Globus Medical, Inc. (NYSE:GMED) Q3 2023 Earnings Call Transcript

Globus Medical, Inc. (NYSE:GMED) Q3 2023 Earnings Call Transcript November 7, 2023

Operator: Thank you for standing by, and welcome to the Globus Medical Third Quarter 2023 Earnings Call. [Operator Instructions]. I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Brian Kearns: Thank you, Leeway, and thank you, everyone, for being with us today. Joining today’s call for Globus Medical will be Dan Scavilla, President and CEO; and Keith Pfeil, Chief Financial Officer. This review is being made available via webcast accessible through Investor Relations section of the Globus Medical website at www.globusmedical.com. . Before we begin, let me remind that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2022 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 on the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website.

With that, I’ll turn the call over to Dan Scavilla, our President and CEO.

Daniel Scavilla: Thanks, Brian, and good afternoon, everyone. This quarter’s earnings release will have a different format than our usual approach. On September 1, after clearing the FTC second request time frame, we executed the Globus NuVasive merger. With the timing of this event, we have a full third quarter revenue and financials for Globus, combined with the month of September only for NuVasive revenue and financials. For this quarter and possibly the next, we’ll share total financial results and comment on stand-alone Globus and stand-alone NuVasive to show how these businesses are performing. However, as we move into 2024 as 1 company with 1 focus, we’re not planning on providing stand-alone company information. For Q3, we delivered record sales of $384 million, a day adjusted growth of 53% or $130 million versus Q3 2022, reflecting 3 months of Globus and 1 month of NuVasive sales.

Non-GAAP EPS was $0.57, up $0.15, and cash flow remains strong with $29 million or 38% increase from prior year. Adjusted EBITDA for the quarter was 29%. Globus stand-alone sales for Q3 were $281 million, increasing $27 million or 12% on a day adjusted growth versus prior year, delivering an adjusted EBITDA of 32%. Sales were driven by the continued above-market growth of 8% in the U.S. versus prior year and increasing momentum internationally with 25% growth include significant gains in Japan. Enabling Technologies sales remain strong with 10% growth and over 59,000 procedures performed to date. Trauma achieved its 15th consecutive quarterly record, adding 53% annual growth or 12% sequentially. The foundation remains strong, and I’m proud of the GM team delivering solid growth and profitability as we enter into our combined future with NuVa. NuVasive stand-alone sales for the month of September were $102 million, down 2% primarily driven by 1 less selling day in the U.S. combined with a onetime 2022 credit not repeated in 2023 for U.S. Spine.

NuVasive clinical services and Pulse sales were lower versus prior year, partially offset by continued strength in international and NuVasive Specialty Orthopedics or NSO. Pulse sales have been impacted by customer uncertainty with the merger, while international remains focused on continued market penetration and NSO on market reentry of key technology. I’m seeing the incredible talent we have with our new teammates from NuVasive, and I’m excited to join forces as we focus on gaining momentum throughout our businesses. In Q3, we launched Hydrone, our interior 3D printed interbody fusion device and Strato wiring system for trauma. Year-to-date, we’ve launched 9 products and plan to launch several more new products by the end of the year. Our product pipeline is full and further enhanced by what is being developed in San Diego, setting the stage for a record year of product introductions in 2024.

Over the next few months, we’ll be adding to our best-in-class expandable portfolio, new offerings, including E-hub Navigation system to provide seamless navigation when combined with our E3D system, and expansion of the precise trauma nailing system. Moving into integration status and starting with the deal rationale. Both companies recognized that a combination of Globus and NuVasive would create a leading world class organization. The global scale and expanded customer reach with minimal sales force overlap, combined with a comprehensive and innovative portfolio in spine, enabling tech and orthopedics positions us well for long-term sustained growth. Combining our product development strength, focused on rapid development of innovative solutions to address unmet clinical needs of our surgeons and their patients while continuing to focus on surgeon education and research will help us shape solutions through the continuum of care as we bring procedural solutions into the marketplace.

