- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to OrthoPediatrics Corporation Third Quarter 2022 Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Emma Poalillo from the Gilmartin Group for a few introductory comments.

Emma Poalillo

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

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

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

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

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

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

David Bailey

us you conference on our morning, call. for third and Good joining everyone, Emma. Thanks, thank quarter

for start we all OrthoPediatrics, calls, the MD volume Pega foreign of like Medical, earnings and represents sales growth than conversion, to the purchases compared quarter disruptions stocking period year of total of by always Medical, XXXX. was third top XXX,XXX the the organic growth we generated Australia and generated children. acquisitions, than organic and to our due refining was children the expected compared Organic lower prior our combined I'd partners quarter period. XXXX. prior the domestic over year remain total acquisitions, highlight, children helped staffing to is unfavorable overall includes of $XX compared X we the in now after to and in Pega our more of negatively to helped thing exchange XX% of inception, MD and EU dollar. Orthopaedics XX% impacted We priority. expected shortages from third million, will XX% set stronger of growth growth and quarter stronger global due to right and international As XX,XXX in Since sales and with the the calculation XX% than has record In revenue third from of revenue Doing Ortho which XXXX,

third we quarter our this generated revenue in growth XX% the expectations. below Although of was XXXX,

case commercial capacity staffing volumes and organic negatively or the market case in estimates, and experienced volumes. extreme share While our quarter. RSV, and and was we execution, our respiratory revenue numerous growth locations gains, strong outperformed conversions high the rate constraints of acquisition Hospital a surgeon below late illness, operational forecast. in Despite impacted in swings

continued showing many multiple reducing customers, started and and up the beds capacity surgery. publications, which significantly in As has of it for largest reference has This October. filling our RSV through in national published September been is

these factors reduced remainder full continue the may revenue year in reflected are guidance. of our the year and All of now for

our are environmental we to producing pediatric unexpected that new cannot be which factors, in observed and Obviously, hospitals, being much hospital but not have in capacity moved adult seems the ambulatory setting. higher surgery users increasing these we control operational can ASCs, unlike than efficiency We portfolio. and commercial our across to cases where adoption and centers, technology case or control growth strong execution, are expanding

of quarter, dollars deliver the EBITDA EBITDA began X on The adjusted of last and strong we up trend, XXXX. the to us million at the foundation producing operational in goal of positive overall improvement million to our XXXX generated sets in over a in several quarters through positive business efficiency, adjusted adjusted Looking $X.X EBITDA. further forming in

X steps further strengthen initiatives invest to took current will balance flow the cash XX-plus Additionally, believe position initiatives. in efficiency next to breakeven growth, and sheet, percent years. provide growth sales sustainable which to continuing flexibility sustained can in X the We our we profitability enable and

surgeon Femur users cannulated total over more Overall, third users ApiFix, the major XX% compared key In representing $XX.X front, revenue external of revenue adoption PNP $X.X Trauma Pega ApiFix and quarter search organic in driven This period. Medical. was quarter and the In deployed XX% third new drove and RESPONSE, of for Femur to generated compared same and Cannulated and we doubling our fixation saw continued growth the XD. Pega share units prior Medical. and significant the RESPONSE, included Orthex System. year growth integration franchise an more PNP of The prior competitors. demo to on share of year acquisitions, T&D prior million, with of new year. representing now prior adoption revenue provide total million ApiFix, to from all year period. on and quarter quarter growth million, we approximately gains account compared combination ongoing Screw than multiple Orthopaedics and the progress prior Revenue than the disruptions, quarter. XD Despite of and prior the MD drove I'll of market our the prior Deformity continue growth we several period growth revenue our and combined with Orthex, quarter. of Moving segments. within representing XXXX, and RESPONSE, XXXX, quarter, doubling million, quarter ApiFix starting and products. the generated screws progress with of XD the taking we our ApiFix $XX ApiFix with of recent in to over key by improvement of Organic XX% global RESPONSE $XX.X year update market added of our Scoliosis was

the and are with initial progress. We are X quarter into the integration pleased

the was the of all legacy in XX-day post-acquisition control. U.S. revenue as followed following record termination monthly some of the worked organization U.S. period. announcement This officially took disruption experienced distributors nearly distributors, September Pega after notice by immediately their expected, the sales through we As revenue OP

