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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to Globus Medical’s Second Quarter 2021 Earnings Call. [Operator instructions]
I will now turn the call over to Kelly Huller, Senior Vice President of General Counsel. Ms. Huller, please go ahead.
Thank you for being with us today. Joining today’s call from Globus Medical will be Dave Demski, President and CEO; Dan Scavilla, Executive Vice President, Chief Commercial Officer; and Keith Pfeil, Senior Vice President and Chief Financial Officer. This review is being made available via webcast accessible through our investor relations section of the Globus Medical website at www.globusmedical.com.
Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2020 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our SEC filings, including the 10-K, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments.
Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in the schedules accompanying the press release and on the investor relations section of the Globus Medical website.
With that, I will now turn the call over to Dave Demski, our President and CEO.
Thank you, Kelly, and good afternoon, everyone. Globus had another outstanding quarter in Q2 building on the momentum we’ve established over the past two years as we continue to take market share. Given the impact of COVID-19, it’s difficult to draw meaningful insights about the business by comparing the results to Q2 2020. So, my comments will be primarily focused on comparisons to the second quarter of 2019.
Revenue for the quarter was a record $251 million up 29% over 2Q 2019. Non-GAAP EPS was $0.56 per share, a 38% increase. And adjusted EBITDA was a strong 35%. Once again, INR and U.S. Spine led the way. INR revenue was a record $21 million up 73% over 2Q 2019 and our third consecutive quarter of strong growth. The clinical superiority of ExcelsiusGPS continues to be recognized by surgeons as reflected in our recent announcement of surpassing 20,000 procedures using Excelsius. More significantly the average number of procedures per robot reached an all time high in 2021, reflecting an acceleration and adoption.
U.S. Spine continues to take significant market share growing by 30% over Q2 2019. Pull through from robotics; contributions from new product introductions; a resurgence in our biologics business; and competitive recruiting were all factors driving growth.
We’re beginning to see several virtuous cycles emerge all emanating from the value created by the adoption of our robotic technology. We have surgeons who utilize Excelsius for the majority of their cases, master increasingly complex pathologies because of the technology and may even perform surgery in situations that would be considered inoperable without robotic assistance. These surgeons wholeheartedly endorse Excelsius to their peers leading to additional robot sales.
We have surgeons who have not previously used Globus implants, but due to Excelsius gain exposure to our entire line of innovative spinal implants and have begun to utilize Globus for non-robotic cases as well. We have surgeons who may not have initially championed the purchase of the robot, but after seeing the success of their colleagues also adopt the technology, which has driven Globus implant usage and led to the purchase of additional robots.
Finally, we have attracted successful competitive reps who after losing a portion of the business to a robotic conversion had decided to join the team with the best technology, bringing additional business with them. As these scenarios increasingly play out, we are seeing what amounts to a flywheel effect on our business. At the heart of it is the utilization and value created by the Excelsius technology. It’s not about merely placing robots. It’s a focused on utilizing technology to improve spine surgery. The growth we have seen in our U.S. business over the past two years is a testament to the power of the transformation taking place.
On the international front, our spinal implant business grew by 5% in the quarter. Strong growth in most markets was offset by declines in Japan, a trend we identify last quarter and expect to continue throughout 2021. Unfortunately, the transition in Japan while necessary for the long-term health of our business is masking a very strong performance by much of the rest of the world.
We lost HEDRON L in Q2 adding a 3D printed spacer to raise ELSA, CORBELand TransContinental to create the most comprehensive suite of lateral interbody solutions on the market today. This broad product portfolio gives surgeons the ability to perform lateral access surgery, utilizing multiple expandable options, multiple static spacers, and integrated plate-spacers solutions to address all levels of the lumbar spine through either a prone or lateral patient position.
Furthermore, the Excelsius Lateral 360 procedural solution allows surgeons to safely and efficiently treat multiple interbody levels and place MIS pedicle screws, while the patient remains in a single position.
Moving to INR product development, we are waiting 510(k) clearance for the Excelsius 3D imaging system and remain cautiously optimistic regarding clearance and launch of the system late in Q3. The full launch of the Excelsius cranial module is slated for later this quarter as well.
