Price Performance In the past six months, OFIX's shares have gained 41.2% compared with the industry's rise of 23.9%. The S&P 500 increased 16.2% in the same time frame. More on the News The Rodeo Telescopic Nail is a novel surgical tool designed to cure fractures or abnormalities in individuals with osteogenesis imperfecta (OI). In addition to telescoping to suit pediatric patients' natural growth, the nail implant stabilizes the patient's limb. Orthofix Medical Inc. (OFIX) recently announced the receipt o ...

Orthofix Medical Inc. (NASDAQ:OFIX) Q1 2024 Earnings Conference Call May 7, 2024 8:30 AM ET Company Participants Louisa Smith – Gilmartin Group Massimo Calafiore – President and Chief Executive Officer Julie Andrews – Chief Financial Officer Conference Call Participants Mathew Blackman – Stifel Jason Wittes – ROTH MKM Jeff Cohen – Ladenburg Thalmann Operator Thank you for standing by. My name is Jale, and I’ll be your conference operator today. At this time I’d like welcome everyone to the Orthofix Q1 2024 ...

Supplemental Financials 1Q24 Earnings () ORTHOFIX® Forward Looking Statements ©2024 Orthofix Medical Inc. All rights reserved | 1 May 7, 2024 ©2024 Orthofix Medical Inc. All rights reserved | Q1 Adjusted Gross Margin: 70.3% vs 70.7% in 1Q23 Q1 R&D: $19.5M; 10.3% of sales vs $23.3M in 1Q23; 13.3% of sales 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, relatin ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Orthofix Medical Inc.'s unaudited condensed consolidated financial statements for Q1 2024 and 2023, including balance sheets, operations, equity, cash flows, and notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (U.S. Dollars, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :--------------- | :---------------- | | Cash and cash equivalents | $26,964 | $33,107 | | Total current assets | $398,978 | $420,443 | | Total assets | $906,050 | $925,315 | | Total current liabilities | $150,621 | $165,223 | | Total liabilities | $335,735 | $326,585 | | Total shareholders' equity | $570,315 | $598,730 | | Total liabilities and shareholders' equity | $906,050 | $925,315 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (Three Months Ended March 31, U.S. Dollars, in thousands, except per share data) | Metric | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Net sales | $188,608 | $175,204 | | Gross profit | $127,242 | $110,329 | | Operating loss | $(29,337) | $(59,714) | | Net loss | $(36,020) | $(60,938) | | Basic net loss per common share | $(0.95) | $(1.71) | | Diluted net loss per common share | $(0.95) | $(1.71) | | Comprehensive loss | $(35,387) | $(60,508) | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited, U.S. Dollars, in thousands) | Metric | At December 31, 2023 | At March 31, 2024 | | :-------------------------------- | :------------------- | :---------------- | | Total Shareholders' Equity | $598,730 | $570,315 | | Net loss | N/A | $(36,020) | | Other comprehensive income, net of tax | N/A | $633 | | Share-based compensation expense | N/A | $8,800 | | Common shares issued, net | N/A | $(1,828) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------------------------------ | :------- | :------- | | Net cash used in operating activities | $(18,595) | $(34,020) | | Net cash provided by (used in) investing activities | $(10,867) | $17,084 | | Net cash provided by financing activities | $21,453 | $15,983 | | Effect of exchange rate changes on cash | $(284) | $221 | | Net change in cash and cash equivalents | $(8,293) | $(732) | | Cash, cash equivalents, and restricted cash at end of period | $29,464 | $49,968 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Business and Basis of Presentation](index=10&type=section&id=1.%20Business%20and%20basis%20of%20presentation) - Orthofix Medical Inc. is a leading global spine and orthopedics company with a comprehensive portfolio of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions, and a leading surgical navigation system[18](index=18&type=chunk) - The Company's products are distributed in more than 60 countries worldwide[18](index=18&type=chunk) [2. Recently Adopted Accounting Standards, Recently Issued Accounting Pronouncements](index=10&type=section&id=2.%20Recently%20adopted%20accounting%20standards,%20recently%20issued%20accounting%20pronouncements) - Adopted ASU 2022-03 (Fair Value Measurement of Equity Securities) effective January 1, 2024, with no material financial impact but modified disclosures[22](index=22&type=chunk) - Adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) effective January 1, 2024, enhancing disclosures about operating segments[23](index=23&type=chunk) - Currently evaluating the impact of ASU 2023-06 (Disclosure Improvements) and ASU 2023-09 (Improvements to Income Tax Disclosures), effective various dates and January 1, 2025, respectively[24](index=24&type=chunk) [3. Mergers and Acquisitions](index=11&type=section&id=3.%20Mergers%20and%20acquisitions) - The merger with SeaSpine Holdings Corporation was completed on January 5, 2023, creating a leading global spine and orthopedics company[25](index=25&type=chunk) - The Company finalized its valuation of assets acquired and liabilities assumed from the SeaSpine merger during the fourth quarter of 2023[26](index=26&type=chunk) SeaSpine Financial Contribution (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------- | :----- | :----- | | Net sales | $70,500 | $60,900 | | Net loss | $(14,300) | $(27,900) | [4. Inventories](index=12&type=section&id=4.%20Inventories) Inventories (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--------------- | :--------------- | :---------------- | | Raw materials | $30,903 | $28,390 | | Work-in-process | $56,193 | $53,510 | | Finished products | $131,980 | $140,266 | | **Total Inventories** | **$219,076** | **$222,166** | [5. Leases](index=13&type=section&id=5.%20Leases) Lease Portfolio Summary (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------- | :--------------- | :---------------- | | Total ROU assets | $35,208 | $36,214 | | Total lease liabilities | $38,975 | $39,842 | Supplemental Cash Flow Information Related to Leases (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Operating cash flows from operating leases | $2,162 | $1,674 | | Operating cash flows from finance leases | $210 | $214 | | Financing cash flows from finance leases | $172 | $160 | [6. Long-term Debt](index=13&type=section&id=6.