Investing in our complementary operational footprint will allow rapid expansion of in-house capabilities to support commercial growth and drive cost savings. Our financial discipline provides the ability to redirect investments into key growth areas while improving combined profitability and cash flow. With the unblinded data available to us after September 1, we were able to move from integration planning into execution focused on our combination of sales forces. The actual surgeon overlap is better than we projected, both domestically and internationally, falling below the 5% we shared previously, which helps in defining territories and reducing overlap. We’re completing and communicating our U.S. commercial structure currently. Newly formed teams are beginning to develop 2024 action plans, cross-training and account building as they complete the busy Q4 season and prepare for launching into the new year.

International is also progressing well with regional and market leadership defined. We’re completing international territories in November with cross-training planned in December. Overall, I’m pleased with our work here and look forward to completing this shortly as we get — as we set the stage for the new year. We’re also receiving significant inbound interest from competitive sales professionals who are seeing the opportunity to carry a bag second to none. The combined company will be a destination of choice for sales personnel who cherish an incredible product portfolio, financial security and longevity. To date, we’ve seen some smaller sales dissynergies, but these still fall well within our projected estimates provided in the S4. One of the immediate benefits of the combination is our ability to cross-sell our existing portfolios.

We made significant investments in key product sets earlier this year and are poised to begin cross-selling as early as next quarter, expanding it over time as we get more sets completed. Surgeons will soon start gaining access to our broader expandable offerings, 3D printed interbody portfolio, cervical disc, robotic prone lateral system, EGPS E3D and neuromonitoring solutions, improved retractors, Magic and the precise family of limb-lengthening products. We also made significant investments in long lead time components and manufacturing resources to scale up our enabling tech capacity, and we’re increasing production output now in preparation for increased demand. For implants and instrumentation, we’re not rationalizing the product offerings as part of our synergy targets.

We believe our surgeons should have their choice of products and will, over time, shape our future portfolio offering. Our financial discipline gives us the ability to continue to keep these products available without negative impacts while continuing to innovate future offerings. In our product development innovation engines, we will carry forward our rich histories of rapid development and launch to remain an industry thought leader. Working with our surgeon partners to address unmet clinical needs from pioneering the XLIF procedure that is now gold standard of lateral surgery, market-leading expandable cage technology, the best supply robot and the most advanced interoperative CT imaging. We are working to create surgical proceduralization of all case spine procedures, combining with enabling technology to create the standard of care across all of spine.

Our intellectual property portfolio has been #1 in the spinal industry for the last decade, and we are committed to further expanding this lead, especially in the enabling tech arenas as we continue to be at the forefront of imaging, navigation and robotics. We remain committed to continuing all-in progress projects on both sides and expect to have a core PD hub on the West Coast. We brought together significant resources to enhance our surgeon easement program from adding scientific affairs, increasing research and clinical investments, adding strong talent to our professional affairs team, coordinating education programs and enhancing our presence in teaching institutions. In addition, we’ve added NuVasive marketing and communication teams.

We’re well poised to increase our impact with surgeons and further strengthen how we interact with them in all aspects of our business. The complementary fit of our operations remains a strength of the merger. Our strong financial position will allow us to expand investments in West Carrollton production facility to support our inventory needs. The Memphis distribution center is expected to support global distribution for the combined organization. We will continue to invest in high-tech manufacturing equipment for our implants, instrumentation enabling tech production capabilities. We’re currently working to consolidate volumes and orders with third-party lenders to accelerate delivery times and drive cost savings. Synergy targets have been refined and communicated to functional leads who are planning out actions for the next several years, focused on out-of-pocket spending and prioritizing investments to match our future growth plans.

Organizational designs are in progress with planned to roll out in the beginning of 2024. As we’ve said before, this is not a slash-and-burn exercise. The acquisition payback is not driven by deep spending cuts, and we’re not racing to impress the market with a quarterly flash. We remain focused on long-term sustained growth and not making cuts that impact our strengths. I want to conclude by sharing a recent event that reminded me of who we are. As part of the integration, we sent a group of former NUVA teammates to visit our enabling tech facility regarding the number of employees focused on the marketed products, the short-term developed launches and the long-term game changers, along with the building square footage we have invested in, supporting enabling tech.

This increased their realization that an ecosystem designed and built from the ground up to seamlessly communicate with each other with options to expand functionality over time is positioned to outperform patch work to market alternatives. We will continue to accelerate and increase our investment in this space and place these offerings through our expanded commercial team as part of addressing unmet clinical needs and shaping procedural solutions. I believe the potential for Globus has never been greater. It’s up to us to harness our resources and shape the future of our market. We have at our fingertips, everything we need to realize this. I will now turn the call over to Keith.

