UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
______________________
Date of Report (Date of earliest event reported): January 9, 2023
| (Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction of incorporation) | ||
| (Commission File Number) | (I.R.S. Employer Identification Number) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code: (574 ) 268-6379
| Not Applicable | ||
| (Former name or former address, if changed since last report) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨
Item 2.02. Results of Operations and Financial Condition.
On January 9, 2023, OrthoPediatrics Corp. (the "Company”) issued a press release announcing its preliminary unaudited net revenue for the fourth quarter and full year ended December 31, 2022, providing management's projection of 2023 net revenue and providing a related business update. The press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02, including the information incorporated by reference herein from Exhibit 99.1, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
The financial information set forth in this Form 8-K reflects the Company's current preliminary net revenue estimates, is subject to the completion of its audit process, and is subject to change. The Company's fourth quarter and full year ended December 31, 2022 results could differ materially from the preliminary estimates provided in this form 8-K. The Company's net revenue for the full year ended December 31, 2023 could also differ materially from the forecasted amounts. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this Form 8-K. You should refer to the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2022, as updated and supplemented by our other SEC reports filed from time to time, for a discussion of important factors that may cause our actual results and net revenue to differ materially from those expressed or implied by these forward-looking statements. Given these risks, uncertainties and other factors, many of which are beyond our control, you are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly release the results of any revision or update of the forward-looking statements, except as required by law.
Item 7.01. Regulation FD Disclosure.
The executive officers of OrthoPediatrics Corp. have several upcoming presentations to representatives of investors and analysts. The officers intend to use the material filed as Exhibit 99.2 herewith, in whole or in part, as part of those presentations.
The information in this Item 7.01, including the information incorporated by reference herein from Exhibit 99.2, is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits | |||||||
| Exhibit No. | Description | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OrthoPediatrics Corp. | ||||||||
| Date: January 9, 2023 | By: | /s/ Daniel J. Gerritzen | ||||||
| Daniel J. Gerritzen, General Counsel and Secretary | ||||||||
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OrthoPediatrics Corp. Announces Preliminary Unaudited Net Revenue for the Fourth Quarter & Full Year 2022, Provides Financial Outlook for 2023
WARSAW, Ind., January 9, 2023 -- OrthoPediatrics Corp. (“OrthoPediatrics” or the “Company”) (Nasdaq: KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, today announced preliminary unaudited net revenue for the fourth quarter and full year ended December 31, 2022, and provided 2023 financial guidance.
Preliminary unaudited fourth quarter 2022 net revenue is expected to be $31.0 million, representing growth of 25% compared to $24.8 million in the fourth quarter of 2021. Preliminary domestic fourth quarter net revenue growth is expected to be 15% compared to the prior year period and international net revenue growth is expected to be 67% compared to the prior year period.
Preliminary unaudited full year 2022 net revenue is expected to be $122.3 million, representing growth of 25% compared to $98.0 million in 2021. Preliminary full year domestic net revenue growth is expected to be 19% and international net revenue growth is expected to be 47%.
“Our fourth quarter net revenue growth reflects continued commercial and operational execution offset by the impact of surgery schedule disruptions experienced in children’s hospitals due to viral respiratory infections,” commented David Bailey, President & CEO of OrthoPediatrics. “While the pressure from the pronounced respiratory illness season impacted our short-term results, we believe OrthoPediatrics remains in its strongest strategic position of all time, supported by an expanding user base, robust product portfolio, recent acquisitions, and a growing international presence.”
2023 Financial Guidance
Management projects 2023 net revenue to be in the range of $146.0 million to $149.0 million, representing growth of 20% to 22% over 2022 preliminary unaudited net revenue.
