Earnings Call Transcript - GMED Q1 2023

Operator, Operator

Welcome to Globus Medical’s First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker today, Brian Kearns, Senior Vice President of Business Development and Investor Relations. Please go ahead.

Brian Kearns, Senior VP of Business Development and Investor Relations

Thank you, Antwone, and thank you, everyone, for being with us today. Joining today’s call from Globus Medical will be Dan Scavilla, President and Chief Executive Officer; and Keith Pfeil, Chief Financial Officer. This review is being made available via webcast, accessible through the Investor Relations section of the Globus Medical website. 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 2021 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 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 Dan Scavilla, our President and CEO.

Dan Scavilla, President and CEO

Thanks, Brian, and good afternoon, everyone. Globus achieved strong results in Q1, delivering record sales of $277 million, a 21% increase in constant currency or $46 million in growth versus Q1, 2022. Non-GAAP EPS was $0.53, increasing 25%, and free cash flow was $37 million, up 51% versus Q1, 2022. Adjusted EBITDA for the quarter was 31%. Keith will speak more about these items in his section. 2023 is starting out to be a strong year for the Globus standalone business that should deliver record sales, strong cash flows, mid-30s EBITDA, and gains in EPS. Looking deeper into Q1 performance, U.S. Spine grew 14% in the quarter with notable gains across our product portfolio in expandables, biologics, MIS screws, 3D printed implants, and cervical offerings. This above-market growth is driven by competitive rep recruiting from prior quarters, robotic pull-through, and a normalization of post-COVID procedures versus the prior year. In Q1, we launched our MARS TLIF pedicle-based retractor as part of our focus on procedural efficiency to offer specialized options to meet surgeon preferences. We also continue to make significant progress in launching our prone lateral patient positioning system. It is an interactive adjustable bed mount that enables a single position, single-stage lateral surgical approach for direct and indirect decompression, designed to maximize operational efficiency, increase ease of implant placement, and minimize surgeon fatigue. It integrates seamlessly with our ExcelsiusGPS and Excelsius3D solutions and also enables significant capabilities in non-robotic procedures. When combined with our Excelsius platform and our range of expandable interbody offerings, we can provide unique and customizable lateral solutions for our surgeons. Enabling technology sales were $25 million, up 91% on a constant currency basis versus the prior year driven by robotic and imaging system sales. This represents our highest Q1 robot sales to date. We continue to see increased interest in sales with significant international gains of ExcelsiusGPS in EMEA and Asia Pacific that will lead to future implant pull-through and strong market share gains. As we enter Q2, we have one of the strongest robot pipelines since launching the system. Robotic procedures continue to accelerate, growing 51% versus the prior year, exceeding 49,000 robotic procedures performed to date. We continue to make positive inroads with our Excelsius3D imaging system. Surgeons have said this is a game changer as they experienced the benefits of integrated imaging. Excelsius3D is a 3-in-1 imaging platform offering three image modalities in a single cart with high maneuverability, a large field of view, and seamless integration with our ExcelsiusGPS robotic navigation system. It is a key component of the Globus ecosystem designed and built from the ground up to communicate with ExcelsiusGPS in the operating room. Market interest remains high for the state-of-the-art technology and customer orders continue to grow. Excelsius3D is positioned to be a major growth driver for 2023. Our International spinal implant business, excluding Japan, delivered record sales in Q1, growing 30% on a constant currency basis compared to the prior year. We delivered double-digit growth in most markets and continue to see strong growth in key markets. Japan delivered 17% constant currency growth for Q1. We expect to see gains in Japan throughout the year as we focus on recapturing market share. Our trauma business delivered its 13th consecutive quarter of sequential growth, delivering 53% growth for Q1 and 16% sequentially. Trauma performance is driven by sales force expansion and strong uptake in all product lines, delivering strong growth throughout our portfolio, including the AUTOBAHN EVO femoral nail system launched last quarter that continues to take hold and make inroads for market share gains. To update you on the merger status, both Globus Medical and NuVasive Class A shareholders voted overwhelmingly in support of the merger, with over 99% approving the transaction. This is a major milestone, and the support of the combined shareholders moves us closer to realizing the deal. Earlier this week, we received notification from the Federal Trade Commission for a second request, and we are working with the FTC to address their open questions. The second request will impact the anticipated deal closure timing, moving from mid-2023 to Q3 2023. However, it does not alter our commitment to the deal. We're confident that this combination will benefit the surgeons and patients in the markets where we compete. We're placing all resources required to quickly address the FTC questions and drive to a successful outcome. In closing, we remain focused on the core elements for long-term sustained growth: innovative new product introductions, robot and imaging systems sales, competitive rep recruiting, and merger integration planning. 2023 is all about focus and execution to deliver value to our customers and drive growth. I know we are well positioned to achieve our mission of becoming the preeminent musculoskeletal company in the world. I will now turn the call over to Keith.

