OrthoPediatrics Corp. Reports Second Quarter 2023 Financial Results
Second Quarter 2023 and Business Highlights
- Helped over 21,000 children in the second quarter of 2023, bringing the total to over 670,000 since inception including MD Orthopaedics ("MD Ortho") and Pega Medical
- Generated total revenue of
$39.6 million for the second quarter of 2023, up 20% from$32.9 million in second quarter 2022; domestic revenue increased 19% and international revenue increased 25% in the quarter - Grew Trauma & Deformity revenue 22%, Scoliosis revenue 16%; Sports Medicine/Other revenue 23%, worldwide in the second quarter of 2023 compared to the second quarter of 2022
- Consigned
$9.2 million of sets in the second quarter of 2023 compared to$3.4 million in the second quarter of 2022, and$3.0 million in the first quarter of 2023, driven by new product development deployments, significant Pega Medical deployments and the consignment of multiple 7D Surgical FLASH Navigation Platforms - Launched the GIRO Growth Modulation System, for the correction of angular deformities of long bones and limb length discrepancy, the first new Pega Medical system to receive FDA clearance and be launched under
OrthoPediatrics - Reiterated full year 2023 revenue guidance of
$148.0 million to$151.0 million , representing growth of 21% to 23% compared to the prior year
Second Quarter 2023 Financial Results
Total revenue for the second quarter of 2023 was
Trauma and Deformity revenue for the second quarter of 2023 was
Gross profit for the second quarter of 2023 was
Total operating expenses for the second quarter of 2023 were
Sales and marketing expenses increased
General and administrative expenses increased
Total other income was
Net loss for the second quarter of 2023 was
Adjusted EBITDA for the second quarter of 2023 was
Weighted average basic and diluted shares outstanding for the three months ended
As of
Full Year 2023 Financial Guidance
For the full year of 2023, the Company reiterated its revenue guidance to be in the range of
Conference Call
Forward-Looking Statements
All statements, other than statements of historical facts, contained in this quarterly report, including statements regarding our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition, are forward-looking statements. You can often identify forward-looking statements by words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "target," "ongoing," "plan," "potential," "predict," "project," "should," "will" or "would," or the negative of these terms or other terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors, such as the impact of widespread health emergencies, such as COVID 19 and respiratory syncytial virus, that may cause our results, activity levels, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements. Forward-looking statements may include, among other things, statements relating to: our ability to achieve or sustain profitability in the future; our ability to raise additional capital to fund our existing commercial operations, develop and commercialize new products and expand our operations; our ability to commercialize our products in development and to develop and commercialize additional products through our research and development efforts, and if we fail to do so we may be unable to compete effectively; our ability to generate sufficient revenue from the commercialization of our products to achieve and sustain profitability; our ability to comply with extensive government regulation and oversight both in
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures such as adjusted diluted earnings (loss) per share and Adjusted EBITDA, which differ from financial measures calculated in accordance with
About
Founded in 2006,
Investor Contact
philip@gilmartinir.com
415-937-5406
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands, Except Share Data) |
||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 9,713 | $ | 8,991 | ||||
| Restricted cash | 1,596 | 1,471 | ||||||
| Short-term investments | 83,472 | 109,299 | ||||||
| Accounts receivable – trade, net of allowances of |
33,849 | 24,800 | ||||||
| Inventories, net | 90,983 | 78,192 | ||||||
| Prepaid expenses and other current assets | 3,642 | 3,966 | ||||||
| Total current assets | 223,255 | 226,719 | ||||||
