Summary of OrthoPediatrics Conference Call Company Overview - **Company**: OrthoPediatrics - **Industry**: Pediatric Orthopedics - **Key Executives Present**: David Bailey (President and CEO), Joe Hauser (President of Trauma and Deformity, OPSB) Key Financial Highlights - **Q4 Performance**: Strong demand for Trauma and Deformity (T&D) implants in the U.S. and internationally, with significant growth in scoliosis products driven by the deployment of 7D technology and early procedures with VerteGlide [4][10] - **Free Cash Flow**: Achieved $10 million in free cash flow for Q4, marking the first quarter of positive cash flow [5] - **2026 Guidance**: Projected top-line growth of 11%-13%, with an adjusted EBITDA of $25 million and at least break-even cash flow [8] Business Segments Trauma and Deformity (T&D) - **Market Position**: T&D is the foundational product line for OrthoPediatrics, with over 40 systems in major children's hospitals across the U.S. [30] - **Competitive Landscape**: Limited competition focused solely on pediatrics, allowing for easier adoption of new products [32] - **New Product Launches**: Anticipated launches include the 3P Hip System and a Small-Mini System, with a goal of at least one major system launch annually [65][66] OrthoPediatrics Specialty Bracing (OPSB) - **Market Opportunity**: Estimated total addressable market (TAM) of $500 million, with current penetration around 10% [90] - **Growth Strategy**: Focus on expanding into new geographical markets and leveraging existing relationships with hospitals [92][94] - **Profitability**: OPSB has lower gross margins but higher contribution margins due to lower selling costs and no capital deployment [99] Scoliosis - **Market Share**: Represents about 25% of global revenue, with less than 20% market share in children's hospitals [111] - **Competitive Advantage**: Focus on early onset scoliosis with limited competition and investment in technology development [118] - **Key Products**: VerteGlide and RESPONSE ribbon Pelvic device are part of a comprehensive portfolio aimed at addressing significant clinical needs [121] Strategic Insights - **Regulatory Approvals**: Recent EU MDR approvals are expected to enhance international growth, particularly in the scoliosis and trauma markets [14] - **Market Dynamics**: Competitors are withdrawing from pediatric products due to regulatory costs, providing OrthoPediatrics with a unique opportunity to capture market share [33][37] - **Long-Term Growth**: The company is positioned for sustained growth with a focus on innovative product development and expanding its market presence [125] Conclusion OrthoPediatrics is strategically positioned in the pediatric orthopedic market with strong financial performance, a robust product pipeline, and significant growth opportunities in both existing and new markets. The company's focus on specialized pediatric products and its unique market position differentiate it from broader orthopedic competitors.

Financial Data and Key Metrics Changes - In Q4 2025, the company reported a revenue of $61.6 million, a 17% increase compared to Q4 2024 [22] - Full year 2025 revenue growth was 15%, with adjusted EBITDA increasing by nearly 75% [8] - The company generated $10 million in free cash flow in Q4 2025, marking its first positive free cash flow quarter in history [7][28] - The gross profit margin improved to 73% in Q4 2025, up from 68% in Q4 2024 [25] Business Line Data and Key Metrics Changes - The Trauma and Deformity (T&D) business grew by 17% in Q4 2025, driven by strong sales of flagship products [11] - Scoliosis revenue increased by 13% in Q4 2025, supported by international implant growth [24] - The Specialty Bracing (OPSB) business continued to be a strategic growth catalyst, with strong same-store sales growth and successful new product launches [14] Market Data and Key Metrics Changes - U.S. revenue was $48.6 million in Q4 2025, a 13% increase, representing 79% of total revenue [23] - International revenue reached $13.0 million, a 33% increase, accounting for 21% of total revenue [23] - The company experienced strong demand in direct markets in the EU and Australia, with a rebound in Latin America [19] Company Strategy and Development Direction - The company aims to help 1 million children annually and is focused on expanding its product portfolio and market presence [9] - A multi-year product innovation cycle is underway, with significant product launches planned [10] - The company is exploring opportunities in pediatric subspecialties beyond orthopedics, including cardiovascular technologies [44][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining revenue growth and achieving cash flow breakeven in 2026 [8][28] - The company anticipates continued share gains and improved EBITDA margins driven by new product launches [10][11] - Management highlighted the importance of the EU MDR approvals for expanding product offerings in Europe [20][88] Other Important Information - The company recorded a GAAP net loss per share of $0.43 in Q4 2025, an improvement from $0.69 in the prior year [26] - Non-GAAP net loss per share was $0.30, compared to $0.29 in the same period last year [27] - The company is