in to we get innovative that instrument sets the meet demand Pega can for we more hands forward, customers these are our Looking eager so technologies. of the increasing

feedback positive. cultural of obvious, for. synergies what customers and this hoped are extremely surgeon business product integration the The Our is exactly we is had

we our revenue As business we XX%. global and greater to at fully sales this expect set than increase grow representatives, allocation train

integration Orthopaedics, the MDO. to of MD Turning or

our very build increased and favorable seeing reorders, our market acquisition these in During customers integration we we from new cash synergies our of Brazil, view is distributor these pieces opening quarter, competitive by Continuing seeing sources on our has positions. the new from continued very positive, both synergies, excited these post early, first sales Overall, volumes translating the to new into resulting been what it strong and acquisition. to a strengthening positive makes are synergies, with and launches, flow. is new of greater increasing revenue and acquisitions us non-surgical success that of great along already. of it stages of growth produce while but the also in franchise Feedback as is going be than and the delivering both key confident of are with we will XX%, growth profit initial acquisitions. We product revenue

product Turning new to development.

During share System, external new gains the launched Drive is Fixation our which acquisition. and and leading External product, placements user to of Rail recently the commenced we market continued complements quarter, Orthex fixation consignment

progressed new instrument upgrades, instrument across with business. segment are of launch derotation preparing Scoliosis, screws. to each and also our RESPONSE cannulated We set our a we RESPONSE of R&D including RESPONSE projects In number

products. In We Trauma surgeons we to Pega non-surgical with allow for and system power and first-ever development during ease. our completion treatment to Deformity, of nearing fractures. which set software, scoliosis DFX screws both onset XXXX, pediatric our our also PNP system pre-planning We're and also product Orthex along launch our pedicle femur will expect non-surgical of place and early the Tibia power correction OP deformity furthered first with the under of quarter continued several screws advancing

spring MDO preparing are the partnerships. extensions Transitioning MDO near to the assist available brace strategic upcoming the for in be future. we clubfoot and to line Lastly,

committee. on navigation a St. at have we Beach working evaluation during first placed with system that RESPONSE Mary's pull-through, penetration. our quarter, several at currently intraoperative our historically Spine through to value System, utilization Palm are of their reminder, units the low particularly Based with the early and experience, have As our analysis the we pleased way accounts initial continue increasing demonstrated surgical XD nav

several XXXX. into confident as We will into are units converted look we be increasingly sales

in pediatric the children's the OrthoPediatrics the to surgery a hospitals pediatric of and reminder, within As owns States. spine orthopedics technology fields access exclusive XD within United

surgeons and helping of at are train across proud continued of the remain orthopedic next contributions generation we particularly Lastly, community. pediatric forefront the of the our

in professionals. ApiFix a of in Research So we Society conducted meetings served far have events where XD. September, user we suite Stockholm, XXX and for featuring training conducted in sponsor gold healthcare hosted technology the Sweden, surgeons XXXX, nearly In our Scoliosis level we as

Meeting. leading Developmental American only continue we Palsy orthopedic the Medicine Annual the as and Academy of for Cerebral sponsor OEM and Additionally,

call the were Fred fellows we Techniques on Fred? to North pediatric offered detail Finally, surgeon With our provide in sponsor financial that, premier I'll to the turn Orthopedic over course orthopedic the more results. of all to Surgical America. Pediatric

Fred Hite

Thanks, Dave.

XX% surgeon XXXX driven third adoption, resulting compared of quarter increased XXXX. when was the revenue growth. continued in quarter the by worldwide quarter in $XX.X XX% third to million primarily Growth Our of organic

XXXX, XXXX, was international stocking $XX.X Pega primarily the combined million Medical. international the quarter the Growth growth primarily well and as the system of of of Scoliosis in non-fusion MDO Pega MDO Pega distributors and as of driven of XX% MD growth and third as Pega Growth prior the to well procedure added they the was Growth prior period. increased In revenue compared we $X.X look stocking addition growth Femur the year increase driven was as quarter, a addition, third growth of quarter the by ApiFix increased to of increased revenue total from RESPONSE the was third driven scoliosis of XX% as increased the third to PNP Medical as well XXXX, increased compared from Medical. $XX.X by to year $X.X period. Trauma Ortho and U.S. well increased to distributors respond set non-organic million, our quarter of quarter representing Screws from and and and set as our driven XX% organic sales generated fusion sales across by primarily the of quarter by million of growth XXXX. MDO million, XX% as $X.X Medical. trauma revenue system In In we of million. sales In In the year the addition million international organic our The revenue was primarily as period. quarter volumes, Deformity to organic backlog. and in of and compared system from prior increased deformity $XX.X Cannulated third revenue to

