KIDS - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to OrthoPediatrics Corporation Second Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] I would now like to turn the call over to Matt Bacso from the Gilmartin Group for a few introductory comments.

Matt Bacso

Thank you for joining today's call. With me from the company are David Bailey, President and Chief Executive Officer; and Fred Hite, Chief Operating and Financial Officer.

provisions let statements you federal XXXX. within including safe today, remarks the securities begin Securities the forward-looking Private include the harbor we me Act that remind company's laws, Litigation Before Reform the of of meaning of forward-looking numerous and the subject uncertainties materially. to may actual results differ are statements and These risks company's

related to and may review with on a respond the which on encourage the COVID-XX, the Commission the to discussion risks company's the challenges. related of to XXXX. filed of For ability demand that company's risk have the pandemic I others, company's form you most the was report Exchange the Xrd, to factors, products Securities and recent including, among annual on March XX-K, impact

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

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

turn date of Executive August I live today, information With events President to taking accurate only the any is reflect broadcast after that as or would the the or law, Officer. undertakes XXXX. David the addition, time-sensitive over required that, no update date Chief conference Bailey, of obligation revise to content of call. the call contains and In circumstances statements company like to to this place Except by this call this of as Xth,

David Bailey

and well. safe you Good for you Matt. everyone, morning, We us. and hope Thanks, joining thank are

the Since of is the all children we revenue like over MD of million, of start inception, where As I the XX% XXXX. quarter to earnings compared in approximately total quarter the which the revenue our we children children that Orthopedics, than second detail more in representing helped always of now immediate provide sales favorable In post priority. top we second second XXXX, quarter more OrthoPediatrics for generated when shortly. million, MD growth XX,XXX and global acquisition. $XX.X of XXXX. Orthopedics on remain of XXX,XXX helped will thing $X.X accomplishments including we realized to I'd Doing synergies will generated right has calls, highlight of total

organic prior quarter second approximately XX% Orthopedics, MD Excluding compared revenue period. the growth was year to

quarter. benefited trends, the As procedure and rescheduling cancellations the due the analyzing headwinds second in canceled second lingering XXXX staffing COVID XXXX, coded shortages. patient off by lingering with the quarter headwinds to cases, hospital reminder, early volumes a started business were from whereas, impacted negatively COVID of of intra-quarter slowly quarter When continued

the accelerated we in leading the third begin volumes quarter, the has normalize, June, continued environment through operating progress elective to quarter. to As which into procedure

a of adjusted period $X.X million. of disruptions, the second EBITDA prolonged by XXXX, recovery. growth a of international Additionally, record COVID the generated in was quarter following we aided strong quarter In

have in sustainable taken Our invest initiatives. and prudently management financial consistently for profitability, role has, years, team improved as to some we our stewards growth seriously

leading important this future We milestone sustainable a profitability. we of believe as it indicator is are and extremely proud to reach

second experienced in segment, Before the the macro on going quarter. revenue some into to each more want to trends speak detail of I

infection to United That recovery our recovery of States, compared the as into other more March, lower of the largest and First, at country. to than the region, said, of was being recovery. backlog sales in more Eastern regions quarter decline COVID which albeit started rates the cases the the COVID, COVID levels to Entering April, we continue specifically, Furthermore, is cancellations, experience expected. to QX. lower second muted region deferred was the compared in

We untreated be simply procedure as over we cases With and of severe volumes more this operating of that that XXXX. estimated balance phenomenon in the that is July, accelerating normalizing deformities U.S. to million a environment increased progress. they given temporary become the view continue rescheduled June the elective as confidence and backlog deferred have $X.X will

associated the disruption global with inflationary the chain is increasing supply and Second risks.