The Company plans to release its fourth quarter and full year 2022 financial results and provide additional commentary on its financial outlook in March. The quarterly and annual preliminary net revenue estimates for 2022 included in this press release are prior to the completion of review and audit procedures by the Company’s independent registered public accounting firm and are therefore subject to adjustment.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of U.S. federal securities laws, including the statements regarding OrthoPediatrics’ preliminary net revenue for the fourth quarter ended December 31, 2022, the 2023 Financial Guidance, and other statements identified 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 related to COVID-19, the continued impact such pandemic may have on the demand for our products, and our ability to respond to the related challenges; and the risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the Securities and Exchange
Commission (the "SEC") on March 3, 2022 as updated and supplemented by our other SEC reports filed from time to time. Forward-looking statements speak only as of the date they are made. OrthoPediatrics assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable securities laws.
About OrthoPediatrics Corp.
Founded in 2006, OrthoPediatrics is an orthopedic company focused exclusively on advancing the field of pediatric orthopedics. As such it has developed the most comprehensive product offering to the pediatric orthopedic market to improve the lives of children with orthopedic conditions. OrthoPediatrics currently markets 46 surgical systems that serve three of the largest categories within the pediatric orthopedic market. This product offering spans trauma and deformity, scoliosis, and sports medicine/other procedures. OrthoPediatrics’ global sales organization is focused exclusively on pediatric orthopedics and distributes its products in the United States and over 70 countries outside the United States. For more information, please visit www.orthopediatrics.com.
Investor Contact
Philip Taylor
Gilmartin Group
philip@gilmartinir.com
415-937-5406
2023 Investor Presentation www.OrthoPediatrics.com
22 0 2 2 / / Disclaimer Forward-Looking Statements This presentation 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 related to COVID-19, the impact such pandemic may have on the demand for our products, and our ability to respond to the related challenges; and the risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the SEC on March 3, 2022, as updated and supplemented by our other SEC reports filed from time to time. Forward-looking statements speak only as of the date they are made. OrthoPediatrics assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable securities laws. Use of Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures such as organic revenue, adjusted diluted earnings (loss) per share and Adjusted EBITDA, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Sales on an organic basis excludes from our reported net revenue growth the impacts of revenue from any acquired business that have been owned for less than one year. We believe that providing the non-GAAP organic revenue is useful as a way to measure and evaluate our underlying performance consistently across the periods presented. Adjusted earnings (loss) per share in this presentation represents diluted earnings (loss) per share on a GAAP basis, plus the accreted interest attributable to acquisition installment payables, the fair value adjustment of contingent consideration, trademark impairment, acquisition related costs, non-recurring professional fees, accrued legal settlement costs and minimum purchase commitment costs. The fair value adjustment of contingent consideration is associated with our estimates of the value of earn-outs in connection with certain acquisitions and the non-recurring professional fees are related to our response to a previously disclosed SEC review. We believe that providing the non-GAAP diluted earnings (loss) per share excluding these expenses, as well as the GAAP measures, assists our investors because such expenses are not reflective of our ongoing operating results. Adjusted EBITDA in this release represents net loss, plus interest expense, net plus other expense, provision for income taxes (benefit), depreciation and amortization, trademark impairment, stock-based compensation expense, fair value adjustment of contingent consideration, acquisition related costs, nonrecurring professional fees, accrued legal settlements costs, and the cost of minimum purchase commitments. The Company believes the non-GAAP measures provided in this earnings release enable it to further and more consistently analyze the period-to-period financial performance of its core business operating performance. Management uses these metrics as a measure of the Company’s operating performance and for planning purposes, including financial projections. The Company believes these measures are useful to investors as supplemental information because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. 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 these non-GAAP measures, 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 non-GAAP diluted earnings (loss) per share or 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 these adjusted measures on a supplemental basis. The Company’s definition of these measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. The schedules below contain reconciliations of reported GAAP net revenue to non-GAAP organic revenue, GAAP diluted earnings (loss) per share to non-GAAP diluted earnings (loss) and net loss to non-GAAP Adjusted EBITDA.
