0000884624false00008846242024-08-062024-08-06
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
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Date of Report (Date of earliest event reported): August 06, 2024 |
ORTHOFIX MEDICAL INC.
(Exact name of Registrant as Specified in Its Charter)
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Delaware |
0-19961 |
98-1340767 |
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(IRS Employer
Identification No.) |
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3451 Plano Parkway |
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Lewisville, Texas |
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75056 |
(Address of Principal Executive Offices) |
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(Zip Code) |
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Registrant’s Telephone Number, Including Area Code: (214) 937-2000 |
(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))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s) |
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Name of each exchange on which registered
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Common stock, $0.10 par value per share |
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OFIX |
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Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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 August 6, 2024, Orthofix Medical Inc. (the “Company”) issued a press release announcing, among other things, its financial results for the second quarter ended June 30, 2024. A copy of the press release is furnished herewith as Exhibit 99.1 and attached hereto.
The information furnished in this Item 2.02, including the exhibit furnished herewith as Exhibit 99.1, will not be treated as “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or into another filing under the Exchange Act, unless that filing expressly incorporates by reference this Item 2.02 of this report.
Discussion of Non-GAAP Financial Measures
In addition to using standard measures of performance and liquidity that are recognized in accordance with accounting principles generally accepted in the United States of America ("GAAP"), the Company uses additional financial measures excluding certain GAAP items ("non-GAAP measures"), such as:
Constant Currency
Constant currency is a non-GAAP measure, which the Company calculates by using foreign currency rates from the comparable, prior-year period, to present net sales at comparable rates. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.
Free Cash Flow
Free cash flow is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operating activities. Free cash flow is an important indicator of how much cash is generated or used by the Company's business operations, including capital expenditures. Management uses free cash flow to measure progress on its capital efficiency and cash flow initiatives.
Adjusted Gross Profit and Adjusted Gross Margin
Adjusted gross profit represents GAAP gross profit with adjustments to exclude the impact of the certain items recorded to cost of goods sold. Such potential adjustments are listed within the section below under the header "Non-GAAP Adjustments." Adjusted gross margin represents adjusted gross profit as a percentage of GAAP net sales.
Adjusted Net Income (Loss)
Adjusted net income (loss) represents GAAP net loss with adjustments to exclude the impact of certain items recorded in such GAAP net loss. Potential adjustments are listed within the sections below under the header "Non-GAAP Adjustments."
Adjusted Operating Expenses
Adjusted operating expenses represents GAAP expenses, such as sales and marketing expense, general and administrative expense, and research and development expense, with adjustments to exclude the impact of certain items recorded in such GAAP operating expenses. Potential adjustments are listed within the section below under the header "Non-GAAP Adjustments."
Adjusted Non-Operating Expenses
Adjusted non-operating expenses represents GAAP expenses, such as interest income (expense), net and other income (expense), net, with adjustments to exclude the impact of certain items recorded in such GAAP non-operating expenses. Potential adjustments are listed within the section below under the header "Non-GAAP Adjustments."
EBITDA
EBITDA is a non-GAAP financial measure, which the Company calculates by adding interest expense (income), net; income tax expense (benefit); and depreciation and amortization to net income (loss). EBITDA provides management with additional insight to the Company's results of operations. Adjusted EBITDA, which is the primary metric used by the Company's Chief Operating Decision Maker in managing the business, consists of EBITDA with adjustments to exclude certain items listed within the section below under the header "Non-GAAP Adjustments."
Non-GAAP Adjustments
The Company's non-GAAP financial measures provide management with additional insight to the Company's results of operations and reflect the exclusion of the following items:
•Share-based compensation expense – Costs related to awards granted under the Company's share-based compensation plans, which include stock options, performance-based or market-based stock options, restricted stock units, performance-based or market-based restricted stock units, and stock issued under the Company's stock purchase plan; see the share-based compensation footnote in the Company's Form 10-Q for the quarter ended June 30, 2024, for an allocation of these costs by consolidated statement of operations line item. Management excludes this item when evaluating the Company's operating performance as it represents a non-cash expense.
•Foreign exchange impact – Gains and losses related to foreign currency transactions, which are recorded as other income (expense), net. Management excludes this item when evaluating the Company's operating results as it is primarily a non-cash expense or benefit and is non-operating in nature.
•SeaSpine merger-related costs – Costs related to the Company's merger with SeaSpine Holdings Corporation ("SeaSpine"), which was consummated in January 2023, including costs relating to integration efforts, severance and retention costs, product rationalization charges, contract termination penalties, and professional fees related to the merger. Management excludes this item when evaluating the Company's operating results as these costs associated with this event are of a temporary nature, are not related to the Company's core operating performance, and are not expected to recur at a similar frequency and magnitude in the future.
•Strategic investments – Costs related to the Company's strategic investments, such as due diligence and integration costs (unrelated to the merger with SeaSpine), which are primarily recorded as general and administrative expenses. These costs are not factored into the evaluation of the Company's performance by management because they are of a temporary nature, not related to the Company's core operating performance, and because the frequency and amount of such costs vary significantly based on the timing and magnitude of the Company's strategic investments.
•Acquisition-related fair value adjustments – Comprised of (i) gains and losses related to remeasurement of contingent consideration to fair value, which are recorded as operating expenses, (ii) recognized costs related to acquired in-process research and development ("IPR&D") assets, which are expensed immediately, and (iii) amortization of acquired inventory fair market value adjustments. Management excludes this item when evaluating the Company's operating results as the remeasurement of contingent consideration is primarily non-cash in nature, the frequency and amount of IPR&D charges can vary significantly based on the timing and magnitude of the Company's acquisition transactions, and inventory fair market value adjustments are of a temporary and non-cash nature.
•Amortization/depreciation of acquired long-lived assets – Amortization of intangible assets acquired in business combinations or asset acquisitions, including items such as developed technologies, customer relationships, trade names, manufacturing agreements, and other intangible assets, and any impairment of acquired goodwill, which are recorded in cost of sales or operating expenses. This item also includes depreciation recognized on adjustments to the fair value of certain long-lived assets acquired in the merger with SeaSpine. Management excludes this item when evaluating the Company's operating performance as it represents a non-cash expense.
