Core Insights - Orthofix Medical reported Q2 2025 results that modestly exceeded expectations for both GAAP earnings and non-GAAP revenue, with GAAP revenue of $203.1 million surpassing the analyst estimate of $196.19 million [1][2] - The company narrowed its net loss per share to $(0.36), better than the expected $(0.49), indicating operational improvements despite ongoing losses [1][2] - The quarter showed positive free cash flow of $4.5 million and a pro forma adjusted gross margin of 72.7%, reflecting incremental progress against operational and commercial goals [1][10] Financial Performance - GAAP revenue for Q2 2025 was $203.1 million, a 2.3% increase from $198.6 million in Q2 2024 [2] - Pro forma revenue (non-GAAP) reached $200.7 million, up 4.1% year-over-year from $192.8 million [2] - Pro forma adjusted net income (non-GAAP) was $4.6 million, a 39.4% increase from $3.3 million in Q2 2024 [2] Business Overview - Orthofix Medical specializes in medical devices and biologics for spine fusion, complex fracture management, and bone healing, with a diverse product mix including spinal hardware and bone growth stimulators [3] - The company focuses on three strategic areas: new product development, optimizing distribution through mergers, and managing regulatory requirements [4] Segment Performance - U.S. Spine Fixation net sales increased by 5%, with procedure volumes rising 7% year-over-year [5] - The Bone Growth Therapies segment reported pro forma net sales of $62.6 million, up 5.8%, with the AccelStim 2.0 device receiving regulatory clearance [6] - Global Orthopedics sales climbed 8.9% on a pro forma basis, with U.S. Orthopedics net sales growing 28% compared to Q2 2024 [7] Margin and Cash Flow - Gross margin expanded by 0.7 percentage points to 72.7% on a pro forma non-GAAP basis, aided by cost management and the discontinuation of low-margin products [10] - Free cash flow was positive at $4.5 million, with cash and equivalents increasing to $68.7 million as of June 30, 2025, up from $60.5 million at the end of Q1 2025 [10] Future Outlook - The company reaffirmed its full-year 2025 outlook, projecting pro forma net sales between $808 million and $816 million, representing approximately 5.0% constant currency sales growth [12] - Adjusted EBITDA (non-GAAP) is forecasted at $82 million to $86 million, with expectations for positive free cash flow excluding one-time restructuring costs [12]

Financial Data and Key Metrics Changes - The company's pro forma net sales for Q2 2025 reached $200.7 million, reflecting a year-over-year constant currency growth of 4% [7][23] - Pro forma non-GAAP adjusted gross margin improved to 72.7%, an increase of approximately 140 basis points compared to 71.3% in 2024 [29] - Pro forma non-GAAP adjusted EBITDA was $20.6 million, representing 10.3% of net sales, with an EBITDA margin expansion of approximately 190 basis points compared to 8.4% in 2024 [30] Business Line Data and Key Metrics Changes - U.S. Spinal fixation net sales grew by 5.4%, with procedure volume increasing by 7% [9] - Bone Growth Therapies (BGT) achieved net sales of $62.6 million, reflecting a 6% growth, with fracture growth within BGT at 7% [26][27] - U.S. Orthopedics grew by 28%, driven by the launch of the TRULOC Elevate system [15][28] Market Data and Key Metrics Changes - The international orthopedics business declined by 2%, attributed to the absence of large NGO orders that occurred in 2024 [29] - The U.S. market for complex limb reconstruction is valued at $1.7 billion, with the company aiming to become a market leader in this category [15][62] Company Strategy and Development Direction - The company is focused on three strategic priorities: enhancing commercial execution, improving gross margins, and disciplined capital allocation [19] - Recent product launches, including the Verada spinal fixation system and TRULOC Elevate, are expected to drive future growth [12][15] - The company aims to leverage its differentiated technology and strong surgeon relationships to enhance market penetration [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive profitable growth and deliver long-term shareholder value [8][36] - The company anticipates that the distributor transition will create a more robust commercial organization, paving the way for future growth [10][48] - Management highlighted the strong demand for the 7D flash navigation system and its role in driving sales growth [11][56] Other Important Information - The company expects full-year pro forma net sales between $800 million and $816 million, excluding