third which the revenue to compared Medicine/Other grew Sports in period. X% Finally, prior quarter million, of was $X.X the year XXXX

to of to million set now were $X.X million quarters compared XXXX. have quarter to deployed the million, the of quarter the to date, third third sets XXXX. up $X.X of Year of X XX% in XXXX $XX.X deployment. first compared Turning we in consigned

few significant metrics. another in XXXX. fourth the a on briefly We key expect Touching deployment quarter of

the driven of in in expenses XX%, in increased XX%, acquisitions. third of sales expenses were the fair expense the the and profit $X.X value comparison to benefit, last margin to XXXX $X.X marketing of by million and period in decrease Interest million same to The of and General third year. last third to resources revenue of as or the additional the the quarter XXXX. $X.X well addition primarily benefit million XXXX XXXX. in $X.X was compared resources The increased forecasted quarter quarter million or quarter million $XX.X increased period profit lower compared addition quarter of in of the quarter acquisitions. by $X.X that This adjusted which the in recent million, a the million, million as comparison by increase that development was our the administrative increase same quarter third related as same which $XX.X addition XXXX, quarter was by gross expenses million third the the driven driven business profit million, of third quarter was support the quarter forecasted or impairment, million of adjustment The third driven personnel third as the quarter primarily to of our $X.X of third $XX.X recent was or expenses period compared XX.X% we the the the was lower third in continued and as was last $XX.X driven in a we million from expenses of increased by well compared XXXX. other recorded operations the XXXX, increased $X.X Total XX%, We the to recent In of addition of for XXXX. XXXX. XXXX. charge For XX%, to and as to the was in decrease a in to to realized our a of trade our In $XX.X million to year. primarily to of year. of commission $XX.X quarter million of EBITDA $X.X an in third Research million, expansion increase in the third quarter reported the name third Sales XXXX operating XX.X% $X.X of of million $X.X to in well acquisitions. XXXX. XXXX, revenue

XXXX. million investments and ended to For less August, of third compared months restricted the $X.X of of cash. We our with includes short-term This our in adjusted line EBITDA generated proceeds million $XXX the in capital $XXX.X we million in recent $X.X $XX of quarter X million gross in first XXXX, approximately positive million cash, from raise credit. repayment

on and increased paid our to materially our down hand, on cash us our million have available of have $XX we We line debt, credit.

of environment, economic of EBITDA strength. tremendous breakeven our a sheet, balance line Given positive the current strong places flow to sight adjusted cash and us in position

remainder the to our Turning XXXX. for outlook of

in year. elective would expected the second backlog the this We surgical extinguished be half of

However, based will in we of continue we saw hospitals September, to on believe XX% at children's approximately their operate what XX% to XXXX capacity.

throughout rates Additionally, be on we a enable these RSV of based all tailwinds surgeon of procedures, including will fourth children the will leading continue impacting key product headwind by to an fundamental taking. be deferred We partnerships growing position, headwinds strategic see of which of increased pending addition expanding our continued high backlog competitive quarter. anticipate to active portfolio, international approvals, the further and share base, offset

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

to $XX plan million and XXXX, million annual between we XX% sets between $XX and year-over-year of Lastly, new in XX%. growth representing deploy

In for addition, a business. major full our dollars million fully EBITDA of generate the year expect milestone we for to of to several XXXX, crossing continue adjusted

the SEC the turn enforcement via Dave previously that now regarding this SEC over At call concluded had company. recommend actions December any and an some to did against point, notified update this an was back closing provide to the inquiry SEC it Earlier wanted comments. for not late its by the year, from I'll disclosed XXXX. that the we us the company Finally, fact-finding in inquiry X-K

