Earning Date, Transcript Summary & Report

Record Revenue Growth: Revenue for the full year was a record $2.519 billion, delivering $951 million of revenue growth or 61% versus the prior year.

Record Non-GAAP EPS Growth: Non-GAAP EPS was a record $3.04, increasing 31% even with the 20% increase in diluted shares versus prior year.

Record Free Cash Flow: Free cash flow was an all-time high of $405 million, increasing $240 million or 145% versus prior year.

Record Sales Achievement: In Q4, we delivered our highest sales yet with $657 million, increasing 7% versus prior year.

Non-GAAP EPS Increase: Non-GAAP EPS for Q4 was $0.84, increasing $0.24 or 40% versus prior year.

Record Enabling Tech Sales: In Q4, we achieved our highest quarterly enabling tech sales and unit placements to date, with enabling technology sales for the quarter at $47 million, an increase of 44% versus prior year.

Spine Product Growth: U.S. Spine grew 4% in Q4 with significant gains across our product portfolio.

New Product Launches: We launched five new products in Q4, enhancing our innovative offerings.

International Revenue Growth: International revenue for Q4 was $135.4 million, growing 7.7% as reported and 8.9% on a constant-currency basis.

Trauma and NSO Growth: The combined trauma and NSO business delivered 8% growth in Q4 driven by strong market penetration.

Synergy Target Achievement: We exceeded our 2024 synergy targets from the NuVasive merger, accelerating value creation and shareholder return.

Acquisition of Nevro Corporation: We announced a definitive agreement to purchase all shares of Nevro Corporation for approximately $250 million, expanding our reach into the musculoskeletal market.

Adjusted Gross Margin Outlook: We expect our full-year adjusted gross margin to be in the range of 67.5% to 68.5% in 2025, representing improvement compared to 2024.

Revenue vs. Organic Growth: Revenue growth was strong, but pro forma sales growth was only 5.2% on an as-reported basis, indicating slower organic growth compared to the overall revenue increase.

Merger Costs Impact Profitability: Net income was impacted by $281.4 million in pre-tax merger and acquisition-related costs and restructuring expenses, which could raise concerns about the sustainability of profitability.

Gross Profit Decline Analysis: The decline in full-year GAAP gross profit to 55.6% from 64.1% in the prior year was primarily due to the inclusion of NuVasive's higher-cost products, raising questions about cost management post-merger.

R&D Expense Trends: Research and development expenses decreased as a percentage of sales, but this was largely due to headcount savings and lower operational spending, which may hinder future innovation.

Foreign Currency Loss Impact: The company faced a foreign currency loss that negatively impacted non-GAAP EPS by approximately $0.10 and adjusted EBITDA by 0.72%, highlighting potential vulnerabilities in international operations.

SG&A Expense Increase: The increase in SG&A expenses for the full year was driven by higher sales commissions and the full-year inclusion of NuVasive, indicating ongoing integration costs that may affect margins.

Unusual Negative Tax Rate: The GAAP tax rate for Q4 was negative 7.4%, which is unusual and may raise concerns about tax management and future liabilities.

Convertible Notes Repayment Risk: The company expects to pay off $450 million in senior convertible notes in March 2025, which could strain cash flow if not managed properly.