OrthoPediatrics Corp. Reports Third Quarter 2017 Financial Results
Third Quarter and Recent Highlights
- Total revenue of
$12.4 million , up 22% as compared to the third quarter of fiscal year 2016 - Launched PediFrag™ Pediatric Specific Clavicle Plate in August and Medial Patella Femoral Ligament Reconstruction System in October, expanding our product portfolio offering to 22 surgical systems
- Secured exclusive distribution rights for FIREFLY® Pedicle Screw Navigation Guides in pediatric hospitals in
the United States - Completed our initial public offering, raising
$59.8 million in gross proceeds, primarily to fund commercial expansion - Signed a Letter of Intent to amend debt agreement with
Squadron Capital LLC , which lowers interest rate and extends term until 2023
“We delivered strong results in the third quarter, highlighted by 22% total revenue growth and the expansion of gross margin to 77%. This included consistent growth in both the U.S. and international markets and across all of our product categories. We were particularly pleased with the performance of our U.S. spine business, which was our fastest growing domestic category this quarter, driven by increased demand for our RESPONSE and BandLoc products,” said
Third Quarter Financial Results
Total revenue for the third quarter of 2017 was
Trauma and deformity revenue for the third quarter of 2017 was
Gross profit for the third quarter of 2017 was
Total operating expenses for the third quarter of 2017 were
Interest expense for the third quarter of 2017 was
Net loss for the third quarter of 2017 was
The weighted average number of diluted shares outstanding as of
Purchases of property and equipment during the third quarter of 2017 were
As of
Capitalization Update
In October,
On
Conference Call
A replay of the webcast will remain available online at OrthoPediatrics’ investor relations website, ir.orthopediatrics.com, until
About
Founded in 2006,
Investor Contact
(646) 536-7020
zkubow@theruthgroup.com
ORTHOPEDIATRICS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands, Except Share Data) |
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September 30, | December 31, | ||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 2,238 | $ | 1,609 | |||
Accounts receivable - trade, less allowance for doubtful accounts of $148 and $152, respectively | 5,686 | 4,098 | |||||
Inventories, net | 18,434 | 13,962 | |||||
Inventories held by international distributors, net | 579 | 924 | |||||
Deferred charges | 1,339 | — | |||||
Prepaid expenses and other current assets | 615 | 233 | |||||
Total current assets | 28,891 | 20,826 | |||||
Property and equipment, net | 9,749 | 8,592 | |||||
Other assets: | |||||||
Amortizable intangible assets, net | 2,183 | 998 | |||||
Other intangible assets | 260 | 260 | |||||
Total other assets | 2,443 | 1,258 | |||||
Total assets | $ | 41,083 | $ | 30,676 | |||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable - trade | 5,102 | 3,543 | |||||
Accrued compensation and benefits | 2,288 | 2,219 | |||||
Current portion of long-term debt with affiliate | 111 | 107 | |||||
Other current liabilities | 2,915 | 1,382 | |||||
Total current liabilities | 10,416 | 7,251 | |||||
Long-term liabilities: | |||||||
Long-term debt with affiliate, net of current portion | 19,986 | 12,931 | |||||
Revolving credit facility with affiliate | 7,500 | 4,500 | |||||
Total long-term liabilities | 27,486 | 17,431 | |||||
Total liabilities | 37,902 | 24,682 | |||||
Commitments and contingencies | |||||||
Redeemable convertible preferred stock: | |||||||
Series A preferred stock, $0.00025 par value; $8,874 cumulative preferred dividends, September 30, 2017 and $7,439 December 31, 2016; 1,000,000 shares authorized, issued and outstanding | 24,874 | 23,439 | |||||
Series B preferred stock, $0.00025 par value; $11,793 cumulative preferred dividends, September 30, 2017 and $8,864 December 31, 2016; 6,000,000 shares authorized; 4,446,978 shares issued and outstanding | 50,793 | 47,864 | |||||
Stockholders' deficit: | |||||||
Common stock, $0.00025 par value; 8,040,000 shares authorized; 2,487,589 shares and 2,421,599 shares issued and outstanding as of September 30, 2017 and December 31, 2016 | 1 | 1 | |||||
Additional paid-in capital | 9,541 | 12,824 | |||||
Accumulated deficit | (82,221 | ) | (78,134 | ) | |||
Accumulated other comprehensive income | 193 | — | |||||
Total stockholders' deficit | (72,486 | ) | (65,309 | ) | |||