David Bailey

as and RSV with to that disruptions operating continued strong it shortages as third growth. revenue continued continued significant fact posture and Fred. aggressive sound quarter But position is our no growth. around there's see ever, no our but disappointment of may Thanks, Overall, strange staff QX, to express getting impact change in is in is XX% We competitive may environment. the it reflected there our note the performance

the our continues remain key drive on position. strengthen surgeon will to track our and position profitability, deployments, near-term We new be of enhanced and fact, synergies placements produced of X successful acquisitions. our competitive improved increasing products, In adoption from catalysts all These set expanding XD by sales to continue value profitability. market-leading prospect our

Our will breakeven. support combined will sheet bolstered to cash company drive growth, balance with the flow future and disciplined investment,

children culture places remains and corporate success a helping at our center Finally, the that grounded of in we everything first do.

these over give turn to our successfully long-term confidence to back the to questions. execute I'd any factors in that, With the open continue of the like strategy. All ability operator for to line our us to call

Operator

[Operator Instructions].

first Our with O'Brien Piper Sandler. question Matt comes from

Matthew O'Brien

successful in for when to you Congrats on that's at this I with start the the Wanted million. guide up morning. guidance, SEC the the concluded year, look and because couple a announced increase the MDO/Pega

are is business impacting versus guess impact bit organic goes parse year. the about pandemic as actually question from you what we you're love a next how is far if leads head Would into any out the I XXXX $X that as into the you're the you. potentially that next maybe seeing then So thinking could business as And logical just little and factors million. down other the

David Bailey

maybe the as seeing I'll been we what of volume just of Yes, our talk environment future. the is take here Fred, September key on then terms in really script, of you noted about and in particularly a we've wild think Matt, I guide the customers. here, the some have in swings in

with our into all speculate pandemic That a of our we XXXX. get the don't about And operating -- long impacting but the particularly of I organic decline. of time, a wild we have how some it's get it summer. hit but into of to a And that you and I hopefully, you've as back combination seen that throughout RSV side. in these think we spikes see type this, And these as And October starting COVID were to Still very early revenue rough swings. Obviously, that to would into -- RSV. staffing, for difficult of the going in these on And RSV, and think having months starting very hopefully build from around that we RSV rapid hope negatively been I rapid new the a have think our guide this we this kind would would that's But of some really for has accounts tapped but fast has impacting this RSV, saying out with know patients. saw as that particularly can this so these deep account-to-account, -- I of to is what it and typically improve. you environment certainly expectation publications region-to-region, we month, normal got been hope said, in pretty the shortages, have we would noted be -- you hospitals number into look and us improve. certainly, it's staffage to part September a But marketplace XXXX, the see this certainly certainly growth, know it And then then last X.X QX. forward, think improve this really moving improve. wouldn't could been the past, that

Fred Hite

to The would one in variable that. just Yes. there is add FX. other I

change rates in the in we in So month about came quarter. those into quarter, look September impacted unfavorably organic fourth the Europe, were of the you continuing third the business we by real $XXX,XXX. when anticipate And and at the

definitely, with provided side the fourth have another we'll combined the negative impact quarter, was of the that will in the overall organic on the quarter third guidance that impact So business.

Pega fourth that that they into on at can positive into side acquisitions doing inventory we business. And are and I the the the continuing of think better get is the the and we as some doing quarter be actually sets year, next some deployed particularly domestically we thought this much X see point. than would

next for So, very excited to Pega. about year the related growth drivers

Matthew O'Brien

And on going new set from really people maybe, year? tease it. in rollout's on lot next them. helpful. Got some then are excited really a can products level bit XXXX? introducing. the like that. registry/commercial new out about there's little you contributors see just Dave, Is just a perspective know a seems That's to lot And it then product you It meaningfully, ApiFix, maybe mentioned Can you're how we that of you more these flex bigger the I going? of a or us some of of And should