Keith Pfeil, CFO

Thanks, Dan, and good afternoon, everyone. We are extremely pleased with our first quarter results as they demonstrate our growing position in the market. Strong sales growth was seen across our portfolio and geographies as we've continued to take share while also not experiencing the procedural softness seen in last year's first quarter. Our Q1 revenue was $276.7 million, growing 20% as reported and 21% on a constant currency basis. Net income was $49.1 million, resulting in fully diluted GAAP earnings per share of $0.48. Non-GAAP net income was $53.8 million, delivering $0.53 of fully diluted non-GAAP earnings per share, representing 25.1% growth over the prior year quarter. Turning our attention to sales, Q1 musculoskeletal revenue was $251.6 million, growing 15.7% as reported when compared to the prior year quarter. Growth was led primarily by our spine business, driven by strong procedural volumes both in the U.S. and internationally, driven by continued share gains as well as softer comps when compared to the prior year quarter. First quarter 2023 enabling technologies revenue grew 90.8% as compared to the prior year quarter, driven by ongoing demand for our robotics and imaging system technologies. I specifically note that our robotic pipeline and its development were strong coming out of Q4 and remained so heading into our first quarter of 2023, both in the U.S. and internationally. First quarter U.S. revenue was $234.1 million, growing 19.2% as reported, led by our spine and INR businesses, as well as our biologics and trauma businesses, as Dan mentioned earlier. International revenue was $42.6 million, growing 24.7% as reported and 31.5% on a constant currency basis. Growth was again led by our international spinal implant businesses, mainly in Australia, Brazil, Poland, the UK, Spain, and Germany. Our strategy remains consistent as we seek to drive greater share in our focus countries across our international markets. Gross profit in the first quarter of 2023 was 74.4%, essentially flat to the 74.3% in the prior year quarter. Increased product costs as a result of product and geographic mix were partially offset by lower inventory write-offs related to scrap, as well as improved manufacturing and supply chain efficiencies. Research and development expenses for the quarter were $21.1 million or 7.6% of sales, consistent with the prior year. The increased dollar spend remains consistent with our strategy of growth around procedural solutions as reflected in higher spend mainly in our spine and enabling technologies businesses, which will help sustain sales growth as we move ahead. SG&A expenses in the first quarter of 2023 were $122.4 million or 44.2% of sales compared to $100.7 million or 43.7% of sales in the prior year quarter. The increased spending is primarily reflective of higher personnel-related expenses primarily driven by sales compensation, as well as higher meetings, travel, and training expenses. Sales compensation increases are primarily the result of achieving growth targets, while travel is a result of the timing of our annual global sales meeting. The effective income tax rate for the quarter was 22.3%, up slightly from the 22.1% noted in the prior year and in line with expectations. Adjusted EBITDA was 30.8% in the quarter, as reflective of my earlier comments on gross profit and SG&A impacts and is largely in line with our Q1 2023 expectations. Non-GAAP EPS in the first quarter of 2023 was $0.53 compared to $0.42 in the prior year quarter. The $0.11 growth includes $0.03 of non-operating items, namely higher interest income and a lower share count, partially offset by higher depreciation expense. Free cash flow was $37.3 million in Q1, $12.6 million higher versus the prior year quarter, driven by higher cash profits and lower CapEx, partially offset by working capital investments in inventory and accounts receivable. We ended the first quarter with $984.4 million of cash, cash equivalents, and marketable securities. The company remains debt-free. Our standalone 2023 guidance remains unchanged at $1.1 billion in net sales and $2.30 in fully diluted non-GAAP EPS. In closing, I want to reiterate a few brief comments in addition to Dan's earlier comments related to the Globus NuVasive merger. Once regulatory approvals are obtained and the transaction closes, we expect to deliver 20% non-GAAP EPS accretion by the completion of the first full year following deal closure. We expect near-term sales dissynergies to be partially offset by revenue synergies around complementary product offerings of both companies. In addition, we expect to deliver on $170 million of cost synergies, of which we expect to achieve 50% by the end of year one following deal closure, 75% by the end of year two, and 100% by the end of the third year. We remain confident in the strength of our Globus business and remain steadfast in driving organic growth while seeking to close and integrate our merger with NuVasive. Post-close, we will continue to seek both organic and inorganic growth opportunities as we continue to develop new and exciting technologies internally while also deploying cash for complementary M&A opportunities. We seek to achieve our long-term objectives and want to thank our Globus team members as we continue to improve the lives of patients with musculoskeletal disorders. Operator, we will now open the call for questions.

