GLOBUS MEDICAL INCGMED
GLOBUS MEDICAL INC Income Taxes Disclosure
INCOME TAXES
The components of income before income taxes are as follows:
| Year Ended | |||||||||||||||||
| December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | 586,468 | $ | 149,514 | $ | 181,752 | |||||||||||
| Foreign | 18,600 | (28,792) | (16,359) | ||||||||||||||
| Total | $ | 605,068 | $ | 120,722 | $ | 165,393 | |||||||||||
The components of the provision for income taxes are as follows:
| Year Ended | |||||||||||||||||
| December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | |||||||||||||||||
| Current | $ | 40,455 | $ | 112,768 | $ | 81,504 | |||||||||||
| Deferred | 45,918 | (104,581) | (46,217) | ||||||||||||||
| State | |||||||||||||||||
| Current | (3,527) | 25,650 | 15,190 | ||||||||||||||
| Deferred | (38,753) | (13,385) | (6,421) | ||||||||||||||
| Foreign | |||||||||||||||||
| Current | 9,845 | 13,357 | 4,075 | ||||||||||||||
| Deferred | 13,262 | (16,071) | (5,611) | ||||||||||||||
| Total | $ | 67,200 | $ | 17,738 | $ | 42,520 | |||||||||||
In December 2021, the Organization for Economic Co‑operation and Development (“OECD”) released model rules under the Pillar Two framework establishing a global minimum tax rate of 15%. We evaluated the impact of these rules on our global tax profile, including the related top‑up tax requirements. The Pillar Two provisions did not have a significant impact on our consolidated financial statements for the year ended December 31, 2025. We will continue to monitor legislative developments as additional jurisdictions enact or amend tax laws implementing the Pillar Two framework.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the “OBBBA”), which, among other things, modifies the international tax regime and extends or makes permanent various provisions from the Tax Cuts and Jobs Act, including bonus depreciation and research and development expensing. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation did not have a material impact on our fiscal 2025 effective tax rate but resulted in lower cash tax payments. We continue to review the OBBBA tax provisions to assess impacts to our consolidated financial statements
A reconciliation of the statutory U.S. federal tax rate to our effective rate is as follows:
| Year Ended | |||||||||||
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Statutory U.S. federal tax rate | 21.0 | % | 21.0 | % | |||||||
| State income taxes, net of federal benefit | 5.5 | 4.1 | |||||||||
| Foreign taxes | 0.4 | (0.6) | |||||||||
| Valuation Allowance | 10.6 | 0.4 | |||||||||
| Tax credits | (9.0) | (3.4) | |||||||||
| Stock-based compensation windfall | (5.0) | (0.9) | |||||||||
| Nondeductible expenses | 3.9 | 1.3 | |||||||||
| Foreign inclusions | (0.8) | (0.9) | |||||||||
| Acquisition related charges | — | 4.9 | |||||||||
| Other | 0.6 | (0.2) | |||||||||
| Legal entity reorganization | (8.6) | — | |||||||||
| Uncertain tax position | (3.9) | — | |||||||||
| Effective tax rate | 14.7 | % | 25.7 | % | |||||||
ASU 2023-09 has been adopted prospectively. Below is the expanded reconciliation of the statutory U.S. federal tax rate to our effective rate for the year ended December 31, 2025:
| Year Ended | |||||||||||
| December 31, | |||||||||||
| 2025 | |||||||||||
| (In thousands, except percentages) | Balance | Percentage | |||||||||
| Statutory U.S. federal tax rate | $ | 127,064 | 21.0 | % | |||||||
State income taxes, net of federal benefit(1) | (38,830) | (6.4) | |||||||||
| Foreign taxes | |||||||||||
| Malta | |||||||||||
| Legal entity reorganization | 32,768 | 5.4 | |||||||||
| Valuation Allowance | (30,502) | (5.0) | |||||||||
| Other | (906) | (0.1) | |||||||||
| Australia | |||||||||||
| Legal entity reorganization | 9,932 | 1.6 | |||||||||
| Other | (996) | (0.2) | |||||||||
| Other | 6,262 | 1.0 | |||||||||
| Effect of Cross Border Tax Laws | 6,043 | 1.0 | |||||||||
| Tax credits | (5,818) | (1.0) | |||||||||
| Nontaxable or Nondeductible expenses | |||||||||||
| Other | 5,539 | 0.9 | |||||||||
| Bargain Purchase | (24,759) | (4.1) | |||||||||
| Changes in unrecognized tax benefits | (4,500) | (0.7) | |||||||||
| Other | |||||||||||
| Legal entity reorganization | (10,848) | (1.8) | |||||||||
| Other | (3,249) | (0.5) | |||||||||
| Effective tax rate | $ | 67,200 | 11.1 | % | |||||||
(1) State taxes in California make up the majority (greater than 50 percent) of the tax effect in this category. | |||||||||||
Deferred income taxes reflect the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting purposes and tax purposes. Significant components of our deferred income taxes are as follows:
| December 31, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Inventory reserve | $ | 81,051 | $ | 70,011 | |||||||
| Accruals, reserves, and other currently not deductible | 36,382 | 47,434 | |||||||||
| Stock-based compensation | 32,294 | 41,084 | |||||||||
| Capitalized R&E | 76,015 | 83,581 | |||||||||
| Net operating loss carryforwards | 245,667 | 110,386 | |||||||||