committed to maintaining a strong R&D pipeline, with several innovative products expected to launch in the coming years [80] Q&A Session Summary Question: Insights on Scoliosis performance and competitive pressure - Management noted strong performance in the Scoliosis segment, driven by the VerteGlide system and new product launches, with expectations for continued growth [33][34] Question: Outlook on margin progression - Management indicated that gross margins are expected to remain around 73% in 2026, with adjusted EBITDA projected to increase significantly [36] Question: Exploration of options to increase shareholder value - Management emphasized the potential for expanding the commercial footprint into other pediatric subspecialties, leveraging existing infrastructure [42][44] Question: Updates on 7D placements and strategy - Management reported normal growth in 7D placements, with optimism for 2026 based on strong performance in existing accounts [55] Question: Impact of new product launches on guidance - Management stated that while there is significant interest in new products, minimal revenue from these launches is included in the 2026 guidance [57] Question: Pricing and margin impact from new products - Management confirmed that new technologies are commanding higher premiums, which will positively impact profitability over time [87] Question: EU MDR strategy and market penetration - Management highlighted the importance of having a full range of product sizes approved in Europe, which will facilitate surgeon conversions and drive growth [88] Question: Cardiovascular business margin profile - Management indicated that the gross margin profile for the cardiovascular business is expected to be higher than the current implant business, which is encouraging for future profitability [90]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported a revenue of $61.6 million, a 17% increase compared to Q4 2024 [22] - Full year 2025 revenue growth was 15%, with a nearly 75% increase in Adjusted EBITDA [8] - The company generated $10 million in free cash flow in Q4 2025, marking its first positive free cash flow quarter in history [7][28] - The gross profit margin improved to 73% in Q4 2025, up from 68% in Q4 2024 [25] - GAAP net loss per share was $0.43, an improvement from $0.69 in the prior year [26] Business Line Data and Key Metrics Changes - The Trauma and Deformity (T&D) business grew by 17% in Q4 2025, driven by flagship products [11] - Scoliosis revenue increased by 13% in Q4 2025, supported by international growth and OPSB [24] - The OPSB business continued to be a strategic growth catalyst, with strong same-store sales growth and successful new product launches [14] Market Data and Key Metrics Changes - U.S. revenue was $48.6 million, a 13% increase from Q4 2024, representing 79% of total revenue [23] - International revenue reached $13.0 million, a 33% increase compared to Q4 2024, representing 21% of total revenue [23] Company Strategy and Development Direction - The company aims to help 1 million children annually and is focused on expanding its product portfolio and market presence [9] - A multi-year super cycle of product innovation is underway, with significant product launches planned [10] - The company is exploring opportunities in pediatric subspecialties beyond orthopedics, including cardiovascular technologies [44][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining revenue growth and achieving cash flow breakeven in 2026 [8][28] - The company anticipates continued strong performance in the scoliosis segment, driven by new product launches and market expansion [34] - Management highlighted the importance of the EU MDR approvals for enhancing international market penetration [20][89] Other Important Information - The company is committed to maintaining a strong R&D pipeline, with several innovative products expected to launch in the coming years [80] - The acquisition of a Brazilian distributor is expected to improve cash collection and market penetration in Latin America [20] Q&A Session Summary Question: Insights on Scoliosis performance and competitive pressure - Management noted strong growth in the scoliosis segment, driven by new product launches and increased surgeon adoption [33] Question: Outlook on margin progression - Management expects gross margins to remain around 73% in 2026, with Adjusted EBITDA projected to increase significantly [36] Question: Exploration of options to increase shareholder value - Management indicated interest in expanding the commercial footprint in pediatric subspecialties and leveraging existing capabilities [42][44] Question: Updates on new product launches and guidance - Management stated that while new product launches are not heavily factored into guidance, there is significant interest and potential for future revenue [57] Question: Pricing and margin impact from new products - New technologies are expected to command higher premiums, positively impacting profitability over time [87] Question: Impact of EU MDR approvals on international growth - The approval allows for a full range of product sizes, facilitating surgeon conversion and enhancing growth in the European market [88]