%20Long-term%20debt) Long-term Debt (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------------------------------------- | :--------------- | :---------------- | | Total indebtedness from initial term loan and delayed draw term loan | $118,196 | $94,357 | | Current portion of long-term debt | $3,125 | $1,250 | | Long-term debt | $115,071 | $93,107 | | **Total indebtedness outstanding** | **$118,196** | **$94,357** | - The Company borrowed **$15.0 million** under its Revolving Credit Facility on January 10, 2024, and the **$25.0 million** Delayed Draw Term Loan was fully funded on March 22, 2024, with proceeds used to repay the Revolving Credit Facility[30](index=30&type=chunk)[31](index=31&type=chunk) - As of March 31, 2024, the Company was in compliance with all required financial covenants[32](index=32&type=chunk) [7. Fair Value Measurements and Investments](index=15&type=section&id=7.%20Fair%20value%20measurements%20and%20investments) Fair Value Measurements of Financial Assets and Liabilities (U.S. Dollars, in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :--------------- | :---------------- | | Total Assets (Fair Value) | $14,637 | $13,020 | | Total Liabilities (Fair Value) | $(11,274) | $(10,174) | - The Neo Medical Convertible Loan, previously measured using unobservable inputs, is now classified as a Level 2 financial asset due to fair value estimation based on observable market inputs, and is set to convert into preferred equity securities in April 2024[36](index=36&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - The estimated fair value of the Lattus contingent consideration increased to **$9.67 million** as of March 31, 2024, from **$8.50 million** at January 1, 2024, determined using Monte Carlo simulation and discounted cash flow models[43](index=43&type=chunk)[44](index=44&type=chunk) [8. Commitments and Contingencies](index=18&type=section&id=8.%20Commitments%20and%20Contingencies) - Former executives (Valentine, Bostjancic, and Keran) filed arbitration claims for wrongful termination, seeking severance payments and forfeited equity grants; the Company intends to vigorously defend these claims[47](index=47&type=chunk)[48](index=48&type=chunk) - The Company has options to purchase distributor businesses, which, if all exercised, could result in the issuance of approximately **1.5 million shares** of common stock[49](index=49&type=chunk) Italian Medical Device Payback (IMDP) Expense (U.S. Dollars, in thousands) | Period | Expense | | :-------------------------------- | :------ | | Three Months Ended March 31, 2024 | $300 | | Three Months Ended March 31, 2023 | $300 | - As of March 31, 2024, the Company accrued **$7.7 million** related to the IMDP, classified within other long-term liabilities, with the actual liability subject to legal proceedings and further clarification[52](index=52&type=chunk) [9. Accumulated Other Comprehensive Loss](index=19&type=section&id=9.%20Accumulated%20other%20comprehensive%20loss) Accumulated Other Comprehensive Loss (U.S. Dollars, in thousands) | Component | December 31, 2023 | March 31, 2024 | Change (QoQ) | | :-------------------------- | :---------------- | :------------- | :----------- | | Currency Translation Adjustments | $(1,065) | $(2,103) | $(1,038) | | Neo Medical Convertible Loans | $(228) | $1,443 | $1,671 | | Other Investments | $0 | $0 | $0 | | **Total** | **$(1,293)** | **$(660)** | **$633** | [10. Revenue Recognition and Accounts Receivable](index=19&type=section&id=10.%20Revenue%20recognition%20and%20accounts%20receivable) Net Sales by Major Product Category (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Bone Growth Therapies | $52,477 | $47,714 | 10.0% | | Spinal Implants, Biologics, and Enabling Technologies | $108,816 | $101,492 | 7.2% | | **Global Spine** | **$161,293** | **$149,206** | **8.1%** | | Global Orthopedics | $27,315 | $25,998 | 5.1% | | **Net sales** | **$188,608** | **$175,204** | **7.7%** | Product Sales and Marketing Service Fees (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | | :---------------------- | :----- | :----- | | Product sales | $175,831 | $162,248 | | Marketing service fees | $12,777 | $12,956 | | **Net sales** | **$188,608** | **$175,204** | Allowance for Expected Credit Losses (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Beginning balance | $7,130 | $6,419 | | Current period provision for expected credit losses | $1,376 | $208 | | Ending balance | $8,398 | $6,691 | [11. Business Segment Information](index=20&type=section&id=11.%20Business%20segment%20information) - The Company's operations are managed through two reporting segments: Global Spine and Global Orthopedics[57](index=57&type=chunk) - Adjusted EBITDA is the primary metric used by the Chief Operating Decision Maker (CODM) for managing the Company[57](index=57&type=chunk) Net Sales by Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Segment | 2024 | 2023 | Change | | :------------------ | :----- | :----- | :----- | | Global Spine | $161,293 | $149,206 | 8.1% | | Global Orthopedics | $27,315 | $25,998 | 5.1% | | **Net sales** | **$188,608** | **$175,204** | **7.7%** | Adjusted EBITDA by Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Segment | 2024 | 2023 | | :-------------------------- | :----- | :----- | | Global Spine | $19,890 | $14,981 | | Global Orthopedics | $(1,492) | $44 | | Corporate | $(10,733) | $(11,821) | | **Consolidated adjusted EBITDA** | **$7,665** | **$3,204** | [12. Acquisition-related Amortization and Remeasurement](index=23&type=section&id=12.%20Acquisition-related%20amortization%20and%20remeasurement) Acquisition-related Amortization and Remeasurement (Three Months Ended March 31, U.S. Dollars, in thousands) | Component | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Amortization of acquired intangibles | $4,226 | $4,134 | | Changes in fair value of contingent consideration | $1,170 | $0 | | **Total** | **$5,396** | **$4,134** | [13. Share-based Compensation](index=23&type=section&id=13.