Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to OrthoPediatrics Corporation's Second Quarter 2023 Earnings Conference Call. At this time all participants’ are in 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. ahead. go Please

Trip Taylor

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

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

factors, discussion of Form encourage a filed the For review will company's which recent risk with on I report you today. SEC quarterly to the be most XX-Q,

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

on in measure measure non-GAAP the For measure financial most referenced has non-GAAP the the to this each of a financial included its release. call, earnings GAAP reconciliation comparable financial company directly

note as analytical not isolation, accordance tools GAAP. in have be OrthoPediatrics' considered the and or limitations as with non-GAAP Please for results prepared should other financial in financial substitute measures that

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

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

David Bailey

our second thank you and joining quarter morning on call. Good us Chris. everyone Thanks, XXXX conference for

over second our that record in by like XX,XXX remains of to start helped and we XXX,XXX we calls, the all success. XXXX, helped kids. Helping a children As the measure of inception, more now highlighting best since we have children begin earnings quarter I'd

to XX%, we our continued representing of the operating $XX.X within market momentum In we quarter taking record the generated high of a by revenue encouraged are of challenging of generated second the and growth first-half in growing XXXX. the Despite business we compared million, environment second hospitals, year. share the by of XXXX, children's quarter

to period against the generated of year XX% are while of second-half growth proud year. positioned million the comparable Altogether of we strongest deploying the again have $X.X of We favorably for the are sets.

are we experiencing are As gradual nearly the improvement where in environment expected, procedures inpatient month-by-month performed. a all of surgical our

insurance lower have As you volumes, may overall read increased have reported procedures. companies many but inpatient

recent average feel and Our lower the the than to environment. children's of consistent commentary observations we this continue with impacts historical are volumes in hospital

$XXX execution of gains to Nevertheless, and is strategy representing conditions. million sustainable Therefore, revenue successful growth we guidance historically our XX% of of share quarter-over-quarter $XXX to leading to XX%. regardless consistent market producing reiterating is of are growth our million,

Correction in Revenue to compared Moving by Trauma revenue first portfolio saw plating DFOS driver external products. and quarter Assist. the and strong driven a our system particularly The quarter. ApiFix PediPlate, a software the new PediFoot, the all from performance system pre-planning Orthex launched in fixation recently record we XXXX, of were year we by Pega launched quarter prior the performances revenue period. our the XX% of of to Deformity the in $XX.X total generated strong and and representing segments, growth second million, growth led XXXX, in was quarter in Deformity

few than cannulated the trends. it growth has PNP/femur grew Although dynamic last continued quarters, screws in the slightly trauma slower franchise and their

to reach Pega nearly the yet expected, through are of Additionally than stocking has better as conversions we revenue, deployed sales in potential and to Pega our early the are strong working distributors of doubling several just U.S., we additional agencies. seeing been full International product we now ever returns have its while inventory.

and tailwind solid strong second-half We a expect XXXX of beyond. become growth source of the in to and a this

benefit pleased this Overall, and revenue company the next continue several are we for how years to is with the trending. strong will very Pega

with developed to Speaking for it using deformity of providing Pega utilizes of Pega, acquisition, are system, procedure Montreal. osteotomy. the without unique treat a why team R&D surgeons, in June, and our innovation This on so as the in system illustrates This we way announced by R&D system launch limb pipeline. OrthoPediatrics' the tethering strengthens and need builds the legacy we GIRO reason guided another limited Pega pleased the the growth, new first

follow-on PNP/Femur. first PNP/Tibia approval, PNP/Femur about will see be growing quarter. third largest PNP/Tibia side the Lastly, we excited nailing after on product eagerly are and pediatric first are our R&D approval market potential. as late launch which tibial the our If of anticipating to will a growth its and case the trauma kind a modeled leading FDA largest system, our we deformity trauma rigid we successful beta its we targeting of trauma fastest the and system serve and the are in a extremely

the Bar non-surgical Within T&D our portfolio, has received which customer the highlighted bracing perform MDO Brace. response. expanding the by specialty the second business continues specialty In business bracing non-surgical positive quarter Clubfoot the launched to MDO well, business, a Clubfoot very Move

fracture in femur this as is much-anticipated final through We the are from which the several launch DFX launching proceeded additional team well eagerly awaiting of brace, products recently and Ireland, month. validation our as

