KIDS - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen and welcome to the Q1, 2018 OrthoPediatrics Corp. Earnings Conference Call. [Operator Instructions].

Now I’d like to turn the call over to Tram Bui, from the Ruth Group. Please go ahead.

Tram Bui

everyone in thanks call. and Operator for today’s participating Thanks

Throdahl; Company, Officer, Officer. Joining the Mark Chief Financial me from Chief are Executive Hite; and Fred

uncertainties we material the statements Reform These within the comments results meaning listeners Security and of this to Litigation Securities I Act risks Provisions the call by forward-looking may Laws of Federal including Private conference forward-looking management XXXX. during Harbor actual statements Before that materially. include will and the begin, Safe involved like of company's made differ caution the

risk filed review quarterly March recent of the today. later XX,XXXX XX-K discussion Securities factors, company's with be most its report For I on encourage to filed on and the Form you and XX-Q Commission Exchange will Form which

certain investors The these company operations evaluating supplemental measures also call are which will for as believes period-over-period. format. During the information measures in management the useful non-GAAP financial of its provide discuss measures used

referenced in isolation this financial the as directly limitations release. to For -- substitute GAAP. of each non-GAAP prepared GAAP of on should a measures note financial be and that call, not Please included OrthoPediatric's tool earnings non-GAAP as measures company with financial a the in comparable financial results most measures the reconciliation its measures considered non-GAAP financial for has or in accordance

broadcast of like law, the With live events place revise Mark. call call statements information by is that reflect circumstances or that that undertakes to this as XX, date update over the this as time-sensitive the after this any contains to In addition, of to obligation turn call. contact or date conference said, company of the I'd accurate no only take XXXX to the of required May except

Mark Throdahl

today first financial up provide by then operating overview I'll with for questions. review. Good quarter our make morning some XXXX for who our the call. conference and will begin detailed closing of Fred, thank and call highlights on quarter followed an earnings I'll remarks joining us first and you everyone financial Afterwards open

solid first Sports the product strong expectations year, We very contributed and revenue and growth. Scolios to and pleased of with our exceeded are the growth start our Deformity, all Medicine/Other three lines XX% to Trauma quarter

segment, Within domestic the our industry to scolios we saw the which Orthopedics. market continue dynamic further sales in particularly and pediatric outpace leadership solidify

our the deployment to of sets million. quarter $X.X increased we consigned During

to exclusively full a total As these X we in our across that million achieve role goal distribute OrthoPediatrics on we sales we which XX deploy continue now focus geographies increasing of were critical to will to organization quarter and growth play expansion product of of year. target as our The remain to representatives and the domestic for more sets. in added sets deployment the selling lines, investment $XX on our set

significantly improved to an position. Update addition, System by sets quarter. research we products quarter. with the a competitive launched in Surgical deploying our In our This to and and development expanded largest system a XX% of the has more strengthened salesforce, investment XXth one investment Novel increased our in our legacy We during

the XXth describe and This portfolio. year surgical in surgical Nailing in of system upgrade Surgical growth organic in We throughout and The nailing Pediatric MRI beyond. These recent personnel launch position Nailing allergy, expands for multiple offering, already FEMUR. now our extensive [indiscernible] as that includes implant systems further Intramedullary of also we for progressed new the franchise, comprehensive screws. modified FDA company our sets, strong XXX X physeal both low diameters launched stainless expansion summary, nickel next-generation a early studies Oplates solid PediPlates With year profile intended investments with In Advanced. clearance March, system XXth and System, PediFlex patients the and we let maybe the in R&D platform, completed expansion step and tethering sales elastic another me as our Platform is our it throughout available implant system. Titanium our for with both the or remainder steel of for Titanium instrument this designed our and where specified, provides In well product January, introducing system links flexible physicians Titanium. in nail legacy by design the with a Iplates,

