OrthoPediatrics Corp. Reports Fourth Quarter and Full Year 2018 Financial Results
Fourth Quarter / Full Year 2018 and Recent Highlights
- Reported total revenue of
$14.6 million for fourth quarter 2018, up from$11.7 million or 24.7% year-over-year, respectively. - Record setting
$57.6 million for full year 2018, up from$45.6 million or 26.2% year-over-year, respectively. - Generated adjusted EBITDA of
$518 thousand for full year 2018, up from negative$58 thousand for full year 2017. (See below for additional information and a reconciliation of non-GAAP financial information.) - Strengthened global footprint with the conversion of stocking distributors to sales agencies in
Canada during 2018 andBelgium andthe Netherlands at the beginning of 2019. - Deployed
$12.0 million in consignment sets and expanded product portfolio offering to 26 surgical systems in 2018. - Bolstered cash position with
$43.4 million net follow-on offering inDecember 2018 . - Provided full year 2019 revenue growth guidance to be in a range of 21.0% to 23.0% and investment in consignment sets to be in a range of
$15.0 million to $17.0 million .
Mr. Throdahl continued, “In addition to our revenue and profitability achievements in 2018, our strengthened balance sheet following a successful secondary raise in December positions us well for sustainable future growth. This capital supports our increased investment in consignment set deployment to a range of
Fourth Quarter and Full Year 2018 Financial Results
Total revenue for the fourth quarter of 2018 was
Total revenue for 2018 was
Trauma and Deformity revenue for the fourth quarter of 2018 was
Trauma and Deformity revenue for 2018 was
Gross profit for the fourth quarter of 2018 was
Total operating expenses for the fourth quarter of 2018 were
Interest expense for the fourth quarter of 2018 was
Net loss for the fourth quarter of 2018 was
Net loss for 2018 was
The weighted average number of diluted shares outstanding for the year ended
In the fourth quarter of 2018, we had more than 130 sales representatives, compared to more than 110 in 2017.
The change in property and equipment during the fourth quarter of 2018 was negative
As of
Capitalization Update
On
Full Year 2019 Financial Guidance
- Revenue growth in a range of 21.0% to 23.0%
- Consigned set investments in a range of
$15.0 million to $17.0 million
Conference Call
A replay of the webcast will remain available on OrthoPediatrics’ website, www.orthopediatrics.com, until
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of U.S. federal securities laws. You can identify forward-looking statements by the use of words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "could," "believe," "estimate," "project," "target," "predict," "intend," "future," "goals," "potential,” "objective," "would" and other similar expressions. Forward-looking statements involve risks and uncertainties, many of which are beyond OrthoPediatrics’ control. Important factors could cause actual results to differ materially from those in the forward-looking statements, including, among others, the risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the
Use of Non-GAAP Financial Measures
This press release includes the non-GAAP financial measure of Adjusted EBITDA, which differs from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA in this release represents net loss, plus interest expense (income), net plus other expense (income), depreciation and amortization, stock-based compensation expense, accelerated vesting of restricted stock upon our IPO, public company costs and initial public offering costs. Adjusted EBITDA is presented because the Company believes it is a useful indicator of its operating performance. Management uses the measure as a measure of the Company’s operating performance and for planning purposes, including financial projections. The Company believes this measure is useful to investors as supplemental information because it is frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company believes Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and it should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, the measure is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as debt service requirements, capital expenditures and other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and other potential cash requirements. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. The Company’s presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using Adjusted EBITDA on a supplemental basis. The Company’s definition of this measure is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. The schedules below contain a reconciliation of Adjusted EBITDA to Net Loss.