•Interest and (Gain) Loss on investment securities – Interest income and net gains or losses recognized (realized or unrealized) within interest income (expense), net and other income (expense), net, respectively, relating to certain of our investments. Management excludes these items when evaluating the Company's operating performance as it typically represents a non-cash gain or loss and is not related to the Company's core operating performance.
•Litigation and investigation costs – Inclusive of (i) adverse or favorable legal judgments or negotiated legal settlements and certain related legal expenses and (ii) amounts incurred in relation to and as a result of the Board of Directors’ investigation conducted by independent outside legal counsel that resulted in the departure of three former executive officers and certain charges stemming from these actions. These charges are primarily recorded within general and administrative expenses. Management excludes these items when evaluating the Company's operating results as these costs and/or benefits can vary significantly based on the timing, frequency, and magnitude of litigation matters.
•Medical device regulation – Incremental costs incurred (i) to establish initial compliance with the regulations set forth by the European Union Medical Device Regulation (“MDR”) related to the Company's currently-approved medical devices, which are recorded primarily as research and development expenses, and (ii) related to rationalization of certain product lines that the Company does not expect to continue to market subsequent to the effective date of these regulations, which are recorded primarily as costs of sales. Management excludes this item when evaluating the Company's operating results as these costs are temporary in nature and associated with events that are not expected to recur at a similar frequency and magnitude in the future.
•Succession charges – Costs related to the transition of certain named executive officers, including any cessation and onboarding amounts, consulting services, and other related expenses, which are primarily recorded as general and administrative expenses. Management excludes this item when evaluating the Company's operating results as these costs associated with events that are not expected to recur at a similar frequency and magnitude in the future.
Usefulness and Limitations of Non-GAAP Financial Measures
Management uses non-GAAP measures to evaluate performance period-over-period, analyze the underlying trends in the Company's business, assess the Company's performance relative to its competitors, and establish operational goals and forecasts used in allocating resources. Management uses these non-GAAP measures as the basis for evaluating the ability of the Company's underlying operations to generate cash, prior to required investments in working capital, and to further its understanding of the performance of the Company's business units.
Material Limitations Associated with the Use of Non-GAAP Financial Measures
The non-GAAP financial measures described above may have limitations as analytical tools, and should not be considered in isolation or as a replacement for GAAP financial measures. Some of the limitations associated with the use of these non-GAAP financial measures are that they exclude items that reflect an economic cost and can have a material effect on cash flows. Similarly, certain non-cash expenses, such as share-based compensation, do not directly impact cash flows, but are part of total compensation costs accounted for under GAAP.
Compensation for Limitations Associated with Use of Non-GAAP Financial Measures
The Company compensates for the limitations of its non-GAAP financial measures by relying upon GAAP results to gain a complete picture of the Company's performance. GAAP results provide management with the ability to understand the Company's performance based on a defined set of criteria. The Company provides reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures and encourages investors to review these reconciliations.
Usefulness of Non-GAAP Financial Measures to Investors
The Company believes that providing non-GAAP financial measures that exclude certain items provides investors with greater transparency to the information used by management in its financial and operational decision-making. Management believes it is important to provide investors with the same non-GAAP financial measures it uses to supplement information regarding the performance and underlying trends of the Company's business operations in order to facilitate comparisons to the Company's historical operating results and internally evaluate the effectiveness of the Company's operating strategies. The Company believes that these non-GAAP financial measures also facilitates comparisons of the Company's underlying operating performance with other companies in the industry that also supplement their GAAP results with non-GAAP financial measures.
Item 7.01 Regulation FD Disclosure.
The Company expects to use the corporate investor relations presentation furnished as Exhibit 99.2 to this report, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts, and others during the fiscal year ending December 31, 2024.
The information furnished in this Item 7.01, including the exhibit furnished herewith as Exhibit 99.2, will not be treated as “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act, or into another filing under the Exchange Act, unless that filing expressly incorporates by reference this Item 7.01 of this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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.
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Orthofix Medical Inc. |
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By: |
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/s/ JULIE ANDREWS |
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Julie Andrews Chief Financial Officer |
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Date: August 6, 2024
Exhibit 99.1
News Release
Orthofix Reports Second Quarter 2024 Results and Raises Full-Year 2024 Financial Guidance
LEWISVILLE, Texas — August 6, 2024 — Orthofix Medical Inc. (NASDAQ:OFIX) today reported its financial results for the second quarter ended June 30, 2024 and increased its full-year 2024 financial guidance.
Recent Highlights
•Second quarter 2024 net sales of $198.6 million, an increase of 6% on a reported and constant currency basis compared to second quarter 2023
•Bone Growth Therapies (BGT) net sales growth of 12% compared to second quarter 2023, marking six consecutive quarters with double-digit net sales increases
•U.S. Spine Fixation1 net sales growth of 12% compared to second quarter 2023, driven by distribution expansion and further penetration in existing accounts
•Global Orthopedics net sales growth of 5% on a reported basis and 6% on a constant currency basis compared to second quarter 2023
•Second quarter 2024 net loss of $(33.4) million; Non-GAAP adjusted EBITDA of $16.6 million, an increase of $6.7 million, with adjusted EBITDA margin expanding 310 basis points compared to second quarter 2023
•Significant improvement in cash usage, paving the way for earlier than expected positive free cash flow for the second half of 2024
•Announced appointments of four new executive team members, further strengthening the breadth and depth of the Company's leadership team
•Increases full-year 2024 net sales guidance to $795 million to $800 million from $790 million to $795 million; Raises full-year 2024 non-GAAP adjusted EBITDA guidance to $64 million to $69 million from $62 million to $67 million
Second quarter net sales were $198.6 million, an increase of 6% on a reported and constant currency basis. Net loss was $(33.4) million and earnings per share ("EPS") was $(0.88) on a reported basis, representing an improvement of 18% when compared to the prior year period. Non-GAAP adjusted EBITDA was $16.6 million for the second quarter, representing adjusted EBITDA margin expansion of 310 basis points over the prior year period.