specialty delay modest may only times. anticipate the weeks. in experience of select be by to disruption several limited continue We that to form We extended continue disruptions set supply will instruments deployments lead supply any and on chain

minor million $X In to July. deployed sets into approximately fact, delays in of June fall early caused

expect We not this or we and from Concerning temporary impacted be minimal do to inflation, believe suppliers increases throughout in gross to quarter. third of meaningful expect be are price implants delays instruments, thus, XXXX. not the our seeing and margins surgical also

deformity the and be trauma of revenue million, quarter $X.X approximately million prior we growth generated XXXX, the second In MD will period. XX% second to to which generated on Orthopedics, of as of deformity XXXX. trauma revenue and representing forward, Moving of going segments. revenue compared of in year reported $XX.X the quarter our total revenue

growth period. XX% prior Orthopedics, the was MD second organic year and Excluding compared quarter approximately trauma revenue deformity to

Segment started in a environment slower by normalized. offset quarter the quarterly April June in was previously, deformity but off meaningfully May. partially slowly, as and accelerated in cases the growth recovery operating mentioned As elective

volumes elective in June. previously, As mentioned procedure accelerated

rate delivered led PNP strong growth, and Our of screws system, trauma Femur adoption non-elective high by surgeon systems. new cannulated our of continued the business skippy

second total Biologics revenue growth of generated million, $X.X prior representing business. PediFoot we of in scoliosis the XX% Additionally, compared to year period. quarter we saw substantial In the our growth XXXX, of and

and where added volumes Despite Following and a in headwinds, multiple we the deployed Consistent these demo experienced elective significant improvement with my overall June. to elective May, quarter, quarter users remarks. COVID the April units on headwinds, prepared the second had start of new challenging also procedure saw early considerably later June. ApiFix response we XD in I residual procedure but several touch month will in of volumes, a challenging U.S. improved which in

provide now of volumes on users. In procedure an orthopedic I'll in July, strategic XXXX a and additional demo services to of June the founded we Pega growth. half ApiFix combination Given a treatment in striving Medical. was conversions, the in have Medical to the in sight strong company, deliver of and few the scoliosis the back elective revenue line pending of XD of conditions. improve update with of response bioengineering better acquisition a our starting XXXX as key Pega initiatives, acceleration

Fassier-Duval systems the deformity their patient to osteogenesis osteogenesis in include development orthopedics, has surgeons Intramedullary and bone This technologies and pediatric experience population. the OEMs, for the pediatric development, XX devises and transitioned become years imperfecta Telescopic and of conditions its of Nail the disrupting in imperfecta of Orthopedics of Pega which sells children different FD on regulatory it XX%. increases System launch trauma can has product to around to and evaluation for from the led world in orthopedics. XXXX. over implant The the offerings Nail in XX% specifically without from from trauma includes the the unique most FD to world Their deformities short. years, the pediatric Over is XX, a XX parts focus Pega's within approximately around deformity to patients total and XX product universities some OPs novel innovation collaborating OP in world. products its treatment percentage the of with with of Furthermore, approval total the since countries innovative MD increases treat normal or Pega's Pega with treat the to trauma treat designed cases the cutting-edge growth. for orthopedic recognized most portfolio

we when infrastructure, current the combined with of product for development Given innovation OPs product capacity R&D believe, launches Pega's is pipeline, history and future significant. robust

agency acquisitions, commercial use side, the plan market, infrastructure further the we the in penetrate strong previous particularly similar here States. sales to On United to to our

to of Orthopedics, turning MDO. the Now integration MD or

of million. full in to It's for MDO the racing generated our allowed own reminder, foot. its for that has a important which MDO revenues together, faster-than-anticipated specialty of note In distribution company a As acquired we channel, club $X.X approximately established April, treatment MDO, quarter has first integration.

seen effect sold which MDO resulted new received the orders in large a partners, notably, we've the better-than-expected revenue the Most a stocking developing second within multiple halo distribution quarter, such, European during quarter. channel. commercial As in

QX now initial QX to approximately million expect $X.X orders, per quarter. and we these revenue Given be

the While by still early feedback been in surgeon synergy the MDOs positive integration, promising from global we and customers. the opportunities have encouraged revenue

a cadence rapid nonsurgical care walked have know long well. we market. that Additionally, and of alongside new profit we estimated over view treatment, and driver period and the establishing of years, Pega are a many nonsurgical a $XXX to development term. involving pediatric orthopedic million of XX% With this business their as MDO penetrate multiyear companies we significant a approximately the for stories actively Both product we growth are