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

large OrthoPediatrics launch and have in business our Now can bracing thesis year into space. specialty we slightly the than build validated more a will a and profitable that

can kids impact areas that invest customers much with truly in in care R&D presenting needed solutions. us Our help to are needs are several deliver that further unmet for planning and we the can

the portfolio capital-efficient represents and for in reduces continual need opportunity capital business our bracing the for specialty most growth Our deployment.

early While providing in and we the excess in see are years, we growth to $XXX new this next several very growing opportunity. business of a million exciting and

by the our strategy million, $XX.X XX% growth and a generated to of Scoliosis Moving business the revenue combined of driven quarter of second promoting XXXX, RESPONSE ApiFix, representing to compared of the continuation period, of placements. strength of year in the XD we prior

started May the carry June, usual summer. dramatically throughout and summer quarter expect uncharacteristically up forward the to in we second improved The seasonality to which started slow, show to in but

expect growth XD bolster multiple that sales pipeline the units to second-half of along in scoliosis and our in year. placed consignment with QX, also strong We the

to scoliosis We're in pleased period, to users of XD combination as of new customer and helping all prior see ApiFix, is enabling ApiFix placements increased comprehensively technologies leading acquisition. needs the usage and fusion surgeon Again, meaningfully, is XD platform our ongoing expose technology FIREFLY share RESPONSE the gains. to driving such share non-fusion value year surgeons to addressing proposition additional our for and market total RESPONSE gains compared the QX driving and new

among and users ApiFix usage in both growing, existing of terms users. is new increases

Our despite from new practice locations. revenue an to continues our absence scoliosis of largest sites three transitioned growth have as surgeons of those

will coming quarters. in normalize expect We the this

make support to believe the and ApiFix's progress continue podium which data, presence. We on non-fusion we to increasing clinical of development KOL will lead

these to see device of one first XXX POSNA cases podium just of the on the patients This pleased the X.X%. example, data to went these by five related ApiFix the from Dr. was of at presented XXX that re-operation are For and done patients year Haft. rate especially low showed given fusion We're in U.S. results, Geoff just

better we and advancements As the the expect we on learn get technique, even coming will more, implant make and curve results in further work the learning through years.

early we come. in the several Given see data, expect to publications the additional to quarters

instrumentation. RESPONSE launched On cannulated de-rotation front, Power RESPONSE we products screws including and RESPONSE the line R&D extensions, QX and in Torque, several key Power, RESPONSE

with During especially we surgeon a our products the quarter performed power glowing new positive surgeries about commentary each with system. feedback of several these and received

progress growth during Lastly, we on on suite our achieved of milestones products continued major EOS our QX. EOS guided systems and

FDA by year-end. product key expect submission this of We

XX% strong international, new prior MDO that Moving compared our products with growth, due $X of we XXXX, purchases on of $XX offset in by to distributors growth, the slower in to international of period, of revenue year XXXX. primarily driven by stocking by legacy QX were MDO generated the timing quarter high performance to slightly million second very million, delivering

schedule. strong, a surgical German sales particularly signalized in and progress were of Europe normalizing is in model sales ahead environment market direct bit a Agency our

to this of this We the are strength the pleased in with rebound second-half continue year. expect and

at While of Europe beginning revenue business to we are positively and this XXXX. the small in expect impact launching very our scoliosis this time, as at early as

starting of complete, the results major to to to growth XXXX Additionally, contribute will as products revenue stocking just are transition the to believe to this international very U.S. second-half XX tailwind to of a the markets. growth see U.S., sales we in our agencies beyond. of distributors of similar we expect that Pega be outside begin to and and in Once

And worked updates I our few toward expanding Additionally, footprint. to have distribution we've share. a international

agreements. distributor signed quarter, two This stocking new we

the our agreement for our in distribute expect is in contribute and product of is to the international second first them strengthen The we distribution Brazil. will broader OrthoPediatrics' of in growth and These second-half the year to Peru. scoliosis an presence portfolio beyond. And the our distribution agreements to

process received new of expect opening achieve MDR compliance related long to launch products XXXX. have thus suite the XXXX. Lastly, products to to feedback intention opportunities in of coming in Europe to the to approval OrthoPediatrics' is EU we've in MDR several compliant products and audit with positive EU the It our year, full