Shifting to trauma. Revenue was up over 250% compared to the second quarter of 2019, 29% over the second quarter of last year and relatively flat sequentially. We are focused on sales force expansion and have several exciting product launches planned for the second half of this year and 2022.
In summary, we’re off to a fantastic start in 2021. It promises to be an amazing year. If we continue to execute the way we did in the first half. All parts of the company are performing well and we’re working together as a team. I’m grateful for the dedication, ability and effort of our worldwide Globus team members as they serve our customers and patients.
I will now turn the call over to Keith.
Thanks, Dave, and good afternoon, everyone. Globus is coming off a fantastic second quarter and continues to build momentum through ongoing market penetration from our implant business and further adoption of our robotics technology. Q2 continues the trend of strong revenue, profit and free cash flow growth.
Before I jump into my discussions on the quarter, I want to highlight that it will focus the majority of my comparative comments, in the second quarter of 2019. However, there are a few areas where I will provide comparisons against both Q2 of 2019 and Q2 of 2020. This will provide the most meaningful insights into our business.
Our second quarter revenue was $251 million growing 29% as reported versus Q2 of 2019 and 28.9% on a constant currency basis. On a day-adjusted basis, sales were higher again by 28.9%, the same number of selling days in the U.S. and two more selling days in Japan, when compared to Q2 of 2019.
Q2 net income was $41.5 million and non-GAAP net income was $57.9 million driving $0.56 a fully diluted non-GAAP earnings per share. Adjusted EBITDA was 35%, we generated $50.8 million of free cash flow. Our second quarter, U.S. revenue was $215.1 million or 34.5% higher versus the second quarter of 2019 reflected those continued share growth across our implant business and the increasing adoption of robotics technology within INR, which is inclusive of days earlier comments.
International revenue for the second quarter was $35.9 million, growing 3.9% compared to Q2 of 2019. We experienced strong growth in most international markets, which was dampened by lower sales in Japan, based on our previously discussed sales transition. As mentioned in Q1, we expect Japan to be a headwind as we progress through 2021. However, this will strengthen our position in Japan over the longer term.
Q2 gross profit was 74.6% compared to 77.4% in Q2 of 2019. The primary drivers of the decline or higher plan depreciation expense related to instruments and cases, slightly higher product costs driven by the mix of sales and additional inventory reserve expenses associated with a non-recurring write-off of raw materials.
Research and development expenses for the quarter are $15.5 million or 6.2% of sales, essentially in line to Q2 of 2019, but lower as a percentage of revenue driven by the impact of higher sales. The planned increases in spend, we outlined last quarter have not materialized yet as labor markets remain tight. However, we remain committed to expanding our R&D team, as we continue to develop new and innovative products across our portfolio.
SG&A expenses for the second quarter were a $107.3 million or 42.7% of sales compared to $88.4 million or 45.4% of sales in the second quarter of 2019. The higher spending in Q2 of 2021 was mainly a result of higher sales compensation costs. However, SG&A has a lower as a percentage of revenue due to the leverage impact of higher sales.
The effective income tax rate for the quarter was 15.1% as compared to 19% in the second quarter of 2019. The lower tax rate was driven primarily by tax benefits associated with stock option exercises. As a reminder, Q2 of 2020 results include the large charge to R&D expenses associated with the Synoste acquisition, which also impacted our effective tax rate.
We concluded Q2 at $914.2 million of cash, cash equivalents and marketable securities. Net cash provided by operating activities was $59.2 million and free cash flow was $50.8 million. Year-to-date free cash flow is $100.7 million. And on a rolling four quarter basis, the company has generated a record $202.7 million of free cash flow, reflective of higher earnings in the business, lower capital expenditures, as well as working capital improvements.
At this time, the company is increasing its 2021 guidance to $950 million in net sales and $2 in fully diluted non-GAAP earnings per share. The industry is experiencing a declining case volume early in the third quarter, as surgeons take extended vacations and regional shutdowns of elective procedures emerge due to the Delta variant of COVID-19. We expect the impact from vacations to reverse in September and October once kids go back to school. While it is hard to predict the impact of the recent increases in COVID cases, I’ll remind everyone that the spine market has shown great resilience in dealing with COVID-19 and Globus specifically has been able to take market share through the previous outbreaks. While we expect to situation to be transitory, we do project a sequential decline in revenue in Q3 associated with the procedural slowdown.