32 0 2 2 / / pediatric patients treated since inception 610,000+ OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions 1 (1) Includes patients treated by MD Orthopaedics (MDO)
01 Children’s unique clinical conditions Existing solutions are re-purposed from adult implants Limited development of new technologies No specialized sales force in Pediatric Orthopedics Limited industry support of clinical education 02 03 04 05 42 0 2 2 / / Historical Challenges of Pediatric Orthopedics Re-Purposed Adult Plate Screws through growth plate
52 0 2 2 / / OrthoPediatrics Solution 01 02 03 04 05 Product development focused exclusively on pediatric patients Broadest pediatric specific portfolio in the industry Delivering first in market novel surgical solutions Only global commercial channel to market Leading provider of surgeon clinical education PediLoc Femur Screws parallel to growth plate Enhance surgeon confidence Increase surgical efficiency Improve surgical accuracy
62 0 2 2 / / Total Addressable Market – $3.9B 1 Management’s Mar 2022 updates to IMS data from 2016 Competitive Dynamics $609M Trauma & Deformity $315M Scoliosis Fusion $200M Scoliosis Non-Fusion $270M Specialty Bracing $187M Sports Medicine $140M Smart Implants Large incumbents repurpose adult implants Require specialized sales force Lack of focus on pediatric conditions 01 02 03 U.S. Addressable Market1 — $1.7B 2 0 2 / /
72 0 2 2 / / Only Focused Pediatric Orthopedic Company Consistent 20%+ Growth Since Inception (1) Includes MDO (2) Excluding COVID-impacted 2020 46 unique surgical systems Consistent cadence of innovative product launches Expanding suite of enabling technologies Internal R&D, acquisitions, and partnerships Only global sales & distribution channel Serve 100% of top children’s hospitals in the U.S. 201 domestic field representatives Sell in over 70 countries around the world Commitment to clinical education Leading sponsor of critical pediatric medical societies >300 clinical product/education events per year Founder of Foundation of Advancing Pediatric Orthopedics Innovative Technology Commercial Execution Clinical Education 2 1
82 0 2 2 / / Strategic Pillars 02 Provide a broad product portfolio uniquely designed to treat children, surround pediatric orthopedic surgeons covering their needs 04 Expand addressable market through aggressive investment in R&D and select M&A opportunities 05 Train next generation of pediatric orthopedic surgeons 03 Deploy instrument sets and provide unparalleled sales support 01 Laser focus on high-volume Children’s Hospitals that treat majority of pediatric patients
92 0 2 2 / / 1 Management’s Mar 2022 updates to IMS data from 2016 Comments ~1,400 Fellowship Trained Pediatric Surgeons Majority of Pediatric Centers are Teaching Hospitals Centers Treat Most Complex Pediatric Conditions 01 02 03 $378M Trauma & Deformity $195M Scoliosis Fusion $180M Scoliosis Non-Fusion $175M Specialty Bracing $17M Sports Medicine 300 U.S. Pediatric Centers conduct ~62% of T&D and Scoliosis procedures U.S. Current Target Market1 — $0.9B 01 Focus on High-Vol Children’s Hospitals Current Target Market – $2.1B 2 0 2 / /
102 0 2 2 / / Pre-IPO Transitioned from Early Entry to Clinically Significant Cannulated Screws Response 5.5/6.0mm Fusion System PediPlate Physeal Tethering Hip Systems LCB / LPF ACL System BandLoc 5.5/6.0mm Banding Clavicle Plating System PediFlexPediLoc Femur PediLoc Tibia PediFragLocking Proximal Femur LPF Plate Distal Femoral Osteotomy System DFOS PAOSpica Table 02 Broad Product Portfolio 2008 2009 PediNail System 2012 2013 2014 2015 2016 2017