%20Share-based%20compensation) Share-based Compensation Expense by Category (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Cost of sales | $576 | $471 | | Sales and marketing | $1,667 | $2,249 | | General and administrative | $5,548 | $9,104 | | Research and development | $1,009 | $1,196 | | **Total** | **$8,800** | **$13,020** | - During 2024, the Company awarded grants valued at approximately **$14.9 million** to new executive leadership (President and CEO, CFO, Chief People & Business Operations Officer, and Chief Legal Officer) as an inducement to accept employment[71](index=71&type=chunk) [14. Income Taxes](index=25&type=section&id=14.%20Income%20taxes) Income Tax Expense and Effective Tax Rate (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | | :------------------ | :----- | :----- | | Income tax expense | $(851) | $(611) | | Effective tax rate | (2.4%) | (1.0%) | - The effective tax rate for Q1 2024 was primarily affected by certain losses not benefited and tax amortization on acquired intangibles[73](index=73&type=chunk) [15. Earnings Per Share ("EPS")](index=26&type=section&id=15.%20Earnings%20per%20share%20(%22EPS%22)) Net Loss Per Common Share (Three Months Ended March 31) | Metric | 2024 | 2023 | | :-------------------------- | :----- | :----- | | Basic Net Loss Per Share | $(0.95) | $(1.71) | | Diluted Net Loss Per Share | $(0.95) | $(1.71) | - **6.7 million** weighted average outstanding stock options and restricted stock units were anti-dilutive and excluded from diluted EPS computation for the three months ended March 31, 2024[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Orthofix Medical Inc.'s Q1 2024 financial condition and operations, focusing on key metrics, segment performance, and liquidity changes post-SeaSpine merger [Executive Summary](index=27&type=section&id=Executive%20Summary) - Orthofix is a leading global spine and orthopedics company following its merger with SeaSpine in January 2023[78](index=78&type=chunk) Q1 2024 Key Financial Highlights (U.S. Dollars, in millions) | Metric | Value | Change YoY | | :-------------------------------- | :------ | :--------- | | Net Sales | $188.6 | +7.7% | | Bone Growth Therapies Net Sales Growth | 10.0% | N/A | | U.S. Spine Fixation Net Sales Growth | 16% | N/A | | Global Orthopedics Net Sales Growth | 5% | N/A | | Net Loss | $(36) | Reduced from $(60.9)M | | Non-GAAP Adjusted EBITDA | $8 | +$4.5M (220 bps expansion) | [Net Sales by Product Category and Reporting Segment](index=27&type=section&id=Net%20Sales%20by%20Product%20Category%20and%20Reporting%20Segment) Net Sales by Product Category and Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Category | 2024 | 2023 | Reported Change | Constant Currency Change | | :------------------------------------------ | :----- | :----- | :-------------- | :----------------------- | | Bone Growth Therapies | $52,477 | $47,714 | 10.0% | 10.0% | | Spinal Implants, Biologics, and Enabling Technologies | $108,816 | $101,492 | 7.2% | 7.2% | | **Global Spine** | **$161,293** | **$149,206** | **8.1%** | **8.1%** | | Global Orthopedics | $27,315 | $25,998 | 5.1% | 3.8% | | **Net sales** | **$188,608** | **$175,204** | **7.7%** | **7.5%** | [Global Spine](index=29&type=section&id=Global%20Spine) - Global Spine net sales increased by **$12.1 million**, or **8.1%**, to **$161.3 million** for the three months ended March 31, 2024[81](index=81&type=chunk) - Bone Growth Therapies net sales increased by **10.0%**, driven by increased gross order volumes from direct sales channel investments and continued growth and adoption of AccelStim[81](index=81&type=chunk) - Spinal Implants, Biologics, and Enabling Technologies net sales increased by **7.2%**, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants (cervical, interbody, and thoracolumbar franchises)[81](index=81&type=chunk) [Global Orthopedics](index=30&type=section&id=Global%20Orthopedics) - Global Orthopedics net sales increased by **$1.3 million**, or **5.1%**, to **$27.3 million** for the three months ended March 31, 2024[83](index=83&type=chunk) - U.S. Orthopedic net sales grew by **$1.5 million** or **22.9%**, largely due to investments in recent product launches, commercial execution, and surgeon education programs[84](index=84&type=chunk) - International sales were flat compared to the prior year due to healthcare provider strikes in the UK and timing of certain stocking distributors' orders[84](index=84&type=chunk) [Gross Profit](index=30&type=section&id=Gross%20Profit) Gross Profit (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :---------- | :----- | :----- | :------- | | Net sales | $188,608 | $175,204 | 7.7% | | Cost of sales | $61,366 | $64,875 | (5.4%) | | **Gross profit** | **$127,242** | **$110,329** | **15.3%** | | Gross margin | 67.5% | 63.0% | 4.5% pts | - The increase in gross profit was driven primarily by net sales growth across all principal product categories and an **$8.6 million** reduction in amortization of the inventory fair value step-up recognized in the Merger[85](index=85&type=chunk) [Sales and Marketing Expense](index=30&type=section&id=Sales%20and%20Marketing%20Expense) Sales and Marketing Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------- | :----- | :----- | :------- | | Sales and marketing expense | $100,043 | $93,791 | 6.7% | | As a percentage of net sales | 52.9% | 53.5% | (0.6%) pts | - The increase was due to a **$3.4 million** rise in variable compensation expenses (commissions) and a **$2.9 million** increase in depreciation expense related to deployed instrumentation, partially offset by merger synergies[86](index=86&type=chunk) [General and Administrative Expense](index=31&type=section&id=General%20and%20Administrative%20Expense) General and Administrative Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------------- | :----- | :----- | :------- | | General and administrative expense | $31,648 | $48,811 | (35.2%) | | As a percentage of net sales | 16.8% | 27.9% | (11.1%) pts | - The decrease was primarily due to a **$16.2 million** reduction in integration-related expenses and realization of Merger-related synergies, and a **$3.6 million** decrease in share-based compensation expense[90](index=90&type=chunk) - This