OrthoPediatrics(KIDS) - 2025 Q2 - Quarterly Results

Company Overview and Q2 2025 Highlights OrthoPediatrics Corp. reported strong Q2 2025 results, achieving record revenue of $61.1 million, a 16% increase year-over-year, fueled by robust procedure and clinic volumes and market share gains across key segments Second Quarter 2025 and Business Highlights OrthoPediatrics Corp. reported strong Q2 2025 results, achieving record revenue of $61.1 million, a 16% increase year-over-year, fueled by robust procedure and clinic volumes and market share gains across key segments like Scoliosis and Trauma - OrthoPediatrics achieved record Q2 2025 total revenue of $61.1 million, marking a 16% increase year-over-year, driven by strong procedure and clinic volumes and market share gains[3][4][5] - Adjusted EBITDA increased by 58% to $4.1 million in Q2 2025, compared to $2.6 million in Q2 2024[1][5][14] - The company expanded its OrthoPediatrics Specialty Bracing Division (OPSB) with multiple new clinics and entry into two new territories, including its first international operation in Ireland[3][5] - Full year 2025 revenue guidance was increased to a range of $237.0 million to $242.0 million from a range of $236.0 million to $242.0 million, representing 16% to 18% growth over 2024[5][16] Second Quarter 2025 Financial Results Summary Total revenue for Q2 2025 reached $61.1 million, a 16% increase year-over-year, with U.S. revenue growing 17% and international revenue increasing 12%, primarily fueled by strong performance in Scoliosis and Trauma & Deformity Revenue Performance Total revenue for Q2 2025 reached $61.1 million, a 16% increase year-over-year, with U.S. revenue growing 17% to $48.1 million and international revenue increasing 12% to $12.9 million, driven by strong performance in Scoliosis and Trauma & Deformity Total and Geographic Revenue Total revenue for Q2 2025 reached a record $61.1 million, a 16% increase from the prior year, with domestic revenue growing 17% to $48.1 million and international revenue increasing 12% to $12.9 million | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | % of Total Revenue (Q2 2025) | | :----- | :----------------- | :----------------- | :--------- | :----------------------------- | | Total Revenue | $61.1 | $52.8 | 16% | 100% | | U.S. Revenue | $48.1 | $41.2 | 17% | 79% | | International Revenue | $12.9 | $11.6 | 12% | 21% | Product Category Revenue Scoliosis revenue showed the strongest growth, increasing 35% to $18.5 million, driven by new product sales and 7D technology, while Trauma and Deformity revenue grew 10% to $41.7 million | Product Category | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :--------------- | :----------------- | :----------------- | :--------- | | Trauma and Deformity | $41.7 | $37.8 | 10% | | Scoliosis | $18.5 | $13.7 | 35% | | Sports Medicine/Other | $0.9 | $1.3 | -33% | - Growth in Scoliosis was driven by increased sales of Response and ApiFix non-fusion system, and revenue generated from 7D technology[7] - Trauma and Deformity growth was primarily driven by PNP Femur, PNP Tibia, DF2, and OPSB products[7] Profitability and Operating Expenses Gross profit increased by 8% to $44.0 million, but the gross profit margin declined to 72% due to higher 7D growth and international Scoliosis set sales, leading to an increased net loss of $7.1 million, despite a 58% increase in Adjusted EBITDA to $4.1 million | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Gross Profit | $44.0 | $40.8 | 8% | | Gross Profit Margin | 72% | 77% | -5 ppts | | Net Loss | ($7.1) | ($6.0) | -18.3% | | GAAP Diluted Loss Per Share | ($0.30) | ($0.26) | -15.4% | | Non-GAAP Diluted Loss Per Share | ($0.11) | ($0.23) | 52.2% | | Adjusted EBITDA | $4.1 | $2.6 | 58% | - The decrease in gross margin was primarily driven by higher 7D growth and increased international Scoliosis set sales, both of which generate lower gross margins[8] - Total operating expenses increased by 18% due to restructuring charges ($3.0 million), increased non-cash stock compensation, and additional personnel to support company growth, including OPSB clinics[9][12] Gross Profit