| General business and other credit carryforwards | 61,804 | 33,995 | |||||||||
| Lease Liability | 18,028 | 27,449 | |||||||||
| Other | 8,229 | 45,703 | |||||||||
| Total deferred tax assets | 559,470 | 459,643 | |||||||||
| Valuation allowance | (139,168) | (182,607) | |||||||||
| Total deferred tax assets, net of valuation allowance | 420,302 | 277,036 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation and amortization | (201,655) | (173,845) | |||||||||
| Right of Use Asset | (4,413) | (12,065) | |||||||||
| Total deferred tax liabilities | (206,068) | (185,910) | |||||||||
| Net deferred tax assets/(liabilities) | $ | 214,235 | $ | 91,126 | |||||||
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize a portion of the benefits of these deductible differences at December 31, 2025 and 2024. The Company has established valuation allowances of $139.2 million and $182.6 million at December 31, 2025 and 2024, respectively, primarily related to the uncertainty of the utilization of certain deferred tax assets comprised of tax loss carryforwards and tax credits in various jurisdictions. The decrease in the valuation allowance during 2025 was primarily driven by the legal entity reorganization and ability to utilize state credits and net operating losses. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.
At December 31, 2025, the Company had $105.8 million, $30.5 million and $109.4 million of federal, state and foreign net operating loss carryforwards, respectively. Federal and state net operating loss carryforwards begin to expire in 2026 and foreign net operating losses carry forward indefinitely.
The Company has California research and development income tax credit carryforwards of $40.3 million. The California credits can be carried forward indefinitely. The Company has foreign tax credit carryforwards of $2.1 million, which expire beginning in 2027.
Due to the “change of ownership” provision of the Tax Reform Act of 1986, utilization of the Company’s net operating loss and credit carryforwards may be subject to an annual limitation against taxable income in future periods. As a result of any future ownership changes, the annual limitation of loss and credit carryforwards may cause them to expire before ultimately becoming available to reduce future income tax liabilities.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Year Ended | |||||||||||||||||
| December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefits at the beginning of the year | $ | 56,363 | $ | 33,757 | $ | 986 | |||||||||||
| Additions related to current year tax positions | 4,532 | 2,601 | 853 | ||||||||||||||
| Additions related to prior year tax positions | 1,748 | 27,922 | 32,045 | ||||||||||||||
| Reductions related to prior year tax positions | (5,493) | (7,917) | (127) | ||||||||||||||
| Unrecognized tax benefits at the end of the year | $ | 57,150 | $ | 56,363 | $ | 33,757 | |||||||||||
The additions related to current year tax positions for the year ended December 31, 2025 of $4.5 million are primarily related to additional current year reserves. The additions related to the prior year tax positions for the year ended December 31, 2025 of $1.7 million are related to the historical positions from the NuVasive Merger, partially recorded to goodwill using the acquisition method of accounting. The reductions related to prior year tax positions for the year ended December 31, 2025 of $5.5 million are primarily related to the resolution of certain foreign and U.S. federal tax positions through audits and statute of limitation expirations.
The impact of our unrecognized tax benefits to the effective income tax rate is as follows:
| December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Portion of total unrecognized tax benefits that, if recognized, would affect the effective income tax rate | $ | 20,027 | $ | 33,958 | $ | 27,601 | |||||||||||
Due to recent tax reform in the U.S. and favorable treaties between the U.S. and countries in which the Company’s controlled foreign corporations operate, the Company has the ability to repatriate earnings without incurring significant tax liabilities. Accordingly, the Company has recorded a liability for taxes associated with any future distributions of these undistributed earnings of $0.5 million.
Interest and penalties are recorded in the statement of income as provision for income taxes. The total interest and penalties recorded in the statement of income was immaterial for the years ended December 31, 2025, 2024, and 2023. We do not expect a significant change in our uncertain tax benefits in the next twelve months. We are subject to federal income tax as well as income tax of multiple state and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examination by tax authorities in major jurisdictions for years prior to 2020 as of December 31, 2025.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Feb 29, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.