The frequent all instruments for innovative commitment week, nail to importantly, system, innovative along us unprecedented legacy evolution one inserter investment allowed More is last utilizes offerings. platform PD-nail to to provides solved months. the the specific nail Nailing improvement distinct during control nailing company’s our We Late issues commercially two and the XX% Intramedullary These an with another anticipate received in enhancements upgrade step platform new significant continue multiple fronts. pediatric The our insertion, which instrument, procedures. that system instruments indicate surgical XXth franchise. our launching we on best-in-class systems in high nail system extraction. the offers to precision XXX flexible flexible a pediatric FDA accompany clearance enhanced company's seamer, endemic pediatric coming to of and nailing the upgrade of increase continuous development product has new also most and implant R&D of the in for

nearing Additionally, submission for patients. banding planned system BandLoc an smaller Other and new both in Nail to Osteogenesis final FDA polyester pediatrics our our deformities are XXXX, include flip system small pediatric sublaminar systems will the offering first stature Imperfecta treat and broaden system.

year. million during full roughly the $X.X previously we already we constraint tethering implants to accelerating the sets first will on in in mentioned, from $XX target and consigned investment progress, to growth increase million remain XXXX, We development, derive growth of invested million our also first and quarter we $X.X have sustainable future for a remove compared quarter part historical with in growing the sets continue spinal make invest on in A the active Company, development consigned programs. and as the encouraging

a the us of stocking XX dedicated puts our hired These the season end full our reps attend of additional consisting XX and distributors quarter from represent from The the of for the well abroad in time of sales surgeons consultative first greatest additions year. up United and of year every have ahead sales reps up team, for States, XXXX, XXXX. advantage. personally goal sales representatives XX XX our fourth full nine competitive in our at XX resource in one sources We equivalent of surgery, quarter

in the being at April, POSNA named orthopedic where the from to subspecialty the just our a In returned injuries our education is a is two and for a Pediatric Orthopedic advancing meeting open vital work culture continued ceiling pleased the one we of were that orthopedics. Furthermore, an to Deformity pediatric context Children of in us best correction, pediatric funding in the of Our European types of Fractures our again prioritize and mindset we are orthopedics. based this associates Spinal leader of in the pediatric OrthoPediatrics Open We soft of XXX and guidelines places that substantial Indiana we addition the entrepreneurial who society leading every recognized we as Entrepreneurial It well-attended of EPOS world's organizations. on annual do of of sponsorship we proportion management Society the our in program, which advancing company's largest success. Sponsoring as dedicated symposium finalist associate. year. double-diamond in backbone Management second our use, for cultural to is was hosted the surgical orthopedic pediatric pediatric orthopedics, year education, out annual of of in the these in of the evidence the we remain key entitled the market physicians to one At or scientific that EPOS United We POSNA discussed of international in pediatric featuring allows of field most of of fractures. company ongoing becoming the -- States. of context program focused America The sponsor. of employer leaders the a unrelated an to European sessions to scholars goal on fractures, to clinical outside tissue choice. event, of reinforces And panel as not This the key of industry the trauma in participated the and meeting pediatric is opinion everything commitment award. to being recognition antibiotic medical partially of hosted to size the treatment frequent dedicated North visiting to and all levels field Orthopedic

financial turn demonstrates I'll to the this a think be our results. means what a call leader. review I market now to Fred Fred? for it of

Fred Hite

same to last compared XX% revenue. in XX% to up representing million revenue Total same first quarter year over in our $X.X was XXXX. revenue. total same XX% million quarter was period XX% the in increase of almost $X.X period Mark. little when for to the revenue first year last $X.X to the million, for total the million quarter in in representing revenue XXXX million of the compared $XX.X increased million XX% International $X.X of $X.X U.S. of XXXX first compared a Thanks the period XXXX a our

