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 8, 2018
OrthoPediatrics Corp. |
(Exact name of registrant as specified in its charter) |
Delaware |
(State or other jurisdiction of incorporation) |
001-38242 | 26-1761833 |
(Commission File Number) | (I.R.S. Employer Identification Number) |
2850 Frontier Drive Warsaw, Indiana | 46582 |
(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) |
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 [X]
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 [X]
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 99.1 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 99.1, 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 | |
* * * * * *
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 8, 2018 | By: | /s/ Daniel J. Gerritzen |
Daniel J. Gerritzen, General Counsel and Secretary | ||
OrthoPediatrics Corp.
January 2018
Mark Throdahl, CEO
Fred Hite, CFO
Disclaimer
This presentation contains and related discussion may contain “forward-looking statements” within the meaning of U.S. federal securities laws. All statements
contained in this presentation and related discussion other than statements of historical facts are forward-looking statements. Forward-looking statements include
information concerning possible or assumed future results of operations, including descriptions of our business plans and strategies. You can identify forward-
looking statements by the use of words such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,”
“predict,” “intend,” “future,” “potential,” “suggest,” “target,” “forecast,” “continue” and other similar expressions. Forward-looking statements are not historical
facts, and are based upon management’s current expectations, beliefs, estimates, projections and various assumptions, many of which are inherently uncertain and
beyond our control. Such expectations, beliefs, estimates, projections and assumptions are expressed in good faith and management believes there is a reasonable
basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates, projections and assumptions will be achieved, and actual
results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and
uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including risks detailed in
the most recently filed Quarterly Report on Form 10-Q for the period ended September 30, 2017 filed by OrthoPediatrics Corp. (the “Company”) with the U.S.
Securities and Exchange Commission (the “SEC”) on November 13, 2017. Forward-looking statements speak only as of the date the statements are made. The
Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting
forward-looking information except to the extent required by applicable securities laws. Certain information in this presentation is based upon management
forecasts and reflects prevailing conditions and management’s views as of this date, all of which are subject to change.
Before you invest, you should read the most recently filed Quarterly Report on Form 10-Q and other documents the Company has filed and will file with the SEC for
more complete information about the Company. You may obtain these documents for free by visiting EDGAR on the SEC website at http://www.sec.gov.
The Company owns or has rights to use a number of registered and common law trademarks, service marks and trade names in connection with its business in the
United States and in certain foreign jurisdictions, including the OrthoPediatrics name and logo. Solely for convenience, the trademarks, service marks and trade
names referred to in this presentation may be without the ® and ™ symbols, but such references are not intended to indicate, in any way, that the Company will not
assert, to the fullest extent under applicable law, its rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This
presentation contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service
marks and trade names appearing in this presentation are, to the Company’s knowledge, the property of their respective owners.
2
Highlights
3
Orthopedic company focused exclusively on pediatric orthopedics
Protected market opportunity: $1.1 billion U.S., $2.5 billion globally in 2016
High U.S. procedure concentration: <300 hospitals and ~1,200 surgeons
Focused call point: generalists who use our entire product portfolio
Broadest product offering: 24 systems specifically designed for children
Sustainable competitive advantage:
- Comprehensive product offering
- Clinical education programs
- Surgeon relationships
- Experienced sales organization
FY17E revenue of $45.4M-$45.6M, which represents ~22% revenue growth
Recent IPO will, among other things, fund consigned sets and accelerate proven strategy
Large Market Proprietary Technology Scalable Business
OP Today
Treated 16,000 patients in 2016
24 surgical systems; 2,700 SKUs; strong pipeline
62 direct employees; 69 focused FTE sales reps
Global sales organization focused on pediatric
orthopedic surgeons in 36 countries
International: 31 stocking distributors; 2 sales agencies
21 issued patents; 19 pending patents
Only non-founding Chief Medical Officer in the
industry who is a fellow surgeon
Average FDA approval time: < ½ industry average
History of stable reimbursement
Improving the lives of children
with orthopedic conditions
Company Snapshot* Cause
4
A Company Built on a CAUSE
Gideon with CMO Peter Armstrong, M.D., c. 1995.