decrease was partially offset by a **$2.2 million** increase in succession charges resulting from recent executive leadership changes[90](index=90&type=chunk) [Research and Development Expense](index=31&type=section&id=Research%20and%20Development%20Expense) Research and Development Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------- | :----- | :----- | :------- | | Research and development expense | $19,492 | $23,307 | (16.4%) | | As a percentage of net sales | 10.3% | 13.3% | (3.0%) pts | - The decrease was driven by a **$2.3 million** reduction in costs to comply with European Union Medical Device Regulations and a **$1.4 million** decrease in merger and integration-related expenses, partially offset by increased clinical spend for the M6-C artificial disc study[91](index=91&type=chunk) [Acquisition-related Amortization and Remeasurement](index=31&type=section&id=Acquisition-related%20Amortization%20and%20Remeasurement) Acquisition-related Amortization and Remeasurement (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :------------------------------------------ | :----- | :----- | :------- | | Acquisition-related amortization and remeasurement | $5,396 | $4,134 | 30.5% | | As a percentage of net sales | 2.9% | 2.4% | 0.5% pts | - The increase was primarily due to a **$1.2 million** remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the Merger[90](index=90&type=chunk) [Non-operating Income and Expense](index=32&type=section&id=Non-operating%20Income%20and%20Expense) Non-operating Income and Expense (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :-------------------------- | :------- | :------- | :------- | | Interest expense, net | $(4,558) | $(1,289) | 253.6% | | Other income (expense), net | $(1,274) | $676 | (288.5%) | - Interest expense, net, increased by **$3.3 million** due to a **$3.6 million** increase in outstanding indebtedness, partially offset by a **$0.6 million** decrease from an early termination prepayment penalty in 2023[95](index=95&type=chunk) - Other income (expense), net, decreased by **$2.0 million**, primarily due to a **$2.2 million** unfavorable change in foreign currency exchange rates (non-cash remeasurement loss of **$1.6 million** in 2024 vs. gain of **$0.6 million** in 2023), partially offset by a **$0.3 million** increase from the reversal of expected credit loss on the Neo Medical convertible loan[95](index=95&type=chunk) [Income Taxes](index=32&type=section&id=Income%20Taxes) Income Tax Expense and Effective Tax Rate (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | % Change | | :------------------ | :----- | :----- | :------- | | Income tax expense | $851 | $611 | 39.3% | | Effective tax rate | (2.4%) | (1.0%) | (1.4%) pts | - The increase in tax expense was primarily a result of changes in valuation allowances and tax amortization on certain acquired intangibles[96](index=96&type=chunk) [Segment Review](index=33&type=section&id=Segment%20Review) Adjusted EBITDA by Reporting Segment (Three Months Ended March 31, U.S. Dollars, in thousands) | Segment | 2024 | 2023 | | :-------------------------- | :----- | :----- | | Global Spine | $19,890 | $14,981 | | Global Orthopedics | $(1,492) | $44 | | Corporate | $(10,733) | $(11,821) | | **Consolidated adjusted EBITDA** | **$7,665** | **$3,204** | - Consolidated Adjusted EBITDA improved significantly, partly due to a decrease in SeaSpine merger-related costs from **$20.7 million** in 2023 to **$4.5 million** in 2024[98](index=98&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, Cash Equivalents, and Restricted Cash (U.S. Dollars, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :--------------- | :---------------- | | Cash, cash equivalents, and restricted cash | $29,464 | $37,757 | Net Change in Cash and Cash Equivalents (Three Months Ended March 31, U.S. Dollars, in thousands) | Activity | 2024 | 2023 | Change | | :------------------------------------------ | :------- | :------- | :------- | | Net cash used in operating activities | $(18,595) | $(34,020) | $15,425 | | Net cash provided by (used in) investing activities | $(10,867) | $17,084 | $(27,951) | | Net cash provided by financing activities | $21,453 | $15,983 | $5,470 | | Effect of exchange rate changes on cash | $(284) | $221 | $(505) | | **Net change in cash and cash equivalents** | **$(8,293)** | **$(732)** | **$(7,561)** | Free Cash Flow (Three Months Ended March 31, U.S. Dollars, in thousands) | Metric | 2024 | 2023 | Change | | :-------------------------- | :------- | :------- | :------- | | Net cash used in operating activities | $(18,595) | $(34,020) | $15,425 | | Capital expenditures | $(10,817) | $(11,835) | $1,018 | | **Free cash flow** | **$(29,412)** | **$(45,855)** | **$16,443** | [Operating Activities](index=34&type=section&id=Operating%20Activities) - Cash flows from operating activities increased by **$15.4 million**, primarily due to a favorable change in net loss of **$24.9 million**[100](index=100&type=chunk)[105](index=105&type=chunk) - Days sales in receivables were **61 days** at March 31, 2024, compared to **58 days** at March 31, 2023[100](index=100&type=chunk) - Inventory turns improved to **1.2 times** as of March 31, 2024, compared to **0.7 times** as of March 31, 2023[100](index=100&type=chunk) [Investing Activities](index=34&type=section&id=Investing%20Activities) - Cash flows from investing activities decreased by **$28.0 million**, primarily due to a **$29.4 million** decrease attributable to cash acquired as a result of the Merger in 2023[101](index=101&type=chunk)[106](index=106&type=chunk) - This decrease was partially offset by a **$1.0 million** decrease in capital expenditures and a **$0.5 million** decrease in other investing activities in 2024 compared to 2023[106](index=106&type=chunk) [Financing Activities](index=34&type=section&id=Financing%20Activities) - Cash flows from financing activities increased by **$5.5 million**, driven by a **$6.9 million** increase associated with net borrowing activities related to credit facilities and the assumption of SeaSpine's outstanding indebtedness[101](index=101&type=chunk)[106](index=106&type=chunk) - This increase was partially offset by **$1.5 million** in debt issuance costs