quarter, company, signals sessions to programs, than of field central our professionals. and orthopedics, helping second the advance that to to we To is are XX included strategy pediatric were goal and outsized X,XXX who training of OrthoPediatrics reaching education competitors. our which over support That continue we training brings and This a as training. events, orthopedic pediatric and pillar Throughout clinical held education. over to healthcare different us prioritize surgeon our believe entire support customers the of of we our educational

providing and our sponsorship the continues meeting solidifying membership Through combined pediatric equity unveiled our saw as society. have leading and support both grants position we are of and grow and belonging sub-specialties. commitment surgical prominence founded a surgeons our women's diversity, POSNA, POSNA May, society and support at we events and our group educational record and In Emerald healthcare. fording the the supporter scholarships in long-term attendance in in professional, for the inclusion The to to new across healthcare Nashville, of rigorous ongoing XXXX other affinity to efforts training

Retired to colleague Medical Armstrong case-based Dr. options we adolescent treatment friend. interactive Chief as into the technology celebrated Officer, discuss ApiFix Peter we Hall and our inducted our of POSNA he and scoliosis, novel Additionally, utilizing hosted Fame. in seminars was idiopathic

it Medical Board at a School. Fred, of welcome our being and Surgery I'm Orthopedic before Women's in as delighted surgeon at to Dr. Brigham Hospital George Boston, Dyer over Professor is Lastly, to Harvard Associate to of He orthopedic Directors. I turn well as renowned

to him Orthopedic of the clinical Combined allow George country. largest program, XX-years, as product contribute one programs as deep training our residency the our For of strategy. to in Residency was well program program the Harvard experience His the director portfolio orthopedic will

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

Fred Hite

Dave. Thanks,

$XX.X quarter growth of non-surgical by XX% of in was quarter across XXXX of portfolio bracing to driven well compared share gains increased second as second Our the the revenue million, as legacy primarily XXXX. quarter business. our worldwide Growth our specialty continued

was deformity the non-surgical product deformity of revenue lines, driven the quarter the revenue a scoliosis was We Growth product $XX.X well and the to the in products, product scoliosis million, in XX% our bracing. XX%, as business including total increase as quarter from second including XXXX. generated second of compared our XXXX. bracing $XX.X U.S. and and our delivered performance strong million, across by specialty across of lines, of within growth quarter our lines. Growth international trauma our was quarter non-surgical trauma representing

period. In quarter was in revenue driven the Trauma of XX% gains Deformity Growth $XX.X compared across increased million XXXX entire contributions deformity second the and to correction. portfolio, primarily strong with the share from by year prior of quarter our

XX% In Scoliosis XD. RESPONSE year was compared the $XX.X driven of and primarily XXXX, by of the prior the combined revenue strength period. Growth increased second million ApiFix, quarter of to

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

driven second $X.X consigned to the set quarter well of new sets to $XX.X by million as to in second the development significant consigned first-half Turning million was quarter have million, the we of deployed XXXX, Pega of of XD product as $X.X were multiple units. deployments, year. The deployments, XXXX. Year-to-date, last million $X.X compared deployment, significant compared in increase in

Touching briefly key few on metrics. a

by or as quarter was XXXX and increased second expenses quarter the primarily the constant personnel addition driven in margin profit $X.X XX.X%. expenses, of at increase incremental well The second million Total to of by ongoing the required related sales the $XX.X remained support marketing of XXXX. in expenses XXXX driven million as operating and growth company, For to the of revenue. gross increase increased XX% the

second to driven million expenses marketing expenses. XXXX. commission in million quarter and increased increased Sales or primarily the of $XX.X sales The $X.X by was increase X%

to G&A to expenses, stock-based $X.X administrative compensation, the The of increased support and related in company. additional increase General as by an expenses XXXX. quarter primarily million in non-cash the driven second of was $XX.X or the required including well XX% as growth depreciation, expenses amortization, some ongoing increase million personnel

expenses development $X.X the reported quarter last to the of XXXX, million second same the and compared second for adjusted to was of million second quarter XXXX, product income $X.X second compared million income for to in in Research year. quarter period XXXX. XXXX, increased or We the of EBITDA XX% $X.X driven $X.X of other of million for introduction by of $X.X million the acceleration quarter efforts. an million Total new $X.X

quarter and restricted We short-term ended cash, the in investments million second with cash. $XX.X

to position, of continue $XX million cash strong to maintain our well as credit. on as us We available line