revenue from discontinued M6 product lines [32] - Positive free cash flow of $4.5 million was generated in Q2, with expectations for continued positive cash flow throughout 2025 [30][34] Q&A Session Summary Question: What is driving the growth in U.S. Orthopedics? - Management indicated that growth is driven by both deeper utilization among existing customers and the introduction of new products like TRULOC Elevate, which addresses the diabetic foot market [39][40] Question: Is there guidance for CapEx in the second half? - Management noted that while CapEx was lighter than anticipated in Q2, it is expected to be heavier in Q3, with overall spending flat compared to last year [42][44] Question: How is the U.S. spine distributor transition progressing? - Management expressed satisfaction with the transition's execution and anticipates accelerated growth from Q3 onwards due to these efforts [48][49] Question: What is the status of the Xcelsim 2.0 launch? - The product has received FDA approval and is planned for launch in the second half of the year, with expected contributions to growth [50][51] Question: What impact did pricing have in Q2? - Management confirmed that pricing remained stable, with the majority of growth differences attributed to a significant customer impacting the spine fixation business [58][68]

Group 1: Earnings Performance - Orthofix reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.04 per share, and up from $0.05 per share a year ago, representing an earnings surprise of +225.00% [1] - The company posted revenues of $203.12 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.51% and up from $198.62 million year-over-year [2] Group 2: Stock Performance and Outlook - Orthofix shares have declined approximately 37.9% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3] - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $200.11 million, and for the current fiscal year, it is $0.49 on revenues of $811.9 million [7] Group 3: Industry Context - The Medical - Instruments industry, to which Orthofix belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]

Q2 2025 Financial Performance - Pro Forma Net Sales reached $2007 million, a 35% year-over-year increase on a constant currency basis[18, 27, 28] - Non-GAAP Pro Forma Adjusted EBITDA was $206 million, representing 103% of pro forma net sales, compared to $166 million in Q2 2024[18, 30] - Non-GAAP Pro Forma Adjusted Gross Margin improved to 727%, compared to 713% in Q2 2024[18, 30] - Free Cash Flow was $45 million, showing continued positive year-over-year progress[18] Segment Performance - Bone Growth Therapies (BGT) net sales increased by 6% year-over-year[18, 23] - U S Spine Fixation net sales grew by 5% year-over-year, driven by a 7% increase in U S procedure volume[18, 24] - U S Orthopedics net sales saw a significant increase of 28% year-over-year, marking the fourth consecutive quarter of double-digit growth[18] Future Outlook - The company expects to be free cash flow positive for the full year 2025[36] - Full-year 2025 guidance includes Pro Forma Net Sales of $808 million to $816 million and Pro Forma Adjusted EBITDA of $82 million to $86 million[38]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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, 2025 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: 0-19961 ORTHOFIX MEDICAL INC. (Exact name of registrant as specified in its charter) Delaware 98-1340767 (State or other jurisdictio ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Orthofix reported strong Q2 2025 performance with sales growth, improved net loss, and strategic progress, including new product launches [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) Orthofix reported second quarter 2025 net sales of $203.1 million (reported) and $200.7 million (pro forma, excluding M6® discs), showing growth of 2.3% and 3.5% (pro forma constant currency) respectively, achieving a significant improvement in net loss and a 24.1% increase in non-GAAP pro forma adjusted EBITDA | Metric | Q2 2025 (Reported) | Q2 2025 (Pro Forma) | Q2 2024 (Reported) | YoY Change (Reported) | YoY Change (Pro Forma Constant Currency) | | :-------------------------------- | :------------------- | :-------------------- | :------------------- | :-------------------- | :--------------------------------------- | | Net Sales | $203.1 million | $200.7 million | $198.6 million | 2.3% | 3.5% | | Net Loss | $(14.1) million | N/A | $(33.4) million | N/A | N/A | | Non-GAAP Pro Forma Adjusted EBITDA | N/A | $20.6 million | $16.6 million | N/A | 