OrthoPediatrics Corp. Reports Fourth Quarter and Full Year 2024 Financial Results

Record full year 2024 revenue of $204.7 million increased 38% compared to prior year, and more than doubled fourth quarter 2024 adjusted EBITDA WARSAW, Ind., March 04, 2025 (GLOBE NEWSWIRE) -- OrthoPediatrics Corp. (“OrthoPediatrics” or the “Company”) (Nasdaq: KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, announced today its financial results for the fourth quarter and full year ended December 31, 2024. Fourth Quarter and Full Year 2024 & Recent Business Highlights Helped a new record of over 34,000 children in the fourth quarter 2024 and approximately 138,000 for full year 2024, bringing the total to over 1.14 million since the inception of OrthoPediatrics Generated total revenue of $52.7 million for fourth quarter 2024, up 40% from $37.6 million in fourth quarter 2023; domestic revenue increased 52% and international revenue increased 5% in the quarterAchieved adjusted EBITDA of $3.0 million in the fourth quarter of 2024, compared to $1.3 million in the fourth quarter of 2023Generated record total annual revenue of $204.7 million for full year 2024, up 38% from $148.7 million in 2023; domestic revenue increased 45% and international revenue increased 15% in 2024Achieved record full year adjusted EBITDA of $8.5 million in 2024, compared to $5.0 million in 2023Reduced fourth quarter 2024 free cash flow usage by 70% as compared to the third quarter 2024 year to date average, and reduced fourth quarter 2024 free cash flow usage by 67% as compared to the same period in the prior year. Anticipate first full quarter of positive free cash flow in fourth quarter 2025Reiterated full year 2025 revenue guidance to be in a range of $235.0 million to $242.0 million, representing growth of 15% to 18% compared to 2024 “2024 was yet another year that OrthoPediatrics delivered strong results, successfully executed on our strategy, and further solidified our market leading position as we surround the pediatric orthopedic surgeon with all of the technology they need. With an extremely diverse business we have multiple levers that drive growth and we saw strength across all segments as Trauma and Deformity, Scoliosis, and OPSB continue to capture market share,” commented David Bailey, President & CEO of OrthoPediatrics. “Looking ahead, we are positioned well to further build on our past success and achieve our long-term goal of helping one million kids per year. We will help more children than ever, capture more share across the entire business as we continue to break revenue records, grow our adjusted EBITDA, and improve cash usage in 2025 and beyond, and we look forward to driving our Company through this next phase of growth." Fourth Quarter and Full Year 2024 Financial ResultsTotal revenue for the fourth quarter of 2024 was $52.7 million, a 40% increase compared to $37.6 million for the same period last year. The increase in revenue in the fourth quarter of 2024 was driven primarily by growth across Global Trauma and Deformity, Scoliosis, and OPSB, plus the addition of Boston O&P, partially offset by lower growth in international revenue. U.S. revenue for the fourth quarter of 2024 was $42.9 million, a 52% increase compared to $28.3 million for the same period last year, representing 81% of total revenue. International revenue for the fourth quarter of 2024 was $9.8 million, a 5% increase compared to $9.4 million for the same period last year, representing 19% of total revenue. Growth in the quarter was primarily driven by Scoliosis sales. Total revenue for the full year 2024 was $204.7 million, a 38% increase compared to $148.7 million in 2023. Full year U.S. revenue was $161.2 million, a 45% increase compared to $111.0 million in 2023, representing 79% of total revenue. International revenue for the full year 2024 was $43.6 million, a 15% increase compared to $37.7 million in 2023, representing 21% of total revenue. Trauma and Deformity revenue for the fourth quarter of 2024 was $36.4 million, a 35% increase compared to $27.1 million for the same period last year. Revenue was driven by growth from Trauma, Pega products, Ex-Fix, and OPSB, as well as the addition of Boston O&P. Scoliosis revenue was $15.6 million, a 62% increase compared to $9.7 million for the fourth quarter of 2023. Scoliosis growth was driven primarily by increased U.S. growth across the Response and ApiFix non-fusion system, as well as the addition of Boston O&P. Sports Medicine/Other revenue for the fourth quarter of 2024 was $0.6 million, compared to $0.9 million for the same period last year. Trauma and Deformity revenue for the full year 2024 was $145.1 million, a 36% increase compared to $106.8 million in 2023. Scoliosis revenue for the full year 2024 was $55.2 million, a 45% increase compared to $37.9 million in 2023. Sports Medicine/Other revenue for the full year 2024 was $4.4 million, an 11% increase compared to $4.0 million in 2023. Gross profit for the fourth quarter of 2024 was $35.6 million, an $8.9 million increase compared to $26.7 million for the same period last