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

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

Financial Performance - Net sales for Q2 2025 reached $203.1 million, a 2.5% increase from $198.6 million in Q2 2024[16] - Gross profit for the first half of 2025 was $261.2 million, slightly down from $262.0 million in the same period of 2024[16] - Operating loss for Q2 2025 was $16.0 million, an improvement from a loss of $24.9 million in Q2 2024[16] - Net loss for the first half of 2025 was $67.2 million, compared to a net loss of $69.5 million in the first half of 2024[16] - The company reported a comprehensive loss of $10.6 million for Q2 2025, compared to a comprehensive loss of $35.5 million in Q2 2024[16] - For the three months ended June 30, 2025, consolidated net sales were $203,121 thousand, a 2.5% increase from $198,620 thousand in the same period of 2024[63] - The company incurred a loss before income taxes of $14,223,000 in Q2 2025, compared to a loss of $32,359,000 in Q2 2024, indicating an improvement of 56.0%[62] - The total adjusted EBITDA for the first half of 2025 was $48,407,000, compared to $46,265,000 in the first half of 2024, reflecting a growth of 4.6%[61] Cash and Liquidity - Cash and cash equivalents at the end of Q2 2025 were $65.6 million, up from $26.4 million at the end of Q2 2024[20] - The company expects to maintain sufficient cash and cash equivalents to meet anticipated cash requirements[13] Research and Development - Research and development expenses decreased to $15.9 million in Q2 2025 from $18.0 million in Q2 2024[16] Inventory and Assets - As of June 30, 2025, total inventories amounted to $172.993 million, a decrease from $189.452 million as of December 31, 2024, reflecting a reduction in finished products inventory from $105.352 million to $84.997 million[27] - The Company reported total lease assets of $39.767 million as of June 30, 2025, compared to $32.624 million as of December 31, 2024, indicating an increase in operating leases[28] - Total property, plant, and equipment decreased to $129,200 thousand as of June 30, 2025, from $139,804 thousand at the end of 2024[63] Debt and Financing - Outstanding term loans remained stable at $160 million, with total indebtedness from outstanding term loans at $157.047 million as of June 30, 2025, unchanged from December 31, 2024[29] - The Company entered into a $275 million secured credit agreement on November 7, 2024, and was in compliance with all required financial covenants as of June 30, 2025[30] Legal and Regulatory Matters - The Company has received arbitration claims from former executives alleging wrongful termination, seeking severance payments and damages[40] - The Company is vigorously defending against multiple legal claims, including securities class action complaints, but cannot estimate a possible loss at this time[41] - The One Big Beautiful Bill Act signed on July 4, 2025, includes tax reforms that may impact the Company's deferred tax assets and valuation allowance[74] Segment Performance - The Global Orthopedics segment reported a net sales increase of 8.9% to $33.3 million for the three months ended June 30, 2025[52] - The Global Orthopedics segment reported total net sales of $33,297 thousand for the three months ended June 30, 2025, compared to $30,586 thousand in 2024, reflecting an increase of 8.8%[63] - Total segment revenues for Global Spine reached $169,824,000 in Q2 2025, a slight increase from $168,034,000 in Q2 2024, representing a growth of 1.1%[61] Expenses and Impairments - The Company recognized impairment charges of $2,548 thousand for inventory reserves and $608 thousand for property, plant, and equipment related to the M6 product lines during the second quarter of 2025[73] - Share-based compensation expense totaled $7,824 thousand for the three months ended June 30, 2025, down from $9,959 thousand in 2024, indicating a decrease of 21.5%[65] - The Company plans to discontinue the M6 product lines to focus on more profitable growth opportunities, with related assets fully impaired as of June 30, 2025[71] Other Financial Metrics - The allowance for expected credit losses increased to $8,909,000 in Q2 2025 from $8,368,000 in Q2 2024, reflecting a year-over-year increase of 6.5%[54] - The effective tax rate for the three months ended June 30, 2025, was 1.0%, compared to (3.3%) for the same period in 2024, influenced by certain losses not benefited and tax amortization on acquired intangibles[67]