Scolios quarter in XX% revenue Our the $X.X million, Deformity as increase Trauma the was first breakdown an in category a U.S. was and revenue of adoptions in the acceptance first period in to compared growing XXXX XXXX first the last quarter revenue period same year-over-year and was quarter by by $X.X million assisted year. product follows year XX% favorable sales strong $X.X compared increase comp. same last driven to $X.X by supplemented with product the in a million also million but competency customer

to the volume. last representing XXXX, by same increase increased a to Lastly, revenue Nearly $XXX,XXX sports revenue all about be year. of XXX% the almost of driven a unit in quarter our period when $XXX,XXX was first growth compared medicines/other continues in

the in mix Moving the addition gross expenses the first primarily of to to quarter $X.X set in million Gross compared down to first $X.X we XXXX. the to that and million, to of increased $X.X marketing transition increase period in a of when first last sales. of paid commissions the of the quarter expenses. and in the first four XXXX million year, the quarter compared was expense income XX%, increase instrument during in XX% growth million first marketing the by was XXXX plus of million of Sales revenue, period XXXX, to higher an international increased $X.X margin XX% first markets XX% of the profit year. XX% compared by XX% international driven model in the being agency quarter ongoing quarter G&A million the in revenue same $X.X $X.X XXXX, quarter the including driven was XXXX XXXX, last in same in statement, a

First expense XXXX. non-cash G&A in quarter by six the non-cash restricted stock our compensation quarter first compensation This of IPO. stock million stock primarily driven [best increased in $XXX,XXX reflecting after XXXX, accelerated compares was in] $X.X a months to

of of now will all in quarter That post of was higher Net attributable expenses of to quarter $X Total accelerate months experienced months the just legal a of the million to increase future negative when XXXX. same IPO. of operating million support $XXX,XXX $X.X the $X.X Additionally, growth incremental compared the Research million to XXXX, of use to this increased period the compared expense due in primarily debt the the incremental our also of support the XXXX, pipeline. for first associating I’ll development of quarter a primarily million being IPO. accelerated basic as to of we’ll year. non-cash quarter in stock cost six $X.X projects share compared reflecting quarter quarter first in our increased coupled as first quarter an public the was by $X.X interest of of year. and accelerated second XXXX engineer non-cash XXXX company restricted the discussed, loss XXXX, first per Net $X.X to compensation compared addition XX% and operating note to the million XX% XXXX. $X.X another quarter $X.XX in was expenses XXXX, XX% quarter business in $X.X and quarter EBITDA due stockholders first loss and was stock diluted additional result in same first Adjusted product legal development expense and the of million contributed have well loss to in last for $XXX,XXX of year. of the quarter was last increase first accelerated Net expense to six in $X.X compared increase basic period first with the to of million personal R&D last as of of period of to to interest the of million the as million that first $XX.X a common expenses. a finalize net investing higher The in increase million XXXX in XXXX, the including of was compared the launches XXXX. Operating same personnel, in $X.X of our share growth best per in million diluted in in in were post share resources the XXXX first a year. $X.X expenses the to with during versus same was Company, $X.XX the loss loss expenses the per the increase. product to and during last the period driven The

Turning to balance sheet. our

deployment March As $X.X compared a XXX% The in was includes in increase XX, million increase last the property $X.X first purchases specific period of XX, as $XX.X balance and the to primary of during [cases of million million to the as trace]. same purchases of cash quarter XXXX, and instruments equipment of of XXXX. our which were driver of the well XXXX sets $XX.X as equipment million December property products compared the year. consigned during was Net

$XX.X facility as outstanding of XX, March down including from XX, total million credit of revolving debt million our As million XXXX. slightly was December XXXX, $XX.X $X.X under

during a our and Capital, a We of of with to an our to XXXX. Squadron $XX able quarter of current fourth consolidate to signed January debt term shareholder a amendment As reminder, we facility. reestablish million modify of Both revolver. those credit expired $XX and loan revolving the and term largest the agreement million amounts the majority the XXXX our note into note notes were terms extend term