Keith Pfeil: Thanks, Dan, and good afternoon, everyone. As Dan alluded to in his prior comments, our discussion today will have a different feel as compared to our earlier calls. The resulting impact of the September 1 merger completion with NuVasive is such that my discussion on our results will seek to identify the underlying legacy Globus Medical results as well as the contributions from the inclusion of NuVasive financial information. . I ask everyone to remember that our Q3 2023 results include 3 months of legacy Globus financial information and 1 month of NuVasive, reflective of the September 1 merger closing date. My comments today will seek to provide insights into our quarterly business performance, insights into our capital allocation priorities, early insights into integration and synergy tracking as well as views on overall guidance for the remainder of the year.

As I move through my discussion this afternoon, I will first comment on our as-reported results, providing insights into the legacy Globus business as well as high-level comments on the contributions from NuVasive on an as-reported basis. All information is done so based on Globus accounting policies and is consistently applied in the as-reported results from legacy Globus and legacy NuVasive. We are extremely pleased with our third quarter results, both with and without the impact of NuVasive. Our sales results clearly demonstrate that we are still driving market share growth. Third quarter revenue was $383.6 million, growing 51% on an as-reported basis and 50.3% on a constant currency basis as compared to the third quarter of 2022. The day adjusted sales growth was 52.9% with 1 less selling day in Q3 ’23 versus Q3 ’22.

Net income in the third quarter of 2023 was $997,000 reflective of merger and acquisition-related costs due to the September 1 merger completion with NuVasive. Non-GAAP net income was $65.5 million compared to $50.3 million in the prior year quarter, $0.57 of fully diluted non-GAAP earnings per share. Our fully diluted non-GAAP EPS was 14.7% versus the prior year quarter despite our diluted share count growing by 13.7% versus Q2 of ’23 and to 115.2 million fully diluted shares. Adjusted EBITDA was 29.4%, and we generated $29 million of free cash flow during the quarter. Our legacy Globus business adjusted EBITDA 31.6% while legacy Globus free cash flow was $26 million. Delving into revenue further. Our third quarter net sales of $383.6 million reflect legacy Globus sales totaling $81.2 million growing 10.7% as reported compared to the prior year.

Legacy Globus musculoskeletal revenue was $254.7 million, growing 10.7% as reported. Legacy Globus Enabling Technologies revenue was $26.5 million, growing 10.2% as reported. NuVasive contributed $102.4 million of revenue during the quarter, inclusive of $92.8 million of musculoskeletal revenue, $8.5 million of neuromonitoring revenue and $1.1 million of Enabling Technologies revenue. U.S. revenue during the third quarter of 2023 was $309.3 million, growing 42.5% as reported. Legacy Globus U.S. revenue during the third quarter of 2023 was $234.7 million, growing 8.1% versus the prior year quarter. Our legacy Globus business continues to drive share growth across its U.S. spine and trauma portfolios, while our Enabling Technologies business is benefiting from the continued uptake of our systems, namely EGPS and E3D.

Q3 international revenue was $74.3 million, growing 100.2% as reported and 96% on a constant currency basis. International revenue for the legacy Globus business was $46.6 million, growing 25.5% as reported compared to the prior year quarter. The continued strong growth from our international business was driven by further penetration of our focus countries, including Australia, Italy, Belgium, Poland, Austria and Ireland. Shifting to NuVasive. Stand-alone September 2023 results totaled $102.4 million, which was $2.5 million or 2.4% lower as compared to the prior year month. This is driven by 1 less selling day in the month of September as well as a $2.7 million nonrepeating credit in the prior year, which did not repeat in the current year.

Gross profit in the third quarter was 64.7% compared to 74.2% in the prior year quarter and is inclusive of the mix impacts from NuVasive as well as $19 million of inventory step-up amortization related to the merger. Given the impact of step-up amortization on GAAP results, we are introducing an adjusted gross profit metric to better provide comparability with operating results. Adjusted gross profit was 69.7% compared to 74.2% in the prior year quarter. Looking ahead, we expect step-up amortization to enact GAAP gross profit for at least the next full fiscal quarters, thus we plan to report on this metric move more during this time. Legacy Globus GAAP and adjusted gross profit was 73.9%, essentially in line to the 74.2% in the prior year quarter, with the slight decline being driven by primarily higher inventory obsolescence reserves and write-off expenses.

