Earnings call transcript Q1 2023

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Operator

Good morning and welcome to OrthoPediatrics Corporation’s First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of today's call.

As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Trip Taylor from the Gilmartin Group for a few introductory comments.

Trip Taylor

today's joining for you call. Thank

the With and Financial David President are Executive me Officer. Officer, and from Chief Operating and Bailey, Chief Company Fred Hite,

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

discussion of the filed X, a XX-K report risk For March you factors, was to Company's on I review with which annual on encourage the SEC most recent XXXX. Form

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

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

XXXX. circumstances to no call reflect of to taking as the content undertakes the X, update of broadcast required or time-sensitive call. In Company of addition, is or the by the obligation this contains Except place only live date any that May events today, as conference law, this accurate information date revise this after statements of

David Officer. Bailey, turn to like Executive call President Chief and would to over I that, With the

David Bailey

conference you us our Thanks, on Trip. first quarter joining call. XXXX for morning, Thank Good everyone.

thing quarter that XXX,XXX and now earnings of XXXX. top our to right As Orthopedics of for MD additions Doing priority. in calls, we Since Pega first the I'd kids. highlighting have helped Medical, like we nearly almost and children inception, the XX,XXX remains start with children helped the by begin all we

of quarter growth to by revenues first XXXX, year. of first growth start quarter and XX%, compared we revenue million, representing than encouraged strong a the generated the the to expected We're In of the better of $XX.X XXXX.

of XXXX hospitals As a year. the we've in continue headwind throughput, quarter levels we early high remained the half but some eased the throughout of cases in the back and RSV negatively progressed. to also staffing headwinds shortages record children's impact QX discussed, to expect as continued Staffing

main our deliver MD Scoliosis Despite from results the and challenging execute correction environment, the very with & quarter and included limb across elective Deformity to businesses. continue drivers The strong strategy Medical. Pega contributions and procedures, the strong in Trauma we both, and combined scoliosis Orthopedics deformity

underperformed growth, ongoing distributors, Organically, which impacts. due by to domestic growth FX slightly outpaced purchases and stocking set of timing international

throughout the to expect we However, and XQ improve year international in as remains the underlying demand business strong.

representing Overall, growth full pleased we the increasing the strategically XX%, of to XXXX. $XXX guidance year compared to million and to Therefore, with our story. revenue million, start our XX% positioned the for to we growth are are we successful year continue are $XXX well of extremely believe to

demand summer. our remain second meet and the quarter unpredictable, in QX second experienced Despite remain into heading late impact our throughout cautiously hospitals rising success, ability the quarter. Staffing could the we optimistic summer and usually dynamics the typical to seasonality and

and quarter we structural until difficult of tangible the our we outlook. conservative will comparison evidence pediatric within the to of the remain with XXXX see Given second improvements market,

deformity correction included and and driven $X.X for by prior year we of MDO of Pega period. performance generated quarter by electric strong to March. softness XXXX, offset was first the the and quarter million global the procedures of limb In we of trauma MDO in growth in compared of Revenue Trauma revenue XX% saw return Deformity Pega that Medical. segment. revenue rebound & combined total million, of approximately representing our revenue This $XX.X to Moving growth the

strong & products Cannulated Trauma as were continue in remains quarter. Demand the Deformity Deformity Trauma PediPlate, PNP market & and the high gains our portfolio. for the correction products, Defo, Femur sales we share Screws pave particularly of entire across

each have that to growth our their integrated, Now to growth. MDO be Pega ability and contributions we been continue accelerate overall to fully pleased with and in franchise

is With bolstering addition products and growth. and new into existing of respect new the the MDO, to markets expansion organic markets

to new franchise which are nonsurgical represent detail pipeline opportunity, products portfolio. of new I'll shortly. and The excited compelling provide expand more the a cadence and launch our on We products within MDO launch

trained. product Pega a the first access rapid for expectations. pace products the due is quarter, As exceeding almost as to very of surgeon fully that growth a sets initial by higher sales Medical our the come Pega at product expanded supported The force grew existing has sales of entirely are portfolio. our now the in percentage