Our second quarter results continue the strong start to 2021. Year-to-date we’ve generated $478.4 million in revenue, 35.1% in adjusted EBITDA and a $1.05 in non-GAAP diluted earnings per share. I’ll be looking ahead to the back half of the year. We’re focused on our continued push to take implant share and drive the adaptation of our robotics technology, while continuing to launch new and exciting products. We will do all of this while maintaining our strong operational focus on execution and discipline in our approach to managing the business.
We are committed to expanding our investment and we’ll continue to pursue complimentary acquisitions all of which will drive long-term shareholder value. I’m thankful to our Globus team and their pursuit of excellence. As we continue to serve our customers and patients.
We will now open the call for questions
[Operator Instructions] Our first question comes from the line of Shagun Singh from Wells Fargo. Your line is open.
Thank you so much for taking the question. I guess just two from me. The first one on capital, obviously it was a very strong quarter and it appears that, you approach an inflection probably exiting 2020. So, if you can just touch on the outlook of the business in the second half, just given seasonality and then, even beyond that in 2022 and beyond, that would be helpful. And then I have a follow-up.
Yes. Shagun this is Keith. Thanks for the question. Generally speaking, I mean, we feel extremely positive about our business. As we look to the back half of the year, everything that we’ve done in the first half has shown that we’ve executed well and we’re taking share. As we look to the back half, we remain positive across our entire business. As it relates to 2022, I think it’s a little early to give comments on 2022, but as we look at our last several quarters, we feel that we’re well positioned to drive to the future for sales growth.
I got it. The question was just a little bit focused on capital. So just the ExcelsiusGPS, can you talk to us a little bit about the outlook of that business, just given that, it seems like it’s at an inflection point, so how should we think about it in the back-off, just given seasonality and then beyond that, so just specific to capital?
Thanks, Shagun. I think the third quarter is typically a slower quarter relative to some of the other ones in capital. Usually the fourth quarter is at the end of the budget cycle for a lot of accounts. So that tends to be the strongest. And then there’s a little second wave at the second quarter, so that you might see a little dip there, but generally speaking, we’re very bullish about the adoption of Excelsius. And I think that’s creating additional demand. So our pipeline continues to be very strong and we’re very bullish about technology for the rest of this year and into next year as well.
I got it. And then, just with respect to your guidance, if you look at it over 2019, can you just help us understand, what you’ve included in there for backlog? We are hearing that the spine backlog was substantially realized during the first half. So, what are you including in the back half for backlog and then, anything when they impact of the coronavirus variants? That would be helpful. Thank you.
I think as we look to the back half of the issue year again, we remain positive, when I go back to 2019 and I look at our business. Our current guidance in 950 implies 10% compounded annual growth from 2019 to 2020 to 2021. As we look and I would also comment that, that growth is organic. That growth is coming across all factors of our business and to drive that level of organic growth shows that we feel very positive that where we’re going.
Thank you.
Our next question comes from the line of Matt Miksic from Credit Suisse. Your line is open.
Hey, thanks. Thanks so much for taking the questions and congrats on another really strong quarter. I’m sure everyone on the line would love to hear if you’re willing to share that average procedures per robot number that you mentioned hitting a high mark this quarter, but I’m guessing that you would have said it if you’re going to share it, but we’d love to hear it, but two questions for me, I guess if I could follow-up on your comment on vacations. I suspect that’ll get some folks attention, just because that had been kind of a hypothesis heading into Q3, potentially that we may see something like that. If you could just if possible, maybe sketch out what has the historical, yes Dave, you mentioned the historical revenue trend in Q3 is down, how much more of an impact, are you expecting if it’s down three historically, should we expect down five, just some sense of what the increment is. And then I have one follow-up if I could?
