step 2: Boundaries set by Montgomery Township Board of Supervisors
after holding at least one public hearing- Step 3: School Board Formal Resolution
School District LERTA Support:An Important Component of the Project
LERTA in Montgomery County: A Key Economic Development Tool- North Penn & at least 5 other Montgomery County School Districts have participated
(Hatboro-Horsham, Norristown Area, Pottsgrove, Souderton Area, Spring-Ford Area)- Most have adopted a 10-year, 10% declining balance exemption
Important component of total financial & incentives package- Significant factor in Globus Medical’s decision-making process- Improves economic viability of investment during initial years of operation- School District 10 year, 10% LERTA participation is critical- Globus Medical/School District partnership will have multiple positive outcomes
• Incremental economic & tax revenue impact will be substantial• Globus Medical would look forward to continuing its tradition of community
participation in partnership with the District
We respectfully request that the District participate in bringing this project to the community through favorable consideration of the LERTA proposal