NuVasive adjusted gross profit was $59.4 million or 58% in the quarter. On a pro forma basis, NuVasive gross profit of 58% in September 2023 compared to 62% in the prior year month reflected primarily of higher depreciation expenses and operational spending. Q3 research and development expenses were $29.3 million or 7.6% of sales compared to $18.7 million or 7.4% of sales in the prior year quarter. Legacy Globus R&D expenses totaled $20.4 million or 7.3% of sales compared to the prior year quarter of 7.4%. The growth in legacy Globus R&D spending is reflective of additional headcount, primarily within our Spine and Enabling Technologies businesses, which is in line with our expectations. Our consolidated R&D expense of $29.3 million includes $8.9 million of R&D expense from NuVasive, which equates to 8.7% of sales based on the $102.4 million of revenue contributed from NuVasive during our fiscal third quarter.

The September 2023 NuVasive R&D expense of $8.9 million or 8.7% of sales compared to September 2022 R&D expense of $7.5 million or 7.1% of sales. The increase in pro forma NuVasive R&D expense in 2023 is primarily the result of adopting Globus accounting policies specifically that internal labor and third-party consulting expenses are treated as period costs and not capitalized on the balance sheet and ultimately amortized. SG&A expenses for the third quarter were $156.2 million or 40.7% of sales compared to $106.6 million or 41.9% of sales in the third quarter of the prior year. Legacy Globus SG&A expenses were $118.7 million or 42.2%. The increased spending is primarily reflective of additional sales compensation costs from higher volume, higher benefit costs and some additional bad debt expenses.

NuVasive contributed $37.5 million of SG&A expenses in the quarter or 36.6% of sales. Turning our attention to cash and liquidity. As part of the merger closing on September 1, Globus has paid off the outstanding NuVasive line of credit balance and subsequently terminated the former NuVasive line of credit. The total amount paid was $420.8 million. In addition to the line of credit, Globus also assumed the 0.375% senior convertible notes due in 2025, which have a principal balance of $450 million. Our current intent for these notes is to remain part of our capital structure until they are due to be settled in March 2025. During the month of September 2023, we entered into a new 5-year unsecured $400 million syndicated line of credit agreement.

At our request, this line of credit has the ability to flex up to $100 million if needed. As of September 30, 2023, we have not borrowed under this credit facility and fully expect this credit facility to provide sufficient additional liquidity, if needed. Cash, cash equivalents and marketable securities were $744.9 million at September 30. Our net cash defined as total cash, cash equivalents and marketable securities less debt was $335.2 million at September 30. Shifting to cash flow. Our net cash provided by operating activities was $50.4 million and free cash flow was $28.9 million for the third quarter of 2023. Net cash provided by operating activities for the 9 months ended was $138.8 million, and free cash flow was $83.4 million. Our capital allocation priorities remain unchanged.

Our primary use of capital will be to fund internal investment and drive complementary M&A. Our share repurchase program will remain an integral part of our capital allocation priorities. However, we will continue to focus our primary use of capital on driving investments for long-term growth. During the quarter, our Board of Directors authorized an additional $350 million to be used to fund share repurchases, bringing the total amount authorized to $500.8 million. The company will utilize its cash reserves to fund share repurchases. Turning our attention to integration. Dan provided a detailed update in his earlier comments, However, I’d like to add a few comments in addition to his prepared remarks. We are actively working to integrate the business and are laser-focused on the key activities that will help drive commercial success and generate internal efficiencies.

Our integration activities are deliberate and aggressive. We want to go fast, maximize our ability to generate value. However, we are taking the time to understand different processes and approaches as we bring the 2 organizations together. Our Globus culture is 1 where we will seek to move and drive actions, which lead to swift decision making. When we announced the deal earlier in 2023, earlier in 2023, we commented on generating $170 million in cost synergy savings over 3 years. Internal synergy targets have been defined, and the team is actively taking steps to achieve the savings previously stated. Given the delay in our merger closing with the FTC second request process, we now expect our synergy targets to push out to 2024. As such, we still expect to generate the $170 million in synergies as previously communicated, However, this will begin with the 2024 fiscal year and will be realized over 3 years with 40% in year 1, 70% in year 2; and 100% by year 3.

