Matt Miksic at Barclays. Next session is NuVasive. very pleased to have Chris Barry, CEO of NuVasive with us remotely, and Matt Harbaugh, Chief Financial Officer here, on stage with me. Thanks, guys, very much for making the time. Thanks for having us. Appreciate it. Thanks. I know there were some changes here in the last minute to kind of shuffle things around, so appreciate your flexibility. Maybe, you know, it's an open-ended question, but, you know, we've heard a fair amount from the Globus team about their rationale for the transaction, the proposed merger between NuVasive and Globus. Maybe, just to start at a high level, Chris, if you could talk a little bit about, you know, where you saw the strategic opportunities for NuVasive, you know, leading up to these conversations with Globus and what it is about them that makes this an attractive deal for you? Yeah, you know, as we talked, you know, over the last couple of quarters as far as our standalone strategy, we really looked at how could we accelerate, how could we transform the company. As I looked at the opportunity with Globus, which we had conversation for some time. Hang on a second. Getting an echo here for a second. Sorry. Can you guys hear me now? Yeah, we can hear you. It really came down to acceleration. I looked at our, you know, confidence in our standalone plan, our core growth strategy, intelligent surgery, our ability to create, enough to go out and do other attractive market opportunities and as we talked about, expanding the profitability of the company. As we look at these two entities coming together, it accelerated us on all four of those dimensions, and doubled the size of our commercial footprint and expanded our innovation portfolio across some, you know, a multitude of different key technologies. For those reasons, and they, you know, just a exceptional sense. We've talked in the past about the combination. It's been compelling. I think the team has been at times challenging through some of the pandemic years and some of the leaks that we incurred in 2021. That was the real compelling picture was what it did to accelerate our capability, to execute our strategy and the cash position that allowed us to go out and do other things that we want to do in our future. That was really what the driving force behind our decision was. And your audio's coming through a little bit muffled and your video has stopped, but that's okay. We'll sort that out in a minute. I guess what I'm hearing is that, you know, you had, as we, as we know, a number of strategic programs. You know, say the robot, you know, insource manufacturing in no particular order. You know, making cervical a bigger, more powerful part of the portfolio, in addition to, you know, doing what you're doing in lateral and prone lateral and so on. Those three programs sort of stand out as, you know, areas where this kind of, if you will, sort of take some risk off of the table, and gets your, gets your teams access to those, to those programs sort of sooner. You know, you can get a more developed team in each one of those categories that you can kind of combine together and leverage. Is that a fair, you know, rewording of what you were, what you were sort of some of what you were describing? It is. You know, the opportunity that we see and the timing of that opportunity also is compelling for us. You mentioned cervical and robotics. Both those areas are growing nicely. Obviously, robotics for Globus and our cervical portfolio specifically Simplify for us, with a real opportunity to go out and really transition the market. For those reasons, made a lot of sense. The timing is, I think, critical for us, and we take full advantage of the opportunity where both companies have. Yeah, you summed it up well. I think the other thing I would just add is this is a global opportunity. I'm as excited about what we can do internationally as I am about what we can do domestically, with everything you just brought up. Okay, that's great. One of the other, one of the questions I get fairly often is, will the NuVasive shareholders vote for this deal? I know you can't answer that question, but maybe you can give us some sense, each of you as to kind of what some of the feedback you've received from investors, what are some of the concerns or the pushback or, you know, what's the reaction been from your shareholders as you communicate what you just described? Well, I'm happy to say I've had a chance to talk to several investors and, you know, we just filed, or Globus actually had to file the S-4 on Friday, so it should be visible now on EDGAR. You can go and a lot of folks are waiting to read the proxy, the joint proxy statement. Honestly, you know, they've asked a lot about strategic rationale. They clearly, I think, see the strategic rationale. I think most of the conversations that I've had are more around scientific deals. How will this be different? Not a lot of question on the strategic rationale, more of environmentally, how will you guys integrate effectively? How do you learn from some of the challenges that maybe some other deals had experienced in the past, and how do you overcome those? Some questions around how things like limited commercial overlap. What does that mean? A lot of, a lot of those types