in yet from U.S. sets to have a the major impact see new We

the plan Cannulated PNP in such several Pega we However, DRIVE launch Femur, Rail. legacy second deployment sets significant to and a products OP alongside quarter, new Screws as of

position ramping their these have allowing commercial deformity OP our footprint. and as team to in and meet that up with by customers tremendous needs. leverage pediatric MDO Pega franchises growth products done global us comprehensive advanced our patient of in leading job further has we all a surround portfolio a strategic trauma our The

will XX% We revenue continue rate of growth XXXX. excess growth expect to in each organic of corporate normal in our these drive franchises

by domestic of reflects period, RESPONSE and Scoliosis XX%. of steady elective This the in and improvement share continued of very quarter with performance gain In prior XXXX, compared revenue growth growth first to million, a we Moving $X.X the generated representing the environment revenue year XX% the ApiFix. strong of surgical business. highlighted to

few a certain international revenue International growth points set comparisons blunted by a timing overall and of orders. tough to due

be However, we the to year. temporary tailwind to growth a for the remainder become and for expect this of

RESPONSE, XD We comprehensively are addressing ApiFix, surgeon proposition pleased to share of market and driving of see needs the the and gains. value combination

to increased the Total users in period. year compared prior QX meaningfully

strong ApiFix. the in new to deployed scheduling fusion quarter. have first units growth in clinic in quarter, we have despite see XD affecting grew We started incremental or ApiFix early where RESPONSE visits the surgeons negatively our accounts, continue using

As been quarter. a pushed scheduling many second have into the of result ApiFix challenges,

Additionally, data, we to progress which will make continue development and ApiFix's the of KOL lead presence. to clinical support stronger on podium

Specifically, at the one XX follow-up data recent from presented, early year patients the POSNA experience. meeting, highlighting positive was U.S.

the become is We with more societies matures, continue into will ApiFix where and comfortable to surgeons as presented data practices at their meetings. expect scientific fits U.S. increasingly

we and performed received neuromuscular FDA for QX, Surgeon this case to and in RESPONSE Screws first Cannulated improve fixation. outcomes expect with in requiring our Late pelvic system feedback March. for approval scoliosis patients very positive, we the was

will to Additionally, RESPONSE believe momentum support power and gain the disposable scoliosis limiters share continue early our within deployment fusion torque We line of extensions portfolio. these underway. is

deploy we Overall, portfolio, our users system, surgeons are and to RESPONSE our to children's fusion as continue intraoperative systems hospitals advance new and scoliosis increasingly add navigation XD attracted ApiFix. of

as share expect All to gain, is continue we and execute. we of this to that leading

international MDO on legacy contributions & the period, of $X.X first by of international dynamics, purchases, large and our XXXX, generated Deformity year second Pega strong the the year. performance FX to set improve ongoing million throughout international. driven remains primarily to the our the Scoliosis timing business. impacted distributors quarter Moving quarter expect Trauma the million orders Demand $X.X to we of In negatively and products of sales. remainder prior compared for stocking The and the the in and by we in international revenue

to new product development. Turnings

approvals, on received penetration and meaningful The as FDA product share product represent for progress quarter developments launches first advanced each full new be these launched long-term made market deployments, gains and several incremental R&D their a to development. initiatives. new products quarter expand. believe proved drive of We very We scale product to successful accomplishments opportunities and