We acquire OrthoPediatrics growth. a enhance have and drive story. cash the not do require assets build financial OP companies they From perspective, positive incremental to long on meaningful to expenses our both flow competitive wanted today position because these are operating from and revenue

are scale our As pediatric M&A that we of now, orthopedics do strategic financial not far any assets see or as is interest. in of pipeline concerned, right

integrate sales Our organic while and focus is MDO Pega driving to now also growth.

manage number components is that FDA new fractures cases. these Unique the Drive drive and a Drive which and clearance external In fixation lower Rail, received simplify rail, complex system parts product launched with to development. features new designed needed to extremity and corrective April. system external of to we integrated this to our procedures. perform customizable surgical June, Turning system, fixation unilateral Rail contains steps in

multiple on and `In the cannulated are Dried extension on entire exciting Canada, in and sets placements MBO addition, be quarter, track new sold products system screw of distributors international half complements welcome response, the line the In set response system, the XXXX. and second at in fixation Australia and same In U.S., number can portfolio. and Orthex working consignment our we're addition our launch addition a with planning we the of a instrument we new multiple with serving Pega, a to is back the rail time. to rail external upgrades the utilized to the EU. drive indications

are Mary's Regarding overall agreement encouraged exclusively in our the was we initial Palm growth, product product system signed, cerament at distribute our to first St. and interoperative we accounts In partnerships. Beach, an having agreement surgical with quarter, QX. biologics the navigation we several Since West void signed bone in within XX new the U.S. strategic by the added Transitioning Bonesupport product adoption to and portfolio, July, Florida. first Hospital dealer placed the hospital

units have As way working we committees. their exit analysis currently we several value July, evaluation through

the alongside placed we OP response have penetration. we each have hospitals in pull-through. these strong unit been being units said, where currently account see That to importantly, used and demo starting system, More are is low

As of we XXXX, the back sales. will high be degree a units confidence look that to into demo of half we have converted these

to continue patient-specific Also to announced devices. will XD-printed as pull guides orthopedic mid-July, transformative engagement the of resection platform cutting biologics corrective patient that through the software improve many a XD-Side, oncology XD-Side leverage developer exposure an portfolio solutions, bone XD complements products. biologic our outcomes, involving cases of offering other pediatric patient-specific exclusive surgeons implant view osteotomies. us distribution drive and full implants, product technology require our Belgian assist a sales to entire complement allow a deformity including agreement challenging limb increased where and and and and to of We we of surgeon in our with tumor tumor performing increases and orthopedic market, pediatric most resection manufacturer in

our excited provide cut to this We with orthopedic to relationship XD products. pediatric access XD-Side are the to customers enter

proud women care the our In XXX June Lastly, trained surgeons. pediatric for showcasing sponsor again in educational particularly OP pediatric diamond attended. execution at well alone, surgeons and held and second events health orthopedics, in generation through navigation event events XX, demos. of helping we networking a extremely which once out Chicago in hosted we was POSNA next were a and training we performing more quarter surgical Phoenix ApiFix We for the are Year-to-date, Vancouver, over carried XXX double of train Orthex. We and several orthopedic on than professionals. XX

us keeps to cases degree XXXX. true into as and are the greater XX% growth in high quarter Our procedure and rescheduled. pediatric To July, of we our close, have visibility environment in of enhanced backlog ability trends signals of Therefore, operating confidence our remainder to the third normalizes, generate the orthopedics. organic a elective being and field entire dedication volume improved noncommercial education commitment cause sequentially into clinical have our to we advancing to revenue or