Mike Miksic, Analyst

Hey, good evening. Thanks so much for taking the questions, and congrats on a really strong quarter, guys.

Dan Scavilla, President and CEO

Thanks.

Keith Pfeil, CFO

Thanks.

Mike Miksic, Analyst

I have a question regarding the pending merger and also about operations. Regarding the merger, I’m curious if you have gained any insights from the time you’ve spent together within the limits allowed at this stage. Have you found anything that has reinforced the areas of synergy and opportunity you previously mentioned, or have you discovered anything new during those meetings and planning sessions? I also have a follow-up question.

Dan Scavilla, President and CEO

Thanks, Mike. This is Dan. I'll answer that. You're right. We continue to work together for planning and organization and learning with this. And I would tell you that throughout the value streams and the work streams that we've set up, it's really been more positive the more we work together. I know there's a lot of talk about culture out there, and I'll admit that there are differences in culture, but what I've learned is it's over-exaggerated. I think we are more similar than folks would realize when you get down to the core of it. They have an incredibly strong leadership team. I found that every person there is top quality. The willingness and thought process of how to move forward is very aligned. So I'll be honest, the more I work with them, the more encouraged I am. I think, as I learn about their strengths, as we've talked about before, whether it be the surgeon experience or even marketing or how they do training, seeing how that could further Globus going forward remains enticing to me.

Mike Miksic, Analyst

Great. The strength in the quarter was significantly better than many had anticipated. Could you discuss the factors contributing to this strength and any temporary elements affecting the decision to hold back on a rate? Were there any surprises for you regarding the sources of this strength? Also, why isn't guidance being raised for the rest of the year?

Keith Pfeil, CFO

This is Keith. I'll take that, and Dan could add anything he wants at the end. But I think the first quarter was extremely strong. I talked a little bit about the robotic pipeline remaining strong coming into the quarter. That was definitely a benefit. But as I look at the year and look at the quarter specifically, we had a very strong international quarter. In some of our international markets, we do have some distributors, and there could be some stocking orders in there that may have kind of pushed that up a little bit. And quite honestly, when I step back and look at the year, we still feel extremely good about the business, but we still think it's too early to give a raise to the full year. A lot could still happen in the year, but we're really happy with how the quarter landed.

Dan Scavilla, President and CEO

Yes. And Mike, I'll build on that. We don't plan on exiting the year as a standalone company. We're expecting to execute on this, so any standalone guidance for the year, while directional for you, isn't really meaningful as we get into the rest of the year.

Mike Miksic, Analyst

Sure. That's fair. Thanks so much.

Operator, Operator

Thank you, Mike. One moment for our next question. Our next question comes from Shagun Singh from RBC. Please go ahead.

Shagun Singh, Analyst

Great. Thank you so much for taking the questions and congratulations on the shareholder support for the deal. So I understand the big focus right now is to get through the FTC process, and they have made a second request. Does that come as a surprise to you? Are there any specific areas of products that have been identified—interbody cages, biologics? I know one of your filings mentioned neuromonitoring and enabling tech, where you guys have leading positions. I'm just wondering if there's anything you can share on the FTC process and potential divestitures? And then I have a follow-up.

Dan Scavilla, President and CEO

Thanks, Shagun. This is Dan. I would tell you that, as you know, a second request is not unusual. From what I've seen, certainly there's no need for alarm with this. We remain committed to the deal. It doesn't change where we are or what we want to do; it just shifts the timing a little bit. I can't go into the specifics of it. There's nothing alarming in what was given to us. Everything I've seen so far has been fairly general, nothing focused specifically that I think right now we are aware of or that I could share. So to me, I think it's an overall data search. We have to step up and give them what they need. We'll do that as fast as we can so that we can progress forward and realize the potential that's in front of us.