Deformity Rail. integrated new Within fixation & business, span initiated Orthex our the deployment mechanism, full to is system. to with unique, options of Trauma a It designed scale mobile hinge DRIVE and includes external the product, lengthening joint, we integrate our a

of in quarter. We Rail deployed the be DRIVE set to large volume expect second of a

domestic software and imaging. a prior FDA This full cases, scale our and Orthex process technology Additionally, their we planning pre-planning received in of XXX(k) and Orthex will are surgeons precisely based case approval data and efficiently advanced for assist launch. the on

development in R&D pediatric PNP the specific made strides Finally, entirely Tibia new plating an system. of and the solid team

franchise, product in we new first for FDA guided the area the beta the in weeks. received Pega our approval Inside XXX(k) Gyro. our July last [Ph] since Gyro launch called the acquisition to several growth begin the next of expect We

the world time. product to educated way, prospects. inventory are new portfolio heavy found about we're around We're the about a for of on deployment excited our growth organization. first the surgeons introductions the as Beyond treating all global busy their being products many customers these With we launches. sales through Because we Pega entire are the Gyro, introducing

launch move use side, standard bracing in major March MDO the first treatment The On This position we'll of DFX the move product years clubfoot take specialty it in beta completed and gold and fracture of the expands bracing in expands place the Mitchell introduction second particularly represents MDO within launch team brace. quarter. to further we non-surgical is non-surgical brace, profile the several the market of MP come. Ponseti the second our bar first in executed conducting launch expect full the of the franchise, leading nonsurgical to is beta our bar a Mitchell for also the new meaningful, we've the clubfoot in as be and franchise, Also the the and several the development Ponseti quarter. femur

the front, March. case Scoliosis as On and RESPONSE performed the we Screws received first for FDA XXX(k) Cannulated approval mentioned, our in

the system neuromuscular expect was first RESPONSE launched our that We its XXXX. of in of this use expand system kind will

RESPONSE off power our placement both easier rollout disposable the we much and which early addition, make customers. final In screw tightening will of for torque, kicked and

longer our onset this, as rib within and continued our and such our run. guided growing term progress Beyond on all initiatives, development pelvis, Scoliosis growth, of we great early

Medtech analytics to OR briefly software, care ultimately platform decision improve for will want environment. streamline Concepts We've in platform in this discuss early surgeons combines perioperative an increase to acquired the The that resources drive I Medtech for provide making pre-commercial closed interpretive will bolt-on technology help enabling yesterday. health stage In we acquisition better Concepts. believe data improve hardware, is efficiency the and valuable platform making, to and solution called support care operative and Finally, efficiency a kids. decision room. an the future, designed operating we

we we market much Well, platform from systems revenue view FIREFLY and the support the years expect XXXX, an opportunity, gains implant to continue share contributions as our for to come. this in material XD to in don't like

an and Board team, the a XX-year Kevin to of from previously was Unger, our has stepped as him OrthoPediatrics our are the Medtech us down thank of to enabling behalf time We full working joined drive strategy. Directors. excited technology member Directors, his for Board founder, of We I'd Board who look like to forward the contributions. of Kevin the entire Kevin welcome with employee. Concepts OP has On all to to

commitment and the unwavering XX. hands-on brings education orthopedic the That train to success our period to us from to over In in next for to sessions training first an training pediatric support grew education. to and surgeons. healthcare help pediatric year surgeon providers orthopedic we prior XX training the generation conducted number is of Critical of the and quarter, clinical

We also XXX sessions. a reached global product on Combined, basis. over we conducted XXX nearly individuals

We challenging pediatric a problems, EPOS in is pediatric XXX presentation Medical our the surgeons. symposium face. studies attendees scoliosis by orthopedic most most Ireland, complex EPOS Poland. held the the to largest Orthopedic moderated were their of practices. and quarter, of the orthopedic nearly held osteogenesis we place Pediatric surgeon, first Scott we pediatric once Also OI, one The Hoffinger. leading course contributors surgeons pathology or best a orthopedic surgeons. Director the Krakow, discussion That Dublin, highlights Dr. case took were by course in course IMS the European and again in imperfecta supporter engage on where attended own and Furthermore, OI pediatric about or of surgical facing experiences was discussions Society during

largest X,XXX industry was meeting, surgeons. orthopedic pediatric Just we attended last POSNA, week, over attended by our which

multiyear We are clinical as education highest commitment unveiled a society clear commitment very leader training. excited orthopedic of to pediatric new, and is in prestigious larger to establish This what and new and is continues and the supporting its the level term OrthoPediatrics, to this have longer membership.