Turning expectation for $XXX be reiterating are in to guidance, to of to to full XX% XX%. $XXX growth we million, XXXX year-over-year of range representing our year the revenue

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

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

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

David Bailey

I'd more come. remind growth impressive has Brett. OrthoPediatrics put Thanks. drivers array to of like growth XX% you of to that continue or annual that years into will systematically an produce for place to long-term

gains. and and Medical as ApiFix such also ORTHEX, education great share continue Pega grow such conversions driving rapidly. are second technologies product New surgeon XD market and assignments, Acquisitions surgeon as and to launches, MDO will

effort I'd healthcare cause. and kids investing associates specialty you, And health bracing thank Further, growth my pediatric non-surgical for solutions basis. we profitable like their efficient more a while to global surgeon to in franchise, partners our opportunities for capital that are our In on supporting thank also are more world. around future, building new shareholders create the the while closing, you. like tireless helping to a for of that all exciting and improve as new digital and I'd and Thank

Operator

comes Ryan from with [Operator question Instructions] The first Zimmerman BTIG.

Your line is open.

Ryan Zimmerman

hear you me Hey guys, can okay.

David Bailey

Loud morning. clear. Good Yes. and

Fred Hite

Good morning, Ryan.

Ryan Zimmerman

Good you Good guys. morning. speak to with

I So couple to started questions, we here. of wanted if just ask could get

it normalization it's it's I it? kind sounds the curious improving view, the pediatric expectation environment to they're kind in in the I'm the is about hospitals, So just space? pediatric and of challenging what your why remains And what's but doing for like still in guess of quote-unquote address kind of

David Bailey

Yes, good question.

same in normal, So And with consistent on We're said, particularly now specialized kind not just the think to seeing it. the this beyond it's in the for year. part wanting that's better still complex due staffing, not procedures. we've we've to certainly. And think throughput. pretty what not dwell terms more of seen of that's I moved of we That

the really execute drive acquisition lot and growth. producing in in the that growth of has nice that quarter, of weren't of a I acquisition think the volumes new continue we just to we have that we obviously customer XX% offset really, to We saw a mean things accounts. some major to our normal some -- I do

up. I are these month So I improving, We're as seeing children's hospitals Ryan, think month staffing think is improve it. to you're this this seeing

that very think a the little surgery little the with clearly. we very pretty see And the inpatient outpatient our particularly and places reports environment to account are share look account, pointing do really where we is you consistent just and our I we we're what the by in outpatient that high when know. Obviously, that we have at we of weaker, is seeing are as environment, strong, environment very

improves, matter And gradual now will, it's a to just quarters where we again a fast is have customers this improvement. more offset of enough this couple a that. are onboarding new it maybe as And we here and

-- think where just in to forward. move and tried dwell be overall better a not but we it on out, spot, but point got will We to spot we've a I it

Ryan Zimmerman

Pega products, a you investors, of But the said, into we things Pega there's of of Pega of terms that a stuck on half of in for you doubled couple What of, me, term. guess the think just out at think that Pega appreciate grow deployment a about manner? you're to of kind do and -- penetration similar good then Yes. chew I new as ton this Do being, can where in it And about Maybe like to sounds back lot think huge you kind you of the in U.S. revenue, MDO year You kind 'XX. I Fair opportunity enough. laid talked out that. penetration and and in of think longer and to? results.

in second with all your portfolio of question portfolio, scoliosis the ApiFix of is then view of And response. the terms to this XD, the the and complete combination in

kind curious your Thanks guys. the is for question, of there Just well. taking as thinking what

David Bailey

Ryan. questions. good Yes,

yes, Pega since nearly the the the time United the business So in doubled States acquisition. of

to adoption So a We're of products. Pega clarify lot wanted definitely seeing of I just that.