Now let to me closing for turn Mark remarks. the call back

Mark Throdahl

XX% high XXXX entered row year third This new Fred. fourth a a And will our Thanks solid quarter quarter. OrthoPediatrics returns. first have performance and of the growth. year that effective XX% sets strong the stage for highly because the future shareholders in is company quarter we for revenue public strong guidance grew as beat our the and annual is delivering full sales the of from constitute momentum with expectations. execution. foundation This first And

increasing sales systematically system strengthening remain year-end. to FDA X We which PediFlex received XXth surgeries major for launched remaining countries the XXth XX operate. industry on we by where the expected XX% position in on our the improve introducing a XXX our further System on new remains performed to clearance will launch the already developing R&D we first and requires in addition of portfolio Surgical upgrade execution surgical systems effectiveness our focus and also in Advanced. committed fronts; Our leading expand three is investment we technologies extensive our innovation, to in of by of

targeting is new quarter. $XX The of invested the which XXXX sets million for the full have been in of confine investment already million first year second $X.X front

expanding that targeted salesforce, these set keeping on will quarter build the momentum guidance. modest anticipate investments throughout second have With a on impact the but the us year we

team that orthopedic pediatric Medical surgeons non-commercial train The to whose formation best-in-class our that culture And initiatives. corporate will we which third by of leader, Education end, They children the Officer Research has of our education. Orthopediatric's next the for as questions clinical we’ll generation and front any the we surgeons advisory the Board committee. consists education, that, share around lives clinical and challenged is world sophisticated providing am transforming execute assembled cause of led of and have conditions. have. the the have us with Chief you Foundation of very market welcome education by the To were confident with they might the the these I company’s clinical take orthopedic

Operator

[Operator Instructions].

from question first is Stifel. with Rick Our Wise

open. Your now line is

Rick Wise

Mark, Good good Alfred. morning morning

top about you talk can off an as and Maybe me start excellent viewed what Let guidance. at start for right quarter, the after just only that. thank

I that guided for quarter. remembering XX%, I didn’t topline You -- guidance XX% the not to you’ve comment really clearly in your first the seasonally growth heard on if you’ve exceeded at quarter correctly you don’t year, think strongest

you it, take the mean further on words field, guidance potential more incremental upside? reflect we the I full As I that your new know year to about products. sets just and in How for reps, more do more think

Fred Hite

comments his maintaining are this mentioned Mark at XXXX in we our total time. of Yeah, that guidance XX% year

Rick Wise

to expand that. Feel free on

Fred Hite

we but a guidance. the higher that our pleased with quarter time even full had at we’re in and little it model this enough first change in So, we’re than very our to not came year

maintaining growth the we’re So, for year. XX% our full

Mark Throdahl

the If I things. amount impressionistic terms in the for Rick. know to might education we But this the at sets, and clinical acceleration programs doing simply of resource make do all is this research and predicting beyond to something in water development, comment that we’re an in in unchartered right unprepared invest is so having moment XX% us of we’re

Rick Wise

mean as actually. Talk major Yes, you as to couple I alluded our having forward and of think bit to for is an gross it’s margin, is if that one better about gross internationally. transition, questions if A for driver to have back it talk Fred, here understand models? of about below FX a saw heard range, going gross all, a around help right impact modeling fell us three-point XX%, international that to growth first us our of about there. the we a this this in expected sustainability it margin. international to the we and an did than do going way I sales Maybe kind quarter is the me tied continue, that, XX% margins the of to concern you and the know gross question, correctly and I some little

Mark Throdahl

questions in there. several So,

be quarter first The very would for strong. that growth the obviously first in the OUS XX% is

had a our and to ordered both agencies few we domestically we quite sets, countries talked the sets As to deploy earlier, four in overseas.