“We delivered another strong quarter driven by successful execution of our key growth priorities,” said Massimo Calafiore, President and Chief Executive Officer. “Highlights in the quarter included notable revenue growth across each of our business segments where our performance was led primarily by strength in our U.S. markets, including Bone Growth Therapies, which grew 12%, and further highlights the benefit of cross-selling in our integrated spine channel. In addition, we delivered growth of 12% in U.S. Spine fixation, more than twice the market rate. Based on continued positive momentum, the strength of our differentiated and expanding product portfolio, which continues to win share, and our confidence in sustainable growth trends, we are raising our full-year net sales and adjusted EBITDA guidance. We also are on track to achieve positive free cash flow for the second half of this year, much earlier than we originally anticipated.”
1 Spine fixation is comprised of the Company's Spinal Implants product category, excluding motion preservation product offerings
Financial Results Overview
Second Quarter 2024 Net Sales and Financial Results
The following table provides net sales by major product category by reporting segment:
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Three Months Ended June 30, |
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(Unaudited, U.S. Dollars, in millions) |
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2024 |
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2023 |
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Change |
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Constant
Currency
Change |
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Bone Growth Therapies |
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$ |
59.1 |
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$ |
52.7 |
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12.3 |
% |
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12.3 |
% |
Spinal Implants, Biologics and Enabling Technologies |
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108.9 |
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105.3 |
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3.4 |
% |
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3.4 |
% |
Global Spine |
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168.0 |
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158.0 |
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6.4 |
% |
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6.4 |
% |
Global Orthopedics |
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30.6 |
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29.0 |
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5.3 |
% |
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6.3 |
% |
Net sales |
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$ |
198.6 |
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$ |
187.0 |
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6.2 |
% |
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6.4 |
% |
Gross margins were 67.8% for the quarter and were 71.3% on a non-GAAP adjusted basis.
Net loss was $(33.4) million, or $(0.88) per share, compared to net loss of $(39.4) million, or $(1.07) per share in the prior year period. Non-GAAP adjusted EBITDA was $16.6 million, or 8.4% of net sales, compared to non-GAAP adjusted EBITDA of $9.9 million, or 5.3% of net sales, in the prior year period.
Liquidity
Cash, cash equivalents, and restricted cash on June 30, 2024, totaled $28.9 million compared to $29.5 million on March 31, 2024.
Business Outlook
The Company is increasing its 2024 full-year guidance as follows:
•Net sales are expected to range between $795 million to $800 million, representing implied growth of 6.7% to 7.4% year-over-year on a constant currency basis, an increase from the previous guidance range of $790 million to $795 million. These expectations are based on the current foreign currency exchange rates and do not take into account any additional potential exchange rate changes that may occur this year.
•Non-GAAP adjusted EBITDA is expected to range from $64 million to $69 million, an increase from the previous guidance range of $62 million to $67 million.
•Company now expects to be free cash flow positive for the second half of 2024.
Conference Call
Orthofix will host a conference call today at 8:30 AM Eastern time to discuss the Company's financial results for the quarter ended June 30, 2024. Interested parties may access the conference call by dialing (888) 330-2508 in the U.S., and (240) 789-2735 in all other locations, and referencing the access code 9556380. A replay of the call will be available for three weeks by dialing (800) 770-2030 in the U.S., and (647) 362-9199 in all other locations, and entering the access code 9556380. A webcast of the conference call may be accessed at ir.Orthofix.com.
About Orthofix
Orthofix is a leading global spine and orthopedics company with a comprehensive portfolio of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions and a leading surgical navigation system. Its products are distributed in more than 60 countries worldwide. The Company is headquartered in Lewisville, Texas and has primary offices in Carlsbad, CA, with a focus on spine and biologics product innovation and surgeon education, and Verona, Italy, with an emphasis on product innovation, production, and medical education for orthopedics. The combined company’s global R&D, commercial and manufacturing footprint also includes facilities and offices in Irvine, CA, Toronto, Canada, Sunnyvale, CA, Maidenhead, UK, Munich, Germany, Paris, France, and São Paulo, Brazil. For more information, please visit www.orthofix.com.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. Forward-looking statements in this communication include the Company's expectations regarding net sales, adjusted EBITDA, and free cash flow for the year ended December 31, 2024. Forward-looking statements are not guarantees of our future performance, are based on our current expectations and assumptions regarding our business, the economy and other future conditions, and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, including the risks described in Part I, Item 1A under the heading Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), and in Part II, Item 1A under the heading Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. Factors that could cause future results to differ from those expressed by forward-looking statements include, but are not limited to, (i) our ability to maintain operations to support our customers and patients in the near-term and to capitalize on future growth opportunities, (ii) risks associated with acceptance of surgical products and procedures by surgeons and hospitals, (iii) development and acceptance of new products or product enhancements, (iv) clinical and statistical verification of the benefits achieved via the use of our products, (v) our ability to adequately manage inventory, (vi) our ability to recruit and retain management and key personnel, and (vii) the other risks and uncertainties more fully described in our periodic filings with the Securities and Exchange Commission (the “SEC”). As a result of these various risks, our actual outcomes and results may differ materially from those expressed in these forward-looking statements.
This list of risks, uncertainties, and other factors is not complete. We discuss some of these matters more fully, as well as certain risk factors that could affect our business, financial condition, results of operations, and prospects, in reports we file from time-to-time with the SEC, which are available to read at www.sec.gov. Any or all forward-looking statements that we make may turn out to be wrong (due to inaccurate assumptions that we make or otherwise), and our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to update, and expressly disclaim any duty to update, our forward-looking statements, whether as a result of circumstances or events that arise after the date hereof, new information, or otherwise, except as required by law.
The Company is unable to provide expectations of GAAP income (loss) before income taxes, the closest comparable GAAP measures to adjusted EBITDA (which is a non-GAAP measure), on a forward-looking basis because the Company is unable to predict without unreasonable efforts the ultimate outcome of matters (including acquisition-related expenses, accounting fair value adjustments, and other such items) that will determine the quantitative amount of the items excluded in calculating adjusted EBITDA, which items are further described in the reconciliation tables and related descriptions below. These items are uncertain, depend on various factors, and could be material to the Company’s results computed in accordance with GAAP.
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Company Contacts |
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Investor Relations |
Julie Dewey, Chief Investor Relations and Communications Officer |
JulieDewey@Orthofix.com |
(209) 613-6945 |
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Media Relations |
Denise Landry, Vice President, Global Corporate Communications |
DeniseLandry@Orthofix.com |
(214) 937-2529 |
ORTHOFIX MEDICAL INC.