year. Gross profit margin for the fourth quarter of 2024 was 67.5%, compared to 71.0% for the same period last year. The decrease in gross profit margin was primarily driven by an approximately $3.0 million, full year, adjustment from the reclassification of certain labor and overhead expenses previously recorded in general and administrative expenses into cost of revenue related to our Boston O&P manufacturing business. For the full year 2024, gross profit margin was 72.6%, compared to 74.8% in 2023. The decrease in gross profit margin was primarily driven by an approximately $3.0 million, full year, adjustment from the reclassification of certain labor and overhead expenses previously recorded in general and administrative expenses into cost of revenue related to our Boston O&P manufacturing business. This reclassification does not impact our total operating loss, net loss or Adjusted EBITDA. Total operating expenses for the fourth quarter of 2024 were $49.6 million, a $14.8 million increase compared to $34.8 million for the same period last year. Full year operating expenses were $183.6 million, a 33.0% increase compared to $138.0 million in 2023. The increase was mainly driven by volume of units sold, and increased volume related commission, as well as the addition of Boston O&P. Sales and marketing expenses increased $4.0 million, or 31.1%, to $16.8 million in the fourth quarter of 2024. For the full year 2024, sales and marketing expense increased $11.5 million, or 21.7%, to $64.3 million. The increase was primarily driven by increased sales commission expenses. General and administrative expenses increased $5.4 million, or 28.2%, to $24.4 million in the fourth quarter of 2024. For the full year 2024, general and administrative expense increased $29.5 million, or 40.2%, to $102.8 million. The fourth quarter and full year increases were driven primarily by the addition of personnel and resources to support the continued expansion of the business, the addition of Boston O&P, and increases in non-cash items such as stock compensation, depreciation and amortization. One-time charges for the fourth quarter 2024 included a $3.7 million restructuring charge associated with the closure of our Israel office and included severance, inventory write off, lease exit fees, and other expenses. In addition, we recorded an impairment charge related to one of our tradenames of $1.8 million compared to $1.0 million during the third quarter in 2023. Total other expense was $2.4 million for the fourth quarter of 2024, compared to other income of $1.2 million for the same period last year, and other expense was $6.9 million for 2024 compared to other income of $5.4 million for 2023. For 2024, there was no fair value adjustment of contingent consideration compared to a $3.0 million benefit for 2023, and in 2024 we incurred a one-time refinancing expense of $3.2 million. Net loss for the fourth quarter of 2024 was $16.1 million, compared to $6.7 million for the same period last year. Net loss per share for the period was $0.69 per basic share and diluted share, compared to $0.29 per basic and diluted share for the same period last year. Adjusted EBITDA for the fourth quarter of 2024 was $3.0 million as compared to $1.3 million for the fourth quarter of 2023. Net loss for the full year 2024 was $37.8 million, compared to a net loss of $21.0 million last year. There was no fair value adjustment of contingent consideration for year 2024, the sales performance period associated with our ApiFix system sales milestone ended, and no additional amounts were owed to the sellers. This is compared to a favorable $3.0 million fair value adjustment in 2023. Net loss per share for the period was $1.64 per basic and diluted share, compared to net income of $0.92 per basic and diluted share for the same period last year. Adjusted EBITDA for the full year 2024 was $8.5 million compared to $5.0 million for the full year 2023. See below for additional information and a reconciliation of non-GAAP financial information. Weighted average diluted shares outstanding for the three months ended December 31, 2024 was 23,171,662 shares. As of December 31, 2024, cash and cash equivalents, short-term investments and restricted cash were $70.8 million compared to $78.1 million and $82.3 million as of September 30, 2024 and December 31, 2023, respectively. We also have an additional $25.0 million available on our term loan. Full Year 2025 Financial GuidanceFor full year 2025, the Company expects its revenue to be in the range of $235.0 million to $242.0 million, representing growth of 15% to 18% over 2024 revenue. The Company also expects its annual set deployment to be approximately $15.0 million and expects to generate $15.0 million to $17.0 million of adjusted EBITDA for full year 2025. Conference CallOrthoPediatrics will host a conference call on Tuesday, March 4, 2025, at 4:30 p.m. ET to discuss the results. Investors interested in listening to the conference call may do so by accessing a live and archived webcast of the event at www.orthopediatrics.com, on the Investors page in