Thank you, Matt. As we expected, we’re not going to disclose that average number of procedures for a robot, but really, really excited about that. I think that’s just validation of what we’ve been doing and to see the technology being utilized is really a bellwether for what’s – for the future so super excited about that trend. In terms of vacations, I think that the situation this year is, we really didn’t have much in the spring. I would say we started to see a little bit after school was over in June. But they just seem more pronounced and prolonged at this point.
Obviously I mean there’s a pent-up demand among in our society for travel. We’re seeing the surgeons take that, but I fully expect that they’ll be back in, once school starts again in September. So, we’re expecting a strong September, October clearly given no dramatic change in the COVID situation, but I think there’ll be transitory, but from a sequential standpoint, it’s going to cause us to dip a little bit here in the third quarter.
Fair enough. And then the follow-up is a question I get often about some of the growth rates you’d been putting up over the past several quarters is sort of how to parse the various kind of growth drivers that are causing it to grow so much faster than market. And I know there’s many, but if you could zero in on a couple like, how much of a factor is the movement of 3D printed implants and how much of a factor at this point, do you feel like the robot is, and sort of closing the distance between call it, I don’t know, 2% underlying growth and 30% to your stack growth that you’ve put up?
Yes, I’m not going to drill down into the real granular numbers, but I will tell you that the robotic technology or the computer assisted technology is transformational. So, we’ve always been an innovative company. That’s attracted new surgeons through great technologies, if we made implants technology. So, we’re still thinking that, but on top of that, we have this transformation in the way surgery is being done. And I think we’re leading the way in terms of robotics. So that’s got a big impact at the top level, but it also helps us bring in over reps, sales reps in this business want to sell, what is going to be more, most effective for them. So tried to try to convey that a little bit with some of the situations that we described, but there’s a synergistic effect. So it’s really challenging to parse it out and say, which one’s more important, clearly from a long-term standpoint, the computer assisted segment is something that we’re seeing a lot of growth from and the trend is up. So, we’re excited about where we’re going.
That’s great. Thank you.
Your next question comes from the line of Richard Newitter from SVB Leerink. Your line is open.
Hi, thanks for taking the questions and congrats on another very strong performance. Wanted to – maybe just start off on the imaging system that you guys have. I think, with the FDA right now, any updates on the timelines there, if I missed it, I apologize. And then I’d also just love to hear kind of your views of kind of a year one launch and contribution potential for that product, especially with some other imaging modalities, recently FDA approved and or turn and commercial from some of your competitors. So, thoughts there, and then I have a follow-up. Thanks.
Sure, Rich, and thank you. We’re with the FDA now. We responded to some questions and it’s back with them and we’re hopeful. They’ll approve it this quarter. And then we will –we’re planning on a commercial launch. It’s going to be the end of the quarter or right early in the fourth quarter now as it looks. In terms of our projections it’s really challenging to come up with a number, but I will tell you that every surgeon we show it to is excited about getting the technology.
We obviously have to work through the contracting process with their hospitals, but just anecdotally, we’ve had several, who have stopped the plan process of other competitive systems until ours is ready. So the tech benefits – the benefits this technology is going to bring are significant versus what’s out there today. So, we’re excited about the impact and we just need to at this point, I think make enough of them next year to satisfy the demand.
Okay. That’s helpful. Just on the cadence here. I appreciate the comments around 3Q seasonality, maybe being a little more pronounced vacations, but just on the capital side, what is implied in your guidance for the seasonal kind of cadence of enabling technologies, if 2Q the high watermark in your guidance and 4Q, which typically is seasonally stronger quarter higher than 3Q, but not necessarily as high as 2Q, or are you assuming a typical kind of, the 4Q is the strongest quarter in your updated guidance?
Yes. Thanks for the question. I think, the way I look at that is, Q3 is typically a slow down quarter followed by Q4 picking up. In terms of high watermark for Q2 versus Q4, I wouldn’t say that it’s necessarily going to be a whole lot different than history. Again, we remain positive about where we’re going, but we do see that slowdown coming sequentially in Q3 across the entire business. Some of which would include the slowdown in robotics as we enter the third quarter.
