OrthoPediatrics (KIDS) FY Conference August 13, 2025 11:00 AM ET Speaker0Good morning, everyone, and thank you for joining us at this year's Canaccord Genuity Global Growth Conference. My name is Caitlin Cronin, and I'm on the medical device team here at Canaccord Genuity. I'm joined today by OrthoPediatrics, a medical device company dedicated to developing orthopedic solutions exclusively for the pediatric population. And with me today are Dave Bailey, CEO, and Fred Hite, CFO. And before we begin, I want t ...

Financial Data and Key Metrics Changes - In Q1 2025, worldwide revenue reached $52.4 million, a 17% increase compared to Q1 2024 [31] - U.S. revenue was $40.9 million, reflecting a 19% increase and accounting for 78% of total revenue [32] - Adjusted EBITDA loss was reduced to $400,000, over 50% improvement from a loss of $1.1 million in Q1 2024 [37] - Free cash flow usage decreased by 36% to $8.4 million compared to the same period last year [37] - Cash, short-term investments, and restricted cash at the end of Q1 2025 totaled $60.8 million [37] Business Line Data and Key Metrics Changes - Trauma and Deformity (T&D) global revenue was $37.9 million, a 14% increase year-over-year [33] - Scoliosis global revenue reached $13.7 million, a 34% increase compared to the prior period [33] - The OPSB business showed strong growth, contributing to overall revenue growth and market share gains [8][21] Market Data and Key Metrics Changes - International revenue was $11.5 million, an 11% increase year-over-year, driven by increased procedure volumes [32] - Trauma replenishment growth was nearly 20%, while scoliosis grew greater than 20% in international markets [26] - The company has minimal exposure to tariff-related impacts, with 95% of COGS from domestic suppliers [11] Company Strategy and Development Direction - The company aims to support the treatment of 1 million children annually, focusing on profitable growth and cash generation [41] - Expansion of OPSB is a key growth driver, with plans for territory expansion and new product launches [17][20] - The company is committed to innovative product development, with several FDA approvals and new product launches planned [8][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth and profitability despite broader economic conditions [12] - The company anticipates increased momentum throughout 2025, driven by successful scaling of OPSB and innovative product launches [12] - Management remains cautious about summer months, traditionally strong for the business, and is focused on cash collection in international markets [48][49] Other Important Information - The company received FDA approval for multiple products, including the Vertiglyde system and the 3P Pediatric Plating Platform Hip System [8][16] - The company hosted 172 training experiences for over 2,245 healthcare professionals in Q1 2025 [29] - OrthoPediatrics was named one of the best places to work in Indiana for 2025, marking the ninth time on this list [30] Q&A Session Summary Question: Can you discuss the strong performance in the spine business and the impact of Vertiglyde? - Management noted strong growth in scoliosis, driven by high adoption rates and new accounts, with Vertiglyde expected to contribute positively [44][45] Question: Why is the revenue guidance conservative despite strong performance? - Management indicated caution due to the upcoming summer months and a focus on cash collection in international markets [48][49] Question: How does the 7D technology impact the adoption of scoliosis products? - Management confirmed that accounts with 7D technology are seeing increased adoption of scoliosis products, contributing to overall growth [56][57] Question: What are the plans for clinic expansion in Florida and Colorado? - Management expressed optimism about ongoing clinic performance and plans for further expansion in the U.S. and internationally [72][75] Question: Can you provide updates on the LE device submission and EU MDR products? - Management indicated positive discussions with the FDA regarding LE and plans to launch trauma and deformity products in Europe once EU MDR approval is secured [82][88]