We to last fulfill put really is us stocking sell demand also to they a that which of through sets on starting our year. backlog had starting distributors, ordered

about mix so overall so XX% much increase that’s we those the out business. sales overall to international our in We as set set that, for than the increased may down the margin distributor set our is this set drawn that and zero to in the top sales, forward a expect overall margin expect for growth of gross would X% internationally, margin that lot XX%, stocking On have we So, lot the with going that three go should at next of had domestic not sales strong negative drags the you of as year, so line. recall of and not did for international a margin international and on but be that impact sales would drive the is margin, that I not rate sales higher growth a so and weighted forward that heavily within carry would several not at the quarters business. XX% expect at growth

Rick Wise

range, we might originally. So, a maybe that return to have thought more that mid-XXs

Mark Throdahl

Correct.

Rick Wise

Last XX. me, questions, had I only XX for I had

spine interest last in the there your system. met docs, to a a and new in upcoming bunch lot the with week surgeons stature of questions, meeting know you we of seems As follow-up two small attended [indiscernible] response be

rollout search another that that was more would going now. accounts on there and very any instrumentation. of areas we is curious, welcome. hospital that XXX% he hearing that are it's color want to a community of two trend, understand multiple suggesting are us Just and hospitals his reaction are with around and it, lot to a might thing, his to a separator so peers Thanks doing Is OrthoPediatric now about much. XXX% help Again, those be expand spoke you and the dock general the across the

Mark Throdahl

might are number you, Thank think, we we for we We in approval to is approval that completing on. might lower scoliosis small by our very fingers having stature submission is not percentage, XX% we experts not perhaps the forward very The have to more that Those a then out go of that reasonable are very, FDA I the Rick. converting this a looking system mention will but and that, Regulatory estimate small gaining country than an system keep marvelous just that The a expeditious that objection OrthoPediatrics. soon somewhat crossed system stature cases key questions. even or should with deal agency. institution and something of and no requires an

are like suppliers with company things its product still in few that. These So, By new small OP, systems going to weight more gathering same have it's expand have. relatively we a a to might other do But I cases. think utilizing observed being of shows gathering should primary comparable will trend the there and even that has and have realizing converting that supplier your that more the colleague -- like that feel sense. continues our custom seeing surgeons as definitely we is and adult and that With the XXX% in cause and for facture a we company regard that become is major certain momentum and visited as sense fill modulus to outpunch be a which fact you And institutions have not line and of there done product within are to relevant. become be are then for sense they'll in POSNA. we as momentum institutions that more of still

Operator

is question next with from Ryan BTIG. Our Zimmerman

line Your open. now is

Ryan Zimmerman

base. on Wanted bit your to just a sets touch and little distributor instrument the

you're Thank million sets? have to now And Will base you. have think How of get can a distributor before certain amongst your understand I the a do quarter. Help follow who said distributors about up. systems those in then of they thinking about you more? number $X.X as amount how deployed you do You've that? us business gets

Mark Throdahl

process stem judgement that, make with typically allows from beyond Ryan, involved. collective And us very to rigorous every which Well summer. strategic business that vetting agency our stem take the have we a system, we sales a planning a to have grew we

strategic are priorities of that lot call very also the minds. this in mode a still the clear a in clearing in we up pent demand. our And up analysis make. government So, is But are our final we of

And so, we standpoint to from with led that with certain and an geographies to certain products throughout the fair invest areas or the attempting we are on minded sort priorities we'll of say internationally. interesting strategic by be country certain But in only pend of blindly it's year. or to of demand up go balance cleaning that not the up of and process expect

Ryan Zimmerman

positively. Thank then away the and we also conference POSNA And attended came Understood. you, Mark.

