Globus Medical GMED operates in a challenging environment caused by interest rate uncertainty, inflation and geopolitical tensions, which can disrupt supply chains and increase costs. While gross margin improved to 69.2% in the first quarter of 2026, it remains below management’s long-term target of the mid-70% range, leaving limited room to absorb higher costs.
Selling, general and administrative expenses rose to $297.8 million from $242.8 million a year earlier, mainly due to higher compensation and benefit costs associated with increased sales volume. The company also incurred restructuring expenses as it continues integration and synergy initiatives, which could lead to fluctuations in near-term operating costs.
Globus Medical’s international business adds another source of uncertainty. International net sales reached $155.0 million in the first quarter of 2026, increasing 35.6% year over year on a reported basis and 27.8% on a constant currency basis, highlighting the impact of exchange rate movements on reported results.
The company recorded a $2.1 million foreign currency transaction loss during the quarter, which reduced other income. With significant operations in regions such as Japan, the Eurozone, the United Kingdom and Australia, ongoing currency fluctuations could continue to affect revenue growth, profit margins and operating expenses over time.
Peer Update
Medtronic’s MDT operations remain vulnerable to cost inflation, reimbursement constraints, geopolitical disruption and changing global trade policies. It also embedded a roughly 1-point EPS drag from higher fuel and transportation costs tied to the recent shift in the geopolitical environment.
Medtronic generates a large portion of sales internationally, leaving reported results sensitive to exchange rates. Foreign exchange added $819 million to fiscal 2026 revenues, but fiscal 2027 guidance assumes a neutral to $100 million revenue drag.
Edwards Lifesciences’ EW extensive global operations and overseas manufacturing facilities and suppliers bring certain financial, economic, political and other risks. The business is also currently experiencing staffing shortages within the hospital systems.
In the first quarter of 2026, these issues resulted in a 20.2% increase in COGS and a year-over-year decline of 64 basis points in gross margin. Foreign exchange is a major headwind for Edwards due to a considerable percentage of its revenues coming from outside the United States. Foreign exchange rates negatively impacted the second quarter gross profit margin by 60 basis points compared to the prior year.