About
Founded in 2006,
Investor Contacts
Tram Bui /
(646) 536-7035 / 7024
tbui@theruthgroup.com / epoalillo@theruthgroup.com
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share Data)
| As of December 31, | ||||||||
| 2018 | 2017 | |||||||
| Current assets: | ||||||||
| Cash | $ | 60,691 | $ | 42,582 | ||||
| Accounts receivable - trade, less allowance for doubtful accounts of $134 and $143, respectively | 8,999 | 5,603 | ||||||
| Inventories, net | 25,541 | 19,498 | ||||||
| Inventories held by international distributors, net | 167 | 1,047 | ||||||
| Notes Receivable | 502 | - | ||||||
| Prepaid expenses and other current assets | 1,256 | 831 | ||||||
| Total current assets | 97,156 | 69,561 | ||||||
| Property and equipment, net | 12,768 | 10,391 | ||||||
| Other assets: | ||||||||
| Amortizable intangible assets, net | 1,921 | 2,089 | ||||||
| Other intangible assets | 260 | 260 | ||||||
| Total other assets | 2,181 | 2,349 | ||||||
| Total assets | $ | 112,105 | $ | 82,301 | ||||
| Current liabilities: | ||||||||
| Accounts payable - trade | $ | 3,971 | $ | 5,495 | ||||
| Accrued compensation and benefits | 3,552 | 2,905 | ||||||
| Current portion of long-term debt with affiliate | 118 | 113 | ||||||
| Other current liabilities | 1,576 | 954 | ||||||
| Total current liabilities | 9,217 | 9,467 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt with affiliate, net of current portion | 21,156 | 21,418 | ||||||
| Revolving credit facility with affiliate | - | 3,921 | ||||||
| Total long-term liabilities | 21,156 | 25,339 | ||||||
| Total liabilities | 30,373 | 34,806 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.00025 par value; 50,000,000 shares authorized at December 31, 2018 and 2017, respectively; 14,538,202 shares and 12,621,781 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 4 | 2 | ||||||
| Additional paid-in capital | 197,442 | 150,424 | ||||||
| Accumulated deficit | (115,091 | ) | (103,066 | ) | ||||
| Accumulated other comprehensive (loss) income | (623 | ) | 135 | |||||
| Total stockholders' equity | 81,732 | 47,495 | ||||||
| Total liabilities and stockholders' equity | $ | 112,105 | $ | 82,301 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net revenue | $ | 14,568 | $ | 11,681 | $ | 57,559 | $ | 45,620 | |||||||
| Cost of revenue | 4,054 | 2,849 | 14,879 | 11,170 | |||||||||||
| Gross profit | 10,514 | 8,832 | 42,680 | 34,450 | |||||||||||
| Operating expenses: | |||||||||||||||
| Sales and marketing | 6,558 | 5,405 | 26,563 | 20,527 | |||||||||||
| General and administrative | 4,545 | 6,690 | 20,938 | 16,972 | |||||||||||
| Research and development | 1,277 | 941 | 4,732 | 3,423 | |||||||||||
| Total operating expenses | 12,380 | 13,036 | 52,233 | 40,922 | |||||||||||
| Operating loss | (1,866 | ) | (4,204 | ) | (9,553 | ) | (6,472 | ) | |||||||
| Other expenses: | |||||||||||||||
| Interest expense | 533 | 633 | 2,255 | 2,490 | |||||||||||
| Other expense (income) | 69 | 8 | 217 | (30 | ) | ||||||||||
| Total other expenses | 602 | 641 | 2,472 | 2,460 | |||||||||||
| Net loss from continuing operations | (2,468 | ) | (4,845 | ) | (12,025 | ) | (8,932 | ) | |||||||
| Net loss | $ | (2,468 | ) | $ | (4,845 | ) | $ | (12,025 | ) | $ | (8,932 | ) | |||
| Net loss attributable to common stockholders | $ | (2,468 | ) | $ | (15,078 | ) | $ | (12,025 | ) | $ | (23,530 | ) | |||
| Weighted average common shares - basic and diluted | 13,010,761 | 10,731,478 | 12,567,387 | 4,017,330 | |||||||||||
| Net loss per share attributable to common stockholders - basic and diluted | $ | (0.19 | ) | $ | (1.41 | ) | $ | (0.96 | ) | $ | (5.86 | ) | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
| Year Ended December 31, | |||||||