While it's following and early acquisitions especially of the strategic been Pega. to better in start the thinking company has MDO never XXXX, position, about a

opportunities, that also the opening gross be we addition and our greater create call and future orthopedics. provide up margin ensure and the the expense Fred we quarter distance of continue both the of significant on there growth over new profile second make exciting from In to in attractive drivers Fred? summary, given our In underlying in operating to long-term as fundamentals pediatric I'll turn to requirements. and leader that, market assets enhanced that business their believe competitors profit our financial results. to investments will were more detail limited success With

Fred Hite

Thanks, Dave.

the growth, organic with throughout XXXX. quarter, XX% to Growth XX% XXXX $XX.X the million Our when second primarily quarter continued combined of driven trauma worldwide in revenue of growth. was procedures in increased non-elective second quarter second increasing quarter compared resulting the by

we as $X.X as PNP boosted the revenue. well representing international by our Growth total was Femur by Ortho organic compared period. nonorganic XXXX, scoliosis the of the of as growth which incremental sales XXXX, and by increase $X.X increased In primarily deformity scoliosis set MD Growth EU international period. of a correction MD growth the and by revenue. distributor generated of the distributors BandLoc organic million, $XX $X.X in XXXX. added second growth The addition, addition quarter the was driven primarily compared Growth year procedure million, In to as revenue $X growth In set quarter primarily primarily of of stocking the growth driven incremental the respond was added screws, the scoliosis of quarter, was second Ortho XX% distributors million to of million increased of quarter second $X.X Ortho, across the PD as increased international year and which in Ortho, increased period. products, trauma was of cannulated U.S. quarter [indiscernible], to well XX% trauma sales XXXX, multiple by million shipments. XX% added from stocking of quarter XX% revenue prior increased backlog. in the revenue increased we revenue in well systems increased volumes, to In and revenues well year of from MD In look our quarter sales as and million and MD $XX.X trauma correction. deformity compared stocking was million. to the as to of $X.X second of as driven they FIREFLY prior deformity from prior million driven to second foot as from

the revenue year Medicine/Other compared was the XXXX XX% Sports second which quarter $XXX,XXX, in Finally, to prior of declined period.

expect deployment, in second was July primarily and on compared throughout gross in of of to sets XXXX. the Touching quarter profit on million of XXXX. sets million consigned million quarter in to a international XX.X% second some stocking the were Turning at briefly deployment. driven XXXX set XX.X% metrics is our quarter in compared of $X.X key second of delayed sales Slight the for to margin margin distributors Gross $X.X to $X continued of a delays few quarter items XXXX. zero rest by XXXX. launched change margin. the The few in of increased the and another set second rollout we a

$X.X and marketing or to Sales to quarter increased in higher replenishment increased in XXXX, the with same benefit, operating as the profit second of or last from Interest $X.X to increased quarter $X that in comparison inputs the in million were the million administrative by compared million and of legal the prior quarter a quarter or drive expense increase million expenses adjusted of for by compared was charge future. resources XXXX. $X.X EBITDA quarter in value should of roughly $XX.X The second other quarter in expenses of The we increased sales fair the increase $XX.X adjustment million an million driven lower period. driven In continued second million million XXXX. and million XXXX. this to $X.X the in compared a XXXX, second However, $X to of period expense $X.X XXXX. personnel addition of second XX% the million were valuation year, commission quarter was sales Total the increased quarter in the to driven second of profit second $XX.X quarter our of million which of in of year of the acquisitions. business, $XX.X We the $X second to the XXXX XX% the second realized $X.X XXXX million of XX% to expenses. General a well XXXX. reported of expansion our by primarily expenses was support associated income primarily the recent in million and as

For we the X, of the million and available $X.X of our in in advance of to $XX XXXX, the ended first cash to have generated line cash, drawn of million million credit on We of of with our XXXX $XX $X.X payment positive adjusted million half quarter compared loss $XX.X of and XXXX. a second the on credit. million Medical. continue Pega for first was half restricted cash in million July $XX EBITDA line we

Finally, turning to outlook for XXXX. our

Our active partnerships, the fundamental product international strategic backlog several tailwinds, of deferred increased continue growing business will key expanded from and to including portfolio, base, pending surgeon and of benefit an procedures, addition approvals.

a assumptions recovery, normalizing anticipates global highly the Our procedure levels sensitive which case on elective and throughout scheduling is steady XXXX outlook to year.