the Events & Presentations section. The webcast will be available for replay for at least 90 days after the event. Forward-Looking StatementsThis 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 known and unknown risks, uncertainties and other factors, such as the impact of widespread health emergencies, such as COVID-19 and respiratory syncytial virus, and the other risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the SEC on March 8, 2024, as updated and supplemented by our other SEC reports filed from time to time, 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 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 MeasuresThis press release includes certain non-GAAP financial measures such as adjusted diluted (loss) earnings per share and Adjusted EBITDA, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Adjusted loss per share in this press release represents diluted 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, restructuring charges, European Union Medical Device Regulation fees, acquisition related costs, non-recurring Pega conversion fees, MidCap financing termination fees, 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. We believe that providing the non-GAAP diluted 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, restructuring charges, European Union Medical Device Regulation fees, acquisition related costs, non-recurring Pega conversion fees, MidCap financing termination fees, 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 (loss) earnings 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 diluted (loss) earnings per share to non-GAAP diluted (loss) earnings and net (loss) income to non-GAAP Adjusted EBITDA. 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 over 75 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 75 countries outside the United States. For more information, please visit www.orthopediatrics.com. Investor ContactPhilip TaylorGilmartin Groupphilip@gilmartinir.com415-937-5406 ORTHOPEDIATRICS CORP.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In Thousands, Except Share Data) December 31, 2024 December 31, 2023ASSETSCurrent assets: Cash$43,820 $31,055 Restricted cash 1,957 1,972 Short-term investments 25,013 49,251 Accounts receivable - trade, net of allowances of $1,145 and $1,373, respectively 42,357 34,617 Inventories, net 117,005 105,851 Prepaid expenses and other current assets 7,021 3,750 Total current assets 237,173 226,496 Property and equipment, net 50,596 41,048 Other assets: Amortizable intangible assets, net 64,427 69,275 Goodwill 93,844 83,699 Other intangible assets 16,752 15,287 Other non-current assets 10,417 2,940 Total other assets 185,440 171,201 Total assets$473,209 $438,745 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable - trade 8,908 12,649 Accrued compensation and benefits 13,888 11,325 Current portion of long-term debt with affiliate 160 152 Current portion of acquisition installment payable 1,347 10,149 Other current liabilities 9,659 7,391 Total current liabilities 33,962 41,666 Long-term liabilities: Long-term term loan 23,957 9,297 Long-term convertible note 47,913 — Long-term debt with affiliate, net of current portion 451 611 Other long-term debt, net of current portion 635 — Acquisition installment payable, net of current portion 2,452 3,551 Deferred income taxes 3,381 5,483 Other long-term liabilities 5,892 1,112 Total long-term liabilities 84,681 20,054 Total liabilities 118,643 61,720 Stockholders' equity: Common stock, $0.00025 par value; 50,000,000 shares authorized; 24,217,508 shares and 23,378,408 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively 6 6 Additional paid-in capital 600,897 580,287 Accumulated deficit (235,564) (197,742)Accumulated other comprehensive loss (10,773) (5,526)Total stockholders' equity 354,566 377,025 Total liabilities and stockholders' equity$473,209 $438,745 ORTHOPEDIATRICS CORP.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In Thousands, Except Share and Per Share Data) Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 2024 2023Net revenue$52,667 $37,613 $204,727 $148,732 Cost of revenue 17,102 10,899 56,129 37,479 Gross profit 35,565 26,714 148,598 111,253 Operating expenses: Sales and marketing 16,784 12,799 64,296 52,824 General and administrative 24,431 19,060 102,789 73,300 Trademark impairment 1,836 — 1,836 985 Restructuring 3,653 — 3,653 — Research and development 2,916 2,921 11,034 10,895 Total operating expenses 49,620 34,780 183,608 138,004 Operating loss (14,055) (8,066) (35,010) (26,751) Other expenses (income): Interest expense (income), net 1,319 (303) 2,621 (198)Loss on early extinguishment of debt — — 3,230 — Fair value adjustment of contingent consideration — (6) — (2,980)Other expense (income) 1,035 (854) 1,068 (2,261)Total other expenses (income), net 2,354 (1,163) 6,919 (5,439) Net loss before income taxes$(16,409) $(6,903) (41,929) (21,312)Income tax benefit (340) (212) (4,107) (338)Net loss$(16,069) $(6,691) $(37,822) $(20,974)Weighted average shares outstanding Basic 23,171,662 22,762,689 23,077,704 22,675,477 Diluted 23,171,662 22,762,689 23,077,704 22,675,477 Net loss per share Basic$(0.69) $(0.29) $(1.64) $(0.92)Diluted$(0.69) $(0.29) $(1.64) $(0.92) ORTHOPEDIATRICS CORP.