Medical device company Globus Medical (NYSE: GMED) fell short of the market’s revenue expectations in Q3 2026, with revenue flat year on year at $763.7 million. The company’s full-year revenue guidance of $3.09 billion at the midpoint came in 3.4% below analysts’ consensus estimates. Its non-GAAP profit of $1.23 per share was 2.8% above analysts’ consensus estimates.

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“Third quarter revenue finished at $764 million, down slightly from the prior year quarter,” commented Keith Pfeil, President and Chief Executive Officer. “U.S. Spine faced difficult prior year comparables, growing 2% in the third quarter, as compared to double digit growth in the prior year quarter. On an average two-year basis, the U.S. Spine business is growing mid-single digits, reflecting our ability to capture share in the market, as we lead with innovation and differentiation. Our Enabling Technologies strategy continued to make progress, delivering revenue growth of 24%, while simultaneously deploying 73% more robot and navigation units as compared to the prior year quarter, reflecting continued strong demand for our technology and execution against our capital deployment plan. We remain focused on our long-term strategy of achieving improved surgical outcomes through the Globus ecosystem, bringing together patient selection, surgical techniques with complementary implants and technology to drive the surgical procedure, through a closed-loop surgical intelligence ecosystem.”

Revenue growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones sustain growth for years. Globus Medical’s revenue grew at a strong 27.2% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Globus Medical’s annualized revenue growth of 12.5% over the last two years is below its five-year trend, but the results still suggest healthy demand.

Globus Medical also reports revenue performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency revenue averaged 12.8% year-on-year growth. This was in line with reported revenue growth, indicating that foreign exchange has not had a meaningful impact on revenue.

This quarter, Globus Medical’s $763.7 million of revenue was flat year on year, falling short of Wall Street’s consensus estimates.

Looking ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months, according to S&P, a deceleration versus the last two years. Despite the slowdown, this projection is above the sector average and indicates the market is forecasting some success for its newer products and services.

Adjusted operating margin

Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes and interest on debt – items less connected to business fundamentals.

Globus Medical has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, with an average adjusted operating margin of 24.2%.

Looking at the trend in its profitability, Globus Medical’s adjusted operating margin rose by 1.2 percentage points over the last five years, as its revenue growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 5.2 percentage points on a two-year basis. These gains point to positive momentum.

In Q3, Globus Medical generated an adjusted operating margin of 24.8%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings per share

Long-term changes in earnings per share, or EPS, matter for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Globus Medical’s EPS grew at a strong 18.5% compounded annual growth rate over the last five years. Despite its adjusted operating margin improvement during that time, this performance was lower than its 27.2% annualized revenue growth, indicating that non-fundamental factors such as interest and taxes affected its ultimate earnings.

A closer look at Globus Medical’s earnings helps explain the drivers of its performance. A five-year view shows Globus Medical has diluted its shareholders, growing its share count by 30.3%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Globus Medical reported adjusted EPS of $1.23, up from $1.18 in the same quarter last year. This result beat analysts’ consensus estimates by 2.8%. Over the next 12 months, Wall Street expects Globus Medical’s full-year EPS to grow 5% from $4.97 to $5.22, according to S&P.

Key takeaways from Globus Medical’s Q3 results

Globus Medical’s EPS beat analysts’ consensus estimates, but revenue fell short of Wall Street’s consensus and full-year revenue guidance also missed. The earnings beat was a positive in a quarter that could have been better overall. Shares fell 4.6% to $77.80 immediately after the results.

Globus Medical underperformed this quarter. To assess whether the stock is a buy, it’s important to consider its valuation, business quality and latest quarterly results. For more on Globus Medical, read the full research report here (it’s free).