$XXX annual Medical. Pega and MD assumes representing roughly $X of million between annual and XX%. to we million year-over-year now contribution million from revenue $X between XX% XXXX, guidance Ortho be revenue from growth $XXX to This For expect million,

expect We revenue continue to XX% XX% to organic growth. of

in to increase between we Lastly, between by as new new representing of of driven XX%. annual as demand $XX plan $XX is XD for systems. million This product and deploy systems, systems, growth XX% and consignment legacy well XXXX, navigation introduction million sets intraoperative year-over-year pent-up

business. continue back to for full for fully XXXX, expect major comments. point, the closing several I we the addition, dollars EBITDA crossing generate turn this In for call million year our Dave of milestone this to to adjusted will of At

David Bailey

Thank you, Fred.

I quarter think there from performance. three takeaways second our are

July, greater that into growth XX% and improved XX% First, total XXXX. June, and will revenue growth organic giving continued or or has elective greater procedure generate volumes we that us in confidence in trend revenue

substantially Second, been the MDO time. position companies we the have of for admired company's has Pega, strategic enhanced and by some acquisition known two and

our turn it of clear back bright. the for that line to to has that, to Third, over open operator is the the never strength I'd and competitive the been like future greater, is any business the With questions. call

Operator

Instructions] Our Matt O'Brien with Sandler. [Operator question comes first Piper from

Unidentified Analyst

for on morning. Can good right? is for Phil on Hey, Matt. the and question hear taking you all This Great, congrats me quarter. thanks the

start just a these How orders think see. which with off quarter, to And great stocking EU about run versus with Ortho, the rate? more Let's should quick guidance. follow-up normalized is $X.X in MD just million we a then

where delta way, to up the attributed to mostly million attributable remaining You thinking $X million? between the this so, was the was right MD Orth I MD number. what took and Am Ortho? about then $X it And if about that

Fred Hite

Yes, absolutely.

like are We in in in that quarter. yes, the $X.X quarter the quarter. do to MD million X.X% Ortho X.X all, fourth you going second did think the million more third of and first So correct. is

was that in range. strong that EU from very you delta come The of orders by quarter. second in increase does is correct these it stocking most the in acquisitions. the the are onetime in that revenue, So driven really That

year. as had to see executing business We the in our we planned continue earlier core

XX% XX% The OP And into before. growth same from is coming coming the as so increase the of seeing organic is with family. acquisitions we revenue the from benefits exactly the the we're what to the synergies predicted had incremental

Unidentified Analyst

opportunity Ortho guess M&A. the this there is on are big in you're exceeding and appreciate your you've the today commentary here, specific with space? additional targeting expectations how what initially just I on MD and there what's I commentary nonsurgical areas any said

David Bailey

Yes.

here our think you I might integrate goal is MDO, imagine. as to

the the nonsurgical we lower that seeing, here That look is in MDO least From And in what this that we really business before we're to has and development in obviously extremity club nonsurgical globally be the in of accelerate well really So commentary said, integrate over our with in the field really products that months. a of that Pega, where MD can been six we're lot synergies continue just the focus really as integrate stage has script be end getting to one ahead a been market. to to before expand XX to areas growth pipeline, of next still businesses. about an will gone are to work at think number that foot products year. has to bracing to next think get do Pega. first able those here got the our with X really There's may our the that Orthopedics MDO new will the We're we've of M&A has expand, about of treatment and XX we perspective, MDO far. so started. and which step we

anything see of over don't we've got at next the in that substantial us to point in this marketplace work XX and we so interests the integration. And XX months very us, ahead really

Operator

question Our Rick from Wise with next comes Stifel.