Total liabilities, redeemable convertible preferred stock and stockholders' deficit | $ | 41,083 | $ | 30,676 | |||
ORTHOPEDIATRICS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, Except Share and Per Share Data) |
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net revenue | $ | 12,375 | $ | 10,135 | $ | 33,939 | $ | 27,880 | |||||||
Cost of revenue | 2,884 | 2,978 | 8,321 | 7,913 | |||||||||||
Gross profit | 9,491 | 7,157 | 25,618 | 19,967 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 5,633 | 4,289 | 15,122 | 12,401 | |||||||||||
General and administrative | 3,487 | 2,890 | 10,282 | 8,842 | |||||||||||
Research and development | 1,127 | 501 | 2,482 | 1,599 | |||||||||||
Total operating expenses | 10,247 | 7,680 | 27,886 | 22,842 | |||||||||||
Operating loss | (756 | ) | (523 | ) | (2,268 | ) | (2,875 | ) | |||||||
Other expenses: | |||||||||||||||
Interest expense | 761 | 399 | 1,857 | 1,056 | |||||||||||
Other expense (income) | 20 | (77 | ) | (38 | ) | (992 | ) | ||||||||
Total other expenses | 781 | 322 | 1,819 | 64 | |||||||||||
Net loss | $ | (1,537 | ) | $ | (845 | ) | $ | (4,087 | ) | $ | (2,939 | ) | |||
Net loss attributable to common stockholders | $ | (3,021 | ) | $ | (2,405 | ) | $ | (8,451 | ) | $ | (7,229 | ) | |||
Weighted average common shares - basic and diluted | 1,773,385 | 1,744,356 | 1,754,576 | 1,744,356 | |||||||||||
Net loss per share attributable to common stockholders - basic and diluted | $ | (1.70 | ) | $ | (1.38 | ) | $ | (4.82 | ) | $ | (4.14 | ) | |||
ORTHOPEDIATRICS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) |
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For the Nine Months Ended September 30, |
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2017 | 2016 | ||||||
OPERATING ACTIVITIES | |||||||
Net loss | $ | (4,087 | ) | $ | (2,939 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 1,748 | 1,402 | |||||
Stock-based compensation | 1,081 | 951 | |||||
Research and development fee obligation termination | — | (889 | ) | ||||
Changes in certain current assets and liabilities: | |||||||
Accounts receivable - trade | (1,588 | ) | (74 | ) | |||
Inventories | (3,276 | ) | (2,834 | ) | |||
Inventories held by international distributors | 345 | 1,588 | |||||
Prepaid expenses and other current assets | (382 | ) | (232 | ) | |||
Accounts payable - trade | 1,559 | 1,798 | |||||
Accrued expenses and other liabilities | 513 | (579 | ) | ||||
Research and development fee obligation | — | (628 | ) | ||||
Other | 193 | 0 | |||||
Net cash used in operating activities | (3,894 | ) | (2,436 | ) | |||
INVESTING ACTIVITIES | |||||||
Purchases of licenses | (1,337 | ) | (406 | ) | |||
Purchases of property and equipment | (3,949 | ) | (2,617 | ) | |||
Net cash used in investing activities | (5,286 | ) | (3,023 | ) | |||
FINANCING ACTIVITIES | |||||||
Proceeds from issuance of debt with affiliate | 10,139 | 3,500 | |||||
Payments on mortgage notes | (80 | ) | (77 | ) | |||
Payments of deferred offering costs | (250 | ) | (527 | ) | |||
Net cash provided by financing activities | 9,809 | 2,896 | |||||
NET INCREASE (DECREASE) IN CASH | 629 | (2,563 | ) | ||||
Cash, beginning of year | 1,609 | 3,878 | |||||
Cash, end of period | $ | 2,238 | $ | 1,315 | |||
SUPPLEMENTAL DISCLOSURES | |||||||
Cash paid for interest | $ | 1,856 | $ | 1,056 | |||
Accretion of redeemable convertible preferred stock | $ | 4,364 | $ | 4,290 | |||
Transfer of instruments from property and equipment to inventory | $ | 1,196 | $ | 196 | |||
Net Revenue
The following tables set forth our net revenue by geography and product category for the three and nine months ended
Three Months Ended September 30, |
Nine Months Ended September 30, |
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Product sales by geographic location: | 2017 | 2016 | 2017 | 2016 | |||||||||||
U.S. | $ | 9,556 | $ | 7,875 | $ | 26,085 | $ | 21,565 | |||||||
International | 2,819 | 2,260 | 7,854 | 6,315 | |||||||||||
Total | $ | 12,375 | $ | 10,135 | $ | 33,939 | $ | 27,880 | |||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
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Product sales by category: | 2017 | 2016 | 2017 | 2016 | |||||||||||
Trauma and deformity | $ | 8,730 | $ | 7,168 | $ | 24,339 | $ | 20,184 | |||||||
Spine | 3,299 | 2,729 | 8,652 | 6,940 | |||||||||||
ACL reconstruction/other | 346 | 238 | 948 | 756 | |||||||||||
Total | $ | 12,375 | $ | 10,135 | $ | 33,939 | $ | 27,880 | |||||||