OrthoPediatrics (NasdaqGM:KIDS) FY Conference Transcript

Summary of OrthoPediatrics FY Conference Call (December 04, 2025) Company Overview - Company: OrthoPediatrics (NasdaqGM: KIDS) - Industry: Pediatric orthopedic medical devices Key Points and Arguments Q3 Performance and Guidance Adjustments - Despite a decrease in guidance, the company reported a strong Q3 performance, with challenges primarily in capital sales and Latin America [4][5][6] - The 7D capital product, a navigation platform for spine surgery, had no completed orders in Q3, leading to a significant revenue impact of several million dollars [4][5] - The company has decided to remove 7D revenue from future guidance to provide clearer expectations for investors [6][10] Revenue Growth Components - The company anticipates a baseline growth rate of around 12%, focusing on predictable and high-margin components of the business, including T&D implants and OPSB [32][34] - The scoliosis implant business is expected to remain flat, while international agency sales, particularly in Europe and Australia, are showing strong growth [34] New Product Development - OrthoPediatrics is at the beginning of a new product launch cycle, with significant investments in novel product development expected to impact growth from 2026 onwards [37][38] - Key products include the PNP tibia and femur, which are rapidly growing, and the 3P system, which has received positive feedback and is expected to become a workhorse for the company's hip systems [40][47] Market Opportunities - The plating market is large, with estimates suggesting a collective opportunity exceeding $50 million [48] - The early onset scoliosis (EOS) market in the U.S. is estimated to be over $50 million, with significant potential for growth due to limited competition [88][91] Financial Outlook - The company expects a substantial increase in EBITDA in 2026, with projections indicating a growth rate of around 65% [105][108] - The restructuring efforts and a focus on profitability are expected to positively impact cash flow and operational efficiency [109] Strategic Focus - OrthoPediatrics aims to expand its clinic presence, aspiring to have clinics in every children's hospital in the U.S. and select international markets [104] - The company is focused on generating free cash flow and has limited set deployment to manage cash conversion cycles effectively [58][62] Challenges and Risks - There are theoretical risks associated with not achieving 7D sales, which could impact the spine business, but the company does not anticipate significant negative effects on its implant business [17][29] - The company is cautious about capital deployment for new product launches, ensuring that cash usage aligns with growth strategies [64][68] Additional Important Insights - The company is leveraging advanced technologies in its products, such as RF technology in the LE device, which enhances surgical precision and reduces complications [76][78] - OrthoPediatrics is differentiating itself by focusing on complex surgeries for pediatric patients, which are often overlooked by competitors [71][72] This summary encapsulates the critical insights from the OrthoPediatrics FY Conference Call, highlighting the company's performance, strategic direction, and market opportunities.