Shagun Singh, Analyst

Got it. And can you talk about the sales force morale? The deal is announced, but it's still pending closing. Is it driving any amount of sit among your sales reps? What steps are you taking to ensure that competitors don't poach on your sales reps? And then also, maybe you can talk a little bit about the trends you're seeing in competitive rep recruitment versus recent quarters? Thanks for taking the question.

Dan Scavilla, President and CEO

You got it. So I would tell you all of us are really looking forward to consummating this and moving forward. So any delay is certainly not a welcome thing. But I would tell you that as I talk directly with the sales leadership of both companies and down to the rep level, the excitement remains there, and it's incumbent upon us to work through this and push it forward. Our field and the NuVasive field realize that bringing together our teams and looking at those technologies and combining them can really drive incredible benefits for surgeons and patients. They know that this is the place to be, and they know that this pipeline is stronger than all others. We just have to remind any of those who might be a little weary that this is the place to be, and it's incumbent upon us to work through it and get it done that way. As far as recruiting goes, what we've mentioned in the past is this deal, while it certainly is consuming a lot of our time, is creating a lot of competitive rep interest from folks who want to join this team and look at what the future holds.

Shagun Singh, Analyst

Thank you for the color.

Operator, Operator

Thank you, Shagun. One moment for our next question. Our next question comes from David Saxon from Needham & Co. Please go ahead.

David Saxon, Analyst

Great. Hi, Dan and Keith. Thanks so much for taking the questions, and congrats on a really strong quarter. Maybe first on—yes, maybe first on the enabling tech. I mean, you called out good robotics demand trends. It sounds like those remain strong. So I just wanted to kind of get your thoughts on where we are in terms of robotics penetration in spine. Where does that shake out long-term? Is that a steady grind? Or is there something that can inflect that at some point?

Keith Pfeil, CFO

This is Keith. Thanks for the call. I would say that we're still in a trend of the robotic market where the capital is still being accepted in the market and it's growing. I think that when we think about penetration in the market, there is still plenty of market for us to grow. I think adopters are continuously coming on, and it's still our belief that as time passes, robots will be part of the future from a surgical perspective for spine procedures.

Dan Scavilla, President and CEO

Yes. I would add to it, too. I think it's more of a steady grind. It's about creating awareness and certainly, people's willingness to test and therefore, adopt. Given the new technology that it is for everybody, it's a matter of working through that versus a large explosion that may occur instantly.

David Saxon, Analyst

Okay. Got it. And then maybe on the international, specifically on Japan. I mean, they grew, or that team grew, which—I mean, I can't remember the last time Japan was in the green. So how is that going? Is the team fully right-sized there? Or is there still wood to chop? And then I think you called out some stocking orders through international distributors; any way to quantify the benefit you saw there? Thanks so much.

Dan Scavilla, President and CEO

Thanks. So I'll start and then Keith can kind of finish it up. We've been investing, first off, in international outside of Japan, giving them the tools to trade. It's great to see the traction there. I think that team is motivated and driven. With every country I speak to, I'm feeling really good about their mindset and potential that's there. Japan, as you know, we've done some right-sizing, some reorganizations, some adjusting of vendors, and I feel as we've been calling out, that that would be bottoming out. We've seen that occur really starting in the fourth quarter, and with the team placed now regaining traction. When you say more wood to chop, I don't think we're looking to downsize that team. I think we have to enhance its size, and we continue to recruit and look as a method to penetrate and grow even more.

Keith Pfeil, CFO

And as it relates to stocking orders, my earlier comment: when I look at internationally, places where we see some stocking orders would be Spain and Brazil. The growth rate definitely would have slowed down a little bit, but I would not say materially. We came out of the quarter finished very strong, and as we look ahead, we feel confident that we're going to grow high teens as we look at it internationally for the rest of the year.

David Saxon, Analyst

Great. Thanks, and congrats again on the quarter.

Keith Pfeil, CFO

Thank you.

Operator, Operator

Thank you, David. One moment for our next question. Our next question comes from Sam Dane from BTIG. Please go ahead.

Unidentified Analyst, Analyst

Actually, I think this is Ryan on for Sam. Sorry, we got our lines crossed. So a couple of things there for me. A couple of questions. So number one, you guys had a great quarter. Competitively, where do you think you're taking share from? Is there any concern that you're taking from the asset that you may be buying? How can you reassure investors that you're not spinning your wheels from a share perspective there?