| 2018 | 2017 | ||||||
| OPERATING ACTIVITIES | |||||||
| Net loss | $ | (12,025 | ) | $ | (8,932 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Depreciation and amortization | 2,892 | 2,405 | |||||
| Stock-based compensation | 3,185 | 3,478 | |||||
| Changes in certain current assets and liabilities: | |||||||
| Accounts receivable - trade | (3,801 | ) | (1,505 | ) | |||
| Inventories | (5,681 | ) | (4,287 | ) | |||
| Inventories held by international distributors | 880 | (123 | ) | ||||
| Prepaid expenses and other current assets | (425 | ) | (598 | ) | |||
| Accounts payable - trade | (1,524 | ) | 1,952 | ||||
| Accrued expenses and other liabilities | 947 | 258 | |||||
| Other | (31 | ) | 135 | ||||
| Net cash used in operating activities | (15,583 | ) | (7,217 | ) | |||
| INVESTING ACTIVITIES | |||||||
| Purchases of licenses | (210 | ) | (1,337 | ) | |||
| Purchases of property and equipment | (5,253 | ) | (5,207 | ) | |||
| Purchase of notes receivable | (502 | ) | - | ||||
| Net cash used in investing activities | (5,965 | ) | (6,544 | ) | |||
| FINANCING ACTIVITIES | |||||||
| Proceeds from issuance of debt with affiliate | - | 7,992 | |||||
| Payment of revolving credit facility with affiliate | (4,065 | ) | - | ||||
| Proceeds from issuance of common stock, net of issuance costs | 43,425 | 53,775 | |||||
| Proceeds from exercise of stock options | 410 | - | |||||
| Payment of preferred stock dividends | - | (5,965 | ) | ||||
| Shares surrendered by employees to pay taxes on restricted stock | - | (990 | ) | ||||
| Payments on mortgage notes | (113 | ) | (78 | ) | |||
| Net cash provided by financing activities | 39,657 | 54,734 | |||||
| NET INCREASE IN CASH | 18,109 | 40,973 | |||||
| Cash, beginning of year | 42,582 | 1,609 | |||||
| Cash, end of period | $ | 60,691 | $ | 42,582 | |||
| SUPPLEMENTAL DISCLOSURES | |||||||
| Cash paid for interest | $ | 2,255 | $ | 2,490 | |||
| Accretion of redeemable convertible preferred stock | $ | - | $ | 4,563 | |||
| Transfer of instruments from property and equipment to inventory | $ | 362 | $ | 1,249 | |||
NET REVENUE BY GEOGRAPHY AND PRODUCT CATEGORY
(Unaudited)
(In Thousands)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||
| Product sales by geographic location: | 2018 | 2017 | 2018 | 2017 | |||||||||
| U.S. | $ | 10,929 | $ | 8,824 | $ | 43,461 | $ | 34,909 | |||||
| International | 3,639 | 2,857 | 14,098 | 10,711 | |||||||||
| Total | $ | 14,568 | $ | 11,681 | $ | 57,559 | $ | 45,620 | |||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||
| Product sales by category: | 2018 | 2017 | 2018 | 2017 | |||||||||
| Trauma and deformity | $ | 10,150 | $ | 8,462 | $ | 39,695 | $ | 32,801 | |||||
| Scoliosis | 4,053 | 2,933 | 16,662 | 11,585 | |||||||||
| Sports medicine/other | 365 | 286 | 1,202 | 1,234 | |||||||||
| Total | $ | 14,568 | $ | 11,681 | $ | 57,559 | $ | 45,620 | |||||
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA
(Unaudited)
(In Thousands)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net loss | $ | (2,468 | ) | $ | (4,845 | ) | $ | (12,025 | ) | $ | (8,932 | ) | |||
| Interest expense | 533 | 634 | 2,255 | 2,490 | |||||||||||
| Other expense (income) | 69 | 8 | 217 | (30 | ) | ||||||||||
| Depreciation and amortization | 715 | 657 | 2,892 | 2,405 | |||||||||||
| Stock-based compensation | 287 | 308 | 1,199 | 1,429 | |||||||||||
| Accelerated vesting of restricted stock upon our IPO | - | 2,049 | 1,986 | 2,049 | |||||||||||
| Public company costs | 351 | 531 | 1,365 | 531 | |||||||||||
| Non-Recurring Professional Services Fees | 388 | - | 2,629 | - | |||||||||||
| Adjusted EBITDA | $ | (125 | ) | $ | (658 | ) | $ | 518 | $ | (58 | ) | ||||
Source: OrthoPediatrics Corp.