and other financing activities[106](index=106&type=chunk) [Credit Facilities](index=34&type=section&id=Credit%20Facilities) - The Company's credit facilities include a **$100.0 million** Initial Term Loan, a **$25.0 million** Delayed Draw Term Loan, and a **$25.0 million** Revolving Credit Facility, all maturing on November 6, 2027[101](index=101&type=chunk) - As of March 31, 2024, **$100.0 million** was outstanding under the Initial Term Loan and **$25.0 million** under the Delayed Draw Term Loan, with no borrowings on available lines of credit in Italy[101](index=101&type=chunk)[104](index=104&type=chunk) - The Company was in compliance with all required financial covenants as of March 31, 2024[102](index=102&type=chunk) [Other](index=35&type=section&id=Other) - The estimated fair value of the Lattus Spine LLC contingent consideration was **$9.7 million** as of March 31, 2024[107](index=107&type=chunk) - A **$1.0 million** contingent consideration payment for the IGEA S.p.A. Exclusive License and Distribution Agreement was accrued within other current liabilities as of March 31, 2024[110](index=110&type=chunk) - There were no material off-balance sheet arrangements as of March 31, 2024, and no significant changes to contractual obligations or critical accounting estimates from the 2023 Form 10-K[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) - The Company uses non-GAAP financial measures, including Constant Currency, Adjusted EBITDA, and Free Cash Flow, to provide greater transparency and facilitate comparisons to historical operating results and industry peers[115](index=115&type=chunk) - Constant currency is calculated by using foreign currency rates from the comparable, prior-year period to present net sales without the impact of changes in foreign currency rates[117](index=117&type=chunk) - Adjusted EBITDA is the primary metric used by the Chief Operating Decision Maker and excludes various non-operating and non-cash items[118](index=118&type=chunk) - Free cash flow is calculated by subtracting capital expenditures from net cash from operating activities, used as an indicator of cash generation/usage and capital efficiency[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Reports no material changes to the company's market risks since the disclosures in its 2023 Annual Report on Form 10-K - There have been no material changes to the Company's market risks as disclosed in its Form 10-K for the year ended December 31, 2023[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Addresses disclosure controls and procedures, reporting a continuing material weakness in internal control over financial reporting and ongoing remediation efforts [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The Company's disclosure controls and procedures were not effective as of March 31, 2024, due to a continuing material weakness in internal control over financial reporting[121](index=121&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=36&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) - A material weakness was identified in the design and operation of certain management review controls pertaining to business combinations and assessing recoverability of goodwill[125](index=125&type=chunk) - The weakness resulted from insufficient evidence supporting the precision over the determination of certain estimates and the operating effectiveness of associated review controls[125](index=125&type=chunk) - This material weakness did not result in any misstatements to the consolidated financial statements or disclosures[125](index=125&type=chunk) [Remediation of the Material Weakness](index=38&type=section&id=Remediation%20of%20the%20Material%20Weakness) - Management is actively working to strengthen disclosure controls and internal control over financial reporting, including realigning finance staff and hiring key personnel (new CFO, SVP of Finance and Strategy, and other supporting roles)[127](index=127&type=chunk) - Remediation initiatives include evaluating skill set gaps, providing ongoing training, and enhancing controls over the completeness and accuracy of information used in financial reporting and forecasted financial results, particularly for business combinations and goodwill impairment[128](index=128&type=chunk) - Remediation efforts are ongoing and expected to continue beyond the quarter ended March 31, 2024[128](index=128&type=chunk) [Changes in Internal Control over Financial Reporting](index=39&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - Other than the ongoing remediation activities for the identified material weakness, there have been no other material changes in internal control over financial reporting during the quarterly period[130](index=130&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates legal proceedings information by reference from Note 8 to the Unaudited Condensed Consolidated Financial Statements - Information regarding legal proceedings is incorporated by reference from Note 8 to the Unaudited Condensed Consolidated Financial Statements[132](index=132&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the Company's Form 10-K for the year ended December 31, 2023[133](index=133&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no repurchases of common stock by the company during the first quarter of 2024 - The Company did not make any repurchases of its common stock during the first quarter of 2024[134](index=134&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - This item is not applicable[135](index=135&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - This item is not applicable[136](index=136&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) Reports no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the last fiscal quarter - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the last fiscal quarter[137](index=137&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with Form 10-Q, including letter agreements, executive inducement plans, and certifications - Exhibits include letter agreements, inducement plans for new executive officers (CEO, CFO, CLO, CP&BOO), and certifications (Rule 13a-14(a)/15d-14(a) and Section 1350)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) SIGNATURES - The report was signed on May 7, 2024, by Massimo Calafiore, President and Chief Executive Officer, and Julie Andrews, Chief Financial Officer[146](index=146&type=chunk)