You of number tracking learned were spoke expectations in they and with your on distributors of Certainly, [reps]. from what with ahead a the consistent terms in of call you mentioned fact distributors. the few of your that we

hiring year. taking what shift it previous the does in beyond all expected terms number originally hiring or Just to you're at of increased or see we you what this does changed do giving for rep forward Thank you're your could do potentially questions. plans the expected that to

Mark Throdahl

say is trauma consensus additional that this working of $X.X reps product sales like been taking a this in it with the Ryan, the very, And in and some reps in to But get might we’ve you I regard to our for have not something got time agents judgement. entirely to XX is we’re had million and making sent far we’ve unilaterally. our and were weeks set well. shooting that partners a went that's appreciate is a by stress It's that group for of sets, felt and goal It sales to hire formative think at more group obviously goal they're sessions also is to do week worth is ago talking confidence distributors XX, impressive very, are that would we very sales have being training unilaterally. that to line reps and do going we largest point have for I that it about that ahead for knowing with this the that of get the drive they training above line that did ways and did first where feel to and of us given support compensation of of fact, force decision sales ’XX quarter of sure now it. some for. again this to a the the we this don't a them but but we’re sets well broader initiative to make on a in I'm very this in ahead we is about have need as we very go aggressive as in that several higher commissions the training. cost the we which couple the we help to I both sets curve it place And they expenses the with in good support possible that and in shift as at and

Operator

is next Blair. with [indiscernible] from Our William question

Your line open. is now

Unidentified Analyst

Hi questions. guys, our thanks taking for

just then geographies what US the are of first about to number in in sales the opportunistic or out reps these you nine that you in are incremental how determining and hires what prompted further talk First, lift to add can us to quarter additional reps. you quarter,

Mark Throdahl

nine the least at the Well we feeling to my expansion keeping that force. of asked the with sales regards see is how questions

simply the we the out So, spirit there. threw of number in transparency

the these business I States think how weeks and over ago decisions here all the are that that United in of the group all terms is judging to these with geographic major several make growing in from literally was people we regard markets.

how market is we’ve one spoken widespread hiring which exception face about and the So, there I of a and is there Southern in our on But so these sales aware California opportunity beyond no am more to enormous work sales in it's that we is reps. there position to no because geographically. we geographically priority recruiting more continue probably regard so on with with place particularly we people agent challenging we

Fred Hite

sets the did at that the coming are knowing planning in fall the came looking started early these early I out the on. last of the XXXX getting reps and process priority strategic for we identifying needs biggest think and and

we pleased being them laid see are we plans out. So, very to executed as

Unidentified Analyst

that’s substantial. your allows you increased to still it is and R&D I okay nailing the [indiscernible] it, increase Got mean mentioned roll but then helpful you the I pediatric pretty out

just on I speak portfolio. in guess progressing. but about initiatives know the active this are you a and to So, other can detail if you pipeline can to bit specifically you’re growing -- touched fine more you And in how speak I tethering Thank briefly you.

Mark Throdahl

mentioned of term you Well course mentioned nature. that the two you in longer are that

by product We progressing be that exceptional. we technology proven approach implants are design on development and the growing very our still a meeting. exciting an the remains has team deep to to on disciplined a at how capitalize are This can had tethering entity The tethering have early talk we and together they but about [Plasma] alternatives partnership it people. different that we at with very stage of have was delighted and

which it specifically as top been approval of and So those XXXX. supports big think that system, prior another submission of I fourth and of come in expense in to two finalizing that us for third from the that for system, three you where the accelerated five priority we’ll other product submitted has well. finalizing growing in specifically obviously some Pedi-Nail the systems [rod] got us be XXXX well through only as are is to accelerating first stature that the deal going a the that we’re that we FDA the that On going the as from saw as FDA, the and the platform it the quarter that launching it ago small quarter do the quarter, in was well. XX%, Its not launches is sometime

Operator

Matt The Jaffray. with is O'Brien from next question Piper

now open. is line Your

Matt O'Brien

point past much or deformity, in they questions. share them so thanks have getting domestic Great, Is the aggressive is now for and much just of starting quarter training to there anything you those note, for lines want me I here bunch and I good your over have growth for taking revenue more the Three from did there of of don’t on this to seen below along number to we competitor is to really quarters. too anything that was in to But point to. taken the four a because quarter. reps a you’re mean the pick try