112 0 2 2 / / Accelerating Sales Growth Post-IPO Through Strategic Investment and Innovation $37.3 $45.6 $57.6 $72.6 $71.1 $98.0 2016 2017 2018 2019 2020* 2021 Total Revenue ($M) 2016 2021 CAGR U.S. Independent Sales Consultants 90 190 16% Instrument Set Deployments $7M $14M 15% Unique Surgical Systems 17 37 17% Intl. Independent Sales Agencies 0 14 Fav Increase hospital penetrationAccelerate Revenue Growth Improve Profitability Leverage Balance Sheet +21.3% CAGR 03 Expand Instr. Sets & Sales Personnel *Impacted by COVID
122 0 2 2 / / Post-IPO moved from Clinically Significant to Disruptive 202020192017 2018 FireFly Patient Specific Navigation Guides 2021 DFOS Distal Femoral Osteotomy System MPFL System Wrist Fusion Plates PNP Pediatric Nailing Platform Response 4.5/5.0mm Fusion System Orthex External Fixation Systems PediFoot System SCFE System QuickPack System ApiFix Non-Fusion Neuromuscular Scoliosis System 7D Intraoperative Navigation Enabling Technology 04 Expand Market with R&D Mini Rail System 2022 MD Ortho PonsetiTM Specialty Clubfoot Bracing PediFlexTM Advanced Interlock Clamp System Drive Rail External Fixation System
132 0 2 2 / / Strategic Acquisitions & Partnerships Partnership Acquisition 202020192017 2022 04 Expand Market with M&A 2021 Gold Standard in Club Foot Bracing 2022
142 0 2 2 / / Terms: • Closed April 1, 2022 • $8.2M cash, $8.9M shares, $2.5M RSA MD Orthopaedics • Develops, manufactures and sells the patented Mitchell Ponseti Ankle-Foot Orthosis (AFO) to treat clubfoot • Dr. Ignacio Ponseti developed the gold standard for treating clubfoot which has >90% success rate • Casting is used from 0-3mos then bracing from 3mos–4 years. Requires multiple sizes as child grows creating repeat revenue. • Products sold in 90 countries including e-commerce platform direct to consumers • Approximately 80% of a pediatric surgeon's treatment time is non-surgical • Creates a profitable platform business for OP to develop and manufacture best-in-class specialty bracing with speed to market (class 1 device) as well as no consignment inventory required to grow the business Acquired Innovative Technologies04 Expand Market with M&A
152 0 2 2 / / Terms: • Closed July 5, 2022 • $31M cash, $2M stock Pega Medical • Developed the Fassier-Duval Telescopic Intramedullary Nail System (FD Nail) • FD Nail is cutting-edge implant designed to treat bone deformities in children with Osteogenesis Imperfecta without disrupting their normal growth • Pega offers 7 products in total, 6 of which focus on limb deformity correction, and 1 trauma • Products sold in 70 countries including e-commerce platform direct to consumers • Approximately 35,000 children suffer from Osteogenesis Imperfecta in the U.S. Acquired Innovative Technologies04 Expand Market with M&A
162 0 2 2 / / ApiFix • Disruptive non-fusion technology • Viable alternative to failed bracing & spinal fusion • Posterior, minimally invasive approach • Motion preserving capabilities • Granted FDA HDE approval Orthex • Disruptive software complements ex-fix frame • Expands addressable market • Serve 85% of procedures, up from 65% • Significantly simplifies surgical planning and alignment • Enables participation in most complex surgeries Acquired software-based and non-fusion technologies Significant sales synergies with legacy portfolio Expands critical KOL network Provides surgeons broadest product portfolio Acquired Innovative Technologies04 Expand Market with M&A