| Property and equipment, net | 40,071 | 34,286 | ||||||
| Other assets: | ||||||||
| Amortizable intangible assets, net | 71,932 | 64,980 | ||||||
| 82,911 | 86,821 | |||||||
| Other intangible assets | 16,087 | 14,921 | ||||||
| Other non-current assets | 614 | — | ||||||
| Total other assets | 171,544 | 166,722 | ||||||
| Total assets | $ | 434,870 | $ | 427,727 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable – trade | 20,890 | 11,150 | ||||||
| Accrued compensation and benefits | 8,159 | 6,744 | ||||||
| Current portion of long-term debt with affiliate | 148 | 144 | ||||||
| Current portion of acquisition installment payable | 9,713 | 7,815 | ||||||
| Other current liabilities | 5,401 | 5,018 | ||||||
| Total current liabilities | 44,311 | 30,871 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt with affiliate, net of current portion | 688 | 763 | ||||||
| Acquisition installment payment, net of current portion | 3,427 | 8,019 | ||||||
| Contingent consideration | 6 | 2,980 | ||||||
| Deferred income taxes | 5,564 | 5,954 | ||||||
| Other long-term liabilities | 562 | 492 | ||||||
| Total long-term liabilities | 10,247 | 18,208 | ||||||
| Total liabilities | 54,558 | 49,079 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, |
6 | 6 | ||||||
| Additional paid-in capital | 574,677 | 560,810 | ||||||
| Accumulated deficit | (186,460 | ) | (176,768 | ) | ||||
| Accumulated other comprehensive loss | (7,911 | ) | (5,400 | ) | ||||
| Total stockholders' equity | 380,312 | 378,648 | ||||||
| Total liabilities and stockholders' equity | $ | 434,870 | $ | 427,727 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands, Except Share and Per Share Data) |
||||||||||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net revenue | $ | 39,559 | $ | 32,928 | $ | 71,147 | $ | 56,345 | ||||||||
| Cost of revenue | 9,534 | 7,947 | 17,561 | 12,798 | ||||||||||||
| Gross profit | 30,025 | 24,981 | 53,586 | 43,547 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 13,165 | 12,431 | 25,381 | 22,189 | ||||||||||||
| General and administrative | 19,654 | 14,546 | 37,320 | 27,713 | ||||||||||||
| Research and development | 2,792 | 1,747 | 5,062 | 3,774 | ||||||||||||
| Total operating expenses | 35,611 | 28,724 | 67,763 | 53,676 | ||||||||||||
| Operating loss | (5,586 | ) | (3,743 | ) | (14,177 | ) | (10,129 | ) | ||||||||
| Other (income) expenses: | ||||||||||||||||
| Interest expense, net | 294 | 1,212 | 84 | 1,777 | ||||||||||||
| Fair value adjustment of contingent consideration | (2,304 | ) | (5,010 | ) | (2,974 | ) | (2,440 | ) | ||||||||
| Other (income) loss | (289 | ) | 827 | (620 | ) | 723 | ||||||||||
| Total other (income) expenses | (2,299 | ) | (2,971 | ) | (3,510 | ) | 60 | |||||||||
| Loss before income taxes | $ | (3,287 | ) | $ | (772 | ) | (10,667 | ) | (10,189 | ) | ||||||
| Provision for income taxes (benefit) | (401 | ) | (439 | ) | (975 | ) | (756 | ) | ||||||||
| Net loss | $ | (2,886 | ) | $ | (333 | ) | $ | (9,692 | ) | $ | (9,433 | ) | ||||
| Weighted average common stock – basic and diluted | 22,704,723 | 19,792,286 | 22,587,022 | 19,693,216 | ||||||||||||
| Net loss per share – basic and diluted | $ | (0.13 | ) | $ | (0.02 | ) | $ | (0.43 | ) | $ | (0.48 | ) | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(In Thousands) |
||||||||
| Six Months Ended |
||||||||
| 2023 | 2022 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (9,692 | ) | $ | (9,433 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 7,928 | 6,292 | ||||||
| Stock-based compensation | 5,415 | 3,296 | ||||||
| Fair value adjustment of contingent consideration | (2,974 | ) | (2,440 | ) | ||||
| Accretion of acquisition installment payable | 812 | 1,545 | ||||||
| Deferred income taxes | (975 | ) | (756 | ) | ||||
| Changes in certain operating current assets and liabilities: | ||||||||
| Accounts receivable – trade | (8,964 | ) | (6,614 | ) | ||||
| Inventories | (11,860 | ) | (10,905 | ) | ||||
| Prepaid expenses and other current assets | 72 | 557 | ||||||
| Accounts payable – trade | 9,724 | 5,298 | ||||||
| Accrued expenses and other liabilities | 1,325 | 1,133 | ||||||
| Other | (1,645 | ) | (340 | ) | ||||
| Net cash used in operating activities | (10,834 | ) | (12,367 | ) | ||||
| INVESTING ACTIVITIES | ||||||||