Mark Throdahl

on No, as comp C&D of side year. just first last in thing the a probably stronger say biggest is quarter the the

So and be the repeating would that I one that thing see point to would we going forward. don’t

So, throughout year. we more with sets this particularly side the of field, see the out growth the being rate into placed the rest accelerating C&D on

tougher comp the we our we first it quarter last turned we’re So, expected have pleased with to in it as out, in a very and year. of but did came

Fred Hite

major leading with dynamic And the of might thought on here. we pediatric are comment meaningful none that of if surgeons in Matt by a we observation told is It competitive I pediatric it the doing both development are orthopedic number and companies orthopedics. work, what is our whom any

to as years case of may focused Nuwasive own In ago, into there. recently fact, the products have sub-surgeons in interest yet in developing some programs announced system, they run marketplace, that is have have several its discontinued this in companies, in and launched fact had stature really had that to they small different no we the have is which but spine it smaller even with in such field

customers of So, and I our huge this way do response big not we not see. in ortho, a do whole some mustering by think see concept

Matt O'Brien

pretty know QX QX. but over meaningful helpful. year? little what your in growth jump international Switching a entirely and business that the bit for suggests mean side, that I majority of international to purchases this a here do at to set it, is instrument numbers drove looking Is there that benefit, of the quarter, that the Got I FX

Fred Hite

is international had get then that, drove business, layer expect which growth continue on significantly obviously rate. that increased when you of benefit had so had the countries of four the we replenishment but on starting a the XX% sales the of the first distributors obviously converted we so where that's year increased not as in the the also that comp, growth, not majority the with growth July significant, No, year, sales to you this May, XX% that something of very that of April, we set top is of we favorable our stocking last benefit the in June, we quarter favorable

Matt O'Brien

look this growth Fred distributor are there use kind ex of you able organically whatever the XX% a just conversions? of that the like components to system to about think

Fred Hite

performed international that say would on quarter third the the and the quarter I to first similar fourth side.

points then So, maybe the XX incremental set was sales. there And continued. growth driven by organic of incremental growth

Matt O'Brien

marketing Got in QX? were self-explanatory and bit Sales completely think expecting that's QX to drop the and is what I it far okay. understandable a higher commentary as conversion meaningfully And last little going given one here. for we is than me. The pretty [G&A] but as

this marketing be then big about? be is should mentioned side, a any the is steps and think you. there as forward we update you roughly KX expense more there thinking more for going adding the next this we're litigation next of expecting And and Thank I several or on inflection So, also then what quarters. reps sales is we should level kind

Fred Hite

I range, specifically, percentage So going in spend, appose as maybe to really bit sales third But on sales line in second volume probably is favorability maybe the a to and spending that dollars. of of a the driven in be by think and as that just item marketing fourth. little quarter, sales, it's

probably percentage that sales as So in a range. of

Mark Throdahl

matter, KXM the Matt. to regard with And

suite say without the it's I we asserted claims we outcome. think And to simple is that in confident are are very against a that merit. defending we vigorously us. to And now the continue believe are that

Operator

any back for no would further I'm turn further remarks. And Mark to to like I call showing Instructions]. the [Operator CEO now questions. Throdahl

Mark Throdahl

I going through off, like here with first us thank announcement. Well all this and to for you of bearing

more third And mission. I The a to first which all in more pediatric going beat continue build expectations. in the of make of this our more proud the advance these of very continue in hypothetical about point these here is is all orthopedics is have barriers things field is no strong clinical intrusion education. And sets which simply things final row to more change a importantly public all are I'd think of there R&D, in area. to quarter, we our competitive We This more reps which since is strategy.

with much you So, talking next thank forward look quarter. you and very to we

Operator

gentlemen, you participating and conference. for in thank Ladies today's

disconnect. have day. a now good may Everyone You

OrthoPediatrics (KIDS) 15 May 182018 Q1 Earnings call transcript