OrthoPediatrics Corp. (NASDAQ:KIDS) Q4 2020 Results Earnings Conference Call March 11, 2021 8:00 AM ET Company Participants Christine Petraglia - Investor Relations, The Ruth Group Mark Throdahl - Chief Executive Officer Fred Hite - Chief Operating Officer and Chief Financial Officer Conference Call Participants Kaila Krum - Truist Securities Ryan Zimmerman - BTIG Frederick Wise - Stifel Nicolaus Michael Matson - Needham & Company David Turkaly - JMP Securities Matthew O'Brien - Piper Sandler Operator Welco ...

| --- | --- | |--------------------------------------|-----------------------------------------------------------------| | | | | | | | OrthoPediatrics Corp. November 2020 | Mark Throdahl, CEO Fred Hite, COO & CFO Dave Bailey, President | | | | | | | Disclaimer Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of U.S. federal securities laws. You can identify forward-looking statements by the use of words such as "may," "might," "will," "should," "expect," ...

| --- | --- | |--------------------------------------|-----------------------------------------------------------------| | | | | | | | OrthoPediatrics Corp. November 2020 | Mark Throdahl, CEO Fred Hite, COO & CFO Dave Bailey, President | | | | | | | Disclaimer Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of U.S. federal securities laws. You can identify forward-looking statements by the use of words such as "may," "might," "will," "should," "expect," ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was a record $22.2 million, a 7% increase from $20.7 million in Q3 2019 [42] - U.S. revenue for Q3 2020 was $19.6 million, a 17% increase compared to $16.8 million in the same period last year, representing 88% of total revenue [42] - International revenue for Q3 2020 was $2.6 million, a 34% decrease from $4.0 million in Q3 2019, representing 12% of total revenue [43] - Gross profit for Q3 2020 was $17.6 million, an 11% increase compared to $15.9 million in Q3 2019, with a gross profit margin of 79.4% [49] - Adjusted EBITDA for Q3 2020 was $1.1 million, compared to $0.7 million in Q3 2019 [53] - Net loss from continued operations for Q3 2020 was $4.5 million, compared to a net loss of $2.9 million in Q3 2019 [56] Business Line Data and Key Metrics Changes - Trauma & Deformity sales increased 8% to $15.0 million in Q3 2020 compared to $13.8 million in Q3 2019 [46] - Scoliosis revenue increased 1.3% to $6.6 million in Q3 2020 compared to $6.5 million in Q3 2019 [47] - Sports Medicine & Other revenue grew 56% to $0.7 million in Q3 2020 compared to $0.4 million in Q3 2019 [48] Market Data and Key Metrics Changes - U.S. sales grew 17% year-over-year, with Scoliosis increasing total users by 33% year-to-date compared to Q3 2019 [14] - International sales declined 34% year-over-year, with EMEA sales growing 5% and APAC sales up 7% [17] - Agency sales grew 26% and accounted for half of third quarter international sales [18] Company Strategy and Development Direction - The company aims to maintain market leadership in pediatric orthopedics through innovative product development and selective acquisitions [39][40] - Plans to launch Orthex in Europe with CE Mark in Q1 2021 and continue expanding agency sales [23][61] - The company is focused on converting stocking distributors to sales agencies to enhance revenue and gross margins [34] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about potential deferrals of elective surgeries due to COVID-19 spikes but remains optimistic about U.S. growth [15][59] - The company anticipates continued strong domestic growth in Q4 2020, with international recovery lagging [59][60] - Management highlighted several tailwinds for growth in 2021, including robust ApiFix growth and the launch of individually packaged sterile products [61][63] Other Important Information - The company has maintained financial support for surgical societies during the pandemic, contrasting with other industry sponsors [30] - The company is constructing a new warehouse in Warsaw, expected to be completed in Q1 2021 [37] Q&A Session Summary Question: Thoughts on the extended scoliosis season and its impact on Q4 - Management noted a tail in the summer scoliosis season extending into fall, indicating potential for increased cases in Q4 [71] Question: Interest in individually packed sterile products - The company has been working on this initiative for three years, driven by regulatory demands in Europe [73][74] Question: Expectations for gross margins in 2021 - Management expects gross margins to revert to mid-70s levels in 2021, influenced by stocking distributor purchases [78] Question: Concerns over COVID hotspots affecting domestic procedures - Management is currently not seeing significant impacts domestically but remains cautious about future developments [82] Question: Potential for additional distributor conversions - Management is focused on three major conversions in Europe, with discussions ongoing for additional markets [86] Question: Impact of international business decline and destocking - The majority of the international revenue decline was attributed to a lack of set sales, with agency sales showing growth [90] Question: M&A pipeline outlook - The company plans to digest recent acquisitions before pursuing new major deals, with interest in small bolt-on acquisitions [97] Question: Instrument set deployment expectations - Management anticipates continued rollout of new sets in Q4 and into 2021, focusing on capital-efficient systems [107] Question: ApiFix site approvals and customer base - A mix of existing and new customers are involved in the ApiFix IRB sites, with potential for increased sales through established relationships [110][112]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-38242 OrthoPediatrics Corp. (Exact name of registrant as specified in its charter) FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR (State or other jurisdic ...