David Bailey

volume -- stage, would registry is of from year time next COVID in Yes, expect still We XXXX. the cases certainly say part next would to surgeon revenue on in growth. think good ApiFix to similar into registry Certainly, of see that said a here we of Sure. ApiFix, I from some I movement cases. terms with had at been and with a kind of that and sites. you XXXX expect commercial Sure. at be But and see the We've of that fair point doubling sites particularly closed volume of in more has to respect could this We've really always now year. fits registry it's probably early starts the very to that volume to RSV. this commercial early to contributing expect of with

that because So sites. a fact are into in the in we're of they're number commercial doing cases registry not going

bit. next a grow, very little we're the expected down pleased seeing. year, seeing overall, that extremely ApiFix But and slowed we're the that way with results we're pleased grow we're with So to

for point I be we'll product. to will so X-year that be next And year, another hopefully also results the able publish and inflection think

pleased on in XD, companies world derotation organic also out. -- stage. growing growth we many we're some the new really R&D, Not these the spine business of see but As the the on work of that's far this think instrumentation in scoliosis organic ApiFix the at doing XX%. product of And certainly XX% some of at launches, getting to as too backs

the The side, be So expect drivers. Pega and next constant XD screws. when derotation year to particularly growth year, of Obviously Pega to both driver. expect work We cannulated inventory, next that think And see be next we we a the PNP to take a is drivers. with Femur. PNP a going doing with on behind to quarter right expect first market-leading into the get growth more Tibia see MDO to scoliosis to we're would it. that And able we we we're We then take lot combined real that complex then be expect year, continue believe share to get we to technology. ApiFix the share next which and year. be comes to

just a lot we to positively. to sales impact continue force to think customers going and I continue give So And new business about technologies talk our the are to our there's that there.

Operator

Our next Stifel. comes Rick question with from Wise

Anton Heldmann

for It's Anton Rick. on

Can So become RSV kind to maybe you like fully million sales throughout it larger like on of through? kind about XXXX elevated kind the have worked first, it positive backlog tailwind talk XXXX. to volumes pediatric And when perform weighed ability you last expected bit of XQ, could U.S. quarter now a you a how be performance? be hospitals' talked U.S. RSV that about the of to Has headwinds Is do think us for procedures? a procedure $X.X rescheduled impacted the backlog? backlog deferred

David Bailey

backlog. second built hospitals that the at at full was doubt pick the we operating And And extinguished steam like and we Yes. into certainly, know our there. have there. magnitude again, to right that summer, stage, half U.S. I'd the tilt were based, It's on this outside children's would what very expected there's up of that it some harder we say guide I it's felt to is mean, We in of saw we difficult that. not really no the throughout our are now. determine starting

We us part right telling procedures. major of are scheduled next out they're the now surgeons summer that elective early have anecdotally year with through

uncommon is that the so on now that, another right is And fairly children's really was good, indicative side within and that just of stage these while of on hospitals. capacity one

backlog the probably growing. So is

we difficult back to XX%, us stage and very environment. is, the quantify start Fred really can at I particularly that is tailwind XX% when time capacity, point. when would XXXX, complicated we are hopefully this this having see particularly but for these operating trying to to what get this a think I hard I And a quantify have that hospitals backlog at surgeries. see at to of normal guess we a operating more in it's for

Anton Heldmann

it. your then remarks very Mary's Got the Okay. And St. prepared about XD, RESPONSE encouraging. on was pull-through driving placement

come be further year? currently could there it guess go? to left think we that placements done On systems, to low with how additional Can next any your accounts for for to there? hospitals call I How give see you're of was XD target kind through mentioned demoing what's color much I penetration. pull-through you you last seeing the them convert? strategy us And many OP could additional into systems

David Bailey

question. a it's Yes, great

number of of cliche, would line, of a accounts, are the say, accounts use with are yard goal literally I So new on on key we RESPONSE. the to the number line relatively a X users key those here and

so with signature longer it's impact. XXXX. stage. an or of placing will a suspect we're away units we we're contract. Certainly, on we than But these at have so this expect a It's this the in taken I have that people expected. some And lot from same would of boat

exactly expect to be more you're And in that year place place and to units units units this able acquired We XXXX. and then more acquire right. we the

they're side, unit do the had even RESPONSE that accounts they're the contractually X right placement. product. have before no now or on a in ours through using now X using but our that to exposure RESPONSE. We RESPONSE scoliosis They And system literally were T&D of obligated they're to customers

next in really balance uplift would the the of well choppy a to XX% the we So throughout due the like these types XD, QX, even again, things growth And certainly that what in there. And expect ApiFix, see we're I of as continue balance year. we think year XD of organic driving saw as environment. XD, that positive really we are seeing to

