OrthoPediatrics Corp. Reports Second Quarter 2018 Financial Results
Second Quarter & Recent Highlights
- Increased total revenue to
$15.1 million for second quarter 2018, up 27.7% from$11.8 million in second quarter 2017 - Deployed
$2.8 million of consignment sets during the second quarter 2018 - Added four incremental U.S. sales representatives in the second quarter 2018 for a total of 88 reps
- Launched 25th surgical system, Pediatric Nailing Platform | FEMUR
- Increased revenue guidance to a range of 23% to 24% year-over-year growth and investment in consignment sets to
$11.0 million for full year 2018
Second Quarter 2018 Financial Results
Total revenue for the second quarter of 2018 was
Trauma and Deformity revenue for the second quarter of 2018 was
Gross profit for the second quarter of 2018 was
Total operating expenses for the second quarter of 2018 were
Net interest expense for the second quarter of 2018 was
Net loss for the second quarter of 2018 was
Adjusted EBITDA for the second quarter of 2018 was
The weighted average number of diluted shares outstanding as of
As of the second quarter of 2018 our independent sales agencies in
Purchases of property and equipment during the second quarter of 2018 were
As of
Full Year 2018 Financial Guidance
- Revenue growth in a range of 23% to 24% year-over-year, up from prior guidance of 22%.
- Consigned set investments of approximately
$11.0 million , up from prior guidance of$10.0 million .
Conference Call
A replay of the webcast will remain available online at OrthoPediatrics’ investor relations website, ir.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 metric 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 Net Income to non-GAAP Adjusted EBITDA.
About
Founded in 2006,
Investor Contacts
Tram Bui /
(646) 536-7035 / 7024
tbui@theruthgroup.com / epoalillo@theruthgroup.com
ORTHOPEDIATRICS CORP. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In Thousands, Except Share Data) | |||||||
June 30, | December 31, | ||||||
2018 | 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 26,506 | $ | 42,582 | |||
Accounts receivable - trade, less allowance for doubtful accounts of | |||||||
$131 and $143, respectively | 9,755 | 5,603 | |||||
Inventories, net | 24,816 | 19,498 | |||||
Inventories held by international distributors, net | 595 | 1,047 | |||||
Prepaid expenses and other current assets | 1,063 | 831 | |||||
Total current assets | 62,735 | 69,561 | |||||
Property and equipment, net | 12,770 | 10,391 | |||||
Other assets: | |||||||
Amortizable intangible assets, net | 2,080 | 2,089 | |||||
Other intangible assets | 260 | 260 | |||||
Total other assets | 2,340 | 2,349 | |||||
Total assets | $ | 77,845 | $ | 82,301 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable - trade | $ | 5,455 | $ | 5,495 | |||
Accrued compensation and benefits | 3,237 | 2,905 | |||||
Current portion of long-term debt with affiliate | 115 | 113 | |||||
Other current liabilities | 1,683 | 954 | |||||
Total current liabilities | 10,490 | 9,467 | |||||
Long-term liabilities: | |||||||
Long-term debt with affiliate, net of current portion | 21,360 | 21,418 | |||||
Revolving credit facility with affiliate | 3,938 | 3,921 | |||||
Total long-term liabilities | 25,298 | 25,339 | |||||
Total liabilities | 35,788 | 34,806 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Common stock, $0.00025 par value; 50,000,000 shares authorized; | |||||||
12,789,039 shares and 12,621,781 shares issued and outstanding as | |||||||
of June 30, 2018 (unaudited) and December 31, 2017 | 2 | 2 | |||||
Additional paid-in capital | 153,055 | 150,424 | |||||
Accumulated deficit | (110,758) | (103,066) | |||||
Accumulated other comprehensive income | (242) | 135 | |||||
Total stockholders' equity | 42,057 | 47,495 | |||||
Total liabilities and stockholders' equity | $ | 77,845 | $ | 82,301 |
ORTHOPEDIATRICS CORP. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In Thousands, Except Share and Per Share Data) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net revenue | $ | 15,077 | $ | 11,802 | $ | 27,171 | $ | 21,564 | ||||||||
Cost of revenue | 3,807 | 3,090 | 6,982 | 5,437 | ||||||||||||
Gross profit | 11,270 | 8,712 | 20,189 | 16,127 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 6,776 | 5,299 | 12,855 | 9,491 | ||||||||||||