Thanks a lot. Well, if I could squeeze one more in Dave, you mentioned, I think in your opening remarks, international spinal implants growing 5% year-over-year, was that a comment off of 2019 or 2020?
Yes, 2019
Thank you.
Your next question comes from the line of Kyle Rose from Canaccord. Your line is open.
Great. Thank you very much. And I reiterate the comments on the strong quarter. I wonder if you could just talk if maybe from a bigger picture perspective, what you’re seeing as far as the capital demand, with respect to, how customers want to order or pay for the robotics and then kind of maybe your expectation on a go-forward basis, where you have robots placed. Are you seeing any difference in interest from the imaging modality, as far as, installing upgrades and things of that sort with the installed base that you have within the robotics field, as it stands now, and then I have one follow-up.
Sure, Kyle and then thank you. In terms of how customers will want to pay for it, I think there’s really no change in that over time, that everybody has their own capital constraints or willingness to make other arrangements. And we’re not seeing a big change there. I would say that people are familiar with our technology and how Excelsius works are probably more prone to have interest in an imaging system, just because they have experience with us and with our technology, and they know the value that it brings, but it really opens up for us a competitive segment that we’re currently challenged to address.
So if someone has already adopted computer assisted technology and that they’re doing free hand navigation, they’ve, achieved some benefit from the computer at that point. So it’s probably a little more challenging to get them to make the next step to robotics. So by having Excelsius 3D, we’re going to be able to have a comparable product to what exists today, to compete for that business along with moving people up to robotics.
Great. That’s very helpful. And then just from a bigger picture perspective. I mean, we’ve seen over the last several years, you go from spine and extend yourself into trauma. Obviously you’re launching more enabling technologies. You acquired StelKast or just kind of trying to understand where are you in the life cycle of going, merging into a broader orthopedic organization, when we think about hips and knees and potentially extremities and things of that sort from a long-term, what’s next?
Well, I think we have a lot of work to do with the starts that we’ve made particularly in the total joint area. We really think the particular advantage we can bring there is again, the computer assisted aspect. So, we’re still on development of our robotic solution there. And then as where we’re going to be able to differentiate ourselves from the competition. So it’s early innings there and then trauma is making great progress as we’ve walking you through over the last years. And we continue to expand that portfolio and expand our footprint. And as Keith has alluded to where we’re active and considering other ways to grow the business through acquisitions, but at this point, we don’t have much point to discuss on that area.
Thank you.
Our next question comes from the line of Matt Taylor from UBS. Your line is open.
Hi, everyone, this is John Lee for Matt. Thanks for taking my questions. I guess maybe just one to follow-up on, you mentioned you’re seeing some early impacts from Delta Q3. What are some of the areas in the U.S. or OUS that you’re seeing some of that impact and the areas that you’re paying more attention to given the increase in hospitalization?
Yes, I think it just mirrors where the outbreaks are most significant, so Florida has had a lot of it. We’ve seen Arkansas and Louisiana at this point. Internationally, I don’t have, I’m not as close to that personally to comment on.
Okay, great. It’s helpful. I guess maybe one on trauma, it was flat sequentially you are focused on launching some new products and expanding the sales force was this wondering maybe some product portfolio perspective, where do you think you are relative to the competition, how much more product families and types do you include in the portfolio?
Thanks for the question. This is Dan Scavilla. So just a couple of things. We’ve always said, trauma is a long-term play, and we look at a real long-term horizon. So, while it’s relatively flat sequentially, that’s not something we’re hung up on so much as just along the journey. Q2 was compared to a record high with several of our territory’s actually breaking records in Q1. So, the fact that they’ve maintained that is a very good positive trend for us as we go forward to do this. That said and as Dave mentioned, we’ve got several key launches that we planned to come out in the second half of the year.
That will get us further up into the procedural coverage. We think at that point, we should have the ability to cover about 70% to 75% of the procedures with our expansion of our R&D resources that we have planned when hired will accelerate further into 2022 with the ability to actually a cover off more of that gap. So, I feel very bullish on where we are, the traction we’ve made and what the next steps are to really get out there and be a complete trauma portfolio.
All right. Thank you.
