Earnings Call: Q2 2021

Aug 4, 2021

Welcome to Globus Medical Second Quarter 2021 Earnings Call. At this time, all lines will be on mute and a Q and A session will be held after the prepared remarks. I will now turn the call over to Kelly Heller, Senior Vice President, General Counsel. Is Ms. Haller, please go ahead. Thank you for being with us today. Joining today's call from Globus Medical will be Dave Denske, President and CEO is 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.glovusmedical .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 ks 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 ks, 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. Session. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. Session should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the modest directly comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website. Session. 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 2 years as we continue to take market share. Given the impact of COVID-nineteen, 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 Q2 of 2019. Revenue for the quarter was a record $251,000,000 of 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 $21,000,000 up 73% over 2Q 2019 and our 3rd 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. Session. 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 their 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, Gained 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, I've 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 focus on utilizing technology to improve spine surgery. The growth we have seen in our U. S. Business over the past 2 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 identified 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 launched Headron L in Q2, adding a 3 d printed spacer to Ryzelle, Alsa, Korbel and 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 spacer 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 antibody levels and place MIS pedicle screws While the patient remains in a single position. Moving to INR product development, we are awaiting 510 clearance for the Excelsius 3 d imaging system I remain cautiously optimistic regarding clearance and launch of the system late in Q3. The full launch of the Excelsius cranial schedule is slated for later this quarter as well. Shifting to Trauma. Revenue was up over 2 50% compared to the Q2 of 2019, is 29% over the Q2 of last year and relatively flat sequentially. We are focused on sales force expansion and have several exciting product launches planned session will be recorded for the second half of this year and twenty twenty two. 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 of our Incland business and further adoption of our robotics technology. Q2 continues a trend of strong revenue, Before I jump into my discussions on the quarter, I want to highlight that I will focus the majority of my comparative comments Q2 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 $251,000,000 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 percent, the same number of selling days in the U. S. And 2 more selling days in Japan when compared to Q2 of 2019. Q2 net income was $41,500,000 and non GAAP net income was $57,900,000 driving $0.56 of fully diluted non GAAP earnings per share. Adjusted EBITDA was 35 percent and we generated $50,800,000 of free cash flow. Our Q2 U. S. Revenue was $215,100,000 or 34.5 percent higher versus the Q2 of 2019, Reflective of continued share growth across our implant business and the increasing adoption of robotics technology within INR, which is inclusive of Dave's earlier comments. International revenue for the Q2 was $35,900,000 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 were higher planned depreciation expense related to instruments and cases, slightly higher product costs driven by the mix of sales and additional inventory reserve expenses associated with the non recurring write off of raw materials. Research and development expenses for the quarter were $8,500,000 or 6.2 percent 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 and D team as as we continue to develop new and innovative products across our portfolio. SG and A expenses for the Q2 were $107,300,000 were 42.7 percent of sales compared to $88,400,000 or 45.4 percent of sales in the Q2 of 2019. The higher spending in Q2 of 2021 was mainly a result of higher sales compensation costs. However, SG and A is 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 Q2 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 a large charge to R and D expenses associated with the Sunnost acquisition, which also impacted our effective tax rate. We concluded Q2 with $914,200,000 of cash, cash equivalents and marketable securities. Net cash provided by operating activities was $59,200,000 and free cash flow was $50,800,000 Year to date free cash flow is $100,700,000 and on a rolling 4 quarter basis, the company has generated a record $202,700,000 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 $950,000,000 in net sales and $2 in fully diluted non GAAP earnings per share. The industry is experiencing a decline in case volume early in Q3 as surgeons take extended vacations and regional shutdowns of elective procedures emerge Due to the delta variant of COVID-nineteen, we expect the impact from vacations to reverse in September October once kids go back to school. While it is hard to predict the impact of the recent increases in COVID cases, I will remind everyone that the spine market has shown great resilience in dealing with COVID-nineteen And Globus specifically has been able to take market share through the previous outbreaks. While we expect this situation to be transitory, We do project a sequential decline in revenue in Q3 associated with the procedural slowdown. Our second quarter results continued a strong start to 2021. Year to date, we've generated $478,400,000 in revenue, 35.1 percent in adjusted EBITDA and $1.05 in non GAAP diluted earnings per share. As we look ahead to the back half of the year, we are 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 is disciplined in our approach to managing the business. We are committed to expanding our investment and will continue to pursue complementary 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'll now open the call for questions. Thank you. Please stand by while we compile the Q and A roster. 