of questions, but honestly, very few questions about strategically how this makes sense. I think people generally see it, just asking some of the more specific questions on historic deals and just the nuances of the, of some of the announcements that we've made. Yeah. We're proactively reaching out to our investors as well, and when we're in New York or wherever, you know, we're open to having conversations to make sure everyone fully appreciates what this opportunity means for both companies. It's really exciting. To your point, Chris, I mean, one of the things that has been, I'd say, I don't want to say noisy, but there's been a lot of opining on, you know, how tough some of the deals have been historically. We would say how different some of the deals historically have been from this one. You know, with that in mind, and I guess the risk being, you know, attrition, dyssynergies, fallout in the field force. I mean, same question as I asked about investors, like, you know, if you could put yourself into the mind of some of your salespeople, what inspires them to stay in this situation? What are some of the positives, and what are some of the things that you think would drive folks to drop out? I mean, we've talked a lot about the portfolio value, and I think it stacks up enormously well across, you know, across all the key subsegments it's in and obviously on a global basis. There's always going to be disruption. I think people always look at opportunities. Times are very competitive. When you look at the compelling portfolio value and the ability for a rep to open up for a new piece of rep, the ability to access their imaging, their robotics, their augmented reality technology, or a growth ability to access our lateral portfolio, our surface portfolio. There's just a significant amount of opportunity that I don't think we've seen. If you think about NuVasive, we've been looking to diversify, you know, I guess in a sense, away from just being a excellent company. If you look at our growth profile today, you know, we've grown surgical very quickly over the last several quarters. We have an opportunity now to go after the post-year of state. Our, our reps have transitioned into a breadth and depth opportunity to create more density with key customers, and this plays right into that opportunity. There are always gonna be questions, and anytime you have a deal this funding does seem to get noisy. When I just look at the compelling nature of the portfolios coming together, I don't see a real alternative portfolio that creates the level of value that we think will work together. That's, and I think I see that, and I give our folks clearly how we bring these two organizations together from a cultural and human perspective, and the integration is gonna be critical to do it right. The teams are excited to work together. We're clearly still in the pre-integration planning phase, so we're still independently competing today. The team sees the value, I believe, and we're looking forward to getting the teams together. That's great. You mentioned the core. We did go through that and got some questions from investors on it. One of the things that struck me as being a little bit different from filings like that we've seen in the past is the different sort of projections that, you know, were either presented internally to the board at NuVasive and then, you know, the projections that were assumed, you know, as part of the deal. You know, it jumped out at me. A couple of things jumped out at me and drove some questions. One was the numbers that you had presented to the board, which of course you hadn't shown to us 'cause it wasn't your guidance, but it was your internal plan, were kind of in the high, you know, mid to high single-digit growth for NuVasive over the next several years. Call it 8% or something in that range, if I'm not mistaken. The assumptions that were made that go into the deal, into the, you know, pro forma projections for the deal are more like in the mid-single range, and that's pre-dis-synergy assumptions. Can you help maybe, I think I have a pretty clear understanding as to why that would be, but maybe in your word, just kinda, you know, explain why the, why the two, why the significant step down in expectations, at least the way that you're planning on putting it out there for investors. Maybe talk through that a little bit would be helpful. Yeah. I mean, I'll take a shot here. Matt, you may wanna chime in here as well. Sure. The numbers that we presented were the same numbers that we had really gone through our LRBP in the investor day. What you may have seen is the LRBP numbers we had layered in in May and future revenues from assumed M&A and things that we would do outside of just organic growth. I likely the scenario, but Matt, I don't know if you have more on the difference there. Yeah, no. In the investor day on October 2nd, we were very clear in the, in the slides that we presented that we were anticipating doing significant business development, which would get us up into the range that you're talking about. The numbers that we presented, very consistent with what we've talked to the board with. We don't layer in business development, typically in our internal plan until we, you know, have concrete deals