172 0 2 2 / / FIREFLY® Pedicle Screw Navigation Guides FireFly S2/Alar Unique patient specific 3D printed bone models and drill guides, can be used with any Spinal Deformity Correction system. • 99.7% screw placement accuracy • Preoperative concierge surgical planning drives intraoperative efficiency • Minimal intraoperative radiation • Simplifies S2AI approach Enabling Technology Partnerships 7D Surgical Intraoperative Navigation Eliminates Radiation exposure to staff & patients Cuts Registration from 30 min to < 30 sec Improves Accuracy to improve surgical outcomes Reduces Costs & improve hospital economic value 04 Expand Market with M&A
182 0 2 2 / / 7D Real World Experience Chris Comstock, MD & Eric Wait, MD Driscoll Children’s Hospital First Pediatric Deformity Installation in US I have noticed we are seeing shorter stays for our patients with complex spinal surgeries since we have started using the 7D technology. It used to be children would stay 3-5 days at Driscoll following surgery. Now what we are seeing is most of them are going home after 3 days. And that is better for kids and their families What we are seeing with this technology is surgeries which might have taken up to 5-6 hours are often being reduced to 3.5 hours Dr. Eric Wait Driscoll Children’s Hospital 04 Expand Market with M&A
192 0 2 2 / / Physician Education and Awareness OP Hands-on sales training and support • Annually invests 3% of sales on clinical education • Conducts >300 product/training sessions per year Continuous education • Major Sponsor of the prominent pediatric orthopedic societies Market development • Fosters early relationships with young surgeons and fellows to drive sustainable growth 02 03 01 As a surgeon educator, I have always appreciated and valued OrthoPediatrics’ commitment to education. Ryan Goodwin, MD, MBA, FAOA The Cleveland Clinic 05 Train Next-Gen Surgeons
202 0 2 2 / / Catalysts & Pipeline Enabling Technologies Scoliosis • Orthex surgical software • Firefly patient-specific planning/guides • 7D spinal interoperative navigation • PediPortal app • Advancing non-fusion treatment • Early-onset scoliosis innovations • Innovation in highly-complex fusion • Manual growing, rib based, etc. T&D • Expanding intramedullary nailing portfolio • Solutions for rare bone disease • Expansion of external fixation portfolio
212 0 2 2 / / Trauma & Deformity +13% CAGR 14 26 2016 2021 $26.8 $65.8 2016 2021 Surgical Systems Revenue +19% CAGR Scoliosis >2X Growth 3 8 2016 2021 $9.3 $28.0 2016 2021 Surgical Systems Revenue >3.2X Growth 2021 Revenue by Product Family Trauma & Deformity Scoliosis Sports Medicine67% of Revenue 29% of Revenue 39 Differentiated surgical systems driving growth
222 0 2 2 / / $0.6 $3.0 $7.1 $10.2 $16.1 $19.6 $23.7 $31.0 $37.3 $45.6 $57.6 $72.6 $71.1 $98.0 $122.3 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Strong History of Y/Y Growth ($M) 400% 137% 44% 58% 22% 21% 31% 20% 22% 26% 26% -2% 38% U.S. International (1) Impacted by COVID 1 25% 2022 Preliminary
232 0 2 2 / / $19.3 $22.5 $26.8 $32.8 $39.7 $49.4 $47.7 $65.8 $3.6 $7.4 $9.4 $11.6 $16.7 $21.5 $20.7 $28.0 $0.8 $1.1 $1.1 $1.2 $1.2 $1.7 $2.7 $4.2 $0 $20 $40 $60 $80 $100 $120 2014 2015 2016 2017 2018 2019 2020 2021 Re ve nu e ($ in M ill io ns ) Trauma & Deformity Scoliosis Sports Medicine/Other $16.5 $6.0 $0.9 1Q22 Category Revenue Summary $22.6 $9.4 $0.9 2Q22 3Q22 $10.0 $23.9 $1.1
242 0 2 2 / / Revenue Seasonality Seasonality Drives Stronger Performance in Summer Months and Holiday Periods 21% 26% 27% 25% 20% 25% 29% 26% 23% 19% 31% 27% 22% 27% 26% 25% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Re ve nu e as % o f T ot al Y ea r 2018 2019 2020 2021