we contribution everything may we our it greatest as orthopedics. of believe way, conclude, is can do effort market the responsibility this in our our of the of all. the To advancing collective to entire surgeon support to field be In leader partners a pediatric

Fred to over I'll provide financial the turn that, With Fred? our to results. more call detail on

Fred Hite

Dave. Thanks,

first XX% of Pega the revenue quarter was quarter legacy as we first driven revenue to was MDO In from increase $XX.X Growth was Deformity million. of $XX.X well in Trauma and quarter contributions organic driven Our of and by first MDO gains of sets to growth Medical products, primarily primarily the increased addition share from million, the XXXX, increase as quarter more portfolio of deploy well of Medical. across XXXX by in continued our XXXX. quarter as XXXX. first the the as in compared a the XX% Scoliosis U.S. quarter Growth as million $X.X surgeon worldwide and adoption, & Pega continued and

addition the across in representing the was as on growth XXXX, of international of offset total sales. regions. XX%, quarter growth negative impact the majority partially compared primarily first by ongoing the of MDO In driven Medical, generated year $X.X of by revenue the Pega Growth million, to procedure prior we as our quarter period. of FX of increased was OUS and volume the well This our international

the of surgical the in Growth environment $XX.X by MDO quarter increased as primarily was quarter & year a compared Medical. revenue normal Deformity to the prior In well gradual the XX%, of as period. Pega elective and million addition first driven Trauma

positions. quarter managed $X.X primarily prior to year compared U.S., sales of as distributors lower in cash the of to million their by year-over-year XX%, stocking In Scoliosis offset they temporarily set increased the period. revenue was driven international sales Growth increased our by the first XXXX

to We trend the expect reverse OUS remainder year. for of the this

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

of $X.X million of the compared Turning quarter were deployment. XXXX, set to $X.X sets million in consigned in quarter to of first first the XXXX.

a metrics. Touching on key briefly few

decline gross variances in of XX.X% gross XX.X%, primarily first quarter the margin compared XXXX. first in the of price quarter first favorable first For quarter in which to slight of of margin the quarter XXXX, driven was did repeat not by was XXXX, in The purchase the XXXX.

XX% million of the million MDO Company. was or increase the of the Total in $X.X ongoing $XX.X driven increased of well from operating growth of as first quarter by in incremental to to quarter first Pega expenses XXXX. support $XX.X XXXX personnel as addition The million and required Medical the the

by million the commission was increase increased expenses quarter in or addition of first million recent XXXX. increased to of $X.X sales Sales with acquisitions. expense our XX% and the $XX.X The marketing driven coupled primarily

and first General non-cash primarily Medical of to well the driven or expansion and depreciation, administrative resources in of XXXX. quarter expenses increased was G&A Pega $X.X amortization MDO an business million personnel the to compensation. and of as increase XX% the continued increase the addition $XX.X million and expenses by and in the including stock-based The support as

expense $X.X $X.X quarter $X.X period to increased $X.X XXXX million compared was value of contingent XXXX. Total to we expenses quarter fair adjustment or the of in year. quarter charge of development first for and to million compared first same other In a income of quarter the the Research million in XX% first XXXX, consideration, gain million the a on of recognized last as the for first a XXXX. the

We million of the reported of with in on $XXX.X the $X.X in of quarter available adjusted cash $X.X ended line credit. investments first first to loss and an cash. million We short-term first XXXX, We maintained of loss restricted strong $XX compared for the quarter our quarter position EBITDA and XXXX. million a of million cash, a

$XXX XX% of MDO to before compared roughly range assumes to prior full We their became on year Turning to to in million acquisitions The million, million. to revenue $XXX from growth the our million of contribution XX%, representing guidance the expectations anniversaries. $XXX $XXX $X.X expect of revenue now Medical, to million guidance. of be and year-over-year XXXX organic Pega

growth We XX% expect of to organic XX%.