Condensed Consolidated Statements of Operations
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(Unaudited, U.S. Dollars, in thousands, except share and per share data) |
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2024 |
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2023 |
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2024 |
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2023 |
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Net sales |
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$ |
198,620 |
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$ |
187,016 |
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$ |
387,228 |
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$ |
362,220 |
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Cost of sales |
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63,871 |
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67,465 |
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125,237 |
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132,340 |
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Gross profit |
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134,749 |
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119,551 |
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261,991 |
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229,880 |
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Sales and marketing |
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100,224 |
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99,249 |
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200,267 |
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193,040 |
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General and administrative |
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33,994 |
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34,177 |
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65,642 |
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82,988 |
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Research and development |
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18,049 |
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19,424 |
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37,541 |
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42,731 |
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Acquisition-related amortization and remeasurement |
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7,388 |
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3,333 |
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12,784 |
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7,467 |
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Operating loss |
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(24,906 |
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(36,632 |
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(54,243 |
) |
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(96,346 |
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Interest expense, net |
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(4,943 |
) |
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(1,266 |
) |
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(9,501 |
) |
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(2,555 |
) |
Other income (expense), net |
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(2,510 |
) |
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(20 |
) |
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(3,784 |
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656 |
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Loss before income taxes |
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(32,359 |
) |
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(37,918 |
) |
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(67,528 |
) |
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(98,245 |
) |
Income tax expense |
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(1,084 |
) |
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(1,508 |
) |
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(1,935 |
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(2,119 |
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Net loss |
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$ |
(33,443 |
) |
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$ |
(39,426 |
) |
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$ |
(69,463 |
) |
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$ |
(100,364 |
) |
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Net loss per common share: |
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Basic |
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$ |
(0.88 |
) |
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$ |
(1.07 |
) |
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$ |
(1.84 |
) |
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$ |
(2.77 |
) |
Diluted |
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(0.88 |
) |
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(1.07 |
) |
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(1.84 |
) |
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(2.77 |
) |
Weighted average number of common shares (in millions): |
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Basic |
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38.0 |
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36.8 |
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37.8 |
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36.3 |
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Diluted |
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38.0 |
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36.8 |
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37.8 |
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36.3 |
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ORTHOFIX MEDICAL INC.
Condensed Consolidated Balance Sheets
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(U.S. Dollars, in thousands, except par value data) |
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June 30,
2024 |
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December 31,
2023 |
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(Unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
26,366 |
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$ |
33,107 |
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Restricted Cash |
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2,500 |
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4,650 |
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Accounts receivable, net of allowances of $8,368 and $7,130, respectively |
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125,361 |
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|
128,098 |
|
Inventories |
|
|
210,040 |
|
|
|
222,166 |
|
Prepaid expenses and other current assets |
|
|
21,798 |
|
|
|
32,422 |
|
Total current assets |
|
|
386,065 |
|
|
|
420,443 |
|
Property, plant, and equipment, net |
|
|
154,111 |
|
|
|
159,060 |
|
Intangible assets, net |
|
|
108,310 |
|
|
|
117,490 |
|
Goodwill |
|
|
194,934 |
|
|
|
194,934 |
|
Other long-term assets |
|
|
38,578 |
|
|
|
33,388 |
|
Total assets |
|
$ |
881,998 |
|
|
$ |
925,315 |
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
50,362 |
|
|
$ |
58,357 |
|
Current portion of long-term debt |
|
|
4,688 |
|
|
|
1,250 |
|
Current portion of finance lease liability |
|
|
734 |
|
|
|
708 |
|
Other current liabilities |
|
|
100,183 |
|
|
|
104,908 |
|
Total current liabilities |
|
|
155,967 |
|
|
|
165,223 |
|
Long-term debt |
|
|
113,315 |
|
|
|
93,107 |
|
Long-term portion of finance lease liability |
|
|
18,160 |
|
|
|
18,532 |
|
Other long-term liabilities |
|
|
48,552 |
|
|
|
49,723 |
|
Total liabilities |
|
|
335,994 |
|
|
|
326,585 |
|
Contingencies |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
Common shares $0.10 par value; 100,000 shares authorized;
38,039 and 37,165 issued and outstanding as of June 30,
2024, and December 31, 2023, respectively |
|
|
3,804 |
|
|
|
3,717 |
|
Additional paid-in capital |
|
|
764,538 |
|
|
|
746,450 |
|
Accumulated deficit |
|
|
(219,607 |
) |
|
|
(150,144 |
) |
Accumulated other comprehensive loss |
|
|
(2,731 |
) |
|
|
(1,293 |
) |
Total shareholders’ equity |
|
|
546,004 |
|
|
|
598,730 |
|
Total liabilities and shareholders’ equity |
|
$ |
881,998 |
|
|
$ |
925,315 |
|
ORTHOFIX MEDICAL INC.
Non-GAAP Financial Measures
The following tables present reconciliations of various financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), to various non-GAAP financial measures that exclude (or in the case of free cash flow, include) items specified in the tables. The GAAP measures shown in the tables below represent the most comparable GAAP measure to the applicable non-GAAP measure(s) shown in the table. For further information regarding the nature of these exclusions, why the Company believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company's Current Report on Form 8-K regarding this press release filed today with the SEC available on the SEC's website at www.sec.gov and on the “Investors” page of the Company’s website at www.orthofix.com.