24.1% | - U.S. Spine Fixation net sales grew **5%** with procedure volume up **7%** compared to Q2 2024[5](index=5&type=chunk) - Bone Growth Therapies (BGT) net sales reached **$62.6 million**, growing **6%**, with BGT Fracture net sales up **7%** compared to Q2 2024[5](index=5&type=chunk) - Global Orthopedics net sales were **$33.3 million**, achieving **5%** constant currency growth, and U.S. Orthopedics net sales grew **28%** compared to Q2 2024[5](index=5&type=chunk) - Adjusted EBITDA margin expanded approximately **190 basis points** compared to the prior year, marking six consecutive quarters of expansion[5](index=5&type=chunk) - The company generated positive free cash flow of **$4.5 million** for Q2 2025[5](index=5&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) Massimo Calafiore, President and CEO, highlighted the company's clear progress on its three-year transformation plan, driven by disciplined execution, strong adjusted EBITDA margin growth, and positive free cash flow, emphasizing the traction gained from strategic initiatives and expressing confidence in delivering sustainable long-term shareholder value through product innovation - The company is making clear progress on its three-year business transformation plan[4](index=4&type=chunk) - Disciplined approach led to strong adjusted EBITDA margin growth and positive free cash flow generation[4](index=4&type=chunk) - Strategic initiatives, including accelerating distributor transitions in underpenetrated U.S. territories, are gaining traction[4](index=4&type=chunk) - Expects to benefit from recent product launches and deliver meaningful product innovation[4](index=4&type=chunk) [Key Product Launches](index=1&type=section&id=Key%20Product%20Launches) Orthofix initiated the global commercial launch of the TrueLok® Elevate Transverse Bone Transport (TBT) System and announced the U.S. commercial launch of the Reef® L Interbody System, expanding its product offerings - Initiated global commercial launch of the TrueLok® Elevate Transverse Bone Transport (TBT) System, the first FDA-cleared device for TBT[5](index=5&type=chunk) - Announced U.S. commercial launch of the Reef® L Interbody System, completing the Reef® interbody product family for lateral lumbar spinal fusion procedures[5](index=5&type=chunk) [Financial Results Overview](index=2&type=section&id=Financial%20Results%20Overview) Orthofix's Q2 2025 financial results show pro forma net sales growth, improved net loss, expanded EBITDA margin, and increased liquidity [Net Sales by Product Category and Segment](index=2&type=section&id=Net%20Sales%20by%20Product%20Category%20and%20Segment) The company's pro forma net sales, excluding the discontinued M6® product lines, increased by 4.1% (3.5% constant currency) to $200.7 million in Q2 2025, with Bone Growth Therapies and Global Orthopedics showing strong growth, and Spinal Implants, Biologics and Enabling Technologies also contributing positively | Product Category/Segment | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | Constant Currency Change | | :--------------------------------------- | :-------------------- | :-------------------- | :----- | :----------------------- | | Bone Growth Therapies | $62.6 | $59.1 | 5.8% | 5.8% | | Spinal Implants, Biologics and Enabling Technologies* | $104.8 | $103.1 | 1.6% | 1.6% | | Global Spine* | $167.4 | $162.2 | 3.2% | 3.2% | | Global Orthopedics | $33.3 | $30.6 | 8.9% | 5.3% | | Pro forma net sales* | $200.7 | $192.8 | 4.1% | 3.5% | | Impact from discontinuation of M6 product lines | $2.5 | $5.8 | (57.5%) | (57.8%) | | Reported net sales | $203.1 | $198.6 | 2.3% | 1.7% | *Excludes impact from discontinuation of M6® product lines. [Key Financial Metrics (GAAP & Non-GAAP)](index=2&type=section&id=Key%20Financial%20Metrics%20(GAAP%20%26%20Non-GAAP)) Orthofix's gross margins were 68.7% (reported) and 72.7% (non-GAAP pro forma adjusted) for Q2 2025, with net loss significantly narrowing from $(33.4) million in Q2 2024 to $(14.1) million in Q2 2025, and non-GAAP pro forma adjusted EBITDA increasing to $20.6 million, representing 10.3% of pro forma net sales | Metric | Q2 2025 | Q2 2024 | Change | | :----------------------------------- | :------ | :------ | :----- | | Gross Margin (Reported) | 68.7% | N/A | N/A | | Gross Margin (Non-GAAP Pro Forma Adjusted) | 72.7% | N/A | N/A | | Net Loss | $(14.1) million | $(33.4) million | Improved | | Net Loss Per Share | $(0.36) | $(0.88) | Improved | | Non-GAAP Pro Forma Adjusted EBITDA | $20.6 million | $16.6 million | +$4.0 million | | Non-GAAP Pro Forma Adjusted EBITDA Margin | 10.3% of pro forma net sales | 8.4% of reported net sales | +1.9 percentage points | [Liquidity](index=2&type=section&id=Liquidity) Orthofix's cash, cash equivalents, and restricted cash increased to $68.7 million as of June 30, 2025, up from $60.5 million at the end of the previous quarter | Metric | June 30, 2025 | March 31, 2025 | | :------------------------------------ | :------------ | :------------- | | Cash, cash equivalents, and restricted cash | $68.7 million | $60.5 million | [Business Outlook](index=2&type=section&id=Business%20Outlook) Orthofix reaffirmed its full-year 2025 financial guidance for net sales, adjusted EBITDA, and free cash flow [Full-Year 2025 Guidance](index=2&type=section&id=Full-Year%202025%20Guidance) Orthofix reaffirmed its full-year 2025 financial guidance for net sales, adjusted EBITDA, and free cash flow, excluding the impact of discontinued M6® product lines and restructuring charges | Metric | Full-Year 2025 Guidance | | :--------------------------------- | :---------------------- | | Pro forma net sales | $808 million to $816 million | | Pro forma non-GAAP adjusted EBITDA | $82 million to $86 million | | Free cash flow | Positive (excluding restructuring charges) | [Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of Orthofix's mission and product portfolio, outlines forward-looking statement disclaimers, and details investor communication channels [About Orthofix](index=3&type=section&id=About%20Orthofix) Orthofix is a global medical technology company based in Lewisville, Texas, dedicated to healing musculoskeletal pathologies, offering a broad portfolio including spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies like the 7D FLASH™ Navigation System - Orthofix is a global medical technology company headquartered in Lewisville, Texas[13](index=13&type=chunk) - The company provides medical technologies to heal musculoskeletal pathologies, offering solutions to patients worldwide[13](index=13&type=chunk) - Its comprehensive portfolio includes spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies such as the 7D FLASH™ Navigation System[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements regarding business and financial outlook, based on current beliefs and assumptions, highlighting that these statements are not guarantees of future performance and are subject to various risks and uncertainties, including those detailed in SEC filings, with the company disclaiming any obligation to update these statements, except as required by law, and noting the inability to provide GAAP net income (loss) expectations on a forward-looking basis due to inherent uncertainties - Forward-looking statements relate to business and financial outlook, based on current beliefs, assumptions, intentions, plans, expectations, estimates, forecasts, and projections[14](index=14&type=chunk) - These statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances, including those described in Form 10-K and 10-Q filings[14](index=14&type=chunk) - The company undertakes no obligation to update forward-looking statements, except as required by law[15](index=15&type=chunk) - Unable to provide GAAP net income (loss) expectations on a forward-looking basis due to the unpredictability of certain excluded items in adjusted EBITDA calculations[16](index=16&type=chunk) [Investor Relations](index=3&type=section&id=Investor%20Relations) Orthofix provides investor updates on its website and hosted a conference call to discuss Q2 2025 financial results, with investors able to access information and contact the Chief Investor Relations & Communications Officer for inquiries - Important updates are regularly shared in the 'Investors' section of the Orthofix website (www.orthofix.com)[12](index=12&type=chunk) - A conference call was held on August 5, 2025, to discuss Q2 2025 financial results, with webcast and replay available on the Investor Relations Website[10](index=10&type=chunk) - Investors and media can contact Julie Dewey, IRC, Chief Investor Relations & Communications Officer[17](index=17&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Orthofix's condensed consolidated statements of operations and balance sheets for Q2 2025 and comparative periods [Statements of Operations](index=4&type=section&id=Statements%20of%20Operations) For the three months ended June 30, 2025, Orthofix reported net sales of $203.1 million, a gross profit of $139.5 million, and a net loss of $(14.1) million, significantly reduced from $(33.4) million in the prior year, with the six-month period also showing a reduced