| Acquisition of MD Ortho, net of cash acquired | — | (8,360 | ) | |||||
| Acquisition of |
(3,097 | ) | — | |||||
| Sale of short-term marketable securities | 72,347 | 31,600 | ||||||
| Purchase of short-term marketable securities | (44,600 | ) | — | |||||
| Purchases of property and equipment | (10,563 | ) | (9,465 | ) | ||||
| Net cash provided by investing activities | 14,087 | 13,775 | ||||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of debt with affiliate | — | 31,000 | ||||||
| Installment payment for ApiFix | (2,000 | ) | (3,234 | ) | ||||
| Proceeds from exercise of stock options | — | 42 | ||||||
| Payments on mortgage notes | (71 | ) | (67 | ) | ||||
| Net cash (used in) provided by financing activities | (2,071 | ) | 27,741 | |||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (335 | ) | 400 | |||||
| NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 847 | 29,549 | ||||||
| Cash, cash equivalents and restricted cash, beginning of period | $ | 10,462 | $ | 9,006 | ||||
| Cash, cash equivalents and restricted cash, end of period | $ | 11,309 | $ | 38,555 | ||||
| SUPPLEMENTAL DISCLOSURES | ||||||||
| Cash paid for interest | $ | 11 | $ | 60 | ||||
| Transfer of instruments from property and equipment to inventory | $ | 367 | $ | (130 | ) | |||
| Issuance of common shares to acquire MD Ortho | $ | — | $ | 9,707 | ||||
| Issuance of common shares for ApiFix installment | $ | 6,178 | $ | 10,410 | ||||
| Issuance of common shares to acquire |
$ | 2,274 | $ | — | ||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | 293 | $ | 116 | ||||
NET REVENUE BY GEOGRAPHY AND PRODUCT CATEGORY (Unaudited) (In Thousands) |
||||||||||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| Product sales by geographic location: | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| $ | 29,587 | $ | 24,960 | $ | 53,388 | $ | 43,148 | |||||||||
| International | 9,972 | 7,968 | 17,759 | 13,197 | ||||||||||||
| Total | $ | 39,559 | $ | 32,928 | $ | 71,147 | $ | 56,345 | ||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| Product sales by category: | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Trauma and deformity | $ | 27,514 | $ | 22,568 | $ | 50,909 | $ | 39,084 | ||||||||
| Scoliosis | 10,893 | 9,421 | 17,966 | 15,404 | ||||||||||||
| Sports medicine/other | 1,152 | 939 | 2,272 | 1,857 | ||||||||||||
| Total | $ | 39,559 | $ | 32,928 | $ | 71,147 | $ | 56,345 | ||||||||
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA (Unaudited) (In Thousands) |
||||||||||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net loss | $ | (2,886 | ) | $ | (333 | ) | $ | (9,692 | ) | $ | (9,433 | ) | ||||
| Interest expense, net | 294 | 1,212 | 84 | 1,777 | ||||||||||||
| Other (income) expense | (289 | ) | 827 | (620 | ) | 723 | ||||||||||
| Provision for income taxes (benefit) | (401 | ) | (439 | ) | (975 | ) | (756 | ) | ||||||||
| Depreciation and amortization | 4,080 | 3,331 | 7,928 | 6,292 | ||||||||||||
| Stock-based compensation | 3,303 | 1,770 | 5,415 | 3,296 | ||||||||||||
| Fair value adjustment of contingent consideration | (2,304 | ) | (5,010 | ) | (2,974 | ) | (2,440 | ) | ||||||||
| Acquisition related costs | 199 | 505 | 199 | 709 | ||||||||||||
| Nonrecurring Pega conversion fees | — | — | 277 | — | ||||||||||||
| Minimum purchase commitment cost | 276 | 240 | 576 | 341 | ||||||||||||
| Adjusted EBITDA | $ | 2,272 | $ | 2,103 | $ | 218 | $ | 509 | ||||||||
RECONCILIATION OF DILUTED LOSS PER SHARE TO NON-GAAP ADJUSTED DILUTED LOSS PER SHARE (Unaudited) |
||||||||||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Loss per share, diluted (GAAP) | $ | (0.13 | ) | $ | (0.02 | ) | $ | (0.43 | ) | $ | (0.48 | ) | ||||
| Accretion of interest attributable to acquisition installment payable | 0.02 | 0.06 | 0.04 | 0.08 | ||||||||||||
| Fair value adjustment of contingent consideration | (0.10 | ) | (0.25 | ) | (0.13 | ) | (0.12 | ) | ||||||||
| Acquisition related costs | 0.01 | 0.03 | 0.01 | 0.04 | ||||||||||||
| Nonrecurring Pega conversion fees | — | — | 0.01 | — | ||||||||||||
| Minimum purchase commitment cost | 0.01 | 0.01 | 0.03 | 0.02 | ||||||||||||
| Loss per share, diluted (non-GAAP) | $ | (0.19 | ) | $ | (0.17 | ) | $ | (0.47 | ) | $ | (0.46 | ) | ||||
Source: OrthoPediatrics Corp.