Adjusted Gross Profit and Adjusted Gross Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Gross profit |
|
$ |
134,749 |
|
|
$ |
119,551 |
|
|
$ |
261,991 |
|
|
$ |
229,880 |
|
Share-based compensation expense |
|
|
497 |
|
|
|
482 |
|
|
|
1,034 |
|
|
|
953 |
|
SeaSpine merger-related costs |
|
|
3,115 |
|
|
|
3,782 |
|
|
|
4,418 |
|
|
|
4,486 |
|
Strategic investments |
|
|
63 |
|
|
|
29 |
|
|
|
128 |
|
|
|
210 |
|
Acquisition-related fair value adjustments |
|
|
3,047 |
|
|
|
9,449 |
|
|
|
6,094 |
|
|
|
21,085 |
|
Amortization/depreciation of acquired long-lived assets |
|
|
209 |
|
|
|
544 |
|
|
|
527 |
|
|
|
544 |
|
Medical device regulation |
|
|
— |
|
|
|
41 |
|
|
|
— |
|
|
|
669 |
|
Adjusted gross profit |
|
$ |
141,680 |
|
|
$ |
133,878 |
|
|
$ |
274,192 |
|
|
$ |
257,827 |
|
Adjusted gross margin |
|
|
71.3 |
% |
|
|
71.6 |
% |
|
|
70.8 |
% |
|
|
71.2 |
% |
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net loss |
|
$ |
(33,443 |
) |
|
$ |
(39,426 |
) |
|
$ |
(69,463 |
) |
|
$ |
(100,364 |
) |
Income tax expense (benefit) |
|
|
1,084 |
|
|
|
1,508 |
|
|
|
1,935 |
|
|
|
2,119 |
|
Interest expense, net |
|
|
4,943 |
|
|
|
1,266 |
|
|
|
9,501 |
|
|
|
2,555 |
|
Depreciation and amortization |
|
|
14,032 |
|
|
|
13,327 |
|
|
|
28,894 |
|
|
|
25,997 |
|
Share-based compensation expense |
|
|
9,959 |
|
|
|
13,246 |
|
|
|
18,759 |
|
|
|
26,266 |
|
Foreign exchange impact |
|
|
851 |
|
|
|
(269 |
) |
|
|
2,439 |
|
|
|
(852 |
) |
SeaSpine merger-related costs |
|
|
5,897 |
|
|
|
8,206 |
|
|
|
10,376 |
|
|
|
28,946 |
|
Strategic investments |
|
|
311 |
|
|
|
309 |
|
|
|
431 |
|
|
|
970 |
|
Acquisition-related fair value adjustments |
|
|
6,117 |
|
|
|
8,149 |
|
|
|
10,334 |
|
|
|
19,785 |
|
Interest and loss on investments |
|
|
1,813 |
|
|
|
— |
|
|
|
1,553 |
|
|
|
— |
|
Litigation and investigation costs |
|
|
(277 |
) |
|
|
1,291 |
|
|
|
1,983 |
|
|
|
1,760 |
|
Succession charges |
|
|
5,346 |
|
|
|
262 |
|
|
|
7,556 |
|
|
|
262 |
|
Medical device regulation |
|
|
— |
|
|
|
2,050 |
|
|
|
— |
|
|
|
5,679 |
|
Adjusted EBITDA |
|
$ |
16,633 |
|
|
$ |
9,919 |
|
|
$ |
24,298 |
|
|
$ |
13,123 |
|
Adjusted EBITDA as a percentage of net sales |
|
|
8.4 |
% |
|
|
5.3 |
% |
|
|
6.3 |
% |
|
|
3.6 |
% |
Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
Six Months Ended
June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net loss |
|
$ |
(33,443 |
) |
|
$ |
(39,426 |
) |
|
$ |
(69,463 |
) |
|
$ |
(100,364 |
) |
Share-based compensation expense |
|
|
9,959 |
|
|
|
13,246 |
|
|
|
18,759 |
|
|
|
26,266 |
|
Foreign exchange impact |
|
|
851 |
|
|
|
(269 |
) |
|
|
2,439 |
|
|
|
(852 |
) |
SeaSpine merger-related costs |
|
|
5,967 |
|
|
|
8,049 |
|
|
|
10,815 |
|
|
|
30,353 |
|
Strategic investments |
|
|
371 |
|
|
|
348 |
|
|
|
497 |
|
|
|
1,046 |
|
Acquisition-related fair value adjustments |
|
|
6,117 |
|
|
|
8,149 |
|
|
|
10,334 |
|
|
|
19,785 |
|
Amortization/depreciation of acquired long-lived assets |
|
|
4,648 |
|
|
|
5,810 |
|
|
|
9,440 |
|
|
|
9,944 |
|
Litigation and investigation costs |
|
|
(277 |
) |
|
|
1,291 |
|
|
|
1,983 |
|
|
|
1,760 |
|
Succession charges |
|
|
5,346 |
|
|
|
262 |
|
|
|
7,556 |
|
|
|
262 |
|
Medical device regulation |
|
|
— |
|
|
|
2,055 |
|
|
|
— |
|
|
|
5,689 |
|
Interest and loss on investments |
|
|
1,764 |
|
|
|
— |
|
|
|
1,504 |
|
|
|
— |
|
Long-term income tax rate adjustment |
|
|
416 |
|
|
|
1,224 |
|
|
|
3,112 |
|
|
|
3,238 |
|
Adjusted net income (loss) |
|
$ |
1,719 |
|
|
$ |
739 |
|
|
$ |
(3,024 |
) |
|
$ |
(2,873 |
) |
Cash Flow and Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
Net cash from operating activities |
|
$ |
(9,611 |
) |
|
$ |
(39,536 |
) |
Net cash from investing activities |
|
|
(20,583 |
) |
|
|
4,265 |
|
Net cash from financing activities |
|
|
21,678 |
|
|
|
21,791 |
|
Effect of exchange rate changes on cash |
|
|
(375 |
) |
|
|
387 |
|
Net change in cash and cash equivalents |
|
$ |
(8,891 |
) |
|
$ |
(13,093 |
) |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
Net cash from operating activities |
|
$ |
(9,611 |
) |
|
$ |
(39,536 |
) |
Capital expenditures |
|
|
(20,533 |
) |
|
|
(24,654 |
) |
Free cash flow |
|
$ |
(30,144 |
) |
|
$ |
(64,190 |
) |
Reconciliation of Non-GAAP Financial Measures to Reported Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Sales and marketing expense, as reported |
|
$ |
100,224 |
|
|
$ |
99,249 |
|
|
$ |
200,267 |
|
|
$ |
193,040 |
|
Reconciling items impacting sales and marketing: |
|
|
|
|
|
|
|
|
|
|
|
|
Strategic investments |
|
|
(1,193 |
) |
|
|
(1,422 |
) |
|
|
(3,412 |
) |
|
|
(3,521 |
) |
Litigation and investigation costs |
|
|
— |
|
|
|
(752 |
) |
|
|
— |
|
|
|
(857 |
) |
Medical device regulation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Amortization/depreciation of acquired long-lived assets |
|
|
(119 |
) |
|
|
(297 |
) |
|
|
(297 |
) |
|
|
(297 |
) |
Sales and marketing expense, as adjusted |
|
$ |
98,912 |
|
|
$ |
96,778 |
|
|
$ |
196,558 |
|
|
$ |
188,360 |
|
Sales and marketing expense as a percentage of net sales, as adjusted |
|
|
49.8 |
% |
|
|
51.7 |
% |
|
|
50.8 |
% |
|
|
52.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
General and administrative expense, as reported |
|
$ |
33,994 |
|
|
$ |
34,177 |
|
|
$ |
65,642 |
|
|
$ |
82,988 |
|
Reconciling items impacting general and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
Strategic investments |
|
|
(1,623 |
) |
|
|