The realization of synergies will come predominantly from the legacy NuVasive business and will be across most facets of the business with the exception of the commercial portion of the business. The primary areas of focus are, A operations, B, spending, specifically more stringent spending controls as well as see the elimination of redundant costs. Our operational synergies will focus on manufacturing insourcing, renegotiating supplier and raw material contracts and enhanced controls around capital expenditures. Spending controls will seek to eliminate or greatly reduce third-party spending, while further centralizing decision-making around cash and cash expenditures. Cost reductions will occur in a manner that allows us to deliver best-in-class service to our internal organization while setting the business up for success through greater cash and profitability.

As Dan stated earlier, we do not need a slash-and-burn exercise to drive success. We seek to institute a more disciplined approach to spending and investment moving ahead to drive greater value creation. Shifting attention to guidance. The company is updating its financial guidance for 2023. We expect our full year 2023 revenue guidance to be $1.55 billion, representing 51.5% growth over the prior year. Our non-GAAP EPS guidance remains unchanged at $2.30 per share. However, it is important to note that our full year share count will increase as a result of the merger and the 0.75 exchange ratio of Globus shares for each former NuVasive share. On a pro forma basis, assuming Globus and NuVasive were together on January 1, 2023, our $1.55 billion revised guidance for revenue implies full year pro forma revenue of $2.377 billion or 6.9% growth over the prior year 2022 combined revenues of Globus and NuVasive, which was $2.225 billion.

I also point out that our revised revenue guidance of $2.377 billion is in line with the Globus Management combined stand-alone revenue estimate of $2.361 billion, as reflected in our S-4 document. 2023 has been a year of dramatic change for Globus as well as the larger spine industry. Our merger with NuVasive brings together 2 industry powerhouses to our patients, we will remain focused on improving your outcomes by bringing a best-in-class product portfolio to market. The combined resources will drive future innovation to solve unmet clinical needs. To our surgeons, we will continue to expand our product offerings and drive procedural improvements with our implants and enabling technologies. We will leverage the talent of both organizations and remain committed to global surgeon education and research.

To our employees, we will drive passion and a shared commitment to patient-focused innovation. Specific to our commercial team, we will bring us together in a manner that drives success for the organization and for you. Remember that you have access to the best products in the market and you will be someplace where the innovation engine keeps running, giving you new and exciting things to discuss with your customers. To our shareholders, we will remain focused on driving innovation and investing for the long term, taking our Globus approach to advance patient care while maintaining operational excellence and a focused, disciplined approach to cost containment, driving expanded profitability. We couldn’t be more excited with where we are. There’s still a lot of work to do.

However, we have a team capable of executing the integration and truly separating ourselves from the competition. As always, thank you to the Globus team, including our newest team members from NuVasive as we continue our pursuit for excellence the best to come. We will now open the call for questions.

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Q&A Session

Operator: [Operator Instructions]. Your first question comes from the line of Matt Miksic of Barclays.

Matthew Miksic: Can you hear me okay?

Daniel Scavilla: Yes. .

Matthew Miksic: Great. Well, congrats on a solid start here to the new company. Maybe first, I think we’d love to hear about what kinds of things were sort of positive surprises to you as you sort of like wrapped up this quarter and head into the end of the year in terms of momentum or dissynergies or lack thereof? And then maybe what are some of the areas where you feel you need to maybe work a little harder and focus areas maybe then I have 1 follow-up.

Daniel Scavilla: Thanks, Matt. It’s Dan. I’ll start with that. Truthfully, a lot of positive things. And you’re right, like anything when you come in to the size things are working, some things are not. So it’s not all sunshine. It’s a lot of hard work. But with the positive things, it really is going to get back down to the people and the fit. I know that everyone goes to extremes to talk about different cultures, but I’m going to go back and say the more I work with everybody. The more I see how much we have in common versus a part. I really think that’s big. The rates and the depth at which I see the teams working together, whether it be U.S. commercial or international, commercial, or even all the support teams, it really is amazing.

