Orthofix(OFIX) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Orthofix reported strong Q2 2025 performance with sales growth, improved net loss, and strategic progress, including new product launches Second Quarter 2025 Performance Highlights 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] - Bone Growth Therapies (BGT) net sales reached $62.6 million, growing 6%, with BGT Fracture net sales up 7% compared to Q2 2024[5] - 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] - Adjusted EBITDA margin expanded approximately 190 basis points compared to the prior year, marking six consecutive quarters of expansion[5] - The company generated positive free cash flow of $4.5 million for Q2 2025[5] CEO Commentary 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] - Disciplined approach led to strong adjusted EBITDA margin growth and positive free cash flow generation[4] - Strategic initiatives, including accelerating distributor transitions in underpenetrated U.S. territories, are gaining traction[4] - Expects to benefit from recent product launches and deliver meaningful product innovation[4] Key Product Launches 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] - Announced U.S. commercial launch of the Reef® L Interbody System, completing the Reef® interbody product family for lateral lumbar spinal fusion procedures[5] Financial Results Overview 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 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) 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 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 Orthofix reaffirmed its full-year 2025 financial guidance for net sales, adjusted EBITDA, and free cash flow Full-Year 2025 Guidance 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 This section provides an overview of Orthofix's mission and product portfolio, outlines forward-looking statement disclaimers, and details investor communication channels About Orthofix 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] - The company provides medical technologies to heal musculoskeletal pathologies, offering solutions to patients worldwide[13] - Its comprehensive portfolio includes spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies such as the 7D FLASH™ Navigation System[13] Forward-Looking Statements 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] - 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] - The company undertakes no obligation to update forward-looking statements, except as required by law[15] - 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] Investor Relations 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] - Investors and media can contact Julie Dewey, IRC, Chief Investor Relations & Communications Officer[17] Condensed Consolidated Financial Statements This section presents Orthofix's condensed consolidated statements of operations and balance sheets for Q2 2025 and comparative periods Statements of Operations 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 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 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 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 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) 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 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 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 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% |