| --- | --- | --- | |------------------------------------|-------|-----------------------------------------------------------------| | | | | | | | | | OrthoPediatrics Corp. August 2020 | | Mark Throdahl, CEO Fred Hite, COO & CFO Dave Bailey, President | | | | | | | | | Disclaimer Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of U.S. federal securities laws. You can identify forward-looking statements by the use of words such as "may," "might," "will," ...

OrthoPediatrics Corp. (NASDAQ:KIDS) Q2 2020 Earnings Conference Call August 6, 2020 8:00 AM ET Company Participants Emma Poalillo - Investor Relations Mark Throdahl - Chief Executive Officer Fred Hite - Chief Operating Officer and Chief Financial Officer David Bailey - President Conference Call Participants Patrick Allen - Piper Sandler Ryan Zimmerman - BTIG Kaila Krum - Truist Securities Mike Matson - Needham and Company Dave Turkaly - JMP Securities Operator Welcome to the Q2 2020 OrthoPediatrics Corp Ear ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-38242 OrthoPediatrics Corp. (Exact name of registrant as specified in its charter) As of August 4, 2020, the reg ...

OrthoPediatrics Corp. (NASDAQ:KIDS) Q1 2020 Earnings Conference Call May 6, 2020 8:00 AM ET Company Participants Tram Bui - Investor Relations Mark Throdahl - President and Chief Executive Officer Fred Hite - Chief Financial Officer David Bailey - Executive Vice President Conference Call Participants Rick Wise - Stifel Matthew O’Brien - Piper Sandler Ryan Zimmerman - BTIG Kaila Krum - SunTrust Mike Matson - Needham & Company Dave Turkaly - JMP Securities Operator Ladies and gentlemen, thank you for standing ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited Q1 2020 financial statements report a net loss of **$4.9 million**, a decrease in total assets to **$174.2 million**, and detail recent acquisitions of Telos Partners and Apifix Ltd [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $115,121 | $128,058 | | **Total assets** | $174,199 | $182,154 | | **Total current liabilities** | $13,832 | $13,663 | | **Total liabilities** | $34,932 | $39,793 | | **Total stockholders' equity** | $139,267 | $142,361 | - Cash decreased from **$70.8 million** at the end of 2019 to **$53.6 million** as of March 31, 2020[13](index=13&type=chunk) - Inventories increased to **$44.0 million** from **$38.0 million** at the end of 2019[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Net revenue** | $16,356 | $14,656 | | **Gross profit** | $12,213 | $10,655 | | **Total operating expenses** | $16,710 | $13,372 | | **Operating loss** | $(4,497) | $(2,717) | | **Net loss** | $(4,945) | $(3,020) | | **Net loss per share** | $(0.30) | $(0.21) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(6,956) | $(3,471) | | **Net cash used in investing activities** | $(5,623) | $(4,982) | | **Net cash (used in) provided by financing activities** | $(4,530) | $536 | | **NET DECREASE IN CASH** | $(17,086) | $(7,917) | | **Cash and restricted cash, end of period** | $54,941 | $52,774 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business operations, key accounting policies, the **$3.5 million** Telos Partners acquisition, and the subsequent **$39 million** Apifix Ltd. acquisition - On March 9, 2020, the company purchased Telos Partners, LLC, a regulatory consulting firm, for **$3.5 million** in total consideration, consisting of cash and common stock[28](index=28&type=chunk)[79](index=79&type=chunk) - On April 1, 2020, subsequent to the quarter end, the company acquired Apifix Ltd. for **934,768 shares** of common stock (approx. **$37.0 million**) and **$2.0 million** in cash, with additional future payments contingent on milestones and revenue performance[129](index=129&type=chunk) Revenue by Category (in thousands) | Product sales by category: | 2020 | 2019 | | :--- | :--- | :--- | | Trauma and deformity | $12,210 | $10,017 | | Scoliosis | $3,711 | $4,258 | | Sports medicine/other | $435 | $381 | | **Total** | **$16,356** | **$14,656** | Revenue by Geography (in thousands) | Product sales by geographic location: | 