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 2 from me. The first one on capital, obviously, it was a very strong quarter and it appears that you approached 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. Hi, Shri Gan, 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 I got it. The question was just a little bit focused on capital. So just ExcelsiusGPS, can is 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 half just given seasonality and then beyond that, so just specific to capital. Thanks, Shigun. I think the 3rd quarter is Typically a slower quarter relative to some of the other ones in capital. Usually, the Q4 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 Q2. So 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 the 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 we 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 on the impact of the coronavirus variance, that would be helpful. Thank you. I think as we look to the back half of the year, Shagun, again, we remain positive. When I go back to 2019 and I look at our business, Our current guidance in $950,000,000 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 facets of our business. And To drive that level of organic growth shows that we feel very positive about 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. Two questions from me. I guess, if I could follow-up on your comment on vacations. I suspect that will 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 Dave, you mentioned the historical Revenue trend in Q3 is down. How much more of an impact are you expecting if it's down 3 historically? Should we expect down 5? Just some sense of what the increment is and then I have one follow-up if I could. Thank you, Matt. As we We're not going to disclose that average number of procedures per robot, but 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 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 And 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 that will be From a sequential standpoint, it's going to cause us to dip a little bit here in the Q3. Fair enough. And then the follow-up is a question I get often about some of the growth rates you've been putting up Over the past several quarters is sort of how to parse the various kind of growth drivers Yes, 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 move into 3 d printed implants? And how much of a factor at this point do you feel like the robot is in sort of closing the distance between, call it, I don't know, 2% underlying growth and 30% to your stack growth that you put up. Yes. I'm not going to drill down into real granular numbers, but I will tell 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 technology, through great implant technology. So we're still seeing 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 I'm trying 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 assistance segment is something that we're Seeing a lot of growth from it and we the trend is up. So we're excited about where we're going with that. That's great. Thank you. Your next question comes from the line of Richard Militter 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 1 launch and contribution potential For that product, especially with some other imaging modalities recently FDA approved and or Turning commercial from some of your competitors. So thoughts there and then I have a follow-up. Thanks. Sure, Rich. 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're planning on a commercial launch. It's going to be the end of the quarter or right early in Q4 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 excited about getting the technology. We obviously have to work through the contracting process with their hospitals, but Just anecdotally, you had several who have stopped the planned purchase of other competitive systems until ours is ready. So 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 may be 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, is 2Q the high watermark in your guidance And 4Q, which is typically a seasonally stronger quarter, higher than 3Q, but not necessarily as high as 2Q? Are you assuming a typical kind of the 4Q is the strongest quarter in your updated guidance? Thanks for the question. I think the way I look at that is Q3 is typically a slowdown 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 Q3. Thanks a lot. If I could squeeze one more in. Dave, you mentioned, I think, in your opening remarks, international Final implants growing 5% year over year. Was that a comment off 2019 or 2020? 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. Wondered if you could just talk maybe from a bigger picture perspective what you're seeing as far as 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 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. Then I have one follow-up. Sure, Kyle. And thank you. In terms of how customers will want to pay for it, I think there's really no change in that over time. Everybody has their own capital constraints or willingness To make other arrangements. 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 the imaging system just because they have experience with us and With our technology, they know the value that it brings. But it really opens up for us a competitive segment that we're currently is challenged to address. So if someone has already adopted computer assisted technology and that they're doing freehand 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 Cellcast. I'm 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 Particular advantage we can bring there is, again, the computer assisted aspect. So we're still in development of our robotic solution there. And that's 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 walked you through over the last couple of years, we continue to expand that portfolio and expand our footprint. And as Keith has alluded to, we're active in considering other ways to grow the business through acquisitions. But at this point, we don't have much Our next question comes from the line of Matt is Taylor from UBS. Your line is open. Hi, everyone. This is Yang Liying in for Matt. Thanks for taking our questions. I guess maybe just want to follow-up on, I think you mentioned you're seeing some early impacts from Delta in Q3. What are some of the areas in the U. S. Or OUS that you're seeing some of that impact, the areas that you're paying more is Yes, I think it just mirrors where the outbreaks are most significant. So Florida has had a lot of it. We've seen Arkansas, Louisiana at this point. Internationally, I don't have I'm not as close to that personally to comment on. Okay, great. That's helpful. I guess maybe one on trauma. I think it was Flat sequentially, you're focused on launching some new products and expanding the sales force. I was just wondering maybe from a product portfolio perspective, where do you think you are relative to the competition? How much 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 it over the 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 territories actually breaking records in Q1. So the fact that they several key launches that we plan to come out in the second half of the year that will get us further up into the procedural coverage. We think at that We should have the ability to cover about 70% to 75% of the procedures. With our expansion of our R and D resources that we have planned when hired, we'll accelerate further into 2022 with the ability to actually 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 tonight. Just on the seasonality factor and the sequential decline in the 3rd quarter, You came off the record sales in the Q2. I think consensus has you at $230,000,000 for the Q3. Is that kind of the right way to think about the sequential decline, just given the momentum in 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 in kind of framing what the Seasonality and sequential decline will look like in the Q3. Thanks for the question. This is Keith. I think that, you said roughly around 2.30. 