OrthoPediatrics(US:KIDS)2023-03-01 16:00Financial Data and Key Metrics Changes - In Q4 2022, worldwide revenue was $31 million, a 25% increase compared to Q4 2021. For the full year 2022, revenue reached $122.3 million, also a 25% increase from 2021 [51][52] - Gross profit margin for Q4 2022 was 68.5%, down from 72.9% in Q4 2021. For the full year, gross profit margin was 74.1%, slightly down from 74.9% in 2021 [31][32] - Adjusted EBITDA for Q4 2022 was a loss of $2.2 million, compared to a loss of $0.6 million in Q4 2021. For the full year, adjusted EBITDA was positive at $0.2 million, compared to a negative $0.2 million in 2021 [76] Business Line Data and Key Metrics Changes - Trauma & Deformity revenue in Q4 2022 was $22.1 million, a 34% increase year-over-year. For the full year, revenue was $85.1 million, a 29% increase [30] - Scoliosis revenue in Q4 2022 was $8 million, representing organic growth of 12% compared to the prior year. For the full year, Scoliosis revenue was $33.4 million, a 19% increase [43][72] - Sports Medicine/Other revenue in Q4 2022 was $0.9 million, a decrease of 22% compared to the prior year. For the full year, revenue was $3.8 million, down 9% [73] Market Data and Key Metrics Changes - US revenue for Q4 2022 was $22.7 million, a 15% increase from Q4 2021. For the full year, US revenue was $92.4 million, a 19% increase [29] - International revenue in Q4 2022 was $8.3 million, a 67% increase compared to the prior year. For the full year, international revenue was $29.9 million, a 47% increase [45][71] Company Strategy and Development Direction - The company aims to deliver total revenue between $146 million to $149 million for 2023, representing year-over-year growth of 20% to 22% [9][57] - The acquisitions of MD Orthopaedics and Pega Medical are expected to contribute significantly to growth, with both businesses anticipated to outpace organic growth rates in 2023 [10][18] - The company is focusing on expanding its product offerings and enhancing surgeon training and education to drive growth [25][50] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from COVID-19, RSV, and hospital staffing shortages but expressed confidence in the company's strategic position and growth potential [8][9] - The company expects to achieve cash flow breakeven within the next five years, supported by a strengthened balance sheet [15][35] - Management remains optimistic about growth opportunities, particularly in the Trauma & Deformity and Scoliosis segments, as well as international markets [80] Other Important Information - The company has launched several new products in 2022, bringing the total product offering to 46 systems, which are expected to contribute to growth in 2023 [21][24] - The company is committed to ESG initiatives, highlighting diverse employee representation and strong business ethics [27] Q&A Session Summary Question: Guidance for 2023 revenue - Management reiterated the revenue guidance of $146 million to $149 million, with organic growth expected to be between 15% to 18% [62][77] Question: Impact of RSV and gross margin fluctuations - Management explained that RSV impacted volume and margins in Q4 2022, with expectations for margins to stabilize in 2023 [66][130] Question: Growth expectations for MD Orthopaedics and Pega Medical - Management indicated that both businesses are expected to grow above the corporate average, with significant growth anticipated as inventory is deployed [90][122] Question: Market opportunities and surgeon adoption - Management noted that there is still a significant opportunity to deepen penetration with existing customers and attract new surgeons to their products [110][128] Question: International market expansion - Management acknowledged potential growth in emerging markets like Brazil, India, and China, but emphasized focusing on current opportunities [129]