Your next question comes from the line of Drew Ranieri from Morgan Stanley. Your line is open.
Hi everyone. Thanks for taking the question. And just on the seasonality factor and the sequential decline in the third quarter, you came off the record sales in second quarter. I think consensus has you at $230 million for the third quarter. Is that kind of the right way to think about the sequential decline, just given the momentum of the business? And it’s just kind of difficult to look back at history and see underlying trends just given that the portfolio has changed and robotics has entered the picture, but any help and kind of framing what the seasonality and sequential decline will look like in the third quarter.
Yes. Thanks for the question. This is Keith. I think that you said roughly around 230. I think that makes sense. And when you look back at history, typically from Q2 to Q3, we’re kind of flattish but with our strong second quarter here and the comments that we raised about seen as sequential decline, when I look at it, I feel like, Q3 is going to look at and feel little bit more like Q1. So, I think that your comment there is reasonable.
Okay, got it. Thank you. And just on the spend, not materializing as the labor market remains type comments, was that solely directed at R&D or was that kind of broadly across SG&A also just kind of want to better understand that dynamic as we’re moving into the back half of the year and how your guidance is built around that comment? Thank you.
Yes. My comment was really focused on R&D, because as I look at the spending, spending is really flattish compared to 2019. I wanted to raise that because we had talked previously about being more aggressive in investing, and I wanted to point that out. Yes, the labor market’s tight, it doesn’t change our view. The one thing, I do want to call out is with our Q2 number of about $15.5 million in R&D there is a higher people investment in there. One of the things that we’ve done is, we’ve gone back and looked at our R&D last year during COVID and identified previous acquisition costs that what I would call stranded. We’ve worked to take those costs out of the P&L, so there’s savings there, which is kind of mapping some of the growth. And the last thing I would add is from a – coming back from COVID, our spending is coming back and things like travel. You’ll still see a little bit of a tailwind in R&D as it relates to travel.
Great. Thank you for taking the questions.
Your next question comes from the line of David Saxon from Needham & Company. Your line is open.
Yes. Good morning or good afternoon, and thanks for taking my questions. Just one on the imaging launch, I mean, correct me if I’m off, but I guess you’ve just passed 150 Excelsius placements. So with the imaging launch, do you feel like you can get into to a majority of those accounts over the next 12 months to 18 months? And then I think you mentioned supply could be an issue. Did I hear that right? Or is that just kind of dependent on how the launch goes?
Yes, thanks, David. The comment on supply was really more anecdotal in that. There’s been a lot of interest expressed by surgeons as we’ve previewed the technology to them. It’s really – it’s challenging to translate their enthusiasm to what the hospitals would like to spend. So, I just – on your other point about where though selling it to current robotics users, that is a value for us, but I really think the more significant value for us is to go after other – users of other technology today and not just to sell to our same customer. So, I really see this as again, our ability to take market share and the computer assistance side.
Okay. Thanks. And then just to follow-up on the R&D and the labor markets, I mean, trauma and ortho, I think, has been a focus and it is a focus. So, is there any impact on those initiatives? And then also, could you just give an update on the total joint robot? I think it was 2022 last I heard. Thanks so much for taking questions.
Thanks. This is Dan Scavilla. So earlier on in the year, we had talked about our willingness to invest in expand resources in R&D and Keith just went into some details on that, and that was with the intent of pulling forward and accelerating future launches. So, while the entire world, and especially the U.S. is currently looking at some labor shortages. We’re not signaling that having an impact on any of our in-process launches at this point, only what we could bring forward at a faster pace when we do staff up, that’s really the intent of those comments.
As far as the joint robot is progressing very well, we’ve gone through designs and some of the design freezes to the point where we’ve had several surgeon trials on it, gaining positive feedback. And we do believe that it is on track for the second half possibly later part of the second half of 2022 to become marketable based on all the information we currently have.
Your next question comes from the line of Matt Henriksson from Citi. Your line is open.
Yes, hi, thanks for taking the questions. First turning back to robotics and you talk about a record high average procedures. That is interesting given the fact that you have a lot of new Excelsius adopters in the market. And normally new adopters would water down the average. Are you seeing those new adopters get up to speed faster, or are you seeing kind of your legacy users kind of reach an inflection point and get even utilize the robot even more?