Unidentified Analyst

the question. Han Good Rick. morning, Thanks Fred for David taking for and it’s and

international. on one First

Is a rest or the growth? as you on aspect returned kind to clear, your increased accelerator the set given to we be business would how it headwind continued of have but commentary look international the sounded seem purchasing stage fairly you of more that backlog, positive to levels just for I and now? the Your international year? normalized And do of characterize to growth want to

David Bailey

Yes.

internationally very see stocking distributors to it's think I our to again. purchase good news start sets

here. has that even been the recovery slow, that's As takes something you hold know, certainly been as

a tailwind. because backlog. adoption investments Certainly, in feel here a market accelerating, we're products the and believe that's It's there's like that about little so backlog they they're And quantify States, we the which like picking start probably normalized surgical the to feel XX-month an our fact now environment and purchasing on are we're up and think very a but being easier talk the starting and backlog, And have is to I aggressive $X.X borne of U.S. is in United that to a only distributors that out backlog, we encouraged, the in more we million making see we internationally, us by their habits. the that

Unidentified Analyst

That's noted great given still early, year about as you're in environment? thinking should Could we be to a normal early perspective. more on but I we your and a product things, And expanding perspectives acquisitions growth how see the accelerate recent sizing next return up new 'XX, pipeline. portfolio,

David Bailey

yet at think Pega, in what we a both the looks up at when XXXX. certainly that guidance our on like, organic years with And we'll the the think XX% to we likely company that remain we a XX% haven't honoring XXXX by but absolute come. set R&D organically, to XX% have we're for And organically are XX% very we of robust a growth, acquisitions to case, said competitive MDO, end, I do that's grows several our well pipeline to commitment and improve and worst and extremely like believe I acquisitions. given position, what as competitive and I that is of nice our those with businesses, Obviously, strong. setup the as I really for position

Operator

with BTIG. comes Zimmerman from next Ryan question Our

Ryan Zimmerman

actually Thanks was It with if I for our taking Dave. I morning. to Good questions. want start pretty good. could, scoliosis,

just that where you performance And this but guys the are your Some appreciate in you're from on think have of peers peers been versus softer commented of the commentary market your scaling quarter? scoli just about tougher would given your some past you have quarter. cadence, who not perspective share seeing, has maybe the winning this

David Bailey

Thanks when think Ryan. Xrd, a it's so we January tough Listen, year almost May. been far

a summer. I bounce And the continue back into side, so yes, in struggles saw that June, to early We some expect particularly QX. nice the has into here had scoliosis and even everybody on know

and that into a month increased adoption number of out talk then QX. June users And but XD at XD, about process units particularly I process of of That's in sold unit incremental West adoption through think that gain. now drives having then schedule are that's the share here all the in great, driven have ApiFix, had, new right we of by that of seeing we going number and that of we Palm. a of we're a the the earn-out

why look I the bullish could quarters year back so what could what this think the like. about next look that's really we're like several half of

Ryan Zimmerman

out $X you're million laid and exceed to beyond to expectations for you've do that going upside think I and Maybe known and the helpful David. meetings similar a Got POSNA expectations been turning to it, the maybe Pega not laid grow to to moment. but what at out, the curious Pega opportunity about certainly and just so How those you've through you're doing suggest mean, your that about Ortho the all they've you're going with some company, MD provide above seeing the what forth. you network, distribution what to to are.

David Bailey

Yes.

MDO, been the product, working has Pega, own Pega, FDrad short innovative is as But when always it fairly their run, in immediate them I for I established to term saw products, comes not X very for as and is and of inventory, the is of the access benefit long firm distribution, weak really main engineering as term. been they believe to have great development, we well whereas sales through you, internationally, know, think story to because focus. to product is globally. distribution long which benefit a a representation think known going Pega, adjustments their Pega I access mid a to they synergies were number

think in once inventory, and field, we United organization next so get take Once growth think is at September transfer can really new segment And years. again, the States, of I some start time. can Xst, trauma selling should on the it of our to things couple which to for occur, be and order we those right, the could take business and our could but which you're several going sets here, strong deformity the a that to is we this which of order quarters

Ryan Zimmerman

That’s helpful, Dave.