252 0 2 2 / / Income Statement Summary ($ in Millions) 1 Net loss per share attributable to common stockholders – basic and diluted FY 2018 FY 2019 FY 2020 FY 2021 Revenue $57.6 $72.6 $71.1 $98.0 Growth % 26% 26% (2%) 38% Gross profit $42.7 $54.6 $55.0 $73.4 Margin % 74% 75% 77% 75% Operating expenses $52.2 $63.7 $81.8 $91.4 Operating loss ($9.5) ($9.1) ($26.8) ($18.0) Net (loss) income ($12.0) ($13.7) ($32.9) ($16.2) Net loss per share1 ($0.96) ($0.94) ($1.82) ($0.84) 3Q 2022 3Q 2021 $35.0 $25.1 39% 13% $25.9 $18.6 74% 74% $32.9 $22.2 ($7.0) ($3.6) $18.5 ($2.2) $0.88 ($0.11)
262 0 2 2 / / Organic Revenue Reconciliation Three Months Ended September 30, Product Sales by geography 2022 2021 As reported: U.S. $26.6 $19.4 International $8.4 $5.7 Less impact from acquisitions: U.S. $2.3 - International $2.1 - Organic revenue: U.S. $24.3 $19.4 International $6.3 $5.7 Total Organic Revenue $30.6 $25.1 Three Months Ended September 30, Product Sales by category 2022 2021 As reported: Trauma and deformity $23.9 $16.8 Scoliosis $10.0 $7.3 Sports medicine/other $1.1 $1.0 Less: impact from acquisitions Trauma and deformity $4.4 - Scoliosis - - Sports medicine/other - - Organic revenue: Trauma and Deformity $19.5 $16.8 Scoliosis $10.0 $7.3 Sports medicine/other $1.1 $1.0 Total Organic Revenue $30.6 $25.1 ($ in Millions)
272 0 2 2 / / Adjusted EBITDA Reconciliation Three Months Ended September 30, 2022 2021 Net loss $18.5 ($2.2) Interest expense, net $0.7 $0.5 Other income $0.9 ($0.3) Provision for income tax (benefit) ($4.1) ($0.3) Depreciation and amortization $3.3 $2.7 Trademark impairment $3.6 - Stock-based compensation $1.8 $1.4 Fair value adjustment of contingent consideration ($23.0) ($1.4) Acquisition related costs $0.05 - Non-recurring professional fees - - Accrued legal settlement costs - - Minimum purchase commitment cost $0.1 - Adjusted EBITDA $1.9 $0.5 ($ in Millions)
282 0 2 2 / / Adjusted EPS Reconciliation Three Months Ended September 30, 2022 2021 Earnings (loss) per share, diluted (GAAP) $0.87 ($0.11) Accretion of interest attributable to acquisition installment payments $0.02 $0.03 Fair value adjustment of contingent consideration ($1.12) ($0.07) Trademark impairment $0.18 Acquisition related costs - - Nonrecurring professional fees - - Accrued legal settlement costs - - Minimum purchase commitment cost - - Earnings (loss) per share, diluted (non-GAAP) ($0.05) ($0.15)
292 0 2 2 / / Balance Sheet Assets Cash & short-term investments $121.6 Account receivable $26.2 Inventory (net) $74.0 Other current assets $2.8 Total Current Assets $224.6 PP&E (net) $36.3 Intangibles and goodwill $169.2 Total Assets $430.1 Liabilities Accounts payable $10.9 Debt $0.9 Accrued comp. & other liab. $16.0 Acquisition pay. & cont. consideration $18.9 Paid-in capital $559.3 Accumulated deficit (net) ($168.9) Accumulated other comprehensive income ($7.1) Total Liabilities / Equity $430.1 ($ in Millions) As of September 30, 2022
302 0 2 2 / / Investment Summary Only diversified company focused exclusively on pediatric orthopedics Large, underpenetrated market opportunity in pediatrics Highly concentrated customer base with targeted commercial strategy Broad product portfolio with innovative solutions Only provider committed to pediatric clinical education Dynamic, award-winning corporate culture Proven commercial execution and attractive financial profile 01 04 02 05 03 06 07
2850 Frontier Drive Warsaw, IN 465852 ph: 574.268.6379 or 877.268.6339 fax: 574.268.6302 www.OrthoPediatrics.com2 0 2 2 / /