(2,694 |
) |
|
|
(2,834 |
) |
|
|
(19,992 |
) |
Amortization/depreciation of acquired long-lived assets |
|
|
(2 |
) |
|
|
(336 |
) |
|
|
(72 |
) |
|
|
(336 |
) |
Litigation and investigation costs |
|
|
277 |
|
|
|
(538 |
) |
|
|
(1,983 |
) |
|
|
(902 |
) |
Succession charges |
|
|
(5,346 |
) |
|
|
(262 |
) |
|
|
(7,556 |
) |
|
|
(262 |
) |
General and administrative expense, as adjusted |
|
$ |
27,300 |
|
|
$ |
30,347 |
|
|
$ |
53,197 |
|
|
$ |
61,496 |
|
General and administrative expense as a percentage of net sales, as adjusted |
|
|
13.7 |
% |
|
|
16.2 |
% |
|
|
13.7 |
% |
|
|
17.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Research and development expense, as reported |
|
$ |
18,049 |
|
|
$ |
19,424 |
|
|
$ |
37,541 |
|
|
$ |
42,731 |
|
Reconciling items impacting research and development: |
|
|
|
|
|
|
|
|
|
|
|
|
Strategic investments |
|
|
(340 |
) |
|
|
(490 |
) |
|
|
(576 |
) |
|
|
(2,374 |
) |
Medical device regulation |
|
|
— |
|
|
|
(2,027 |
) |
|
|
— |
|
|
|
(5,017 |
) |
Research and development expense, as adjusted |
|
$ |
17,709 |
|
|
$ |
16,907 |
|
|
$ |
36,965 |
|
|
$ |
35,340 |
|
Research and development expense as a percentage of net sales, as adjusted |
|
|
8.9 |
% |
|
|
9.0 |
% |
|
|
9.5 |
% |
|
|
9.8 |
% |
Reconciliation of Non-GAAP Financial Measures to Reported Non-Operating (Income) Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Unaudited, U.S. Dollars, in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Non-operating expense |
|
$ |
7,453 |
|
|
$ |
1,286 |
|
|
$ |
13,285 |
|
|
$ |
1,899 |
|
Reconciling items impacting non-operating expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange impact |
|
|
(851 |
) |
|
|
269 |
|
|
|
(2,439 |
) |
|
|
852 |
|
Strategic investments |
|
|
— |
|
|
|
(15 |
) |
|
|
— |
|
|
|
(895 |
) |
Interest and (gain) loss on investments |
|
|
(1,787 |
) |
|
|
30 |
|
|
|
(1,504 |
) |
|
|
60 |
|
Non-operating expense, as adjusted |
|
$ |
4,815 |
|
|
$ |
1,570 |
|
|
$ |
9,342 |
|
|
$ |
1,916 |
|
Non-operating expense as a percentage of net sales, as adjusted |
|
|
2.4 |
% |
|
|
0.8 |
% |
|
|
2.4 |
% |
|
|
0.5 |
% |
Source
Orthofix Medical Inc.
###
2nd Quarter 2024 Earnings Call August 6, 2024
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. Forward-looking statements in this communication include the Company's expectations regarding net sales, adjusted EBITDA, and free cash flow for the year ended December 31, 2024. Forward-looking statements are not guarantees of our future performance, are based on our current expectations and assumptions regarding our business, the economy and other future conditions, and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, including the risks described in Part I, Item 1A under the heading Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), and in Part II, Item 1A under the heading Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. Factors that could cause future results to differ from those expressed by forward-looking statements include, but are not limited to, (i) our ability to maintain operations to support our customers and patients in the near-term and to capitalize on future growth opportunities, (ii) risks associated with acceptance of surgical products and procedures by surgeons and hospitals, (iii) development and acceptance of new products or product enhancements, (iv) clinical and statistical verification of the benefits achieved via the use of our products, (v) our ability to adequately manage inventory, (vi) our ability to recruit and retain management and key personnel, (vii) global economic instability and potential supply chain disruption caused by Russia’s invasion of Ukraine and resulting sanctions, and (viii) the other risks and uncertainties more fully described in our periodic filings with the Securities and Exchange Commission (the “SEC”). As a result of these various risks, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. This list of risks, uncertainties, and other factors is not complete. We discuss some of these matters more fully, as well as certain risk factors that could affect our business, financial condition, results of operations, and prospects, in reports we file from time-to-time with the SEC, which are available to read at www.sec.gov. Any or all forward-looking statements that we make may turn out to be wrong (due to inaccurate assumptions that we make or otherwise), and our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to update, and expressly disclaim any duty to update, our forward-looking statements, whether as a result of circumstances or events that arise after the date hereof, new information, or otherwise, except as required by law. The Company is unable to provide expectations of GAAP income (loss) before income taxes, the closest comparable GAAP measures to Adjusted EBITDA (which is a non-GAAP measure), on a forward-looking basis because the Company is unable to predict without unreasonable efforts the ultimate outcome of matters (including acquisition-related expenses, accounting fair value adjustments, and other such items) that will determine the quantitative amount of the items excluded in calculating Adjusted EBITDA, which items are further described in the reconciliation tables and related descriptions below. These items are uncertain, depend on various factors, and could be material to the Company’s results computed in accordance with GAAP.