Financial Performance - First quarter net sales were $188.6 million, an increase of 7.7% on a reported basis and 7.5% on a constant currency basis compared to the prior year[4]. - Net loss for the first quarter was $(36.0) million, or $(0.95) per share, representing an improvement of 44% compared to the prior year period[7]. - Non-GAAP adjusted EBITDA was $7.7 million, reflecting a 220 basis point expansion over the prior year period[4]. - Adjusted EBITDA for Q1 2024 increased to $7,665 thousand, representing 4.1% of net sales, compared to $3,204 thousand or 1.8% in Q1 2023[24]. - The company reported a loss before income taxes of $(35,169) thousand in Q1 2024, an improvement from $(60,327) thousand in Q1 2023[24]. Sales Growth - Bone Growth Therapies net sales grew by 10%, marking five consecutive quarters of double-digit net sales increases[6]. - U.S. Spine Fixation net sales increased by 16%, driven by distribution expansion and further penetration in existing accounts[6]. - Global Orthopedics net sales grew by 5% on a reported basis, primarily due to a 23% increase in U.S. Orthopedic net sales[6]. - Net sales for Q1 2024 were $188,608 thousand, an increase from $175,204 thousand in Q1 2023[26]. Guidance and Projections - The midpoint of full year 2024 net sales guidance was raised to a range of $790.0 million to $795.0 million, implying growth of 6% to 7% year-over-year[12]. - The company expects to be free cash flow positive for Q4 2024[12]. Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash totaled $29.5 million as of March 31, 2024, down from $37.8 million at the end of 2023[8]. - Free cash flow for Q1 2024 was $(29,412) thousand, an improvement from $(45,855) thousand in Q1 2023[25]. - Net cash from operating activities improved to $(18,595) thousand in Q1 2024 from $(34,020) thousand in Q1 2023[25]. Expenses - Sales and marketing expenses as adjusted were $97,646 thousand, which is 51.8% of net sales, compared to $91,582 thousand or 52.3% in Q1 2023[26]. - General and administrative expenses as adjusted were $25,897 thousand, representing 13.7% of net sales, down from $31,149 thousand or 17.8% in Q1 2023[26]. - Research and development expenses as adjusted were $19,256 thousand, which is 10.2% of net sales, compared to $18,433 thousand or 10.5% in Q1 2023[26]. - The company incurred SeaSpine merger-related costs of $4,520 thousand in Q1 2024, down from $20,740 thousand in Q1 2023[24]. Margins - Gross margins were 67.5% for the quarter, with non-GAAP adjusted gross margins at 70.3%[7]. - Adjusted gross profit for Q1 2024 was $132,512 thousand, up from $123,948 thousand in Q1 2023, with an adjusted gross margin of 70.3% compared to 70.7%[23].

Click to edit Master title style 5 NewCo $ (22.049) $ (27.274) $ 13.969 3.141 1.705 0.390 6.286 1.781 8.842 1,953 ' 1.007 2.630 0.426 $ 41.694 $ 37.291 $ 19.645 $ 10.017 Adjusted Gross Margin ($ in millions) NewCo Change 122.229 $ 200.415 $ 186.373 6 8.939 0.102 0.144 · 0.125 7.037 0.373 (0.072) Adjusted gross profit 16.320 68.9% 0.431 11.689 3.481 A reconciliation of proforma Adjusted EBITDA for each quarter of 2022 to the nearest GAAP financial measure for each of SeaSpine and Orthofix is presented on thi ...

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Orthofix, a global spine and orthopedics company, operates through two segments and completed a significant merger in 2023 - Orthofix completed an all-stock merger with SeaSpine Holdings Corporation on **January 5, 2023**[21](index=21&type=chunk) Net Sales by Reporting Segment (2021-2023) | Reporting Segment | 2023 Net Sales (%) | 2022 Net Sales (%) | 2021 Net Sales (%) | | :--- | :--- | :--- | :--- | | Global Spine | 85% | Not specified | Not specified | | Global Orthopedics | 15% | Not specified | Not specified | - Products are distributed in **over 60 countries** via direct sales, agents, and distributors[18](index=18&type=chunk)[110](index=110&type=chunk) - As of December 31, 2023, Orthofix had **1,634 employees worldwide**, with **1,271 in the U.S.**[131](index=131&type=chunk) Research and Development Expenses (2021-2023) | Year | R&D Expense (in millions) | | :--- | :--- | | 2023 | $80.2 | | 2022 | $49.1 | | 2021 | $49.6 | [Global Spine Segment](index=6&type=section&id=Global%20Spine%20Segment) The Global Spine segment, accounting for **85% of 2023 net sales**, offers implantable devices, biologics, and enabling technologies - The Global Spine segment includes Bone Growth Therapies and Spinal Implants, Biologics, and Enabling Technologies[27](index=27&type=chunk) - Key Bone Growth Therapies products include **CervicalStim**, the only FDA-approved stimulator for cervical spine fusion, and **SpinalStim**[32](index=32&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) - The Spinal Implants portfolio features the **M6-C artificial cervical disc**, FDA-approved in **February 2019**[45](index=45&type=chunk) - Enabling Technologies include the **7D FLASH Navigation System** for fast, radiation-free surgical navigation[30](index=30&type=chunk)[51](index=51&type=chunk) - The Biologics portfolio offers cellular allografts like **Trinity Elite** and the shelf-stable **Virtuos Lyograft**[56](index=56&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Global Orthopedics Segment](index=17&type=section&id=Global%20Orthopedics%20Segment) The Global Orthopedics segment, representing **15% of 2023 net sales**, provides solutions for limb deformity and complex reconstruction - This segment offers products for limb deformity correction, complex limb reconstruction, trauma, and foot and ankle procedures[64](index=64&type=chunk) - Key external fixation products include the **TrueLok** and **TL-HEX** systems[68](index=68&type=chunk)[72](index=72&type=chunk) - The **Fitbone Intramedullary Limb-Lengthening System** is a key internal fixation product with an **FDA-cleared pediatric indication**[68](index=68&type=chunk)[74](index=74&type=chunk) - The segment's strategy focuses on expanding leadership in complex deformity and limb reconstruction