Dan Scavilla, President and CEO

Hey, Ryan, it's Dan. It's a great question, and that would certainly be ironic. While we don't share that level of detail, especially right now through the planning phase, our share gains really come in a market-appropriate way. You look at how you tick down with the big guys being Medtronic, J&J, Stryker. I still feel like that's where most of that will come from. Certainly, to the best of my knowledge, we've never been strong at taking share from NuVasive. We've always tended to kind of go after the market and run in parallel versus really heavily competing against each other. It happens occasionally, but I would say it's more rarely the effect.

Unidentified Analyst, Analyst

Okay. And then, Keith, SG&A was a bit higher than we expected this quarter. I just want to understand kind of where you're—one, why is it up so much and kind of how you think about it for the balance of the year?

Dan Scavilla, President and CEO

Yes. SG&A definitely was up a little bit more than we expected in the quarter as well. I commented on sales training being higher as well as some travel. We had our global sales meeting in Q1 this year. Last year, we had it later in the year because of COVID, so there was a bit of a timing flip year-over-year. Generally speaking, we're out there down in the street from a meetings perspective. But most importantly, sales comp was up, really driven by achieving quotas as well as the growth of the sales force from competitive recruiting in the past. As we look ahead, this should balance out a bit. On a full year basis, it feels like it will be a little bit higher, but it doesn't change the fact that we think we're still a mid-30s EBITDA company.

Unidentified Analyst, Analyst

Okay. I'll hop back in the queue. Thanks, guys. Good quarter.

Dan Scavilla, President and CEO

Thanks, Ryan.

Operator, Operator

Thank you, Ryan. One moment for our next question. Our next question comes from Richard Newitter from Truist Securities. Please go ahead.

Unidentified Analyst, Analyst

Hi. This is Sam on for Rich. Thanks for taking my question. The first one I'll ask on robotics. Did you see any greater mix of competitive accounts in this quarter than you've seen with placements in the past?

Dan Scavilla, President and CEO

Yes. We have. We've seen that we're making inroads beyond just the Globus trends, and I think that's a trend we've seen for a while, but certainly in this past quarter.

Unidentified Analyst, Analyst

Great. Thanks. And then just could you parse out at all in the June versus robotics, sort of how we should think about the mix of that through this year? That would be great. Thanks.

Keith Pfeil, CFO

No, thanks, Sam. But we're not parsing out imaging versus robotics. We look at our enabling tech, and we're going to continue to bring a suite of products to the market; it's another SKU within that portfolio.

Unidentified Analyst, Analyst

Got it. Thank you.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from Kyle Rose from Canaccord. Please go ahead.

Kyle Rose, Analyst

Great. Thank you for taking the questions. Just wondering if you could talk a little bit more about the trauma business. I mean, it seems like it's kind of hitting a bit of an inflection point here. You clearly have the manufacturing scale to be able to probably flex inventory a little bit higher there. Just wondering, realistically, we should expect to see some sort of hockey-stick or a larger step-up from a growth perspective, if that's building out additional territories and things of that sort. Is there any expectation to kind of push the gas pedal down, so to speak, here?

Dan Scavilla, President and CEO

Thanks, Kyle. It's Dan. I was thinking 50-some percent was putting my foot down on the gas. But I kind of get it. We can certainly go deeper. What I would tell you, it's a factor of right now is the recruiting and the continuation of adding sets. I think we've got a bag very capable of Level 1 and Level 2 trauma centers, and I think we're seeing that growth come from there. I'm not overly concerned. We are investing in it. Nothing related to the pending NUVA acquisition or merger will impact trauma. As you know, we fund and run it completely separately. I'll take that back and see if I can beat it for Q2 as we continue to drive into the market.

Kyle Rose, Analyst

Great. Yes, it's our job to ask what's next. So on the competitive rep hiring, I guess, just maybe from a high level, how have those discussions changed with the non-NUVA/non-GMED type of reps now that you're out in public, talking about this future marriage? Is there any difference in the type of reps that might be interested in a broader combined portfolio? Just help us understand how those conversations are trending.

Dan Scavilla, President and CEO

Yes, it's a great question. I would say that the conversation is slightly different, but you still have obviously a mix of folks. I wouldn't say I'm able to categorize them as a particular type. I do know that as people, including Wall Street, really understand the potential of this deal and what this company can do long-term, you're really looking at individuals who want to grow and who want to make a difference. That's really who's coming to the door, asking how to become part of this. They know we're going to invest in these portfolios, and we're going to drive this forward, and we will continue to invest and expand. Those folks interested in being part of that story and realizing that are the ones from all different levels coming to us and asking to help join the team.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from Matt Taylor from Jefferies. Please go ahead.