Yes, Matt, I’m not sure I have the granularity to answer that. I – my data is more at the top level, so I think it’s probably more, the legacy users are utilizing the technology and the greater amounts, because to your point, it does take a while for new users to kind of get up to speed and go.
Okay. That’s helpful. And then just turn into the international market. Could you just provide a little more color on the progress you’re making in Japan? The timeline still seems in line, but just any additional commentary and then with the Japan headwind you guys are still up over second quarter of 2019. Could you just comment on which markets or which countries were driving that growth?
Sure. I – the worst is behind us in Japan, but as we’re looking back the last year we still have – we’ve got to get through a full cycle, right. The full year, and then we’ll kind of reset the numbers there. And I believe we’ll be back to strong growth in that market. In terms of the rest of the world we’re strong in a number of companies and countries historically for us Australia, UK, Germany, and of kind of where the major populations are and we’re good medical care is that we track pretty directly with them.
Great. Thanks for taking the questions.
Your next question comes from the line of Jason Wittes from Northland. Your line is open.
Hi, thanks for taking the questions. So maybe you mentioned early in the commentary that you’re doing new types of procedures that haven’t been done before with robotics. Can you elaborate in terms of how this – how the robots being used in particularly those newer procedures that haven’t been done in the past?
Well, I think it just comes down to the sort of complex deformities challenging entryways, where they just don’t have a lot of room and would not necessarily kind of trust themselves with a manual procedure, they can rely on the precision of the robot to get in to really difficult angles for them and tight spots. So it would come in deformity corrections, or sometimes like a tumor resection, those kinds of procedures.
Okay. That’s helpful. And on the trauma business, I don’t know if we could get an update in terms of kind of what the run rate is for the business at this point. Just as a sanity check, I know that you kind of talked about growth rates. I’m curious to know kind of what the run rate is at the current run rate for that business?
So we don’t tend to break out our sections of the business or comment on them or project them forward with that. And especially with trauma given its size, it can really swing depending on how we hire reps when we launch a product, how we enter into accounts. Those are difficult to lay that out, but just in general, we stay away and just do our forecasting at the top for total Globus.
And when trauma becomes a larger part of our business, we’ll break it out at the appropriate time. But right now we tend to really not focus on that from a dollars and cents perspective.
That’s all very fair. Can I ask kind of what the threshold might be?
And threshold – we’re several years away from that. I believe, I mean, we have a lot of things planned, but I think we’re still little while away from that.
Okay. And just last question related to trauma if I could. It sounds like you’ll leave at 70% coverage in terms of product portfolio by the end of this year. And it sounds like you probably round out the rest of the – in sometime into next year, at least from the commentary you had on this call. I’m just curious in terms of the products you’re putting out there, are these sort of sort of fulfilling our portfolio products, or are you kind of beginning to also add in some differentiated products that might really move the needle?
The answer is a little above. So certainly you need the basic bag, which we focus on, but with that, it’s going to be some plus additional features that have gotten the attention of the market and usage and our allowing us to penetrate the market. What we’ll do though, as we fill that bag and get complete, is accelerate some of those innovations and fast follow on innovations that we want to do, just like we did in spine. That’s the intent, but we’re for now getting the basic, getting it tested, adding in some strong features and then looking to accelerate that as we go forward.
Great guys, thank you very much. I’ll jump out.
[Operator Instructions] Your next question comes from the line of Sam Brodovsky from Truist. Your line is open.
Thanks for taking the question. Just quickly to jump back to the sequential comp. You talked about by revenue from surgery vacations, potentially coming back in September, October. Should we read that as maybe a little bit more revenue or a better sequential comp into the fourth quarter, then as a percentage of the total year, a little bit more revenue in the fourth quarter then typical given that a delay of revenue there?