I the deployed of selling that, that think it's organization QX. deployed A impacting clear the impact that U.S. greater inventory then is by lot in organization hit just far inventory. selling U.S.

a of necessarily deployed pull-through we're of the because seeing So inventory. ton not

United than we're the would limited what with was FD Rod, seeing products because it. products, But surgeons say to in were struggled when profile the States, has we're a the user treated more of high I terms the FD to being expand, it is indications the before share I seeing of access in really get share. product are the

products or as day markets. really products, light we've haven't said, of the the six the the U.S. international to respect or of there's seven them seen in with of And there, rest six

launches new well point coming customers right. sales Pega, to with and are things But there. you're all new to with products product new and our force are that of pace our these new so that you product to launches out as going all because these those are to we're on our trying Pega new customers to the And

where several So grow business side -- point the the that's excess we're some I Pega this, to And we international distributors of stocking XX% opportunity that of of in transitioning a guess inventory. then consign with agency. markets continue results why us into of those a were that markets where now have from the to and this what we're lot year to going to XX through as next in OP those of we're a see distributors is lot they internationally, stocking a we only well transition these we that you agency allows in doubling Pega confidence revenue And of yearly. out in know years

the on make bracing of see take launch acquired that I adjacency the what orthopedics So where we half super probably year new pediatric another a us. going It's we specialty for with bullish not coming business, of at it intent consider the big this on I thing. mean the non-surgical the just of see in growth would we specialty can near we of as mean level platform MDO and opportunity macro the non-surgical several years for bracing. for not back to a us as in

deploy competition, doesn't and we've are much capital, and market as capital growth very that, limited done all that there. very good that it's with take opportunities And opportunities reimbursement, over to clear there as

for business purely second really non-specialty half But not bracing as we XXXX, accelerate this think XXXX, see So into several we a for I the get years. opportunity really, next thing. to the again

think portfolio side, Lastly, complete. I that fully scoli on product the don't is

scoliosis. that different three XX% really those top are KLOs about that -- the And the complex, so our of complex is of an the R&D EOS, working institutions. area early is R&D with estimate the that's we on market surgery projects by the in onset untouched And right have with on very which we're market, We now in portfolio. Scoliosis product areas very top

growth product probably that first our And then is mentioned. will I system guided that as pelvic launch we space, rhythm products the system, pelvic, in we and see

products new into just lot expect that XD penetrate -- through seeing We major ApiFix XX% the of with pull us institutions to But market. like and that much to a those dabbling of are drive that products now. obviously with expect our pull we're we and us

Ryan Zimmerman

Got thanks was it. It helpful. And questions. taking the very for

David Bailey

You bet.

Operator

Please our standby for next question.

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

Your line open. is

Matthew O'Brien

taking Good for my morning, thanks question. and

you're bit expected. you those Fred, throughout underlying softer Are It the How just said how gains bit things a that softer they on be built than given still drill little of back facing? little levels, I and QX. all? could taking? you talk I or come that are kind headwinds. these you're pre-RSV at Or the deformity you won't, you I of got about some meaningful imagine more delineate Dave share how can headwinds? was quarter? things quantify it pre-pandemic So that maybe seeing can the big business the then headwinds a little to gains you the can tailwind quarter, Can levels just some you that which know in domestic bit down a know you're than share was a or

David Bailey

then rational doing the completely is pointed on the saw question. major saw snapback. the we Yes, And way and entirely didn't expect very been struggled not And May. Thanks, an we've probably think for grow behaving Yes, April. in this indication would good call, and we about build, we we we think marketplace out QX. struggled that really, the rebound mean, the what we month. a we a just long in really time, is in this I I Matt. we it so that When strong

summer, April and carried into then normal June in and the of in through summer. products. liking of Matt, that's came fairly terms and the leave customers that -- in seasonality stopped So, ease May we saw were They our didn't kind obviously, the back having people forward our us so, an a

the previous we pandemic. had months, and look than we at certainly what choppier to the when seen so choppy And it's

the to gives month gain, a guess we -- that have or it bit we gain pause rational. just seeing, share of even look And quarter share a of us like like what a but that so normal a we doesn't in I despite why we're lot that's a

I to guiding pause out me, that a aggressively, ourselves, normal. that's super not both because gives, ahead not not just think And to be a Fred not of bit be get and to of

Now I quarters, over We the the will next into think June the to and the see pleased course in of certainly normalize. very we're were business. to start few to seasonality see pleased things XXXX,

were ever there given be, we questions as coming a big but very We as prior throughput, as big, given think and in comp some for I of into could this issues. terms needs June year. us. quarter, to And particularly -- summer some nice it difficult the it that big prior had from concern against be it here had to it's been way really staffing wasn't was a certainly it's as

it's years. certainly QX, that to all is So products to to explode and comes you more XX% but more happen we trend delivered that we improving more when what more and to going for using sure of of like to in think think all we've back haven't terms market, Again not growth this all trend. like we accounted in at the going is the QX with and normal, got but up customers