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

between EBITDA $X expect to XXXX. continue of to we million $X generate Additionally, to in million adjusted

over remarks. turn some the for back Dave call now to closing I'll

David Bailey

Fred. Thanks,

culture our our is that and successful cause of success. and brightest impacting a XXth I of best kicking Following the lives to all dedicated our attracting everyone our quarter, first want still off the company, and remind children as underpins year to

share has been a to Our of and the medical and awarded as children orthopedic has culture cause of technology commitment recognized employer companies. of with lives conditions to improving distinction that Top XXX state again fostered the a based Indiana, a in Warsaw unique

And continues for company for corporate Xth only responsibility. proud does support of shareholders, recognition OP but this time. children, you are be many things We to should the not its a has proud received your great that social so of as commitment continued

turn line Thank you. to back the for With any call the I'll open the operator that, to questions.

Operator

Instructions] question from [Operator comes Wise first Our Stifel. Rick with

Your line open. is

Rick Wise

I second in most international, you. we need -- volumes and particularly to And from or Good rest quarter Maybe maybe high-level, be? they international starting maybe through Fred, you recovery know solid just the how the morning, do and just us lot the of back? the there. separately. the see of the Are feel Dave, feel great maybe thank about -- talking perspective. U.S. the this why Talk and the confident a are year where quarterly that Are gentlemen. like, at off? on starting at a flow, to we there's quarterly talk rebound. you at recovery maybe looking confidence Your the and talk about us to about a international flow high-level, rebound? But

David Bailey

Hey Rick, thanks. Yes.

little things really of get a great chop until is about normalized So, we not growth we'll when during of what super a of much, waning a quarter, a here of it to at much of month the more bit it a level end. been in I bit month, illness. portion producing day, obviously, RSV environment to see the I Certainly while, by the respiratory choppiness But -- by what still month. affected I would day think think saw the I first say the from comes completely from call probably would and quarter, normalized to what flow as the think macro it's hasn't part for the we stable -- quarter, month followed to in continuously

are the not reporting think I children's But side, seeing. adult we out I the throughput. news, companies some of as have hospital that's improvement we're on think other hospital seen in the -- all that

hampered be able surgeons’ and We the to with long elective strong capacity throughout a despite us. procedures through, get particularly really quarter for elective to still driving performance time get remained procedures the

you And so, sustainable, And respect will year. we as that's until have we we back we I remain everything and guides year to thinking QX challenges pretty pretty very, we left have anticipates enter of last with remember We into and second if see, completely I staffing. we tough think the like earlier, conservative with a what we to was year, where the half really quarter, staffing comp, our I structural obviously said want still did throughout change RSV that think very see particularly in the wasn't it a well. normal

changed, So, just the the lot we move think of consistently, fairly we August. but really months cautious summer optimistic our through a capacity and cases July hospitals staffing in busy bit June, elective about to of see situations I remain a

I on for And look couple the And got to quarters products, restock We've the particularly could better, fed of through really were like. on that's orders, not but going wasn't what a because think scoli impact it a confident international not a but positively international and very high. just think that the scoli big would I timing, -- how of side. the orders international. three we demand good the really substantially that's I at year. to demand the looks say particularly due but some thing pretty disappointed even grew feel obviously about QX the comment away. a primarily last MDO but business on related Last was, entirely would International I little we Pega,

Rick Wise

helping about And quarterly level. always maybe think been great flow here. you've just through keeping at us the Fred, high seasonal

the for better than -- we off a how how think about quarter, have a a plays nice, the particularly second perspective beat raise, and you do year? from started rest the expected, have cetera. How out about You've the second think it of would and et revenue you

Fred Hite

being all season then Yes. the of quarter the by our We're year, is quarter the the out than That's followed that. assuming kind Absolutely, the it way Rick. the summer be. to still of And anticipate anticipating just we largest second the quarter, below second plays lower fourth third quarter quarter.