Thanks Sam, for the question. I don’t know that I would draw any strong conclusions from that. I think that as we look to the back half we comment on the sequential slowdown in – from Q2 to Q3. I had a question earlier that asks, what does that feel like relative to a consensus? And I commented that really it’s going to be – I feel that right now, we’re going to be able to closer to Q1 versus obviously Q2. As I look to the spread, I mean, typically I go back several years where typically roughly 25% of our sales in Q3 to 27% in Q4. I don’t see that being a whole lot different as we look to the back half of the year.
Great. That’s really helpful. And then as we get closer to the launch of TransContinental imaging system. Can you give us – how is the company thinking about selling the systems to driving out great appointments robotics, or how can we think about the imaging system, maybe even potentially helping to drive greater sharing implants going forward? Thanks.
Thanks Sam. Yes, I think it will have the same sort of impact robotics has. I mean, it’s going to be – it’s going to work better with our implants and there’s a natural tendency to utilize the implants of the enabling technology. So, I think that they’ll have a very similar impact of what we’re seeing in robotics in terms of pulling through implants with it.
Thanks for taking the questions.
Your next question comes from the line of Matt O'Brien from Piper Sandler. Your line is open.
Hi, this is Kreene [ph] on for Matt. Thanks for taking the questions and congrats on the quarter. So, first for us with new – the new competitive navigation systems coming to market, such as [indiscernible], how do you foresee this impacting your ability to sell robots in the future? And how are you positioning the company to withstand these eventual competitive pressures?
Thanks, Kreene. I think robotics is a step up from navigation. I mean, we’ve seen that in the success we’ve had so far, it’s the next evolution in computer assisted surgery. So, I don’t think the newer navigation systems are going to have an impact on us at all in terms of our robotics sales. It’s another competitor from a navigation standpoint. So with the imaging system, there’ll be other competitors. I haven’t seen everything that everyone has to offer, but I certainly know that we stack up very favorably against the competitors are, that are in the market today. And we’ve got some significant advantages over them.
Helpful. Thank you. And just lastly from a modeling standpoint, on the margins with the – it seems like the top-line and the EPS guide does suggest you’re probably going to stay in that mid-30% EBITDA range that you suggested in the past, but can you just confirm that’s kind of where you’re going to shake out for the end of the year and where that can go into 2022?
Hi, thanks for the question. I can confirm that yet. We still feel like we’re a mid-30% EBITDA business as we look to the back half of the year going ahead, I think it’s still a little early to talk about 2022 from our perspective. But what I would say is that we’ve had a history of being a mid-30s EBITDA business, and I expect that to continue.
Thank you.
Our last question comes from the line of Craig Bijou from Bank of America. Your line is open.
Good afternoon, guys. Thanks for taking the questions. Just a couple on robotics. Dave, want to go back to one of your comments that you made that you’re seeing within the accounts that you’ve placed the Excelsius you’re seeing views expand beyond the surgeon champion. So on that comment, I found that pretty interesting. So, one is to see if that’s relatively a new phenomenon, or if you’re just starting to see that now for maybe systems that were placed a couple of years ago. And if you haven’t seen it, is it potentially accelerating from what you saw over the last couple of years?
Thanks, Craig. It’s been there from the beginning, I would say robotics in general is interesting now by surgeons has grown. So, I think the – it is accelerating. I don’t think it’s anything particularly to us. I just – I think that there’s just more interest in robotics. So, more surgeons are interested in getting trained and the ones where they’re in hospitals, where we’ve already sold it. That’s a kind of a layup for us that if they’re interested. So, but we’ve seen it from the beginning some of our early sales were two accounts that have now multiple systems because of the growth and the usage of among the surgeons across the board.
Got it. Understood. And then just, I mean, how would you characterize your growth in the systems where you are in the accounts where you do have an Excelsius installed? I mean, is it a multiple on top of kind of what you’re growing otherwise?
If I understand your question, we grow faster in the robotics account than we do in non-robotic accounts?
Yes. That’s yes. That’s what I was asking. I was hoping that you might quantify that to some extent.
Yes. That’s competitive information from my standpoint. I’m just not comfortable sharing it.
Okay. Fair. Thanks for taking the questions guys.
Sure. Thank you.
With no further questions. This ends the Globus Medical second quarter earnings conference call. Thank you for participating. And have a good evening.