Globus Medical (NYSE:GMED) shares rose more than 2% last week despite a 61% 2nd-quarter profit slide after the medical device company reported earnings above Wall Street’s forecast and confirmed its outlook for the rest of the year.
Audubon, Pa.-based Globus reported profits of $7.4 million, or 8¢ per share, on sales of $107.0 million during the 3 months ended June 30. That’s top-line growth of 11.5%, but a bottom-line slide of 60.9%, compared with the same period last year.
Much of the earnings slide was due to an $18.3 million provision for "litigation loss," stemming from a $16 million judgment in favor of Johnson & Johnson‘s (NYSE:JNJ) DePuy-Synthes unit in an ongoing patent spat. A jury ruled that Globus infringed on 3 spinal implant patents with its now-discontinued Independence ALIF system, Coalition ACDF system and InterContinental Plate-Spacer product lines.
Excluding 1-time charges like the legal provision, Globus logged earnings per share of 21¢, 3¢ ahead of expectations on The Street.
"We are very pleased with our performance this quarter and for the first half of 2013. Our revenue growth and profitability margins remain at industry leading levels, driven by our focus on rapid product innovation, expanding our sales footprint, and efficient operational execution. This quarter we launched six new products, including Latis, the first laterally expanding unitary interbody fusion spacer on the market to offer the benefits of a traditional anterior implant through a posterior approach," chairman & CEO David Paul said in prepared remarks.
Globus also said it still expects to post sales of roughly $432 million this year, with adjusted EPS of about 81¢.
The earnings beat and confirmed guidance combined to push GMED shares up 2.4% to a $17.15 August 2, a day after its earnings release. GMED shares were trading at $17.24 apiece as of about 11 a.m. today, up another 0.5%.