net loss compared to the previous year | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $203,121 | $198,620 | $396,767 | $387,228 | | Cost of sales | $63,588 | $63,871 | $135,615 | $125,237 | | Gross profit | $139,533 | $134,749 | $261,152 | $261,991 | | Sales, general, and administrative | $136,493 | $134,218 | $269,474 | $265,909 | | Research and development | $15,934 | $18,049 | $35,700 | $37,541 | | Operating loss | $(16,003) | $(24,906) | $(64,876) | $(54,243) | | Net loss | $(14,081) | $(33,443) | $(67,175) | $(69,463) | | Net loss per common share (Basic) | $(0.36) | $(0.88) | $(1.71) | $(1.84) | [Balance Sheets](index=5&type=section&id=Balance%20Sheets) As of June 30, 2025, Orthofix reported total assets of $837.2 million, a decrease from $893.3 million at December 31, 2024, with total liabilities also decreasing to $378.8 million, while total shareholders' equity stood at $458.3 million | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $65,606 | $83,238 | | Total current assets | $395,830 | $433,285 | | Total assets | $837,157 | $893,294 | | Total current liabilities | $148,381 | $168,628 | | Long-term debt | $157,047 | $157,015 | | Total liabilities | $378,810 | $390,170 | | Total shareholders' equity | $458,347 | $503,124 | [Non-GAAP Financial Measures Reconciliations](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including adjusted gross profit, EBITDA, net income, and cash flow [Adjusted Gross Profit and Margin](index=6&type=section&id=Adjusted%20Gross%20Profit%20and%20Margin) Orthofix's GAAP gross profit was $139.5 million for Q2 2025, and after various adjustments, including for share-based compensation, merger-related costs, and M6® product line restructuring, the pro forma adjusted gross profit reached $145.9 million, with a pro forma adjusted gross margin of 72.7% | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Gross profit (GAAP) | $139,533 | $134,749 | | Adjusted gross profit | $147,526 | $141,681 | | Adjusted gross margin (% of reported net sales) | 72.6% | 71.3% | | Pro forma adjusted gross profit | $145,887 | $138,738 | | Pro forma adjusted gross margin (% of pro forma net sales) | 72.7% | 72.0% | [Adjusted EBITDA](index=7&type=section&id=Adjusted%20EBITDA) The company's net loss of $(14.1) million for Q2 2025 was reconciled to an Adjusted EBITDA of $20.9 million, and after accounting for M6® product line impacts, the pro forma adjusted EBITDA was $20.6 million, representing 10.3% of pro forma net sales, an increase from 9.6% in the prior year | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net loss (GAAP) | $(14,081) | $(33,443) | | Adjusted EBITDA | $20,943 | $16,650 | | Adjusted EBITDA (% of reported net sales) | 10.3% | 8.4% | | Pro forma adjusted EBITDA | $20,646 | $18,444 | | Pro forma adjusted EBITDA (% of pro forma net sales) | 10.3% | 9.6% | [Adjusted Net Income (Loss)](index=7&type=section&id=Adjusted%20Net%20Income%20(Loss)) Orthofix's reported net loss of $(14.1) million for Q2 2025 was adjusted to a pro forma adjusted net income of $4.6 million, a significant improvement from $3.3 million in Q2 2024, with this adjustment accounting for various non-recurring and non-cash items | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net loss (GAAP) | $(14,081) | $(33,443) | | Adjusted net income (loss) | $5,111 | $1,719 | | Pro forma adjusted net income | $4,560 | $3,335 | [Cash Flow and Free Cash Flow](index=8&type=section&id=Cash%20Flow%20and%20Free%20Cash%20Flow) For the six months ended June 30, 2025, net cash used in operating activities was $(6.8) million, an improvement from $(9.6) million in the prior year, and free cash flow for the same period was $(20.6) million, also an improvement from $(30.1) million in 2024 | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,752) | $(9,611) | | Net cash used in investing activities | $(13,833) | $(20,583) | | Net cash provided by financing activities | $1,989 | $21,678 | | Net change in cash and cash equivalents | $(17,049) | $(8,891) | | Free cash flow | $(20,597) | $(30,144) | [Reconciliation of Operating Expenses](index=8&type=section&id=Reconciliation%20of%20Operating%20Expenses) Sales, general, and administrative (SG&A) expenses were $136.5 million for Q2 2025, adjusted to a pro forma figure of $127.7 million (63.6% of pro forma net sales), and Research and development (R&D) expenses were $15.9 million, adjusted to a pro forma figure of $14.6 million (7.3% of pro forma net sales), with these adjustments primarily excluding merger-related costs, M6® product line restructuring, and litigation costs | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Sales, general, and administrative (GAAP) | $136,493 | $134,218 | | Pro forma sales, general, and administrative, as adjusted | $127,700 | $123,070 | | Pro forma SG&A (% of pro forma net sales) | 63.6% | 63.8% | | Research and development expense (GAAP) | $15,934 | $18,049 | | Pro forma research and development expense, as adjusted | $14,616 | $15,270 | | Pro forma R&D (% of pro forma net sales) | 7.3% | 7.9% | [Reconciliation of Non-Operating (Income) Expense](index=9&type=section&id=Reconciliation%20of%20Non-Operating%20(Income)%20Expense) Non-operating (income) expense, reported as $(1.8) million for Q2 2025, was adjusted to a pro forma figure of $4.6 million (2.3% of pro forma net sales), with key adjustments including foreign exchange impact and employee retention credit | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Non-operating (income) expense (GAAP) | $(1,780) | $7,453 | | Pro forma non-operating expense, as adjusted | $4,596 | $4,798 | | Pro forma non-operating expense (% of pro forma net sales) | 2.3% | 2.5% |

Core Insights - Orthofix reported a quarterly loss of $0.08 per share, better than the Zacks Consensus Estimate of a loss of $0.17, and an improvement from a loss of $0.46 per share a year ago, indicating a 52.94% earnings surprise [1] - The company achieved revenues of $193.65 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.87% and showing a year-over-year increase from $188.61 million [2] - Orthofix shares have declined approximately 22.5% year-to-date, contrasting with the S&P 500's decline of 3.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.08, with projected revenues of $204 million, and for the current fiscal year, the EPS estimate is $0.62 on revenues of $823.9 million [7] - The estimate revisions trend for Orthofix is currently favorable, leading to a Zacks Rank 2 (Buy), suggesting that the shares are expected to outperform the market in the near future [6] Industry Context - The Medical - Instruments industry, to which Orthofix belongs, is currently ranked in the top 25% of over 250 Zacks industries, indicating a strong performance potential [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported pro forma net sales of $189.2 million, representing a year-over-year constant currency growth of 6% [7] - Adjusted EBITDA margin expanded, exceeding expectations, with pro forma adjusted EBITDA of $11.4 million, reflecting a margin expansion of approximately 200 basis points compared to Q1 2024 [28][29] - Total cash balance at the end of Q1 was $60.5 million, with expectations of positive free cash flow for the full year 2025, excluding restructuring charges related to the M6 product lines [29][37] Business Line Data and Key Metrics Changes - The U.S. Spinal Fixation business grew by 5.4% on a same sales day basis, with some short-term softness due to distributor transitions [10] - Bone Growth Therapies (BGT) net sales grew by 7% overall in Q1, with fracture sales growing by 8% [13][26] - The global orthopedic business experienced a strong start, delivering constant currency growth of 13% on a same sales day basis [14][27] Market Data and Key Metrics Changes - The U.S. Orthopedics segment grew by 12%, driven by strong performance in TRULOC and FITBOND products [15][27] - The international orthopedic business grew by 14% compared to the prior year, with variability expected due to the nature of stocking distributor and tender orders [28] Company Strategy and Development Direction - The company is focused on three strategic priorities: sharpening commercial execution, improving gross margins, and disciplined capital allocation [21] - The management is optimistic about the upcoming product launches, including the TRULOC Elevate TBT system, which addresses significant market opportunities in limb reconstruction [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive profitable growth and innovation while increasing long-term shareholder value [21][39] - The company is well-positioned to capitalize on recent product launch successes and maintain a healthy commercial pipeline for substantial revenue growth [20] Other Important Information - The company announced the discontinuation of the M6 artificial disc product lines, which had been a drag on profitability [30] - The anticipated annual exposure to tariffs is estimated to be approximately $3 million to $4 million, which is manageable and already contemplated in the guidance [34] Q&A Session Summary Question: Rationale for optimization within the Spine channel - Management indicated