Orthofix Constant Currency is calculated by applying foreign currency rates applicable to the comparable, prior-year period to present the current period net sales at comparable rates. Constant currency can be presented for numerous GAAP measures, but is commonly used by management to analyze net sales excluding the impact of changes in foreign currency rates. The reasons for and nature of non-GAAP disclosures by the Company, descriptions of the adjustments used to calculate those non-GAAP financial measures, and reconciliations of those non-GAAP financial measures to the most comparable GAAP financial measure, are provided in the Company’s press release issued and Current Report on Form 8-K filed on August 6, 2024. Spine fixation is comprised of the Company's Spinal Implants product category, excluding motion preservation product offerings. 12% Q2 2024 U.S. Spine Fixation(3) YoY Growth Driven by distribution expansion and penetration in existing accounts $198.6M Q2 2024 Revenue 6% Growth YoY as reported 6% Growth YoY constant currency(1) 71.3% Q2 2024 Non-GAAP Adjusted Gross Margin(2) Compared to 71.6% for Q2 2023 $16.6M Q2 2024 Non-GAAP Adjusted EBITDA 310 bps Growth YoY(2) $28.9M Cash & Cash Equivalents, 6/30/2024 Includes $2.5M in restricted cash 12% Q2 2024 Bone Growth Therapies YoY Growth 6th consecutive quarter of double-digit growth Q2 2024 Financial Highlights Massimo Calafiore President & Chief Executive Officer We delivered another strong quarter driven by successful execution of our key growth priorities. Based on continued positive momentum, the strength of our differentiated and expanding product portfolio, which continues to win share, and our confidence in sustainable growth trends, we are raising our full-year net sales and adjusted EBITDA guidance. We also are on track to achieve positive free cash flow for the second half of this year, much earlier than we originally anticipated. ©2024 Orthofix Medical Inc. All rights reserved | 3
New Hire (starts mid-August) President, Global Orthopedics Seasoned Executive Leadership Team 250+ years in spine/orthopedics Jason Shallenberger President, Bone Growth Therapies Julie Andrews Chief Financial Officer Beau Standish, PhD, PEng Chief Enabling Technologies Officer Aviva McPherron President, Global Operations and Quality Massimo Calafiore President and Chief Executive Officer Lucas Vitale Chief People and Business Operations Officer Julie Dewey Chief Investor Relations & Communications Officer Max Reinhardt President, Global Spine Jill Mason Chief Compliance and Risk Officer, Deputy General Counsel, and Assistant Corporate Secretary Andrés Cedrón Chief Legal Officer
Q2 2024 Key Messages Strong fundamentals with compelling growth opportunity and value proposition across diverse portfolio More focused commercial strategy with innovation in spine complemented by successful cross-selling New leadership team well positioned to implement strategic vision and achieve sustainable, profitable growth across portfolio Net sales and adjusted EBITDA guidance raised to reflect confidence in sustainable growth trends and commercial strategy and execution Solid operational execution; on track to reach profitability objectives, including positive free cash flow for second half of 2024, much earlier than originally anticipated ©2024 Orthofix Medical Inc. All rights reserved | 5
Q2 2024 Results Summary Q2 Total Net Sales: $198.6M; 6% YoY constant currency growth Q2 Non-GAAP Adjusted EBITDA: $16.6M; 8% of sales vs $9.9M in 2Q23; 5% of sales Q2 Non-GAAP Adjusted Gross Margin: 71.3% vs 71.6% in 2Q23 Q2 Non-GAAP Sales & Marketing: $98.9M; 50% of sales vs $96.8M in 2Q23; 52% of sales Q2 Non-GAAP Research & Development: $17.7M; 9% of sales vs $16.9M in 2Q23; 9% of sales Second Quarter 2024 Results Summary (in millions) Q2 2024 Q2 2023 Constant Currency Change Bone Growth Therapies $ 59.1 $ 52.7 12.3% Spinal Implants, Biologics, and Enabling Technologies 108.9 105.3 3.4% Global Spine 168.0 158.0 6.4% Global Orthopedics 30.6 29.0 6.3% Total Net Sales $ 198.6 $ 187.0 6.4% Non-GAAP Adjusted Gross Margins 71.3% 71.6% (0.4)% Non-GAAP Adjusted EBITDA $ 16.6 $ 9.9 67.7%
Notable growth across each business segment Q2 Total Revenues $198.6M +6% YoY* * YoY Growth (Decline) on Constant Currency basis Led primarily by strength in U.S. markets Bone Growth Therapies $59.1M +12% Global Orthopedics $30.6M +6%* Global Spinal Implants, Biologics, & Enabling Technologies $108.9M +3%* International Spinal Implants, Biologics & Enabling Technologies $8.8M (17%)* U.S. Spinal Implants, Biologics & Enabling Technologies $100.1M +6% 92% 8%
Q2 2024 Business Segment Highlights U.S. Spine Fixation grew 12% - more than 2x the market rate Initiated limited market release of Reef® L Lateral Lumbar Interbody Initiated limited market release of WaveForm® A Interbody, a new addition to Meridian® ALIF portfolio Sixth consecutive quarter of double-digit net sales increases in both spine and fracture channels Positive 12-month post-market data for patients treated with CervicalStim™ device published in Clinical Spine Surgery Global Orthopedics grew 6% on constant currency basis; U.S. Orthopedics grew 7% 510(k) clearance for Fitbone™ Trochanteric Nail and Fitbone™ Transport and Lengthening System – both in limited market release, full launch expected in Q2 2025 SPINE BONE GROWTH THERAPIES ORTHOPEDICS ©2024 Orthofix Medical Inc. All rights reserved | 8
SmartTRAK® 2022 – 2026 U.S. Estimates *Focused growth segments include Enabling Technologies, Motion Preservation, Interbody, DBM, LLIF/OLIF, MIS and Long Bone Stimulation $7B of Focused, High-Growth Market Segments* | 6% CAGR Motion Preservation Spinal Fixation Spinal Implants Limb Reconstruction Deformity Correction Orthopedics Cellular Allograft Demineralized Bone Matrices Synthetic Bone Grafts Biologics Machine-vision 7D FLASH™ Navigation Enabling Technologies Bone Growth Stimulation Non-Surgical Alternative Regenerative Technology Bone Growth Therapies Synergistic Product Platform Synergistic product platforms lay foundation for sustainable, profitable growth ©2024 Orthofix Medical Inc. All rights reserved | 9