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 seeing the sequential decline. When I look at it, I feel like Q3 is going to Look at and feel a 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 labor market remains Type comments, was that solely directed at R and D or was that kind of broadly across SG and 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 and D, because as I look at the spending, the spending is really flattish compared to 2019. I wanted to raise that because we had talked previously about being more aggressive and investing. And I wanted to point that out that, yes, the labor market is tight. It doesn't change our view. The one thing I do want to call out is With our Q2 number of about $15,500,000 in R and 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 last year during COVID and identified previous acquisition costs that were what I would call stranded. We've worked to take those costs out of the P and L. So there's savings there, which is kind of masking 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 and 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 and Company, your line is open. Yes, good morning or good afternoon and thanks for taking the 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 a majority of Accounts over the next 12 to 18 months. And then I think you mentioned supply could be an issue. Did I hear that right? Or is that just 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 challenging to translate their enthusiasm So what the hospital is willing to spend. So I just on your other point about where the 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 customers. So I really see this as, Again, ability to take market share in the computer assisted side. Okay. And then just a follow-up on the R and D And the labor markets, I mean, trauma and ortho, I think, has been a focus and 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 and expand resources in R and D, and Keith just went Some details on that. 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, it 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 twenty twenty two Your next question comes from the line of Matt Hendrickson 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 The granularity to answer that, my data is more at the top level. So I think it's probably More the legacy users are utilizing the technology at greater amounts because to your point, it does take a while for new users to Okay. That's helpful. And then just turning to 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 Q2 2019. Could you just comment on which markets or which countries were driving that growth? Sure. The worst is behind us in Japan. But as we're looking back to 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 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, U. K, Germany, kind of where the major populations are and good medical care is. We track pretty Your next question comes from the line of Jason Wietes 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 the robot is being used, and particularly those Newer procedures that haven't been done in the past. I think it just comes down to sort of complex deformities, challenging Entryways where they just don't have a lot of room and would necessarily kind of trust themselves With a manual procedure, they can rely on the precision of the robot to get into really difficult angles for them is in tight spot. 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 can get an update in terms of kind of what the run rate is for that business at this point. Just as a sanity check, I know that you kind of talked about growth rates. Curious to know kind of what the run rate is at We don't tend to break out our sections of the business 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 When we launch a product, how we enter into account, it's very 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 That's all very fair. Can I ask kind of where the threshold might be? 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 a little while away from that. Okay. And just last question related to Trauma, if I could. It sounds like you'll be about 70% coverage in terms of product portfolio Pioneer this year and it sounds like you'll probably round out the rest for the end of 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 filling out 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 both. 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 are 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 Your next question comes from the line of Sam Rebofsky from Truist. Your line is open. Thanks for taking the question. Just quickly to jump back to the sequential comp, you talked about Our revenue from surgeon 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 4th quarter than or as a percentage of the total year, A little bit more revenue in the Q4 than typical given that 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 asked, 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 a little bit closer Q1 versus obviously Q2. As I look to the spread, I mean, typically, if I go back several years, we're typically Roughly 25 percent 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 excuse me, the imaging system, Can you give us how is the company thinking about selling the systems to driving great deployments robotics? How can we think about the imaging system maybe even potentially helping to drive greater share gains plans going forward? Thanks. Thanks, Sam. Yes, I think it will have the same sort of impact robotics has. I mean, there is 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 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 is Brian from Piper Sandler. Your line is open. Hi, this is Corrine 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 Pulse and Hollow, 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, Corinne. 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 robotic 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 No, that we stack up very favorably against the competitors 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've 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, comp. I mean, thanks for the question. I could confirm that, yes, we still feel like we're a mid-30s EBITDA business as we look to the 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 Being a mid-30s EBITDA business, and I expect that to continue. Thank you. Session. 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, I 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 Use expand beyond the surgeon champion. So on that comment, I found that pretty interesting. So wanted 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, The interest in that by surgeons has grown. So I think it is accelerating. I don't think it's anything particular to us. 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 the hospitals where we've already sold it, that's Kind of a layout for us, if they're interested. So but we've seen it from the beginning. Some of our Early sales were to accounts that have now multiple systems because of the growth in the usage among The surgeons across the board. Got it. Understood. And then just, I How would you characterize your growth in the systems where you or 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 robotics accounts than we do in non robotic accounts. Yes, I was yes, that's yes, Dave, that's what I was asking. I was hoping that you might quantify that to some extent. Yes. That's competitive information from our 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 2nd quarter earnings conference call. Thank you for participating and have a good evening.