that the optimization is aimed at enhancing long-term growth and shareholder value, with a strong commercial pipeline ready to deliver substantial revenue growth starting later this year [43][44] Question: Maintaining adjusted EBITDA while lowering top line - The company has focused on making high-return investments and rightsizing shared services, which has contributed to maintaining adjusted EBITDA despite lower revenue [45][46] Question: Impact of selling days on growth - The company acknowledged that one less selling day in Q1 resulted in a headwind of over 1.5% on the growth rate [51] Question: Specific impacts of NGO business on segments - The NGO business will impact the international orthopedic segment, with no updates to long-term guidance at this time [63] Question: Details on AxleStim 2.0 functionality - AxleStim 2.0 integrates with the physician portal, allowing for patient monitoring and compliance, which is expected to enhance market penetration [69][70] Question: TRULOC system performance and data collection - The TRULOC system is in limited clinical release, with positive surgeon interest and ongoing data collection to demonstrate its benefits [73][74]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported pro forma net sales of $189.2 million, representing a year-over-year constant currency growth of 6% [6] - Adjusted EBITDA margin expanded, exceeding expectations, with pro forma adjusted EBITDA of $11.4 million, reflecting a margin expansion of approximately 200 basis points compared to the previous year [28][29] - The total cash balance at the end of Q1 was $60.5 million, with expectations for positive free cash flow for the full year 2025, excluding restructuring charges related to the M6 product lines [29][37] Business Line Data and Key Metrics Changes - The U.S. Spinal Fixation business grew by 5.4% on a same sales day basis, with procedure volume growth of 7% [8][26] - Bone Growth Therapies (BGT) net sales grew by 7% overall, with fracture sales growing by 8% [12][26] - The global orthopedic business achieved a constant currency growth of 13%, with U.S. Orthopedics growing by 12% [13][27] Market Data and Key Metrics Changes - The international orthopedic business grew by 14% compared to the prior year, with variability expected in growth rates due to the nature of the business [27] - The company anticipates a $5 million negative impact from U.S. funded NGO business compared to the full year 2024 [35] Company Strategy and Development Direction - The company is focused on three strategic priorities: sharpening commercial execution, improving gross margins, and disciplined capital allocation [21] - The management is optimistic about the transformation of the Spine business and the potential for long-term growth through partnerships with larger, more capital-efficient commercial partners [43] - The company is preparing for the full market launch of the TRULOC Elevate TBT system, which addresses significant market opportunities in limb reconstruction [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive profitable growth and innovation while increasing long-term shareholder value [21][39] - The company is optimistic about the commercial pipeline and expects substantial revenue growth starting later in the year [44] - Management acknowledged short-term challenges due to optimization efforts but emphasized the long-term benefits of these initiatives [43] Other Important Information - The company is discontinuing the M6 artificial disc product lines, which had been a drag on profitability, to focus on more profitable growth opportunities [30][31] - The anticipated one-time cash restructuring charges related to the M6 discontinuation are approximately $8 million [31] Q&A Session Summary Question: Rationale for optimization within the Spine channel - Management indicated that the optimization is aimed at enhancing long-term growth and shareholder value, with a strong balance sheet supporting this initiative [42][43] Question: Impact of selling days on growth - Management confirmed that the one less selling day in Q1 resulted in a headwind of over 1.5% on the growth rate [50] Question: Breakdown of updated guidance - Management clarified that the $5 million impact from U.S. funded NGO business and additional challenges in the spine and biologics segments contributed to the updated guidance [55][56]

Clear Course for Profitable Growth 1Q 2025 Earnings Call May 6, 2025 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, intentions, plans, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looki ...