Orthofix(US:OFIX)2022-11-06 02:42Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $114 million, increasing 1% over 2021 on a reported basis and 5% on a constant currency basis [5][14] - GAAP gross margin in Q3 2022 was 73%, down from 75% in the prior year period [14] - GAAP loss per share was $0.53 compared to a loss of $0.11 in Q3 2021, while adjusted EPS was $0.13 compared to $0.10 in the prior year [16][14] - Adjusted EBITDA margin increased to 13% of net sales compared to 11% in Q3 2021 [15] Business Line Data and Key Metrics Changes - Bone Growth Therapies (BGT) sales were $46.5 million, up 3% on both a reported and constant currency basis [6] - Spinal Implants revenue was down approximately 8% on a reported basis and 7% on a constant currency basis [6] - Biologics revenue was up 8% on a reported and constant currency basis [7] - Global Orthopaedics revenue was up 6% on a reported basis and 19% on a constant currency basis [7] Market Data and Key Metrics Changes - U.S. total net sales were $88 million, or 77% of total net revenue, up approximately 2% versus the prior year [14] - International total net sales were $26 million, or 23% of total revenue, up 13% in constant currency over Q3 2021 [14] Company Strategy and Development Direction - The company is focused on solidifying its position in regenerative healing technologies and driving sustainable profitable growth through innovation and differentiation [18] - The planned merger with SeaSpine aims to create a leading global Spine and Orthopedics company with a combined revenue of nearly $700 million [12][13] - The company is investing in expanding its commercial channels and optimizing its product offerings to enhance market access [11] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macro headwinds, including hospital staffing issues and inflation sensitivity affecting patient behavior [17] - Key products like AccelStim and Virtuos are gaining initial momentum, but significant revenue contributions are not expected until 2023 [17] - The company remains optimistic about future growth driven by new product innovations and commercial channel initiatives [21] Other Important Information - The company received a 2022 Spine Technology Award for the Virtuos Lyograf, highlighting its innovative product offerings [10] - The merger with SeaSpine is expected to enhance the combined company's competitive position and expand its product portfolio [13][46] Q&A Session Summary Question: Can you quantify the commercial channel initiatives and investments? - Management discussed investments in building the fracture channel and noted that results are being seen in the Orthopedics business with 19% growth [25][26] Question: What are the dynamics regarding procedure complexity post-COVID? - Management observed an increase in procedures but a decrease in levels per procedure, attributing this to various macroeconomic factors [28] Question: How should we think about the overall BGT portfolio growth profile with AccelStim? - Management indicated that AccelStim has positively impacted the acute fracture channel and expects continued growth in the BGT area [31][32] Question: Any updates on the M6 two-level study? - Management confirmed ongoing patient enrollment and increased efforts to complete the study as quickly as possible [36][38] Question: What are the implications of the merger on distribution channels? - Management stated that separate channels for BGT and orthopedics will remain, but there are significant opportunities for leveraging combined distribution efforts [45][46]