I think that they’re positive more than anything. Areas of harder focus. Look, we’re creating a great deal of disruption and then that creates some uncertainty and there are some folks that are looking to get answers faster. So what I’d like to do is move at a faster pace. I know we’re moving quickly. But the sooner we can move and create a steady state and get back into the stronger growth that we’re poised to do all the better. So for me, it’s about keep moving forward, make the tough decisions and get into the steady state at a faster pace.

Matthew Miksic: That’s great. So follow-up on the cost side. Maybe you reminded, I know there’s a number of cost avoidance opportunities for you and a combined organization distribution, there’s obviously, as you talked about, is leverage opportunity of existing facilities to do ramp up in sourcing and things like that. Just remind us maybe specifically what’s included and what’s excluded in that $170 million target? I have lots of follow-ups, but I’ll just stop there and pass it back to you guys and the rest of the group.

Keith Pfeil: Sure, Matt. Great question. This is Keith talking. As we think about the $170 million, it’s going to touch on a couple of things. It’s going to touch on manufacturing and product in-sourcing. I might say that we have the ability to positively impact gross margin on a combined basis going forward. That’s really going to be achieved by bringing products from the outside in, getting more efficient with our spending. From a distribution perspective, we believe that there’s efficiencies to be gained. NuVasive has a facility in Memphis. We think that we could further leverage that facility to drive distribution for both companies moving forward. So that’s included in the $170 million. And then on top of that, is redundant costs that you primarily find in SG&A and focused approaches to taking a more discerning look at cash spending.

That’s what’s contemplated in $170 million. As we’ve closed this merger and are looking forward, we feel confident about $170 million. And at this point, it ties back to Dan’s earlier comments that we’re finalizing org design. We’re really going to be rolling things out as we get into 2024.

Operator: Your next question comes from the line Shagun Singh of RBC.

Shagun Chadha: Congratulations on the combined entity. I’m sorry for any background noise here. I was just wondering if you can help us with the framework for 2024, how should we think about top line growth? What are you assuming initially for maybe this synergy? Is mid-single-digit growth the right target, I think, on a combined basis, you guys called out 6.9% for ’23. And then for EBITDA, should we be in the high 20s, any comments on EPS accretion. I think last time, you had indicated plus 20% at year 1. Any puts and takes on 2024 even directionally would be really helpful.

Keith Pfeil: Thanks, again. We’re very limited on the information we’re going to provide for 2024 at this time. I would reference folks back to the S-4 document. We still feel positive that this could be EPS accretive in year 1. So we feel good about that. But as time passes and we get closer to providing initial insights into ’24 in early January, we’ll have more color then.

Daniel Scavilla: I’ll just add to that, too, that with Keith and the team and the projections they put out in the S-4, we’re not anticipating making any material moves off of that at this point. We certainly have 1 month under our belt in a whole quarter to go, but feel positive that we’re in the right direction and have shared that earlier with our recent — with our submissions.

Shagun Chadha: Got it. And then I was just wondering if you can elaborate a little bit more on sales force integration plan, how you’re thinking about territories. Obviously, that has been kind of a sticking point for for a lot of previous mergers, but we do think this is different. So maybe you can elaborate on sales force integration and how you think about that.

Daniel Scavilla: You’ve got it, and I’ll take that for you. So we’ll go down into 2 areas, obviously, being U.S. and international with that. And remember what we’ve called out and have been calling out is we felt that there is a small amount of overlap. And what we’re singling is with the actual data, that’s proven correct and better than we anticipated. And remember, we’re not a 20-share company and a 20-share company coming together and bumping in. Both of us were in that range of, say, 7% to 9% of market share in the U.S. So it did naturally leave a lot of room for us to move around and grow without redundancy. What I would tell you is throughout the world, we really did well with the existing management team with very small changes, and our intent is and to date has been to keep all reps.

Like I said, we don’t see any reason why we would have to shift or change from that. Even with our distributor partners, the message is clear. We want to go forward with you and work with you on that. And to date, we’ve been lucky with that. Unlike other acquisitions of the past, where we have less redundancy and the chance therefore, to grow and focus faster.