Let the me to, understand obviously squeeze in we quarter, their part from first the the year normalized I expect back I you this Fred. back are of came than Gross saw Should one queue. distributors? How inventory in margins a hop last of one those back level bounce set – I'll purchases of thinking international and and that in more think, half a about have quarter? somewhat stocking purchased was higher distributors we back as

Fred Hite

No.

quarter, next we what were what prior their expect We a think to said international in return distributor quarter, artificially we're continue would they without and were you would quarter, is partners, to here was continue more had beginning, the COVID. not situation. I sets We sell is second expanding expect actually single as XXXX a in international normal, the XXXX, see, to purchases in higher. It sets to so fourth year. it sets we did would to selling is our the which what margin third and businesses. quarter and more I quarter, each stocking at say seeing that normalized selling Every was to one-and-done as the

I see we're going strong, the obviously. seeing think forward, we'll gross still very that rate natural which is more what now is margin

Operator

comes & Needham question with Saxon from Our David Company.

David Saxon

question on congrats backlog and quarter. Thanks Fred. one on the taking on David, Pega. morning, for for one Maybe Pega, good the Yes,

not us that pull-through of the FDnail the portfolio? overall have across how Just system product it Maybe remind is market wondering kids’ that to is whether what for and or your meaningful type can portfolio?

David Bailey

XX% us line of to one last question. rare from is what moving this Yes, bone a us big because really this with about children's about area up into the orthopedic X% a talked surgeon We've does an XX%. market with pediatric That diseases. children good for opens product of

plays it. pretty that really market our is for the really XX,XXX include do in it gives kids that's in United XX,XXX the I think XX,XXX States. There's Given FD FD imperfecta, when into a pretty it you the where the to opportunity. so balance the particularly fact those about no to competition, nail It the to United that in powerful products XX,XXX position comes hospital is T&D the there's unique portfolio with States of and OP rod that to osteogenesis significant contracting. us when

FD for lot know I is not has a to historically, selling dedicated a pediatric been know have exclusively reluctant rod, supported and think about of we been while to been call it's the to organization surgeons get difficult so, orthopedics. surgeons that again, by very because And it

David Saxon

helpful. that’s think benefited backlog, you then on cases. some called from out rescheduled it, Got the I And you

quantify then the squeeze and that split much. to think Should you your said way benefit last seasonality? Thanks how can it I on one Just I wondering that anything it I heard typical if X.X%, be think product recapturing or so And any update then, Any in. one don't remaining Orthex. that follow was. does I evenly is on doing?

David Bailey

Yes.

procedures, saw here in of surgery. limb now as that see of big $X.X hear up in hopefully, return that quarters, year. elective that that the million. there's United think we'll deformity did that believe up We as in well any pick States, on in we correction primarily the correct. spine We or between end next You Likely $X.X backlog a QX, pick and don't a few the elective about million

On QX April, of is well. normal still limb circumstance QX, procedures, we and the we into think a on it environment. May saw I Orthex by and elective will Orthex not improve seeing into as the from but all be tough expect pretty side, would mentioned, and those than June, as QX, impacted procedure, Orthex positively backlog deformity better elective improve what Again, an we so Orthex

Operator

Sam with comes Truist. Our question Bardowski from next

Sam Bardowski

guys for congrats the with good start on question, I'll the and quarter. ApiFix. Hi, thanks taking

we in You cases little we experience or be to where curious it a any the about remarks. bit commercial touched up the and prepared a into stands? thinking on registry And more here. into pick that But of just surgeons granularity you rollout give How should us 'XX? could get years with few as hear

David Bailey

question, as we're XXX get Yes, surgeons Sam yet. there's more to no not that data,

did in but have clinical coming trained, yet, think have probably in many sites of is this we to of who in that said, some as scheduled I bump have results year. next really have has are the of experience sites to cases. from environment about cases That through close are first additional do have surgeons until scheduling benefited sites. been year-end of year trained and them as July and half all registry users. Others I capacity have X-rays, sooner. close a We the none nice think feeling registry and send really nice a ApiFix our scheduling see commercial from think seeing or that not June and June, more comfortable we seeing been part is of And into year, are starting leaking But I and new likely into now QX. registry coming to