and Margin Gross profit for Q2 2025 was $44.0 million, an 8% increase year-over-year, but the gross profit margin decreased to 72% from 77% due to higher growth of 7D technology and international Scoliosis set sales | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Gross Profit | $44.0 | $40.8 | 8% | | Gross Profit Margin | 72% | 77% | -5 ppts | - The decline in gross margin was mainly attributed to higher 7D growth and increased international Scoliosis set sales, which generate lower gross margins[8] Operating Expenses Breakdown Total operating expenses rose 18% to $54.7 million, driven by increases in sales and marketing (15% to $19.1 million) and general and administrative expenses (11% to $30.4 million), alongside $3.0 million in restructuring charges | Expense Category | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :--------------- | :----------------- | :----------------- | :--------- | | Total Operating Expenses | $54.7 | $46.5 | 18% | | Sales and Marketing | $19.1 | $16.6 | 15% | | General and Administrative | $30.4 | $27.3 | 11% | | Research and Development | $2.2 | $2.5 | -15% | | Restructuring Charges | $3.0 | $0.0 | N/A | - The increase in total operating expenses was mainly driven by restructuring charges, increased non-cash stock compensation, and incremental personnel to support ongoing growth, including OPSB clinics[9][11] Net Loss and Adjusted EBITDA The company reported a net loss of $7.1 million for Q2 2025, an increase from $6.0 million in Q2 2024, with GAAP diluted loss per share at ($0.30), while non-GAAP diluted loss per share improved to ($0.11) and Adjusted EBITDA increased 58% to $4.1 million | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Net Loss | ($7.1) | ($6.0) | -18.3% | | GAAP Diluted Loss Per Share | ($0.30) | ($0.26) | -15.4% | | Non-GAAP Diluted Loss Per Share | ($0.11) | ($0.23) | 52.2% | | Adjusted EBITDA | $4.1 | $2.6 | 58% | - Total other income was $3.6 million for Q2 2025, a significant improvement from an expense of $0.4 million in the prior year, primarily driven by an increase in foreign exchange translation gain[12] Financial Position and Cash Flows As of June 30, 2025, cash, cash equivalents, short-term investments, and restricted cash totaled $72.2 million, a slight increase from $70.8 million at the end of 2024 | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change | | :----- | :----------------------- | :--------------------------- | :----- | | Cash, Cash Equivalents, Short-term Investments, and Restricted Cash | $72.2 | $70.8 | +$1.4M | - Weighted average basic and diluted shares outstanding for the three months ended June 30, 2025, was 23,460,144 shares[15] Full Year 2025 Financial Guidance OrthoPediatrics increased its full-year 2025 revenue guidance to a range of $237.0 million to $242.0 million, representing 16% to 18% growth over 2024, while reiterating its annual set deployment target and adjusted EBITDA guidance | Metric | Previous Guidance (Millions) | Updated Guidance (Millions) | Growth vs 2024 | | :----- | :--------------------------- | :-------------------------- | :------------- | | Revenue | $236.0 - $242.0 | $237.0 - $242.0 | 16% - 18% | | Annual Set Deployment | $15.0 | $15.0 (Reiterated) | N/A | | Adjusted EBITDA | $15.0 - $17.0 | $15.0 - $17.0 (Reiterated) | N/A | Condensed Consolidated Financial Statements This section presents the company's balance sheets, statements of operations, and cash flows, along with detailed revenue breakdowns by geography and product category Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $503.6 million from $473.2 million at December 31, 2024, primarily driven by increases in current assets, while total liabilities also increased significantly to $148.1 million due to a rise in long-term loans | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | Change | | :----- | :------------------------ | :---------------------------- | :----- | | Total Assets | $503,606 | $473,209 | +$30,397 | | Total Liabilities | $148,092 | $118,643 | +$29,449 | | Total Stockholders' Equity | $355,514 | $354,566 | +$948 | | Cash | $44,553 | $43,820 | +$733 | | Accounts Receivable - trade, net | $53,797 | $42,357 | +$11,440 | | Inventories, net | $125,265 | $117,005 | +$8,260 | | Long-term loan | $47,942 | $23,957 | +$23,985 | Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, net revenue increased 16% to $61.1 million, but net loss widened to $7.1 million from $6.0 million in the prior year, primarily due to higher cost of revenue, increased operating expenses, and higher interest expense | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | Net revenue | $61,082 | $52,802 | 16% | | Cost of revenue | $17,063 | $12,003 | 42.2% | | Gross profit | $44,019 | $40,799 | 8% | | Total operating expenses | $54,676 | $46,465 | 17.7% | | Operating loss | ($10,657) | ($5,666) | -88.1% | | Net loss | ($7,113) | ($6,029) | -18.0% | | Net loss per share – basic and diluted | ($0.30) | ($0.26) | -15.4% | - Other (income) expense significantly improved to ($4,709) thousand in Q2 2025 from $120 thousand expense in Q2 2024, contributing positively to the bottom line despite other cost increases[26] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities increased to ($14.6) million, investing activities resulted in ($9.5) million cash used, and financing activities provided $24.7 million, primarily from debt issuance | Metric | 2025 (Thousands) | 2024 (Thousands) | Change | | :----- | :--------------- | :--------------- | :----- | | Net cash used in operating activities | ($14,618) | ($12,782) | ($1,836) | | Net cash used in investing activities | ($9,532) | $16,018 | ($25,550) | | Net cash used in financing activities | $24,674 | ($4,842) | $29,516 | | Net decrease in cash, cash equivalents and restricted cash | $828 | ($2,137) | $2,965 | | Cash, cash equivalents and restricted cash, end of period | $46,605 | $30,890 | $15,715 | - The significant change in investing activities was due to the absence of sales of short-term marketable securities (which provided $49.8 million in 2024) and new investments in private companies ($1.5 million) and clinic acquisitions ($0.3 million) in 2025[28] - Financing activities were positively impacted by $25.0 million in proceeds from the issuance of debt in 2025[28] Net Revenue by Geography and Product Category For the six months ended June 30, 2025, total net revenue increased to $113.5 million, with U.S. revenue at $89.0 million and international revenue at $24.5 million, while Trauma and Deformity remained the largest category at $79.5 million | Geographic Location | 2025 (Thousands) | 2024 (Thousands) | | :------------------ | :--------------- | :--------------- | | U.S. | $89,039 | $75,554 | | International | $24,454 | $21,933 | | Total | $113,493 | $97,487 | | Product Category | 2025 (Thousands) | 2024 (Thousands) | | :--------------- | :--------------- | :--------------- | | Trauma and deformity | $79,521 | $71,073 | | Scoliosis | $32,186 | $23,886 | | Sports medicine/other | $1,786 | $2,528 | | Total | $113,493 | $97,487 | Non-GAAP Financial Measures Reconciliation This section provides reconciliations of GAAP net loss and diluted loss per share to their non-GAAP adjusted counterparts, highlighting key adjustments Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA For the three months ended June 30, 2025, Adjusted EBITDA was $4.1 million, a significant increase from $2.6 million in the prior year, achieved by adjusting net loss for interest expense, depreciation, stock-based compensation, restructuring charges, and other income | Metric | 2025 (Thousands) | 2024 (Thousands) | | :----- | :--------------- | :--------------- | | Net loss | ($7,113) | ($6,029) | | Interest expense, net | $1,116 | $261 | | Other income | ($4,709) | $120 | | Income tax charge (benefit) | $49 | ($18) | | Depreciation and amortization | $5,170 | $4,779 | | Stock-based compensation | $5,252 | $2,939 | | Restructuring charges | $2,971 | — | | Tariff cost | $648 | — | | Acquisition related costs | $474 | $142 | | Minimum purchase commitment cost | $269 | $433 | | Adjusted EBITDA | $4,127 | $2,627 | Reconciliation of Diluted Loss Per Share to Non-GAAP Adjusted Diluted Loss Per Share Non-GAAP diluted loss per share for Q2 2025 improved to ($0.11) from ($0.23) in Q2 2024, primarily due to adjustments for restructuring charges, tariff costs, acquisition-related costs, and minimum purchase commitment costs | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Loss per share, diluted (GAAP) | ($0.30) | ($0.26) | | Restructuring charges | $0.13 | — | | Tariff cost | $0.03 | — | | Acquisition related costs | $0.02 | $0.01 | | Minimum purchase commitment cost | $0.01 | $0.02 | | Loss per share, diluted (non-GAAP) | ($0.11) | ($0.23) | Additional Company Information This section provides background on OrthoPediatrics, details on its conference call, forward-looking statement disclaimers, and explanations of non-GAAP financial measures About OrthoPediatrics Corp. Founded in 2006, OrthoPediatrics is an orthopedic company exclusively focused on advancing pediatric orthopedics, offering 82 systems across trauma and deformity, scoliosis, and sports medicine/other procedures, distributed globally in over 75 countries - OrthoPediatrics, founded in 2006, is exclusively focused on pediatric orthopedics, offering 82 systems across trauma and deformity, scoliosis, and sports medicine/other procedures[21] - The company's global sales organization distributes products in the United States and over 75 other countries[21] Conference Call OrthoPediatrics will host a conference call on Tuesday, August 5, 2025, at 4:30 p.m. ET to discuss the Q2 2025 financial results, with a live and archived webcast available on the company's investor relations website - A conference call to discuss Q2 2025 results will be held on August 5, 2025, at 4:30 p.m. ET, with a webcast available on www.orthopediatrics.com[17](index=17&type=chunk) Forward-Looking Statements This press release contains forward-looking statements subject to risks and uncertainties, including those related to widespread health emergencies and factors detailed in the company's SEC filings, with OrthoPediatrics disclaiming any obligation to update these statements - The press release includes forward-looking statements, identifiable by words like 'expect,' 'plan,' 'anticipate,' and 'will,' which involve risks and uncertainties beyond the company's control[18] - Important factors that could cause actual results to differ materially are detailed under 'Risk Factors' in OrthoPediatrics' Annual Report on Form 10-K and other SEC reports[18] Use of Non-GAAP Financial Measures The company uses non-GAAP financial measures like Adjusted EBITDA and adjusted diluted loss per share to provide investors with a clearer view of its core operating performance, excluding certain non-recurring or non-cash expenses, emphasizing their supplemental nature to GAAP results - Non-GAAP financial measures, including Adjusted EBITDA and adjusted diluted loss per share, are used to provide a more consistent analysis of core business operating performance by excluding items like restructuring charges, stock-based compensation, and acquisition-related costs[19][20] - Management uses these metrics for operating performance evaluation and planning, but emphasizes that they are supplemental and should not be considered superior to GAAP measures[19][20] Investor Contact For investor inquiries, contact Philip Trip Taylor of Gilmartin Group via email at philip@gilmartinir.com or by phone at 415-937-5406 - Investor contact information is provided for Philip Trip Taylor of Gilmartin Group[22] Supplemental Disclosures Supplemental disclosures for the six months ended June 30, 2025, include cash paid for interest of $2.55 million, transfer of instruments from property and equipment and inventory of $0.65 million, and various issuances of common shares for installments and vendor obligations | Metric | 2025 (Thousands) | 2024 (Thousands) | | :----- | :--------------- | :--------------- | | Cash paid for interest | $2,552 | $760 | | Transfer of instruments from property and equipment and inventory | $651 | $281 | | Issuance of common shares for MedTech installment | $226 | $133 | | Issuance of common shares to settle an obligation with a vendor | $1,261 | — | | Right-of-use assets obtained in exchange for lease liabilities | $3,311 | — |