using the **OrthoNext digital planning platform**[68](index=68&type=chunk) [Government Regulation](index=23&type=section&id=Government%20Regulation) The company's operations are subject to extensive global regulation, including FDA oversight, EU MDR, and healthcare fraud and abuse laws - Products are extensively regulated by the FDA and internationally, with Bone Growth Therapies and the **M6-C artificial cervical disc** classified as **Class III devices**[86](index=86&type=chunk)[87](index=87&type=chunk) - The company is transitioning to the European Union's stricter **Medical Device Regulation (MDR)**, incurring additional compliance costs[88](index=88&type=chunk) - Biologics derived from human tissue are regulated under the FDA's **HCT/P framework** and Good Tissues Practices[92](index=92&type=chunk) - Sales and marketing are subject to U.S. healthcare fraud and abuse laws, including the **Anti-Kickback Statute** and **Physician Payments Sunshine Act**[103](index=103&type=chunk)[107](index=107&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from merger integration, evolving regulations, intense competition, supply chain reliance, and internal control weaknesses - The company may not successfully integrate the Orthofix and SeaSpine businesses or realize anticipated merger benefits[141](index=141&type=chunk)[143](index=143&type=chunk) - A **material weakness** in internal control over financial reporting was identified regarding management review controls for business combinations and goodwill[150](index=150&type=chunk)[151](index=151&type=chunk) - An FDA panel recommended reclassifying bone growth stimulator devices from **Class III to Class II**, potentially increasing competition and negatively impacting sales[141](index=141&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - The company relies on a **limited number of third-party manufacturers and suppliers**, posing risks of delays and increased costs[142](index=142&type=chunk)[236](index=236&type=chunk) - International operations expose the business to risks from political and economic conditions, regulatory differences, tariffs, and foreign currency fluctuations[142](index=142&type=chunk)[250](index=250&type=chunk) [Item 1C. Cybersecurity](index=70&type=section&id=Item%201C.%20Cybersecurity) Orthofix maintains a cybersecurity program based on the NIST Framework, overseen by the Audit and Finance Committee, with no material impact reported in 2023 - The cybersecurity program and incident response procedures are based on the **NIST Cybersecurity Framework** and tested annually[309](index=309&type=chunk) - The **Audit and Finance Committee** oversees cybersecurity risks, receiving quarterly reports from the Chief Information Officer[315](index=315&type=chunk) - Third-party firms are engaged for security technology, audits, penetration testing, and preparedness drills[310](index=310&type=chunk) - As of December 31, 2023, cybersecurity risks have not materially affected the company's business or financial condition[312](index=312&type=chunk) [Item 2. Properties](index=72&type=section&id=Item%202.%20Properties) Orthofix operates key leased and owned facilities globally, including its Lewisville, TX headquarters and Verona, Italy manufacturing site Key Company Properties | Location | Approx. Square Feet | Ownership | Primary Use | | :--- | :--- | :--- | :--- | | Lewisville, TX | 140,000 | Leased | Corporate HQ, Manufacturing, R&D | | Carlsbad, CA | 82,000 | Leased | Spine & Biologics, R&D, Admin | | Irvine, CA | 70,000 | Leased | Biologics Manufacturing & Distribution | | Verona, Italy | 38,000 | Owned | Orthopedics R&D, Manufacturing, Admin | [Item 3. Legal Proceedings](index=74&type=section&id=Item%203.%20Legal%20Proceedings) Material pending legal proceedings are detailed in Note 13 of the Consolidated Financial Statements - Details on material pending legal proceedings are in **Note 13** of the Consolidated Financial Statements[322](index=322&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=75&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Orthofix common stock trades on Nasdaq under 'OFIX'; the company has no current dividend policy and retains earnings for growth - The company's common stock trades on the **Nasdaq Global Select Market** under the symbol **"OFIX"**[326](index=326&type=chunk) - Orthofix has not paid dividends and intends to retain earnings for business growth[328](index=328&type=chunk) Common Stock Price Range (2022-2023) | Year | Quarter | High ($) | Low ($) | | :--- | :--- | :--- | :--- | | 2022 | Q1 | 36.13 | 28.66 | | 2022 | Q2 | 35.34 | 23.17 | | 2022 | Q3 | 26.35 | 18.97 | | 2022 | Q4 | 21.12 | 13.76 | | 2023 | Q1 | 23.19 | 15.09 | | 2023 | Q2 | 20.65 | 16.27 | | 2023 | Q3 | 21.60 | 12.25 | | 2023 | Q4 | 14.39 | 9.57 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=77&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, net sales grew **62.1%** to **$746.6 million** due to the SeaSpine merger, but gross margin declined, leading to significant operating and net losses Key Financial Results 2023 vs 2022 | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $746.6M | $460.7M | +62.1% | | Gross Profit | $486.3M | $337.2M | +44.2% | | Gross Margin | 65.1% | 73.2% | -8.1 pts | | Operating Loss | ($139.1M) | ($13.3M) | N/A | | Net Loss | ($151.4M) | ($19.7M) | N/A | - Net sales growth was primarily driven by the **SeaSpine merger**, with U.S. Spinal Implants, Biologics, and Enabling Technologies growing **7.6%** pro forma[339](index=339&type=chunk)[342](index=342&type=chunk) - Gross margin significantly declined due to **$36.0 million** in inventory fair value step-up amortization and **$6.0 million** in rationalization charges[347](index=347&type=chunk) - General and administrative expenses increased **80.9%** to **$144.7 million**, including **$22.7 million** in merger costs and **$10.0 million** for an independent investigation[345](index=345&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk) Cash Flow Summary (2023 vs 2022) | Cash Flow Activity | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Net cash from operating activities | $(45.8) | $(11.5) | | Net cash from investing activities | $(33.1) | $(24.5) | | Net cash