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In Thousands) Twelve Months Ended December 31, 2024 2023OPERATING ACTIVITIES Net loss$(37,822) $(20,974)Adjustments to reconcile net loss to net cash used in operating activities: Impairment 1,836 985 Depreciation and amortization 19,080 17,385 Loss on early extinguishment of debt 3,230 — Stock-based compensation 13,548 10,526 Fair value adjustment of contingent consideration — (2,980)Accretion of acquisition installment payable 661 1,372 Deferred income taxes (4,736) (1,163)Non-cash other 90 — Changes in certain operating assets and liabilities: Accounts receivable - trade (4,749) (9,724)Inventories (13,197) (26,279)Prepaid expenses and other current assets (1,561) 94 Accounts payable - trade (4,280) 1,491 Accrued expenses and other liabilities 537 6,852 Other 315 (4,631)Net cash used in operating activities (27,048) (27,046)INVESTING ACTIVITIES Acquisition of Boston O&P, net of cash acquired (20,225) — Clinic acquisitions, net of cash acquired (2,882) — Acquisition of MedTech, net of cash acquired — (3,097)Acquisition of Rhino assets — (546)Sale of short-term marketable securities 49,855 112,904 Purchase of short-term marketable securities (25,000) (48,600)Investment in private companies and purchases of licenses (647) (2,106)Purchases of property and equipment (14,263) (16,878)Net cash provided by (used in) investing activities (13,162) 41,677 FINANCING ACTIVITIES Proceeds from issuance of debt 73,533 9,424 Payment of debt issuance costs (3,407) — Proceeds from exercise of stock options — 21 Installment payment for ApiFix (2,250) (2,000)Installment payment for MedTech (1,250) — Payments on mortgage notes (152) (144)Payments on clinic acquisition notes (1,108) — Payment on debt (12,231) — Net cash provided by financing activities 53,135 7,301 Effect of exchange rate changes on cash (175) 633 NET INCREASE IN CASH AND RESTRICTED CASH 12,750 22,565 Cash and restricted cash, beginning of period 33,027 10,462 Cash and restricted cash, end of period$45,777 $33,027 2024 2023 SUPPLEMENTAL DISCLOSURES Cash paid for interest$2,752 $42 Transfer of instruments between property and equipment and inventory$420 $57 Issuance of common shares for ApiFix installment$6,929 $6,178 Issuance of common shares to acquire MedTech$— $2,274 Issuance of common shares for MedTech installment$133 $— Issuance of common shares to acquire Rhino assets$— $478 Right-of-use assets obtained in exchange for lease liabilities$8,957 $706 Debt issuance costs not yet paid$— $127 ORTHOPEDIATRICS CORP.NET REVENUE BY GEOGRAPHY AND PRODUCT CATEGORY(Unaudited)(In Thousands) Three Months Ended December 31, Twelve Months Ended December 31,Product sales by geographic location:2024 2023 2024 2023U.S.$42,894 $28,262 $161,163 $111,010International 9,773 9,351 43,564 37,722Total$52,667 $37,613 $204,727 $148,732 Three Months Ended December 31, Twelve Months Ended December 31,Product sales by category:2024 2023 2024 2023Trauma and deformity$36,409 $27,066 $145,126 $106,781Scoliosis 15,632 9,663 55,153 37,933Sports medicine/other 626 884 4,448 4,018Total$52,667 $37,613 $204,727 $148,732 ORTHOPEDIATRICS CORP.RECONCILIATION OF NET LOSS (INCOME) TO NON-GAAP ADJUSTED EBITDA(Unaudited)(In Thousands) Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 2024 2023Net loss$(16,069) $(6,691) $(37,822) $(20,974)Interest expense (income), net 1,319 (303) 2,621 (198)Other expense (income), net 1,035 (854) 1,068 (2,261)Income tax benefit (340) (212) (4,107) (338)Depreciation and amortization 3,993 5,479 19,080 17,385 Trademark impairment 1,836 — 1,836 985 Stock-based compensation 3,888 2,516 13,548 10,526 Fair value adjustment of contingent consideration — (6) — (2,980)Restructuring charges 3,653 — 3,653 — European Union Medical Device Regulation fees 1,386 — 1,386 — Acquisition related costs 1,762 451 2,266 650 Non-recurring Pega conversion fees — — — 277 MidCap financing termination fees — — 3,230 — Minimum purchase commitment cost 560 915 1,760 1,968 Adjusted EBITDA$3,023 $1,295 $8,519 $5,040 ORTHOPEDIATRICS CORP.RECONCILIATION OF DILUTED (LOSS) EARNINGS PER SHARE TO NON-GAAPADJUSTED DILUTED (LOSS) PER SHARE(Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 2024 2023Loss per share, diluted (GAAP)$(0.69) $(0.29) $(1.64) $(0.92)Accretion of interest attributable to acquisition installment payable — 0.01 0.02 0.05 Fair value adjustment of contingent consideration — — — (0.13)Trademark impairment 0.08 — 0.08 0.04 Restructuring charges 0.16 — 0.16 — European Union Medical Device Regulation fees 0.06 — 0.06 — Acquisition related costs 0.08 0.02 0.10 0.03 Non-recurring Pega conversion fees — — — 0.01 MidCap financing termination fees — — 0.14 — Minimum purchase commitment cost 0.02 0.04 0.08 0.09 Adjusted loss per share, diluted (non-GAAP)$(0.29) $(0.22) $(1.01) $(0.83)

OrthoPediatrics Corp. Reports Fourth Quarter and Full Year 2024 Financial Results

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