Orthofix(US:OFIX)2021-03-02 00:59Financial Data and Key Metrics Changes - Total revenue for Q4 2020 was $46.4 million, a 6.2% increase compared to the prior year [9][22] - U.S. revenue increased 7.2% to $42.1 million, while international revenue declined by 3.2% to $4.3 million [22] - Gross margin for Q4 2020 was 62.8%, down from 64.2% in Q4 2019 due to higher excess and obsolete inventory provisions [25] - Net loss for Q4 2020 was $10.3 million, compared to a net loss of $8.6 million in Q4 2019 [28] Business Line Data and Key Metrics Changes - U.S. spinal implant revenue increased 8.3% year-over-year to $20.7 million, driven by new product launches [23] - U.S. orthobiologics revenue increased 6.2% year-over-year to $21.4 million, primarily due to growth in the OsteoStrand Plus product [25] - Average SeaSpine products used per procedure increased from 1.8 in Q4 2019 to 1.9 in Q4 2020 [10] Market Data and Key Metrics Changes - Worldwide revenue per day grew more than 17% over the prior year in the second half of Q4 2020 [6] - U.S. spinal implants and orthobiologics portfolios generated double-digit growth, although growth slowed due to COVID-19 restrictions on elective surgeries [7] Company Strategy and Development Direction - The company plans to launch more than a dozen products in 2021, focusing on expanding its core distributor network and increasing market share [33][36] - The strategic alliance with 7D Surgical aims to co-market their image-guided surgery platform and develop SeaSpine-specific instrumentation [19] - Continued investment in product innovation and expanding the distribution network is expected to support aggressive growth plans post-COVID [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 20% total revenue growth in 2021, assuming a decline in COVID-19 cases [8] - The company anticipates that most revenue growth will occur later in the year due to the impact of COVID-19 on surgery volumes in early 2021 [8] - Management remains optimistic about returning to sustained double-digit revenue growth as the market stabilizes [36] Other Important Information - Free cash flow burn for Q4 2020 was $17.1 million, a significant increase attributed to higher investments in inventory and capital expenditures [29] - The company expects free cash flow burn for 2021 to be slightly higher than in 2020 due to increased investments in spinal implant inventory [31] Q&A Session Summary Question: What should be factored into models for 2021 outlook? - Management indicated that international visibility remains low due to reliance on stocking distributors, but U.S. spinal implants are expected to drive growth [39] Question: What stage are the 19 product launches from last year? - Most significant launches included the Mariner MIS and Revision systems, which are expected to contribute to revenue growth moving forward [41] Question: What is the state of the commercial team and revenue mix? - The company has added new distributor partners and expects a higher mix of revenues from core distributors in 2021 [45][47] Question: Does guidance consider market disruptions? - Management focused on internal factors such as distributor additions and product launches rather than external disruptions from competitors [55] Question: What is the expected inventory increase for 2021? - Inventory is expected to increase in 2021 due to the deployment of more sets for full commercial launches [72] Question: Can you clarify the gross margin expectations? - Long-term expectations for gross margin growth remain at 100 to 150 basis points, with potential for higher growth in 2021 due to operational efficiencies [73]