done where we know we're gonna get revenue out of them. That's the difference. Then, on the dis-synergy side, if we do the math on what was sort of baked into that, and I realize this is a conversation that would be easier to have and I have had this conversation with your friends at Globus. On the dis-synergy side, the math works out to be something like 10% or something like that in the first year or two. I think the streets may be in, you know, optimists are sub 10% and skeptics are, you know, in the 15% or higher. Maybe talk a little bit about how you felt that 10% was the right number or, you know, how you feel like that's balanced in terms of risk or reality. I think the number, Matt, was You know, $170 million. If you do the math on that, it comes out to around 14%. I mean, most deals are around 15%. I think it's somewhat conservative, but I think that's kind of the numbers I was looking at. Sure. No, and I'm sorry. I'm talking about just the sales dis-synergy side. Oh, okay. The negative number then. That's... The reason I bring it up is 'cause that's the number I think folks are more concerned about. Is that a bigger number than that? Is it 10% or 15%? Is it sub 10%? It seemed like that 10% number was a middle of the range number, at least in terms of street opinions. How did you get to that number? What color can you provide on that? I can't, I mean, I can't get their model number. You know, clearly, we expect some level of short-term disruption. As we look and you look at the opportunity to open up, you know, really twice the, the channel footprint, we think that the revenue synergy more than offsets the revenue dis-synergies in short order. I think that's what I think, you know. That coupled with the fact that we talked about limited overlap, we believe that was a, that was a linchpin, if you will, for doing the deal, is how much overlap we actually have. Like I said before, in the majority of situations, there's no overlap. Where there is overlap, there is in most situations, scenarios where one company has the majority of the business, one company has a much smaller portion of the business. We think it's very manageable. You know, I, like I said, I think the revenue synergies in short order more than offset the dis-synergy debt, but clearly there'll be some disruption out of the gate. We expect that. Okay. I mean, if you think about it, you've got two... arguably the two most innovative companies with very robust R&D pipelines. Yeah, we'll have some disruption in closing the transaction, now you've got all these commercial people around the globe promoting both sides, both innovative pipelines right now. Just think about being taking Simplify and putting it in the hands of their field sales force around the world. It's really exciting for the long term. Definitely. Another question that I would sort of root my hint of this conversation that I've picked up from investors over the last several weeks has been, you know, is idea that there's been a fair amount of pressure, obviously, on Globus, and that's translated through to, you know, the exchange ratio for NuVasive. You know, not all of that is sort of, this deal is a bad idea. You know, I'd say a fair amount of that or some of that is this deal just may not work, you know, soon. It may take a little while. I think there's folks who believe in the strategy on the investor side, but they just it's not clear to them, like, when we're gonna start to see evidence that it's working. You know, assuming, and we can't predict this, of course, but let's say the deal closes on time and it's not all that complicated, to get through the hoops and hurdles you need to get through and it closes mid-year this year. You know, what would you expect the first few things to come out of the deal that would kind of give an indication of, hey, is this does this look like it's working or is this, does this look, you know, more troublesome or do we just not know yet? Yeah, I mean, I would look for, clearly, you know, we're gonna be working quickly to integrate the channel. There is a milestone event there to make sure that that goes well. The first key things would be, you know, how quickly can we transition the portfolio to take full advantage of the opportunity. I believe that that element of acceleration of the portfolio will be critical out of the gate, and I think that's reasonable. You know, we've got to train people up, so there'll be some level of lag. I expect to start to generate the synergies that we talked about, I guess in year one, year two. You know, there's a lot of work to be done operationally that will be going on behind the scenes that I think will create significant opportunity and headwind for us, or tailwind, I should say. The most extreme external metrics I would look for would be the acceleration of the portfolio, effectively integrating the channel. I think those would be critical. Okay. Those would be not necessarily top-line metrics per se, but the comments from you, say, in September or December, you know, on those quarters as like some of these accretion numbers start to come into focus or dilution numbers come into focus. You know, what does this do to product launches? You know, Globus unveiled. You have a prone lateral strategy, you know, that you've