Unidentified Analyst, Analyst

Hi, Dan, Keith. This is Mike on for Matt tonight. Thanks for taking my questions. You talked about a robust robot pipeline entering Q2. It doesn't seem like you're seeing any capital spend hesitancy among customers. Could you talk about how you're thinking about potential macro headwinds and the impact on customer capital spending?

Keith Pfeil, CFO

I'd say the market is definitely dynamic. Last year, we were talking about a robotic pipeline that didn't mature in the U.S. Coming into Q4 and Q1, I would say it was anything but that. We had a really strong pipeline, lots of demand, lots of opportunity out there for the sales team. As we look towards the rest of the year, we still think we have to continue to sell the technology. I mentioned earlier that we're at a place where more and more robots are being adopted. As time passes and you call it an inflection point, you see that other facilities want to get on and adopt the robotic technology. We must continue to sell those benefits as we walk into the macroeconomic headwinds. We have multiple ways to sell the robots. The majority of our sales are outright purchases, but there are other ways that we can sell robots and meet competition with volume-based arrangements and similar strategies. We’re ready to respond to the market depending on what happens macroeconomically.

Dan Scavilla, President and CEO

I'll just build on that, Mike. Certainly, the last three years have been more than a training ground for difficult times, whether you get into COVID or post-COVID without staffing or nurses, etc. Again, I think like anything, putting this technology into the hands of surgeons to make a difference will remain a top priority. As Keith said, multiple approaches to work with the customer and a way to get that out there will be key, especially if we're about to walk into a recession. We have to be mindful of what that can do but not deny technology to people who can really change lives.

Unidentified Analyst, Analyst

Got it. That's helpful. And then just the follow-up there. You mentioned U.S. kind of coming out of 2022. Can you talk about any differences that you see U.S. versus OUS just in terms of robotic demand and customer purchasing behavior and how you're thinking about that trajectory through 2023?

Dan Scavilla, President and CEO

Yes, I'd say it really just depends market by market. You're still nascent in the U.S. with many ways to penetrate and grow. Depending on where you are in the world, there are different uptakes that we're starting to see. I wouldn't say there's an over-focus on where to go or how to do it differently. It's just about education and awareness, hands-on training, and then working with folks to get technology into their OR.

Unidentified Analyst, Analyst

Okay. Thank you.

Dan Scavilla, President and CEO

Thank you.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from Vik Chopra from Wells Fargo. Please go ahead.

Vik Chopra, Analyst

Hey, good afternoon, and thanks for taking the questions. I'll echo my congratulations as well. So two for me. First one, can you provide an update on the Recon robotics program and what the latest timelines are?

Dan Scavilla, President and CEO

Hey, Vik, it's Dan. Yes, I'll be glad to do that. We're still progressing through. We have not yet filed. We're in testing for a lot of things when it comes into electronic equipment. We're working through those now. I just had a meeting today about how to scale up and get ready for the launch. So I don't have a date to give you just yet because we need to get through the testing to do the filing and get this approved. Not seeing anything that is a concern, just working through it. Certainly, a goal, if all goes well, would be potential to see this by year-end, and that's what we're going to push towards right now.

Vik Chopra, Analyst

Great. And then just one more follow-up. Obviously, very strong trends in your robotics business. One of the larger orthopedic competitors has talked about coming out with the spine robot in 2024. I'm curious if you have seen anything change on the competitive landscape and whether you expect any impact in 2023 to your ability to continue to sell Excelsius systems?

Dan Scavilla, President and CEO

Yes. Thanks. I would say we're not really—as you remember, when we came out with this, we always knew that we were one of the first in that the market would continue to have entrants and eventually get more crowded. There's nothing of concern shock here. We are not talking to customers who are concerned about what could happen in 24 months. Right now, they're understanding what the technology is. They recognize ours as the best, and so we'll continue to push with that and look to add options and offerings to our platform that's going to create more value for our customers.

Operator, Operator

All right. Thank you. With no further questions, this concludes the Globus Medical First Quarter Earnings Call. Thank you for joining us today, and have a nice evening. We will now disconnect.