Servicing the full continuum of surgical care Enabling Technologies FLASH™ Navigation with 7D Technology World’s First Machine-Vision image-guided surgical system, registering spinal anatomy in mere seconds without the need for intraoperative radiation Scan QR Code to see simplicity of FLASH Navigation in action ©2024 Orthofix Medical Inc. All rights reserved | 10
Fastest 3D reconstruction in under 30 seconds Flash Fix enables automatic re-registration in seconds Cuts Registration Time Based off preoperative CT or MRI, no intraoperative radiation is required, eliminating exposure to surgeons, staff and patients Eliminates Radiation Quickly register segmentally regardless of patient position or movement Improves Accuracy & Outcomes Cost-effective, surgeon-controlled, sterile system Optimized workflow with no line-of-sight challenges Reduces Costs, Increases Efficiency D0007416A ©2024 Orthofix Medical Inc. All rights reserved | 11 7D FLASH™ Navigation is revolutionizing spinal navigation
98.8% accurate with no pedicle breach1* No neurovascular injuries or return to theatre for screw repositioning1-5* 63.6 minutes saved per case2* faster than intraoperative CT-based systems3* 97.8% reduction in intraoperative radiation during adult degenerative spinal fusions1* 0 3704 81 FLASH NAVIGATION 3D NAVIGATION 4000 2000 3000 1000 258 41 FLASH NAVIGATION MATCHED-POINT BASED SYSTEM 0 800 400 600 200 794 INTRAOPERATIVE CT BASED SYSTEM 61.0% reduction in intraoperative radiation during complex pediatric deformity spinal fusions2* 0 127 52 FLASH NAVIGATION 150 100 50 2D FLUOROSCOPY 94.8% (1) Malham GM, Munday NR. Comparison of novel machine vision spinal image guidance system with existing 3D fluoroscopy-based navigation system: a randomized prospective study. Spine J. 2022;22(4):561-569. doi:10.1016/j.spinee.2021.10.002 (2) Comstock CP, Wait E. Novel Machine Vision Image Guidance System Significantly Reduces Procedural Time and Radiation Exposure Compared With 2-dimensional Fluoroscopy-based Guidance in Pediatric Deformity Surgery. J Pediatr Orthop. 2023;43(5):e331-e336. doi:10.1097/BPO.0000000000002377 (3) Jakubovic R, Guha D, Gupta S, et al. High Speed, High Density Intraoperative 3D Optical Topographical Imaging with Efficient Registration to MRI and CT for Craniospinal Surgical Navigation. Sci Rep. 2018;8(1):14894. Published 2018 Oct 5. doi:10.1038/s41598-018-32424-z (4) Lim KBL, Yeo ISX, Ng SWL, Pan WJ, Lee NKL. The machine-vision image guided surgery system reduces fluoroscopy time, ionizing radiation and intraoperative blood loss in posterior spinal fusion for scoliosis [published correction appears in Eur Spine J. 2023 Oct;32(10):3694. doi: 10.1007/s00586-023-07869-0]. Eur Spine J. 2023;32(11):3987-3995. doi:10.1007/s00586-023-07848-5 (5) Dorilio J, Utah N, Dowe C, et al. Comparing the Efficacy of Radiation Free Machine-Vision Image-Guided Surgery With Traditional 2-Dimensional Fluoroscopy: A Randomized, Single-Center Study. HSS J. 2021;17(3):274-280. doi:10.1177/15563316211029837 * Not a 7D sponsored clinical study Radiation dose (cGycm2) DAP (Gy-cm2) Time (seconds) Average Setup and Registration Time3* ©2024 Orthofix Medical Inc. All rights reserved | 12 Meaningful advantages with FLASH™ 7D technology
Key Priorities for 2024 Profitable Growth Synergistic and Balanced Product Platforms Strategic Innovation Sustainable, differentiated growth engine – avoid “growth at all cost” Efficient working capital management – specifically inventory and instrument utilization and DSO efficiency Adjusted EBITDA expansion and improved cash flow – now expect to be free cash flow positive for 2H of 2024 Leverage technologies and sales channels across complementary product segments Diversified portfolio with complementary multifunctional applications Continuum of musculoskeletal care integrated by enabling technologies Focus on continuous innovation to drive growth and capture market share Resources deployed to high-value businesses Extension of existing product pipeline ©2024 Orthofix Medical Inc. All rights reserved | 13
2024 Increased Full-Year Financial Guidance* $795M - $800M Revenue (Was $790M - $795M) $64M - $69M Adjusted EBITDA (Was $62M - $67M) Revenue range above represents 6.7% to 7.4% year-over-year constant currency growth Guidance information is as of August 6, 2024, based on guidance provided by Orthofix leadership on that date. Inclusion of this information in this presentation is not a confirmation or an update of, and should not be construed or otherwise assumed to reflect any confirmation or update of, that guidance by Orthofix leadership as of any date other than August 6, 2024. * As of the Company’s Q2 2024 Earnings Call hosted on August 6, 2024 Free cash flow positive for 2nd Half of 2024 ©2024 Orthofix Medical Inc. All rights reserved | 14
www.Orthofix.com NASDAQ: OFIX For additional information, please contact: Julie Dewey, IRC Chief IR & Communications Officer juliedewey@orthofix.com 209-613-6945 ©2024 Orthofix Medical Inc. All rights reserved | 15
Appendix ©2024 Orthofix Medical Inc. All rights reserved | 16
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations
Net Sales by Major Product Category by Reporting Segment
Non-GAAP Financial Measures On the Company’s Q2 2024 earnings call held on August 6, 2024, Orthofix management presented Adjusted EBITDA and Adjusted Gross Margin, both of which are non-GAAP financial measures, for the 2nd quarter of 2024. These tables present reconciliations of various financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), to various non-GAAP financial measures that exclude items specified in the tables. The GAAP measures shown in the tables represent the most comparable GAAP measure to the applicable non-GAAP measure(s) shown in the table. For further information regarding the nature of these exclusions, why the Company believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company's Current Report on Form 8-K regarding the press release filed on August 6, 2024 with the SEC and available on the SEC's website at www.sec.gov and on the “Investors” page of the Company’s website at www.orthofix.com.
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