kind of fired up. Globus unveiled something, as you know, at AAOS. It puts them into that, you know, MIS TLIF from lateral segment. Is that something that can launch sort of straight through this or, you know, maybe give us some sense of the distraction or the bandwidth that you've baked into the plan to take into account that maybe the back half just isn't going to be that great for launches? Well, I mean, they've made statements clearly, and I've talked absolutely at length with their management team. Right now, we don't have any we're not canceling any projects. We're not slowing anything down. Our pipeline is robust, as is theirs. I think we're thinking more along the lines of how do we integrate over time, generationally, if you will, sort of merge the portfolios, from a portfolio perspective. There's plenty to be done with both portfolios. There's opportunity, you know, what I said, with doubling the number of customers we can call on. That it'll take some time to ramp up the portfolio from a supply perspective. We're moving full steam ahead. As we come together, we'll look at redundancy that may exist within the pipeline, have to make decisions. The goal is to maintain focus, and if there's redundancy, it frees us up to do something else. Not to really cut our R&D spend, but to continue optimize the spend to make sure that we're doing the other things we want to do. That's kind of how we're looking at it. Okay. I think you'll see capital expenditures probably go up because they're going to be moving into the Ohio facility in Memphis. Investors should look at that as a positive. I think turning to the P&L side, to your question earlier, you know, gross profit as a percent and net sales should strengthen over time as we operationally execute on what Chris just said. Obviously, the SG&A leverage that Chris was mentioning earlier, the $170 million that's in the model, you know, if Globus was here, I think they would say they're very confident that they can achieve those numbers. You'll get some SG&A leverage there as well. Okay. What I'm, what I'm hearing, Chris, and I understand this is like a super hard question to ask in terms of what happens in the first six months of the deal, for example, that we can sort of look at as a signal. It doesn't seem like you're putting anything out there in particular. I think we had a meeting with Globus that talked about robot, the potential to sort of drive more leads and lead generation, you know, a more robust funnel of opportunities for their capital sales team with their robot from the combined organization as a possible maybe back half catalyst. You know, I don't know. It doesn't from what you've just described, it sounds like maybe operationally, we may not see a ton of signals coming out of the organization in the back half. Is that fair, or am I just being too, you know, conservative? I think it's just early. We've got to put these KPIs. We have to understand the lead times on a lot of these things. Certainly there'll be opportunities for us to further communicate, you know, what to expect as it goes. You know, we're still in the pre-integration planning, working through some of it as we speak. We'll learn more as we progress through. Really been focused up to this point on doing HSR, good getting the actual put together. We've kicked off our Integration Management Offices in both organizations. We've got a lot more work to do. That's fair. I guess one of the, one of the last couple of topics I wanted to get into was, Matt, you mentioned on the international side. If you could talk a little bit about maybe the, you know, there's been a fair amount of focus in the U.S., the overlap of accounts in the U.S. You know, what's the match up look internationally and where, you know, you mentioned a strong kind of global play. Where do you see those opportunities? One, I think where we're strong, they're not as strong as we are. A good example of that would be Japan. They've been challenged there. We have a very strong Japanese franchise, if you will. What's really exciting is taking these combined portfolios, as I mentioned earlier, 'cause we've got pretty low share penetration in the international markets and really combining the entities and then really driving our business. It's very exciting. You know, we've got really capable leadership in Europe and Asia Pacific and Latin America and Japan. We've got very capable management teams on our side. I think, as Globus merges into the larger portfolio of NuVasive, the opportunities really are gonna drive the percent of revenue that's gonna be international. In our own plan, as you know, our plan was to go from roughly 24% last year to 30%. They're at, like, 15% of their current net sales. You know, and we're a larger company net sales wise. That kind of gives you a sense of just the sheer scale of the combined organizations. Chris, you have anything you want to add? No. No, we're good. Okay. Well, we're coming up on time here, so I'd rather than open up another question than go over, why don't we call it there, guys? Great. Thank you again, Chris, for making the time, and Matt. Appreciate it. Yeah. Coming down to see us, and I look forward to keeping in touch on this. Thanks for having us. We really appreciate it. Thanks, Matt. Thanks.