indication again way. when by that scoli there's But year. we'll the it July, of we severe then largest the shouldn't surgeries. is correction June no And that as see. the really that drives play kids business, this In would followed and are August So, month now, -- right June or as anticipate out well actually deformity out school happening the

Rick Wise

And sorry just more to here, just to sneak in understand. I sure make one

get Fred? didn't. about dollar going Pega second quarter Obviously, expect about that additions perspective, should I you from or grow we number growth? year-over-year, -- year, we totally do you're this quarter, How think you're the comment those business ex the positive second still MDO Your the to you have what a Can report saying. and

Fred Hite

Yes.

kind of to great everything we of aggressive year, and the thought number. to last very first was thought growth the first quarter on had side. the second normalized domestic back the as we or was That third international I started fourth And point, quarter. the COVID children's back as then, quarter went filling RSV the We hospitals. impacted quarter slowed And kind as in up a well negatively normal. growth sprung Dave's so away, think and to of what side,

a so obviously and add just second Dave growth quarter on stop because are comp, the strong. calling which business. side, the excluding Pega, to to was growth we'll going But think organic tremendous MDO I tougher So, out the

a quarters. Just comp tougher fourth than and the third

Operator

Ryan BTIG. from comes with Our next Zimmerman question

Ryan Zimmerman

A I me, couple if of may. for questions

disappointment run quarter, million be the the think annual an basis, fair out they I viewed through highest as can really of those Is MDO call or $XX it were a balance they it of you and kind given and is, started The investment since expecting we've to Pega nice that had combined and inorganic. on deployments assume you're year? at, the a set would reporting that the seen, first

Fred Hite

pleased Pega, with tremendous MDO Listen, growth both And and their we’re year-over-year from that continue. we numbers. very anticipate organic will

would we higher As pretty growth the going be like year it's be we good the going year, than what those last in XXXX. very XX%, we on year XX% to in range. here deployed very continuing earlier as stated sets is feel the into very strong And both anticipate that to not growth businesses. for the to explosive but And you're continue close I think get year, throughout of aggressively about next

David Bailey

Yes, Ryan.

getting by way most is sets sets the the of particularly a Obviously, organization. impact the Pega in are But domestic. what field growth not particularly launching a bolus was And to on kind more month-to-month, this think big stage. we're been I the And of has see out there. selling have I came we just the don't out. in, U.S. that's at week-to-week, ton side enthused really the we of

next group surgeon started surgeons in because group. is that more it's the not particularly And demand. instantly strong feel confident sets really products. driving I that calling next this, quarters and performed the necessarily And Pega the be has the here, just commercial think to of sales for domestic much And strong -- think really the it's I with I'm kudos So that years really them team, really several and inventory. get pure could U.S. proud some three be the force how

Ryan Zimmerman

I the RSV And you Okay, to back $X to I it. million impact T&D maybe it’s the prior at underlying notes, $X you if had of similar look fourth my in quarter, When this then, look impact. growth, thing, a got quarters. other think million

if wondering thoughts what may what may kind I January. of you the made sale I'm have some your how of those may are, potential those But RSV the quarters? And or quarter few from up first in and thinking that there was the Thanks. know you you're the or may kind not will, balance of recoupment, through of up in So what not about made procedures of have you impacts. or about Dave, next

David Bailey

conservative is just consistent got what our fairly QX, with get what the hope We up think on we as this out pretty from late that, our backlog, say, balance much from make guide Yes. We saw just throughout QX a volume we back is again, It's got to in It OR that POSNO. point. EPOS. hearing the backlog. I back let's get less normal earlier, tough we're required I through customers from of log case just, to pointed time appropriate is

it's us so to for tough And that. forecast

And for -- side we bit was I in make QX seen but And deformity by saw in of trauma the a really really is what few rebounded it the softness think what trauma was a products. certain sense, in well. much we've but didn't offset aggressively quarters, in in example, that quarter correction some of our deformity performed first from that March. turnaround then business

difficult us going we'll in where the back the I directionally month overall, well, all the -- on couple trauma to said probably say but for additional Rick volume. I to know is it's environment months -- think makes -- in we year even of say come month this chop QX. next from earlier, there, to up pick elective over the I'd a it that for to that like it's So is going everything and