Sam Bardowski

That’s think of one forward. acquisitions for about probably forward of going of should balance you. sheet cash Great. liquidity? further scale the going on then, the commentary and And Fred, got use How helpful. we I lack

Fred Hite

Yes, absolutely.

million the first in Xst that continue July used we third is us $XX.X with $XX good our So Pega. to of of cash another to of cash, quarter, credit. of news the was million have line $XX million The on available day

balance us also it the financing, be in very the commitment manage flexible think effectively lot leeway which continued demonstrates a to to gives Squadron our of sheet. from I

encouraged the to So year cash overall the which payment. set our rest that's growth have we're pay will by of that ApiFix used year, But of and the deployment to both the and covering this start amount will for some yes, we year adjusted and very of reducing business. of cash builds, and continue required obviously, used we've support to the next earlier then EBITDA, MDO cash this positive pay our numbers the set

Operator

Our from Securities. Stauder with next question JMP comes Daniel

Daniel Stauder

Great. Thank you.

gross on back touching margin. Just

might that pricing then issue? mitigate the price see any give meaningful you us inflation to to ortho color bank, some mentioned the you you PedOrtho adult become inflation that same or erosion any your maintain an in adult seen players could And But haven't is you You should that give us the on in to ability mind, from compared suppliers. whether in even that ortho naturally note any your typically able of industry. market on gain color could

any players adult that pricing color bank, to could comment should is become industry? to whether same you. that naturally us there inflation market PedOrtho helpful. an any issue? any be mitigate Thank in commentary And So you in see would ortho erosion on the the typically then able So give you might

David Bailey

been get the feel we to of little price. in fortunate and we a Listen, absolutely. able in. bit work live Yes, that we Traditionally, have environment very

been could talk the you and opportunities I to to six we in We bit future we the think confident seeing or the to Pega those have a inflation. offset little portfolio business. products, products been Pega say a and did with I continue we proactive out we cover little price States. increase that launched argue would go today lot price inflation enough higher to customer would the of able to part, be to transportation we where that get are pricing a the has Yes, a but the we'll offset to year, price within through our also with United experience there particularly bit of in gain This of FD, value that be little United get as the for Pega impact the into and We're able overall is increase see this. States. haven't on to additional most inflation a that about

have so both like in months. on well And pure over the at it's of we're almost next as a just the six, trauma looking for launch. succession seven course rapid pricing mean our I new as portfolio product we launches the deformity limb XX opportunity

for our and scale gives in us think for also it position, So side, some business of course, leverage opportunities on there's us T&D competitive circumstances. of the the pricing there. the those I just

Fred Hite

Yes. products time I that and those will the order Pega later some launching add early to get month we'll least It just a products right? have will time, take this on probably would those XXXX. suppliers. into have lead So the six be hopefully in we year the to four side, sets those launching at from to and/or

Daniel Stauder

Thank Great. just quick one. you and one

set at the deployment. Just looking

of more year needed and is the give guidance back for that idea the any concern? mentioned the delays. for comment just us an a of in investment XXXX on half some the incremental the of but some Pega of You of set the could of reiterated You it, year? But slight cadence you spend or

David Bailey

mentioned as which year. Pega, our out, be well amount XX, from reconfirm of the little in some get Yes. get The number year we that XXXX. we earlier pretty does month in include, going be is the fact, suppliers as to able as Pega after into we'll The start the of deploying after be throughout this of majority month and month And then rest will to that XXXX. of the cadence consistent

Operator

Bailey. There call questions. over further are no David the like I'd to turn to back

David Bailey

to you Once the for in everybody, and you. for your forward future. again, you, thank Thank your at we look you conferences Thank seeing time. questions,

Operator

This concludes program. the

disconnect. have now may great You day. Everyone, a

OrthoPediatrics (KIDS) 6 Aug 222022 Q2 Earnings call transcript