Operator

Our with next question comes from BTIG. Zimmerman Ryan

Ryan Zimmerman

on the fourth follow the up in Matt's I set bit. little RSV just XXXX. it Given RSV how guidance for confident for a volatile fourth just make you with the like accounted question do guys quarter and to of you've that ask you that's is, and Dave, Want feel impact quarter? sufficiently on want to feel sure full

Fred Hite

started RSV, at years It seems this and mentioned, past. trend then well. year the CDC down great than about really, Dave have really if spikes look fast Yes, it really fast website, as earlier on you charts to comes question. X the as months

we be anticipate fourth down the guidance reflected as in confident that quarter, anticipate, sometime we well feel that quarter and the before this us that fourth first in impacting fully end have so will business. recovering the the quarter. And we bit the unfavorable to would that and going quarter. back fourth as can of start that's And the behind get we FX into a pretty We hopefully, the then in the come starting

So good you question. the and it included We will, think bracketed, adequately in guidance. we've if got

David Bailey

becoming and I are honorary virologists I think here. Fred

it's accounts certainly a gauge have been to to try we conversations our impacting so them. lot in of involved And with exactly how

Ryan Zimmerman

appreciate to though I even helpful, I I But that's because growth. disclosures ask No, call Yes. -- the couldn't on I want it, organic tried. thought I clearly about

asking it's for think been a for have investors a OrthoPediatrics I question on while.

in you slows from a that than kind take notice just What run from the million, over the did M&A The guidance. M&A one, And through did terms in of could expectations? but your that up better Just that was talk contribution kind Is little -- your seasonality? this $X of Fred. rate year bit, little about quarter, you're expected you do X, you next I of what prior contribution million $X reason so can we Then around maybe the there December. me implying that businesses. thinking million $X a Is down? why and bit a

Fred Hite

Yes, absolutely.

we agents. better once doing than in As both expected, the into September, got sales of hands the mentioned, domestic businesses our it of particularly are Pega month

those the business. quarter seasonality with pleased as third businesses same follow very so And legacy trend our in our Both the of performance.

have kids quarter in back fourth third in know, you as gone quarter, school. the are they obviously so are the softer And sales the than the to typically because

the by And million, that's that the is businesses are and these of both exciting, these our that pediatric growth business included and versus $X.X Listen, the in so really the be the that both businesses few correct, reduction very overall faster just in for which are beyond you revenue all for of there. seasonality XXXX of $X business is overall the of million we of than growth driven years. will anticipate probably included, more a

the and tail into Pega Dave with So the we the the launches, first half and continue next for second of And into start side, time the business. That a as second deploy Brazil side, opened of getting we MDO in really mentioned, first sets it's continue deployed. to the product year out that quarter matter probably as quarter on will sets in on them. the

lot We distributor Brazil. They historically. not in have a there of relationships were selling

to country correction have to to and open so encouraged clubfoot And that more come.

Operator

Brodovsky Our comes Truist. with from next question Sam

Samuel Brodovsky

can reasonable so sort of is acquisitions. all on increase XQ? a between it the little And to out you parse the Is that sequential million in mix a between more I'll maybe MDO, for think -- there flat bit just or from an the -- $X.X then X? there add one at

Fred Hite

Yes.

about half combined, businesses of it think half I the it domestic, was OUS. was of So

business, outside and we growth of Pega of those saw again, our is MDO anticipate U.S. both within we And international from that nice are the continuing. businesses as So as both than about more legacy which the well quarter, XX%

Samuel Brodovsky

with that think about maybe year? that think Okay. success, for we is million reasonable And rate to continued next run then a revenue, is if $X.X-ish just MDO, the like that on XQ

Fred Hite

this I that next think for year. for on reasonable year. should grow It that's

Samuel Brodovsky

just Deformity a and algorithm it, mid-teens business? about to And we for we performing higher been call the Great. level, how to Deformity the in has about basis, there Trauma think that growth. Scoliosis and growth, organic really is XX% quarters helpful. at should the then past organic the Trauma on some get business. businesses be when an and XXXX going Or to acceleration thinking Is the beyond? That's and well in be maybe X