Gideon’s drawing of his girlfriend, 2016. * As of Q3 2017 (with the exception of surgical systems as KIDS
launched two products following Q3)
Our Key Idea
Address orthopedic industry’s lack of focus
on product development, clinical education,
and sales presence
Implants and instruments avoid complications
of re-purposed adult products
Product development in collaboration with
leading pediatric orthopedic surgeons
Dedicated sales support attending surgeries
Clinical education programs that build
brand loyalty
OP’s Market Impact
5
Screws Through
Growth Plate
Screws Parallel To
Growth Plate
Superior Clinical Outcomes
Children Are Not Small Adults
Re-Purposed Adult Plate OP’s Solution
38%
62%
Large and Focused Market
Current products target three of the largest categories in Pediatric Orthopedics
Pipeline products underway to expand addressable market
Trauma &
Deformity
$401M
OP’S $2.5 Billion Current Addressable Global Market
$1.1 Billion U.S. Addressable Market
Procedures
(%)
High Concentration of Pediatric
Trauma & Deformity and Complex Spine Procedures
Smart
Implants
$299M
Complex
Spine
$285M
Sports
Medicine
$116M
268 U.S.
Hospitals
3,157 U.S.
Hospitals
6
Product Line Diversification
2016 Revenue Growth % by Product Family
$37 million sales in 2016
20% revenue growth in 2016
No dependency on one product family
Consistent growth across all products
Comparable gross margins on all products
2016 Revenue by Segment
7
2016 Revenue by Product Family
72%
3%
25%
Sports
Medicine Trauma &
Deformity
Complex
Spine
0%
5%
10%
15%
20%
25%
30%
A Proven Strategy Since 2011
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Deploy
Instrument
Sets
Sales Focus
On Teaching
Institutions and
High Volume
Hospitals
Expand
Addressable
Procedures
Expand Clinical
Training
Programs
Goals
Accelerate sales growth (requires consigned sets)
Develop novel technologies
5 New Systems in 2017
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FIREFLY® Pedicle Screw Navigation Guides
OP has exclusive distribution rights in U.S. pediatric hospitals
Unique, patient-specific custom guide for screw placement
Provides a 3D printed, patient-specific guide for each vertebral
level
Improves screw placement accuracy without the need for an
expensive navigation or robotic system.
Eliminates intraoperative radiation and is ideally suited for large
construct cases.
Complementary to our RESPONSE Spine System
Complex Spine
Clavicle Plate System
First clavicle system for pediatric patients
Based on proprietary access to Hamann-Todd Collection
Available in 2.7mm and 3.5mm sizes and
in 6, 7, and 8-hole versions
Wrist Fusion Plate System
First pediatric specific plates
Two implant lengths to accommodate patients with and
without proximal row carpectomy
Titanium PediPlates® System
Expands comprehensive physeal tethering offering
Includes both O-Plates and I-Plates with solid and
cannulated low-profile screws
Trauma & Deformity
Sports Medicine
Medial Patella Femoral
Ligament Reconstruction System
Full range of instruments accommodate any technique
Bioabsorbable interference screws
Complements ACL Reconstruction System
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5 New Systems in 2017
Sports
Medicine
Strong Pipeline
Expanding Our Addressable Market
Spine
Foot & Ankle
Hip & Long
Bone
CMF
Proximal
Humerus
Elbow
Hand &
Wrist
Pelvis
Clavicle
Rib
OP Today OP Tomorrow
Now Under Development
Demonstrated ability to
expand portfolio to full
array of pediatric surgeries
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Growing Rods
Global Sales Coverage
United States
77% of 2016
Revenue
33 Sales Agencies,
most of which are
exclusive
International
23% of 2016
Revenue
2 Sales Agencies
+ 31 Stocking
Distributors*
Sales in 35 countries + the United States
Current customers in every major children’s hospital in the United States
Internationally, surgeons pull us into their markets and introduce us to well-respected distributors
Direct in UK, IRE, AUS, NZ
12 * As of Q3 2017
Product breadth
Surgeon relationships
Sales and distribution network
Clinical education programs
Pediatric brand equity
Reputation with pediatric
orthopedic societies
Dynamic culture
New Competitors Would Face Formidable Obstacles
“The ship has sailed.”
