When David C. Paul traveled to Phoenix in 2013, he saw the future of spinal surgery: a robot prototype called the Excelsius GPS. Nicholas Theodore, one of the robot’s inventors, remembers Paul being immediately impressed. “This is going to change everything,” Paul said, according to Theodore. A few months later, Paul bought Theodore’s company, Excelsius Surgical—and the robot with it—for an undisclosed sum.
Paul, 51, couldn’t have hoped for more from the purchase. Since 2014, shares of Globus Medical, Paul’s publicly traded device manufacturer, have more than doubled. Just since the robot received FDA clearance in August 2017, the stock has climbed 65%. Paul owns nearly a quarter of the firm. That stake and recent stock sales add up to a $1.3 billion fortune. Paul, who stepped down as CEO and moved to the executive chairman role last year while recovering from what the company referred to in a press release as a “health condition,” still maintains tight control over the business—owning 76% of the company’s voting shares, according to the latest proxy. (Paul, through a Globus spokesman, declined to be interviewed.)
The Excelsius GPS is one of only two spine-surgery robots on the market, and Globus, which is based in Audubon, Pennsylvania, says it can help surgeons perform spinal fusions by placing screws more quickly and accurately. At this point, though, there’s little large-scale published data to show that Excelsius, which costs more than $1 million per unit, is any better than a surgeon putting in the screws on his or her own; Johns Hopkins University researchers are preparing studies on accuracy and patient outcomes.
There’s a scramble right now to add robots to operating rooms, and money is flowing in that direction. Two months ago medical device maker Medtronic announced its plan to acquire Mazor Robotics, the publicly traded Israeli creator of the other spine-surgery robot on the market, in a deal valuing the company at about $1.6 billion, a 16% premium to the closing share price the day before the acquisition was announced. “I think everyone’s very excited about robots,” says Dr. Jeffrey Wang, orthopedic surgeon and president of the North American Spine Society. “It sounds kind of sexy, and I think people realize there is a lot of potential there.”
Paul got his undergraduate degree in India and came to the U.S. where he earned an engineering master’s degree at Temple University in 1994. He went on to work for Synthes, a Swiss medical device maker owned by billionaire Hansjoerg Wyss, before quitting in 2003 to found Globus.
The next year, Synthes filed a suit accusing Paul, another early Globus employee and Globus of poaching workers and misappropriating trade secrets from Synthes. Paul countersued for libel, among other things. Those suits were settled in 2007, with Globus paying Synthes $13.5 million while not admitting wrongdoing. That didn’t end their fight: Back-and-forth litigation between the two competitors over patents and accusations of employee poaching has continued on for the past 14 years, even after Synthes was acquired by Johnson & Johnson in 2012.
Those disputes haven’t dimmed Wall Street’s view of Globus, which has been particularly profitable. Its adjusted EBITDA margin was 36% in 2017. Most of its mid-cap peers struggle to push their margins over 30%.
“The company has a fast-follower mantra, so they might not invest in building the market in the early stages,” says Kyle Rose, an analyst at Canaccord Genuity. “But they know that their R&D capabilities allow them to quickly identify some of the emerging trends and then capitalize on them with what they view as better products and innovation.”
Reach Michela Tindera at mtindera@forbes.com Cover image by Brian Taylor for Forbes.
