ORTHOPEDIATRICS CORP Q1 FY2025 earnings call

• Scaling of OPSB is advancing with territory expansion, including entering North Carolina in 2025.
• Product launches: Final FDA approval for Verteglide system, sterile PNP femur, sterile PNP tibia, Orthex titanium half pin, and 3P pediatric plating platform HIP system. Continued adoption of response fusion system and DF2.
• Scoliosis segment saw 34% growth driven by increased sales of Response, Apifix non-fusion system, 7D technology, and 3D patient-specific scoliosis braces.
• EU MDR compliance process ongoing with plan to launch new products in Europe starting H2 2025.
• Hosted 172 unique training experiences for over 2,245 healthcare professionals and will participate in key industry events like POSNA.

Global revenue for the first quarter of 2025 was $52.4 million, up 17% compared to Q1 2024. U.S. revenue was $40.9 million (78% of total), up 19% y-o-y. International revenue was $11.5 million (22% of total), up 11% y-o-y. Trauma and deformity global revenue was $37.9 million, up 14% y-o-y. Scoliosis global revenue was $13.7 million, up 34% y-o-y. OPSB is a growing segment with territory expansion and product launches contributing to overall growth.

• Increased full-year revenue guidance to $236 million to $242 million, representing 15%-18% annual growth.
• Reiterated gross margin guidance of 72%-73% for the full year.
• Expect adjusted EBITDA of $15 million to $17 million in 2025.
• Anticipate $15 million of new sets deployed in 2025 and positive free cash flow in Q4 2025.

• Minimal exposure to tariff-related impacts, but international markets face pressure from LATAM and lower set sales. Focus on profitable growth and improved cash flow in international business. Concerns about cash collection in Latin America.

Q: About the strong scoliosis quarter and Verteglide contribution, and OPSB market share.

A: Scoliosis growth driven by high adoption rates, 7D placements, and EOS product development. OPSB synergies contribute to surgeon adoption and market share potential.

Q: On top line guidance, any caution?

A: Generally hew to principles, being judicious in international markets to improve cash flow.

Q: Interplay of 7D accounts and scoliosis product adoption.

A: 7D placements lead to growth in accounts with no prior business, and drive adoption of fusion devices and other scoliosis products.

Q: Gross margin guide and outlook.

A: International set sales and seasonal fourth quarter impact gross margin, but anticipate strong summer performance.

Q: OPSB clinic expansion and EU MDR.

A: Clinic expansion ongoing with positive volume increases, first EU MDR products to launch in H2 2025 on trauma and limb deformity side.

Q: DF2 market and OPSB launches.

A: DF2 converting spica cast usage, OPSB has multiple launches planned including bracing sensor and hip products. Manufacturing capacity being addressed to handle increased demand.