Financial Data and Key Metrics Changes - In Q1 2025, worldwide revenue reached $52.4 million, a 17% increase compared to Q1 2024 [31] - U.S. revenue was $40.9 million, reflecting a 19% increase and accounting for 78% of total revenue [32] - International revenue totaled $11.5 million, an 11% increase, representing 22% of total revenue [33] - Adjusted EBITDA loss was reduced to $400,000, improving over 50% from a loss of $1.1 million in Q1 2024 [37] - Free cash flow usage decreased by 36% to $8.4 million compared to the same period last year [37] Business Line Data and Key Metrics Changes - Trauma and Deformity global revenue was $37.9 million, a 14% increase driven by trauma products and OPSB [33] - Scoliosis global revenue reached $13.7 million, a 34% increase, primarily due to increased sales of Response and ApiFix systems [34] - The T and D business grew 14%, supported by strong market share gains and prior investments in set allocation [13] Market Data and Key Metrics Changes - Over 20% of global revenue is trauma-related, which is largely non-elective, providing stability against economic downturns [12] - International growth was double-digit, but impacted by lower sales in Latin America [26] - Strong adoption trends were noted in Canada and Australia, contributing to international growth [26] Company Strategy and Development Direction - The company aims to execute and scale OPSB, take market share in the surgical business, and continue innovative product launches [7] - Expansion into new territories, including North Carolina, is underway, with plans for additional territories in H2 2025 [18] - The company is focused on improving profitability and cash flow while maintaining growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth and profitability trajectories despite broader economic conditions [12] - The company is increasing its full-year revenue guidance to $236 million to $242 million, representing 15% to 18% growth [12] - Management remains cautious about summer months, traditionally strong for the business, and is monitoring international markets for cash collection opportunities [50] Other Important Information - The company received five FDA approvals in 2025, including major systems that will enhance its product offerings [9] - The company is actively pursuing EU MDR compliance to launch new products in Europe starting in H2 2025 [27] - OrthoPediatrics was recognized as one of the best places to work in Indiana for 2025, reflecting employee dedication [30] Q&A Session Summary Question: Can you discuss the strong performance in the spine business and the impact of VertiGlide? - Management noted strong growth in scoliosis, driven by high adoption rates and new accounts, with VertiGlide expected to contribute positively [45][46] Question: Why is the revenue guidance conservative despite strong performance? - Management indicated caution due to the upcoming summer months and a strategic approach to international markets to improve cash flow [48][50] Question: How does the 7D technology impact the adoption of scoliosis products? - Management confirmed that accounts with 7D technology are seeing increased adoption of scoliosis products, contributing to overall growth [58][60] Question: What is the outlook for the EU MDR and product launches? - Management expects the first approvals to focus on trauma and deformity products, which will modernize existing systems and drive market share [86][88] Question: Can you elaborate on the OPSB product launches? - Management confirmed plans for multiple launches in 2025, including products targeting pediatric hip dysplasia and innovative bracing solutions [95][97]

Financial Data and Key Metrics Changes - In Q1 2025, worldwide revenue reached $52.4 million, a 17% increase compared to Q1 2024 [32] - U.S. revenue was $40.9 million, reflecting a 19% increase and accounting for 78% of total revenue [33] - Adjusted EBITDA loss improved by over 50% year-over-year, from a loss of $1.1 million in Q1 2024 to a loss of $0.4 million in Q1 2025 [39] - Free cash flow usage decreased by 36% year-over-year, amounting to $8.4 million in Q1 2025 [39] Business Line Data and Key Metrics Changes - Trauma and Deformity (T&D) global revenue was $37.9 million, a 14% increase year-over-year [34] - Scoliosis global revenue increased by 34% to $13.7 million, driven by sales of Response, ApiFix, and 3D patient-specific braces [35][22] - The OPSB business showed strong growth, contributing to overall revenue growth and expanding market share [18] Market Data and Key Metrics Changes - International revenue grew by 11% to $11.5 million, representing 22% of total revenue [33] - U.S. market growth was strong, while Latin America experienced softness, impacting overall international performance [15][27] Company Strategy and Development Direction - The company aims to scale OPSB and increase market share through innovative product launches and strategic set deployments [7][13] - The focus remains on expanding clinic territories, with North Carolina being the latest addition, and potential for further expansion in the second half of 2025 [19][21] - The company is committed to becoming a profitable and cash-generative business while helping more children through its products [42][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth and profitability despite broader economic conditions, citing minimal exposure to tariffs [12][13] - The company anticipates revenue growth of 15% to 18% for the full year 2025, increasing guidance to $236 million to $242 million [13][40] - Management remains cautious about summer months, traditionally strong for the business, and is focused on improving cash collection in international markets [51][52] Other Important Information - The company received five FDA approvals in 2025, including significant systems like the Vertiglyde and 3P Pediatric Plating Platform Hip System [9][17] - The company hosted 172 training experiences for over 2,245 healthcare professionals in Q1 2025, enhancing surgeon education and product adoption [30] Q&A Session Summary Question: Can you discuss the strong performance in the spine business and the impact of Vertiglyde? - Management noted strong growth in scoliosis, driven by high adoption rates and new accounts, with Vertiglyde expected to contribute positively [46][47] Question: Why is the revenue guidance conservative despite strong performance? - Management indicated traditional caution regarding summer months and ongoing adjustments in international markets to improve cash flow [50][51] Question: How does the 7D technology impact the adoption of scoliosis products? - Management confirmed that accounts with 7D technology are seeing increased adoption of scoliosis products, contributing to overall growth [56][57] Question: What is the outlook for the EU MDR approval process? - Management expressed optimism about the EU MDR process, with plans to launch several products once approvals are secured [84][85] Question: Can you elaborate on the upcoming product launches in OPSB? - Management confirmed plans for multiple product launches in OPSB, including new bracing technologies and products for developmental hip dysplasia [92][93]