OrthoPediatrics Corp. Q3 FY2025 earnings call

• Competitors like J&J and Smith & Nephew are exiting pediatric products, creating opportunities for OrthoPediatrics.
• OPSB clinics expanded to over 40, with entry into 8 new territories and international expansion to Ireland. Preliminary expectations for new clinic return on investments are being realized.
• 3P platform saw FDA approval of the Hip system and upcoming approval of 3P Small and Mini, with expected case growth ramping in 2026.
• EOS portfolio has positive trends with VerteGlide Spinal Growth Guidance System adoption on track for full market release.
• International sales were solid in EMEA and APAC, but LatAm faced headwinds; efforts are underway to improve the situation.

In the third quarter of 2025, the T&D business grew by 17% driven by strong market share gains in trauma implants and elective limb deformity. OPSB growth was extremely robust with over 20% growth, with approximately 80% T&D and 20% scoliosis. Trauma and Deformity global revenue was $44.1 million, a 17% increase compared to the prior year period. Scoliosis global revenue was $16.3 million, a 4% increase, led by U.S. Scoliosis implant and Scoliosis OPSB growth but offset by lower 7D capital sales. Sports Medicine/Other revenue was $0.8 million in the third quarter of 2025 compared to $1.3 million in the prior year period. International underlying sales were solid in EMEA and APAC but negatively impacted by LatAm stocking and set sales.

• Full year 2025 revenue expected to range from $233.5 million to $234.5 million, representing 14%-15% year-over-year growth.
• Adjusted EBITDA expected to be $15 million to $17 million in 2025.
• Approximately $15 million of new sets deployed in 2025.
• Anticipate positive free cash flow in Q4 2025 and breakeven in free cash flow by 2026.

• 7D capital sales expected in the quarter did not close prior to quarter end.
• Headwinds from stocking and set sales in Latin and South America continued longer than expected.
• Competition from large OEMs exiting pediatric products could impact market share if not managed properly.

Q: Specifically, what competitors were referred to when discussing exiting the pediatric space?

A: David Bailey mentioned J&J and Smith & Nephew, including J&J pulling a Hip product competitor to 3P.

Q: Can OPSB clinic expansions be accelerated?

A: David Bailey stated there is high demand for clinics and they would accelerate if opportunities arise, balancing with P&L requirements.

Q: How does the reduced staffing relate to EU MDR approvals?

A: Staffing changes include shutting down the Israel facility and throttling back expenses related to Telos business as EU MDR technical files are submitted.

Q: When is the next-gen spinal fusion system expected?

A: David Bailey said it's a 2026 initiative, with first cases likely in the back part of 2026 and a big launch in 2027/2028.

Q: How does 3P platform impact growth and profitability?

A: 3P platform allows deeper penetration into existing accounts, improves asset utilization, and drives higher margins and better return on investment.