Operator

with next Matthew Piper O'Brien Sandler. from Our comes question

Unidentified Analyst

Matt. on on Congrats Phil the is quarter. This for

starters MDO to on million and $X raised Just here, for Pega. amounted the guidance, which coming from by beat seemingly and

normal side grower hospitals, And at a coming adult us same. XX% indicate be adult organic way. And you counterparts walk similar remains the guide children's children's least organic from the think might the I big between the you've and in So when a indicated results historically, see adult hospitals desire volumes are your the here differences on that? that something back conditions. to to structural market call Can your through in, it,

David Bailey

Yes.

particularly way the staffing if we in structural, talk I next But that think standpoint. think difference revenue and the we is of more procedures many maybe I'll for hospitals long a from very the between I a children's trained X hospitals extremely been the address the lost that going that and you time. children's there well common quarters were see Fred, have We on were adult about want to a see situations that lot that performed. of in the specialized, some OR hospitals, staff a in

complicated procedures multi-hour the surgical neuromuscular even going staff for it's example, level that so fusion when environment efficiency. to pretty nurse you're maintain into traveling a on of there, scoliosis going difficult a a staffing scoliosis And the a if And procedure same have. you're patient, plug as to member about do or lose is as to you that and

So this quite -- not versus we're extremely where aggressively the have and at COVID pre now, we've we're just where looked share throughput accounts monitored we yet. is a high not just in level there at and

do when much speed. change. bring we care, from a that repetition for And of person, reports lease getting people to staff. even a to health team. the kind specialized total get But to back it's ton get we're staff working easy But involve providers to that you their do hospitals hard procedures lose care that if obviously, workforce. team, members know Now to a are specialized people going care of coming it's and are that up up easier several our efficiencies one total you less I train into the hips, the

counterparts. And what commentary this is on hearing from so why different are we definitely that's our than I our adult think

Fred Hite

children's the I it of add just second COVID the hospitals. the like Yes. would half was last feels really year that for

several overwhelmed, think really issue but nurses, and completely completely to in start the you being adult on overall ago it was If years the not COVID created staffing with, just hospitals overwhelmed. those what nurses back staffing being

is the which lot some they're crazy a with I kind was I think us support, -- year. your they're being just the hearing, that for adult crazy. of quarter was different, and a of lot than in what that, the second the and from dealing definitely breath fourth catching of there just the for first side. working were staff the same throughput volume here not nurses hours. The was -- we're on quarter, in And the as hospitals half think, last getting in of vacation of

Unidentified Analyst

company guess through quickly the you talk it just an similar in this here like guys enabling you that tech you might say, for will vision exist that gears might fact tech to currently hospitals really a let's try acquisition. I product MedTech product for the Can an here Concepts can employ early. enabling and And brought on in walk between, -- adult differentiation in us that you the sit shifting piece. I children's hospital your the

David Bailey

who pleased on to have team, as a opportunity yes, have this the an health asset as well So take very find so very of side, we Certainly the join to Kevin playbook. is pleased things. implant to veteran are here the those digital to on digital in rare seasoned combination

of let's really are XD workflow, we where and what drive side, that think similar unique needs aren't volume, complexity about and that high see procedures, there near these total total surgical just gold Certainly, as talked that hip, capture in SeaSpine like the better help staffing, the aggressively mean, needs to hospitals. of frankly, procedures I say, the there's the of phenomenon particularly is standards we addressing with decision-making, terms I applied. a data our about on digital partnership it's children's see, no companies we the with

