Orthofix(OFIX) - 2025 Q1 - Quarterly Results

Orthofix First Quarter 2025 Financial Results Financial and Operational Highlights Orthofix Q1 2025 pro forma net sales rose 4.3% to $189.2 million, adjusted EBITDA grew 49.1%, with strong segment performance and a key regulatory clearance Q1 2025 Key Financial Metrics | Metric | Value | Growth vs Q1 2024 | | :--- | :--- | :--- | | Reported Net Sales | $193.6 million | 2.7% Reported | | Pro Forma Net Sales | $189.2 million | 4.3% Constant Currency | | Net Loss | $(53.1) million | N/A | | Non-GAAP Pro Forma Adjusted EBITDA | $11.4 million | 49.1% | - U.S. Spine Fixation net sales grew 4% compared to Q1 2024[5] - Bone Growth Therapies (BGT) net sales reached $55.1 million, a 5% increase, with BGT Fracture sales up 6%[5] - Global Orthopedics net sales were $29.8 million, showing 11% constant currency growth and 10% U.S. growth[5] - Received 510(k) clearance and CE Mark for the TrueLok™ Elevate Transverse Bone Transport (TBT) System, the first FDA-cleared device for this specific application[5] Management Commentary Management noted commercial channel optimization impacting short-term guidance but building a stronger organization, with strategic focus on execution, gross margin, and capital allocation - Ongoing commercial channel optimization caused temporary softness in Biologics and Spine Fixation, with expected return to historical growth levels once completed[4] - Proactive spine commercial channel optimization and accelerated distributor transitions are impacting short-term guidance but are expected to build a stronger, scalable organization for future growth[4] - Future strategic priorities include sharpening commercial execution (e.g., 7D FLASH™ Navigation System adoption), improving gross margin, and disciplined capital allocation for adjusted EBITDA expansion and positive free cash flow generation[4] Financial Results Overview Q1 2025 pro forma net sales reached $189.2 million, up 3.9%, with a GAAP net loss of $53.1 million, while non-GAAP pro forma adjusted EBITDA improved to $11.4 million Q1 2025 Pro Forma Net Sales by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | Change (Reported) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Bone Growth Therapies | $55.1 | $52.5 | 4.9% | 4.9% | | Global Spine* | $159.4 | $154.8 | 3.0% | 3.0% | | Global Orthopedics | $29.8 | $27.3 | 9.1% | 11.5% | | Total Pro Forma Net Sales* | $189.2 | $182.1 | 3.9% | 4.3% | Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 (Reported) | | :--- | :--- | :--- | | Gross Margin (GAAP) | 62.8% | N/A | | Gross Margin (Non-GAAP Pro Forma Adjusted) | 70.3% | N/A | | Net Loss (GAAP) | $(53.1) million | $(36.0) million | | Net Loss per Share (GAAP) | $(1.35) | $(0.95) | | Non-GAAP Pro Forma Adjusted EBITDA | $11.4 million | $7.7 million | - Cash and cash equivalents totaled $60.5 million as of March 31, 2025, a decrease from $85.7 million at year-end 2024, primarily due to bonus and commission payments[8] Business Outlook (Full-Year 2025 Guidance) Orthofix updated full-year 2025 net sales guidance to $808-$816 million due to a $5 million NGO business impact, while reaffirming adjusted EBITDA and positive free cash flow guidance Full-Year 2025 Guidance | Metric | Updated Guidance | Previous Guidance | Notes | | :--- | :--- | :--- | :--- | | Net Sales (Pro Forma) | $808M - $816M | $818M - $826M | Implied constant currency growth of 5.0% YoY at midpoint | | Non-GAAP Adjusted EBITDA | $82M - $86M | No Change | Includes impact from M6 discontinuation | | Free Cash Flow | Positive | No Change | Excludes restructuring charges related to M6 discontinuation | Financial Statements Orthofix's Q1 2025 financial statements detail consolidated operations, including net sales and losses, alongside the balance sheet reflecting asset and liability changes Condensed Consolidated Statements of Operations Q1 2025 net sales increased to $193.6 million, but higher costs and a $17.7 million impairment charge led to an operating loss of $48.9 million and a widened net loss of $53.1 million Q1 Statement of Operations Highlights (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $193,646 | $188,608 | | Gross profit | $121,619 | $127,242 | | Operating loss | $(48,873) | $(29,337) | | Net loss | $(53,094) | $(36,020) | | Net loss per share (Diluted) | $(1.35) | $(0.95) | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $823.1 million, primarily due to reduced cash and inventories, leading to a decline in total shareholders' equity to $458.3 million Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $57,953 | $83,238 | | Total current assets | $390,310 | $433,285 | | Total assets | $823,144 | $893,294 | | Total current liabilities | $144,116 | $168,628 | | Total liabilities | $364,850 | $390,170 | | Total shareholders' equity | $458,294 | $503,124 | Non-GAAP Financial Measures & Reconciliations Orthofix provides reconciliations for non-GAAP financial measures, including adjusted gross profit, EBITDA, net income, and free cash flow, to their comparable GAAP counterparts Reconciliation: Adjusted Gross Profit and Gross Margin Q1 2025 GAAP gross profit of $121.6 million adjusted to $133.9 million, with pro forma adjusted gross profit at $133.0 million, yielding a 70.3% pro forma adjusted gross margin Q1 Gross Profit Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross Profit (GAAP) | $121,619 | $127,242 | | Adjusted Gross Profit | $133,926 | $132,512 | | Pro Forma Adjusted Gross Profit | $133,020 | $129,617 | | Pro Forma Adjusted Gross Margin | 70.3% | 71.2% | Reconciliation: Adjusted EBITDA Q1 2025 pro forma adjusted EBITDA increased to $11.4 million (6.0% of pro forma net sales) from a GAAP net loss of $53.1 million, after adding back non-cash and non-recurring items Q1 Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss (GAAP) | $(53,094) | $(36,020) | | Adjusted EBITDA | $9,185 | $7,665 | | Pro Forma Adjusted EBITDA | $11,431 | $9,519 | | Pro Forma Adjusted EBITDA Margin | 6.0% | 5.2% | Reconciliation: Adjusted Net Income Q1 2025 pro forma adjusted net loss improved to $1.2 million from a GAAP net loss of $53.1 million, after adjustments for restructuring costs, share-based compensation, and amortization Q1 Adjusted Net Loss Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss (GAAP) | $(53,094) | $(36,020) | | Adjusted Net Loss | $(3,184) | $(4,743) | | Pro Forma Adjusted Net Loss | $(1,249) | $(3,015) | Reconciliation: Cash Flow and Free Cash Flow Q1 2025 net cash used in operating activities was $18.4 million, resulting in a free cash flow outflow of $25.1 million after capital expenditures, an improvement from the prior year Q1 Free Cash Flow (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $(18,391) | $(18,595) | | Capital expenditures | $(6,736) | $(10,817) | | Free cash flow | $(25,127) | $(29,412) |