Barriers to Entry
13
What Does Category Leadership Mean?
Surgeon relationships and
Clinical education
Relationships with surgeons who use
entire portfolio
Major provider of clinical education
Leading supporter of surgical societies
Custom instruments business
Attractive growth and
margin profile
Consistent growth since 2011
71% gross margins
History of efficient capital
utilization
Robust organic growth
opportunities
$2.5 billion addressable global market
Limited focused competition
Focused, experienced distribution
Instrument set placements drive growth
Broadest, most innovative
product offering
11-year clinical understanding
New product pipeline
Gateway to pediatric market for
distributed products and joint
product developments
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Financial Review
$9.3
$13.3 $15.8
$18.4
$24.9
$28.8
$0.9
$2.8
$3.9
$5.3
$6.1
$8.5
$10.2
$16.1
$19.6
$23.7
$31.0
$37.3
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2011 2012 2013 2014 2015 2016 2017
R
ev
enu
e
(
$
in Mi
lli
on
s)
U.S. International FY17E
History of Strong Revenue Growth
16
$45.4 - $45.6
$19.3
$22.5
$26.8
$3.6
$7.4
$9.4
$0.8
$1.1
$1.1
$0
$5
$10
$15
$20
$25
$30
$35
$40
2014 2015 2016
R
ev
enu
e
(
$
in Mi
lli
on
s)
Trauma & Deformity Complex Spine ACL Reconstruction / Other
$20.2
$24.3
$6.9
$8.7 $0.8
$0.9
9M' 2016 9M' 2017
Category Revenue Summary
17
Revenue Seasonality
2015 2016
20%
25%
28%
27%
0%
5%
10%
15%
20%
25%
30%
Q1 Q2 Q3 Q4
R
ev
e
n
u
e
as % of
To
ta
l Y
ea
r
Seasonality Drives Stronger Performance in Summer Months and Holiday Periods
18
22%
26%
27%
25%
0%
5%
10%
15%
20%
25%
30%
Q1 Q2 Q3 Q4
R
ev
en
u
e
as %
o
f
To
ta
l Y
e
ar
Income Statement Summary
19
($ in Millions)
Year Ended December 31; Nine Months Ended September 30
2014 2015 2016 9M’16 9M’17
Revenue $23.7 $31.0 $37.3 $27.9 $33.9
Growth % 21% 31% 20% NA 22%
Gross Profit $16.6 $21.6 $26.4 $20.0 $25.6
Margin % 70% 70% 71% 72% 75%
Operating Expenses $23.7 $28.2 $32.5 $22.8 $27.9
Operating Loss ($7.1) ($6.6) ($6.1) ($2.9) ($2.3)
Net Loss ($9.5) ($7.9) ($6.6) ($2.9) ($4.1)
Balance Sheet
20
Assets Liabilities
Cash $2.2 Accounts Payable $5.1
Accounts Receivable 5.7 Debt 27.5
Inventory 18.4 Accrued Expenses 2.3
PP&E (net) 9.7 All Other Liabilities 3.0
Intangibles 2.2 Paid In Capital 85.2
All Other 0.3 Accumulated Deficit (82.2)
Total Assets $41.1 Total Liabilities / Equity $41.1
($ in Millions)
Nine Months Ended September 30, 2017
Summary
Surgeon relationships and
Clinical education
Attractive growth and
margin profile
Robust organic growth
opportunities
Broadest, most innovative
product offering
21