I a our think where see playbooks long having for term, that's lot of we customers. value

data intraoperative suite that to our to goal customers able solutions preoperative help better infuse an make in preoperative of decisions. here take Our is be data, to

capture don't use that that making get better they against better and anywhere. -- decisions outcomes to customers for driving ultimately, that their and better kids. and be able that can our outcomes correlate preoperative to all then they're see such data that We doing ensure And at anybody

long-term for a the huge in gain play value so types a unique big terms the overnight. is kind things. point, long-term orthopedics And of We the adult Again, of knees, think pediatric these reputation meets it's a it's that us. see share this opportunity going frequently we we of This think like used but could those business. impact the not for us, develop there's versus to technologies for software needs so and hardware entry and add being surgery, to of have be where hospitals hips, we in where

Operator

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

Mike Matson

looks were the in year. the bit gauge I like numbers confidence there. hit last a want with placements. quarter your the starting It to set the down year just from of guess, first to I ability just the for guidance the

Fred Hite

place have $XX full deploy year. that absolutely We million Yes. in to plans this

swapping the to and demand right places. continues from so out to past, As we're the we've strong stuff get priorities in the field said

that suppliers, and get delays we us last case, the As slight we're instrument some we year need confident year highly had into deployed. can that getting But getting we in one so deployed. last it this what yet the in getting

Mike Matson

powered you're in then that. detail RESPONSE that. something? you the disposable provide just learn powered tools, to about just Scoliosis assume the a just bit not attachments want more torque, just little could some but or actual And more on the Maybe product-related question I one selling

David Bailey

exactly that's Yes, right, Mike.

manually. We -- always You have torque our well you're got and have required as -- can it's you've particularly our it's -- and And it got manually. really for customers as be it an screws providing painful manually always just right. the set when -- screws we process, screws a placed

something so this our We've And few on a for number for -- years. working years. had been of a is we've a of number that

their We that strain that's on to where have tough. are recognition a a number there's shoulder of elbows our the pretty spot customers is getting on strain that a

to that stature as as more easier to well more as of implantation systems. standard and well applies so our physicians. on of you're in And small kit the much, allows efficient, makes surgeons our our it's set BandLoc system clearly power screws RESPONSE this as that And RESPONSE instrumentation screws fusion much a right,

Operator

Sam question with next Our from Truist. comes Brodovsky

Sam Brodovsky

the stick Pega Or there? business we for with through the First those should mirror just I'll about year one, year? sequential to businesses expect growth core and we seasonality Should MDO. the this of think

David Bailey

expect although of business, mere our seasonality the that the Pega nearly would likely most I Yes, would again, we'll see.

full We as because may with with summer Pega born and haven't osteogenesis seasonal perfect. gone not before. It just through be a you're

So shortly after MDO seasonality a probably elective less birth. it's is I as think scoliosis maybe our overall. obviously, that it's applied And not I has condition franchise. mean, as

particularly some we've than less seasonality maybe there, with seasonality So maybe our scoliosis little but -- our franchise. a seen

Sam Brodovsky

things timing OUS year? OUS items this Or the in And that sort about contemplate accelerated quarter through growth in the terms that driving quarters. of low then are being -- some growth there you Is for we mentioned there? X and potentially the set bar should of for to other the next think

David Bailey

quarter. of the we assuming I rate impacting for agree would rate sure. impact in No, be bar negative third We growth second it's bit in organic here on first quarter. the an that rate in us the see Yes. to internationally picking in as organically quarter and would this the a basis, And that growth would we're quarter for low fourth the impact little quarter, the quarter the and FX neutral negative third up a first had then first the anticipate compared fourth second, the for but still

Operator

Dave from Turkaly comes question with next Securities. Our JMP

for are Bailey no to the closing further call remarks. line questions time. David is like Your There I'd at back this over turn to open.

David Bailey

great you us questions conferences at as always, and appreciate look your forward future. the joining to and thank group call really all Well, our our you and from in discussions upcoming on seeing Great. you for

thank So, a great Have you. day.

Operator

participation. This concludes today's conference. Thank you for your

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

OrthoPediatrics (KIDS) 2 May 232023 Q1 Earnings call transcript