David Bailey

with But particularly Yes, We fantastic of to sales are to accelerate, as quarter elective would that T&D Obviously, more I normal our as deformity to Trauma business environment, side. the the grow to got we and Orthex, balance to north get to -- that we've to combined with had in And of MDO has business Cannulated capacity on big and combined It the it's with think taking everything throughout the to PNP had combine XXXX. business, Deformity when Pega has going well I -- in share again, And that, and devised the XD, rail, bullish grown you expect organic expect on The that external the impact. and scoli continue business -- franchise. all drive normalized faster. fixation would again, the a continue back Screws, going we a growth faster. by correction on growing expect scoli grow. to a ApiFix growth XX%. is a we the on continue business we when we've got now environment, very historically about and of

Operator

& from comes with Needham Mike Matson question next Company. Our

Michael Matson

I the what wanted to understand related that impairment. ask was to. about didn't completely trademark I

Fred Hite

the Yes. on both of million the ApiFix. the Both impairment are $XX trademark accretion, related to and those

Michael Matson

Does have or sales the lower planned that been imply expected you for? Okay. than that

Fred Hite

Yes.

a analysis a accretion had well. works forecast, we a we So in is that anticipated, who it then analysis, XX-year as to the [Technical party forecast, through that was impacted flows that which valuation the than third updated is to Difficulty] and forecast, and lower through provide way that And completed goes impairment, here September. and actually, the

As an of earnout a XXXX. system accretion it's payment, reminder, is April the in a sales to related X-year so

Michael Matson

were this what mean you -- to obviously, And a thing I launching degree pandemic. Okay. during

be any were mainly to is or not well that mean, I thought COVID, there So as to caused slower or do other there it it issues terms you ramp? maybe as the related of in

Fred Hite

obviously COVID just when we didn't were know more of to would we be years I we facing much bullish environment. say a going that X were

pandemic, our So really substantial the relatively think and no the quicker. the small. the expected first rollout this though month a term, standpoint And what much filled we scoliosis still from view our business to think I that it's we business be when I is of during acquired doing. it's in growing in change of we way, our registry and obviously obviously And technology even this long have everything

given think it certainly impacts the the the I and probably else, business, everything valuation. for pushed impact out of and this that expectations pandemic a years, that few

Michael Matson

Absolutely.

I'd term, companies. then that I business, as just of had a for few merger in trauma admittedly. deformity the it of views longer pediatric of become some companies maybe? is than seeing are and out in I on player But the And they Okay. with more one they wondering probably some this probably just OrthoPediatrics. Orthofix could what the deal and probably your Orthofix know there sort mean there going that larger imagine the disruption SeaSpine. we're area spine, I'm in to risk a be means But in more there's pediatric terms what is market the of combine And

David Bailey

Yes.

trauma but go. arrangement, scoliosis well work the with upfront concern was were that there. XD technologies of full and just just know we SeaSpine that this very that doing the was And partnership make biggest still develop a concern we Our that all quite and the -- deformity in we partnership to management sure not that's And the confident on limb we're side, biggest had on to ensured the in we're a how strong go very just terms full side.

places, sure revenue going our happen standalone So on My didn't an see particularly if where with is may some our guess, as the company. they nice States, as with particularly I there, United was can't I us to on of company. there expanded opportunity into they or growth big this provides I -- impact And acquisition. what's impact spine that footprint disruption, some opportunities, won't integrate international but particularly think suspicion have outside real to try a probably adult impact a that us Orthofix are any post-Pega comment for some

Michael Matson

you're you're finally, look just major with kind check wanted inflation margin where in to supply And then really what inflationary of was, pressures, regard and seeing kind just any the but doesn't of your like gross chain. on Okay. feeling given to

Fred Hite

it, obviously inflation a a I business but and impacting margin pockets there's Yes, set mean, nothing would some that's suppliers. of and that correct. that little the deployment for transportation some or we leftover from million problems by legacy one The anticipate the the future. in of get is lowering dollars into set in we some or that here out deploy our are absolutely trying to few is dates of the the last from today there, a moving before few numbers instrument suppliers, deliveries again, can

of deployment year. shape. wise, the push next But that'll inflation good some So into in we're

Operator

this time. Fred to no turn to at I'd over questions are There for the further any back call Dave closing and like remarks.

David Bailey

to you. talking look you some Thank Great. And we of forward to investor at several upcoming conferences.

Operator

This concludes the program.

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

OrthoPediatrics (KIDS) 2 Nov 222022 Q3 Earnings call transcript