2020 | 2019 | | :--- | :--- | :--- | | U.S. | $13,384 | $10,267 | | International | $2,972 | $4,389 | | **Total** | **$16,356** | **$14,656** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2020 performance, noting a **12% net revenue growth** to **$16.4 million** despite COVID-19 impacts, leading to a **$4.9 million net loss** Summary of Operations (in thousands) | | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Increase (Decrease) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net revenue** | $16,356 | $14,656 | $1,700 | 12% | | **Cost of revenue** | $4,143 | $4,001 | $142 | 4% | | **Sales and marketing expenses** | $7,564 | $6,547 | $1,017 | 16% | | **General and administrative expenses** | $7,881 | $5,612 | $2,269 | 40% | | **Net loss** | $(4,945) | $(3,020) | $1,925 | 64% | - The COVID-19 pandemic has led to a reduction in revenue due to global delays in elective surgeries. To mitigate supply risks, the company increased certain inventory levels during the quarter[145](index=145&type=chunk)[146](index=146&type=chunk) - Net revenue growth of **12%** was primarily driven by a **$2.2 million (22%) increase** in Trauma and Deformity sales, offset by a **$0.5 million (13%) reduction** in Scoliosis sales[152](index=152&type=chunk) - General and administrative expenses increased by **40%** primarily due to increased resources to support business growth, higher quality and regulatory expenses, and increased stock compensation and legal expenses[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," the company is exempt from providing market risk disclosures - As a "smaller reporting company," OrthoPediatrics Corp. is not required to provide the information for this item[174](index=174&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Management concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective[177](index=177&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[179](index=179&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is vigorously defending a patent infringement lawsuit filed by K2M, Inc. regarding its RESPONSE™ spine systems - The company is defending a patent infringement lawsuit from K2M, Inc. related to its RESPONSE™ spine systems[182](index=182&type=chunk) - OrthoPediatrics denies the claims, has filed counterclaims asserting the patents are invalid and not infringed, and views its case as 'particularly strong'[182](index=182&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor highlights the significant negative impact of the COVID-19 pandemic and deferred elective surgeries on business operations - A new risk factor has been added to address the adverse impact of the COVID-19 pandemic on the business and financial results[184](index=184&type=chunk)[185](index=185&type=chunk) - The deferral of elective surgeries, where a majority of the company's products are used, has had and will continue to have a significant negative impact on the business[186](index=186&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued **36,628 shares** for the Telos Partners acquisition and repurchased **4,014 shares** in February 2020 - On March 9, 2020, the Company issued **36,628 shares** of common stock as part of the acquisition of Telos Partners, LLC[189](index=189&type=chunk) - In February 2020, the company purchased **4,014** of its own shares for a total of approximately **$187,000**[191](index=191&type=chunk)[192](index=192&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities were reported[193](index=193&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - No mine safety disclosures were reported[194](index=194&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - No other information was reported under this item[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed, including the Apifix Ltd. Share Purchase Agreement, corporate governance documents, and officer certifications - The exhibits filed with the report include the Share Purchase Agreement for the acquisition of ApiFix Ltd., loan agreements with Squadron, and certifications by the CEO and CFO[201](index=201&type=chunk)