General and administrative | 5,499 | 3,422 | 11,516 | 6,795 | ||||||||||||
Research and development | 1,115 | 668 | 2,333 | 1,355 | ||||||||||||
Total operating expenses | 13,390 | 9,389 | 26,704 | 17,641 | ||||||||||||
Operating loss | (2,120) | (677) | (6,515) | (1,514) | ||||||||||||
Other expenses: | ||||||||||||||||
Interest expense | 562 | 650 | 1,114 | 1,095 | ||||||||||||
Other expense (income) | 10 | (61) | 63 | (58) | ||||||||||||
Total other expenses | 572 | 589 | 1,177 | 1,037 | ||||||||||||
Net loss | $ | (2,692) | $ | (1,266) | $ | (7,692) | $ | (2,551) | ||||||||
Net loss attributable to common stockholders | $ | (2,692) | $ | (2,720) | $ | (7,692) | $ | (5,431) | ||||||||
Weighted average common shares - basic and diluted | 12,549,226 | 1,746,787 | 12,312,814 | 1,745,390 | ||||||||||||
Net loss per share attributable to common stockholders - basic and diluted | $ | (0.21) | $ | (1.56) | $ | (0.62) | $ | (3.11) |
ORTHOPEDIATRICS CORP. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
(In Thousands) | |||||||
For the Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
OPERATING ACTIVITIES | |||||||
Net loss | $ | (7,692) | $ | (2,551) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 1,400 | 1,092 | |||||
Stock-based compensation | 2,631 | 727 | |||||
Changes in certain current assets and liabilities: | |||||||
Accounts receivable - trade | (4,152) | (2,428) | |||||
Inventories | (4,724) | (3,551) | |||||
Inventories held by international distributors | 452 | 104 | |||||
Prepaid expenses and other current assets | (232) | (727) | |||||
Accounts payable - trade | (40) | 2,569 | |||||
Accrued expenses and other liabilities | 1,061 | 531 | |||||
Other | (377) | - | |||||
Net cash used in operating activities | (11,673) | (4,234) | |||||
INVESTING ACTIVITIES | |||||||
Purchases of licenses | (180) | (300) | |||||
Purchases of property and equipment | (4,167) | (2,844) | |||||
Net cash used in investing activities | (4,347) | (3,144) | |||||
FINANCING ACTIVITIES | |||||||
Proceeds from issuance of debt with affiliate | - | 8,055 | |||||
Payments on mortgage notes | (56) | (52) | |||||
Net cash provided by financing activities | (56) | 8,003 | |||||
Effect of exchange rate changes on cash | - | 72 | |||||
NET INCREASE (DECREASE) IN CASH | (16,076) | 697 | |||||
Cash, beginning of year | 42,582 | 1,609 | |||||
Cash, end of period | $ | 26,506 | $ | 2,306 | |||
SUPPLEMENTAL DISCLOSURES | |||||||
Cash paid for interest | $ | 1,114 | $ | 1,095 | |||
Accretion of redeemable convertible preferred stock | $ | - | $ | 2,880 | |||
Transfer of instruments from property and equipment to inventory | $ | 594 | $ | 770 |
ORTHOPEDIATRICS CORP. | |||||||||||||||
NET REVENUE BY GEOGRAPHY AND PRODUCT CATEGORY | |||||||||||||||
(Unaudited) | |||||||||||||||
(In Thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Product sales by geographic location: | 2018 | 2017 | 2018 | 2017 | |||||||||||
U.S. | $ | 11,458 | $ | 9,193 | $ | 20,111 | $ | 16,529 | |||||||
International | 3,619 | 2,609 | 7,060 | 5,035 | |||||||||||
Total | $ | 15,077 | $ | 11,802 | $ | 27,171 | $ | 21,564 | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Product sales by category: | 2018 | 2017 | 2018 | 2017 | |||||||||||
Trauma and deformity | $ | 9,860 | $ | 7,869 | $ | 18,983 | $ | 15,609 | |||||||
Scoliosis | 4,897 | 3,431 | 7,582 | 5,353 | |||||||||||
Sports medicine/other | 320 | 502 | 606 | 602 | |||||||||||
Total | $ | 15,077 | $ | 11,802 | $ | 27,171 | $ | 21,564 |
ORTHOPEDIATRICS CORP. | |||||||||||||||
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA | |||||||||||||||
(Unaudited) | |||||||||||||||
(In Thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net Loss | $ | (2,692) | $ | (1,266) | $ | (7,692) | $ | (2,551) | |||||||
Interest expense, net | 562 | 650 | 1,114 | 1,095 | |||||||||||
Other expense | 10 | (61) | 63 | (58) | |||||||||||
Depreciation and amortization | 728 | 594 | 1,400 | 1,092 | |||||||||||
Stock-based compensation | 225 | 388 | 645 | 727 | |||||||||||
Accelerated vesting of restricted stock upon our IPO | 229 | - | 1,986 | - | |||||||||||
Public company costs | 337 | - | 674 | - | |||||||||||
Non-recurring professional services fees | 1,314 | - | 1,768 | - | |||||||||||
Adjusted EBITDA | $ | 713 | $ | 305 | $ | (42) | $ | 305 |