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

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

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

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

Financial Performance - Net sales for Q1 2025 were $193,646,000, an increase of 2% compared to $188,608,000 in Q1 2024[16] - Gross profit for Q1 2025 was $121,619,000, down from $127,242,000 in Q1 2024, representing a decrease of approximately 4.1%[16] - The net loss for Q1 2025 was $53,094,000, compared to a net loss of $36,020,000 in Q1 2024, indicating an increase in losses of approximately 47.5%[16] - Operating loss for Q1 2025 was $48,873,000, compared to an operating loss of $29,337,000 in Q1 2024, reflecting a worsening of approximately 66.5%[16] - The company reported a comprehensive loss of $51,348,000 for Q1 2025, compared to a comprehensive loss of $35,387,000 in Q1 2024, an increase of approximately 45.2%[16] - The Company reported net sales of $193.646 million for the three months ended March 31, 2025, representing a 2.7% increase from $188.608 million in the same period of 2024[53] - Bone Growth Therapies generated sales of $55.050 million, up 4.9% from $52.477 million in the prior year, while Global Orthopedics sales increased by 9.1% to $29.810 million from $27.315 million[53] - Total revenues for the three months ended March 31, 2024, were $188,608,000, a 2.1% increase from $184,000,000 in the same period of 2023[64] - Global Spine segment revenues reached $161,293,000, while Global Orthopedics segment revenues were $27,315,000 for the same period[64] Cash and Liquidity - Cash and cash equivalents at the end of Q1 2025 were $57,953,000, compared to $26,964,000 at the end of Q1 2024, showing an increase of approximately 114.5%[18] - The Company had no borrowings on its available lines of credit in Italy, which provide up to an aggregate amount of €5.5 million ($5.9 million) as of March 31, 2025[30] - The Company entered into a $275.0 million secured credit agreement on November 7, 2024, with financial covenants requiring maintenance of a minimum liquidity level and a maximum total debt-to-EBITDA leverage ratio[29] Expenses and Losses - Research and development expenses for Q1 2025 were $19,766,000, slightly up from $19,492,000 in Q1 2024, indicating a growth of approximately 1.4%[16] - The allowance for expected credit losses increased to $8.602 million as of March 31, 2025, compared to $8.398 million at the end of March 2024[55] - The Company accrued $8.9 million related to the Italian Medical Device Payback (IMDP) as of March 31, 2025, with expenses of $0.3 million recorded for both the three months ended March 31, 2025, and 2024[49] - Share-based compensation expenses totaled $6,469,000 for the three months ended March 31, 2025, down from $8,800,000 in the same period of 2024[69] - The company recognized impairment charges of $29,026,000 related to the discontinued M6 product lines during the three months ended March 31, 2025[77] - Amortization of acquired intangibles was $18,355,000 for the three months ended March 31, 2025, compared to $4,226,000 in the same period of 2024[68] Inventory and Assets - As of March 31, 2025, total inventories decreased to $174,480,000 from $189,452,000 as of December 31, 2024, representing a decline of approximately 7.5%[26] - Total lease assets as of March 31, 2025, amounted to $31,727,000, down from $32,624,000 as of December 31, 2024, indicating a reduction of about 2.7%[27] - The total indebtedness from outstanding term loans as of March 31, 2025, was $156,885,000, slightly decreasing from $157,015,000 as of December 31, 2024, a change of approximately 0.1%[28] - The estimated fair value of the Lattus Contingent Consideration as of March 31, 2025, was $14,790,000, down from $15,400,000 at the beginning of the year, reflecting a decrease of about 4.0%[36] - The fair value of Neo Medical Convertible Loan at March 31, 2024, was $8,355,000, up from $6,760,000 at the beginning of the year, indicating an increase of approximately 23.5%[34] Strategic Initiatives - The company expects to leverage anticipated cross-selling opportunities from the merger with SeaSpine Holdings Corporation to enhance future sales[13] - The company plans to continue investing in new product development and enhancements to existing products to drive future growth[13] - The Company is currently in negotiations with a distributor regarding a potential acquisition, which is subject to certain conditions being met[46] - The Company has received notification from a distributor exercising its buyout option, indicating ongoing market expansion efforts[46] - The company plans to complete the sale of M6 product lines assets before December 31, 2025, as part of its strategy to focus on more profitable growth opportunities[75] Legal and Regulatory Matters - The Company intends to vigorously defend against arbitration claims from former executives, which may have financial implications that are currently not estimable[40] - The Company has taken legal action to dispute the legality of the IMDP measures imposed by the Italian government[48] - The consolidated securities litigation case is pending in the Eastern District of Texas, with allegations of misleading statements made by former directors and officers[44] Taxation - The effective tax rate for the three months ended March 31, 2025, was (1.8%), compared to (2.4%) for the same period in 2024[71] EBITDA - Adjusted EBITDA for the Global Spine segment was $19.516 million, while the total adjusted EBITDA for the Company was $19.489 million for the three months ended March 31, 2025[63] - Adjusted EBITDA for the total segments was $18,398,000, with Global Spine contributing $19,889,000 and Global Orthopedics showing a loss of $1,491,000[64]

Orthofix First Quarter 2025 Financial Results [Financial and Operational Highlights](index=1&type=section&id=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](index=5&type=chunk) - **Bone Growth Therapies (BGT)** net sales reached **$55.1 million**, a **5%** increase, with BGT Fracture sales up **6%**[5](index=5&type=chunk) - **Global Orthopedics** net sales were **$29.8 million**, showing **11%** constant currency growth and **10%** U.S. growth[5](index=5&type=chunk) - 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](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) 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](index=4&type=chunk) - 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](index=4&type=chunk) - 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](index=4&type=chunk) [Financial Results Overview](index=3&type=section&id=Financial%20Results%20Overview) 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](index=8&type=chunk) [Business Outlook (Full-Year 2025 Guidance)](index=3&type=section&id=Business%20Outlook) 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](index=6&type=section&id=Financial%20Statements) 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](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) 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](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) 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](index=8&type=section&id=Non-GAAP%20Financial%20Measures) 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](index=8&type=section&id=Adjusted%20Gross%20Profit%20and%20Adjusted%20Gross%20Margin) 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](index=8&type=section&id=Adjusted%20EBITDA) 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](index=9&type=section&id=Adjusted%20Net%20Income) 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](index=9&type=section&id=Cash%20Flow%20and%20Free%20Cash%20Flow) 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) |

Core Points - A class action lawsuit has been filed against Orthofix Medical, Inc. for failing to disclose inappropriate conduct by certain management team members during the class period from October 11, 2022, to September 12, 2023 [1][3] - Following the announcement of the termination of three management team members due to inappropriate conduct, Orthofix's share price dropped by approximately 30%, from $18.63 to $13.01 per share [2] Company Actions - On September 12, 2023, Orthofix's Board of Directors unanimously decided to terminate and replace three members of the management team after an investigation revealed repeated inappropriate conduct [2] - The class action alleges that the company failed to disclose this misconduct, which significantly impacted investor confidence and share price [3] Legal Information - Investors have until October 21, 2024, to apply to be appointed as lead plaintiff in the class action lawsuit [1] - The law firm Kirby McInerney LLP is representing the investors and has a history of successful recoveries in securities litigation [5]