from financing activities | $65.3 | $(0.1) | - In **November 2023**, the company secured a new **$150 million financing agreement**, including a **$100 million term loan**[290](index=290&type=chunk)[366](index=366&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=96&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on floating-rate debt and foreign currency exposure, primarily impacting net sales and operating income - The company faces interest rate risk from outstanding debt bearing floating rates based on **SOFR**[431](index=431&type=chunk) - Foreign currency exposure primarily involves the U.S. Dollar against the **Euro, Brazilian Real, Australian Dollar, Swiss Franc, British Pound, and Canadian Dollar**[433](index=433&type=chunk) - A **10% strengthening of the U.S. Dollar** would decrease net sales by **$9.4 million** and operating income by **$0.6 million**[434](index=434&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=97&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no disagreements with its accountants regarding accounting and financial disclosure - No changes or disagreements were reported[436](index=436&type=chunk) [Item 9A. Controls and Procedures](index=97&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of December 31, 2023, due to a material weakness in business combination and goodwill review controls - Management concluded that disclosure controls and procedures were **not effective** as of **December 31, 2023**[437](index=437&type=chunk) - A **material weakness** was identified in management review controls for business combinations and goodwill recoverability assessment[440](index=440&type=chunk)[450](index=450&type=chunk) - The remediation plan includes hiring additional accounting personnel, providing training, and enhancing financial reporting controls[444](index=444&type=chunk) - Management's internal control assessment excluded the **SeaSpine business**, representing **52% of total assets** and **35% of revenues** for the year[442](index=442&type=chunk)[451](index=451&type=chunk) PART III [Items 10-14](index=102&type=section&id=Items%2010-14) Information for Items 10-14, including executive and governance details, is incorporated by reference from the company's definitive proxy statement - Information for **Items 10-14** is incorporated by reference from the company's definitive proxy statement[463](index=463&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=103&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Form 10-K, including consolidated financial statements and a comprehensive list of exhibits - This section includes the Index to Consolidated Financial Statements and a list of all exhibits filed with the Form 10-K[470](index=470&type=chunk) Financial Statements [Consolidated Financial Statements](index=122&type=section&id=Consolidated%20Financial%20Statements) The 2023 consolidated financial statements reflect the SeaSpine merger's impact, with total assets nearly doubling to **$925.3 million** and a net loss of **$151.4 million** Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $33,107 | $50,700 | | Inventories | $222,166 | $100,150 | | Goodwill | $194,934 | $71,317 | | Total Assets | $925,315 | $458,629 | | **Liabilities & Equity** | | | | Total current liabilities | $165,223 | $83,624 | | Long-term debt | $93,107 | $0 | | Total Liabilities | $326,585 | $121,769 | | Total Shareholders' Equity | $598,730 | $336,860 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | (in thousands, except per share data) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net sales | $746,641 | $460,713 | $464,479 | | Gross profit | $486,273 | $337,169 | $349,565 | | Operating loss | $(139,110) | $(13,268) | $(8,315) | | Net loss | $(151,395) | $(19,749) | $(38,379) | | Net loss per share (Basic & Diluted) | $(4.12) | $(0.98) | $(1.95) | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash from operating activities | $(45,753) | $(11,538) | | Net cash from investing activities | $(33,131) | $(24,534) | | Net cash from financing activities | $65,322 | $(78) | | Net change in cash | $(12,943) | $(37,147) | [Notes to the Consolidated Financial Statements](index=127&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the **SeaSpine merger's $376.7 million** consideration, segment performance, legal contingencies, new financing, and a **$200.2 million** valuation allowance against deferred tax assets - The **SeaSpine merger** was accounted for as a business combination with **$376.7 million** consideration, resulting in **$123.6 million** goodwill allocated to Global Spine (Note 4)[533](index=533&type=chunk)[534](index=534&type=chunk)[535](index=535&type=chunk) - In **September 2023**, the CEO, CFO, and Chief Legal Officer were terminated for cause, leading to arbitration claims in **January 2024** (Note 13)[600](index=600&type=chunk)[601](index=601&type=chunk) - The company accrued **$7.6 million** related to the **Italian Medical Device Payback (IMDP) law** (Note 13)[603](index=603&type=chunk)[605](index=605&type=chunk) - As of **December 31, 2023**, a **$200.2 million valuation allowance** was held against deferred tax assets, primarily from net operating loss carryforwards (Note 20)[676](index=676&type=chunk)[678](index=678&type=chunk) - The company has **$331.7 million** in federal net operating loss carryforwards, subject to **IRC Section 382** limitations and expiring from **2026** (Note 20)[679](index=679&type=chunk)

Exhibit 99.1 Orthofix Reports Fourth Quarter and Full Year 2023 Results Recent Highlights LEWISVILLE, Texas — March 5, 2024 — Orthofix Medical Inc. (NASDAQ:OFIX) today reported its financial results for the fourth quarter and year ended December 31, 2023, and issued guidance for the full year 2024. Fourth quarter net sales were $200.4 million, an increase of 64% on a reported basis and 7% on a pro forma constant currency basis. Net loss was $(22.2) million and earnings per share ("EPS") was $(0.59) on a rep ...

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 September 30, 2023 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 jurisd ...

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, 2023 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 ...