OrthoPediatrics(US:KIDS)2025-10-28 21:32Financial Data and Key Metrics Changes - In Q3 2025, worldwide revenue was $61.2 million, a 12% increase compared to Q3 2024, driven by strong performance in Trauma and Deformity, Scoliosis, and OPSB, offset by declines in 7D unit sales and LATSAM stocking and set sales [19][20] - U.S. revenue reached $48.7 million, a 14% increase year-over-year, representing 80% of total revenue [19] - Adjusted EBITDA improved by 56% to $6.2 million compared to $4.0 million in Q3 2024 [25] - Gross profit margin increased to 74% from 73% in the prior year [21] - Free cash flow usage decreased significantly to $3.4 million from $11.7 million in Q3 2024 [25] Business Line Data and Key Metrics Changes - Trauma and Deformity (T&D) global revenue grew by 17% to $44.1 million, driven by strong growth in multiple product lines [21] - Scoliosis global revenue increased by 4% to $16.3 million, primarily due to increased sales of RESPONSE products, offset by lower 7D unit sales [21][14] - OPSB growth was robust, exceeding 20%, contributing significantly to overall revenue growth [6][11] Market Data and Key Metrics Changes - International revenue totaled $12.5 million, a 6% increase year-over-year, primarily driven by increased procedure volumes, despite lower stocking and set sales in LATSAM [20] - EMEA and APAC regions showed strong demand and surgical volume, while LATSAM faced headwinds due to reduced stocking and set sales [16][17] Company Strategy and Development Direction - The company aims to address critical gaps in pediatric healthcare, focusing on expanding its core business in Trauma and Deformity and Scoliosis implants, as well as OPSB clinics [5][11] - The 3P Pediatric Plating Platform is expected to drive future growth, with new systems planned for launch each year [10][11] - The company is strategically limiting new stocking and set sales in LATSAM to improve cash metrics, focusing on profitability rather than revenue at all costs [17][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive free cash flow in Q4 2025 and breakeven in 2026, despite adjusting revenue expectations [8][26] - The exit of competitors from the pediatric space is seen as an opportunity for the company to capture market share [29] - Management highlighted the importance of maintaining profitability and cash flow while pursuing growth opportunities [80] Other Important Information - The company recorded restructuring and impairment charges totaling $4.6 million in Q3 2025, impacting operating expenses [22][23] - The company has expanded its OPSB clinics from 26 to over 40 since acquiring Boston O&P in January 2024, with plans for further expansion [12][11] Q&A Session Summary Question: Competitors exiting the space - Management noted that major OEMs like J&J and Smith & Nephew are pulling pediatric products, which could benefit the company competitively [29] Question: Potential for accelerating OPSB expansions - Management confirmed high demand for clinics and expressed willingness to accelerate openings if financially viable [30] Question: Impact of 7D placements on core spine business growth - Management indicated that delays in 7D placements would not significantly affect long-term growth rates for the Scoliosis business [54] Question: EU MDR approvals and staffing reductions - Management confirmed that upcoming EU MDR approvals would enhance the Scoliosis portfolio in Europe, while staffing reductions are part of cost-saving measures [64] Question: Long-term growth outlook and profitability in LATSAM - Management emphasized that future strategies would prioritize profitable revenue growth over maximizing revenue at all costs in LATSAM [80]