Matthew O'Brien

that that's going really ramp as you significantly. then start appreciate eventually. to it. far to to business build $XXX just like bracing ‘XX business, business It the well. $XXX mentioned investment million million that. a company a And sounds like as talk Got how how nicely you up But you the about rest more needed, I alongside the that Thanks. can as and of the growing do that's you

David Bailey

out, We of MDO. acquired us But started KOL acquisition, the lot it see saw our good was Move we R&D customers people growth buzz that. seeing were before side. We a right just make lines our papers years MDO DFX and think made we and seeing and to that just that last of two of DFX the on are there's in a came of prominently and decision. that the their POSNA growth a limited lot got partnership I once product at related was there's now that confidence way. the very people on lot we've some awarded us for so through producing question. competition. gave the We together, opportunity Yes, those around and featured the Bar knew we that

investment so combination heavy I think requirements pretty R&D to heavy the we and through of particularly the investment, on develop say are side, regulatory of And the because these not when costly business build in than very less are our to able selling going we we're organization, then feel And to that pretty build strongly some be implants. investment the that and up rapidly.

I going think XX% one XXXX. in our factors of continuation It's to to contribute the plus of probably growth of contribute the will kind it's that base.

are here nice surgical going point consigned growth don't area the really out on to just investors lot inventory, probably talked -- -- produce things just cash. it require we but doesn't about, got bigger think revenue to consign aspiring that to got we another is another to a of another been you're in lever of of that a should towards. yeah, But that I Fred we've that side and conserves lot our this and I profit, all right. It gets we're -- continue want have I much doing in give would XXXX haven't XXXX, require growth, that's all growth addition confidence and everything we've

Matthew O'Brien

Got it. Thank you.

Operator

Company. our and for Needham David comes standby question with Saxon next The question. from next Please

is line Your open.

David Saxon

questions. for a wanted taking I know ask guys, first my I I guess and thanks there's competitive ApiFix. on to morning Good Yes. product launching.

hear just expectations just the trialling perspective. I know on seeing the and new but you So user growth, called that the would ApiFix are competitive product? you're seeing and from you around a also, And out what of just of existing year? update any impact kind docs any kind love new ApiFix to for

David Bailey

Yes.

actually haven't of -- we are product. fine a yet. the I'm we happening, We the aware in I'm product heard anybody just but it's internationally. sure heard So it's sure haven't the U.S. product use

listen, but here I space, been just it's pediatric think awareness surgery tethering non-fusion of non-fusion scoliosis enter general our in to awareness, drives time. is available think I surgery stay. that as awareness patient it people over other the on grow position surgeon for to is number going years, that and for a It's

market the fairly view as We embryonic.

with we're enter. of we side, of directly one the but when do, stack this year one see early, easier product. the with what results, results stack on people So kinds now results, much and going to surgery. we up up use No posterior compete those you right, can obviously ease albeit And new of

driving start what's adopting surgeons that's to think the I technology.

number We added of users. new a

have number using applying of commercially. to And this their this a We first IRB continuation. I are that sites for a is think product start

continue doubles this our We just continue because enter of people the to stand think we'll the market, we're see more and the to I like like We that And give we the again, on think And the this it think anterior and us, seeing. marketplace here. surgical product as benefits we claim results probably does year next take and field, year. awareness. this this grows side business or -- particularly just really grow by raises as probably again

David Saxon

looks first-half product on It OpEx, that's lot Okay, new in mid-XX%s some G&A. then That's R&D versus And of just it like year. was, and the a got it. think behind I helpful. launches last

the So we like does the in or can continue model half? as we some back leverage more go that into see

Fred Hite

really of the leverage. in some We'll to nice increased volume-dependent, through our some As basically right? quarter the we all get e-commerce side. Yes. year. back significantly, website. are non-bracing first quarter, Dave lack It's the the Those more earlier leverage the second half on of consignment mentioned sold volume products see

nice which leverage So gives on commission products, those on a we're us and side. the not marketing bracing sales paying

side, will we that stock heavily. to on then depreciation R&D, it's And G&A in continue the the pretty amortization driving and invest that's comp really that.

We are on side getting of leverage G&A. cash the

we So yes, guess, some half year and the second the topline. continue as into we the improving should different year see in leverage have of drivers, I growth next really

David Saxon

quick it. was the got contribution Okay, follow-on inorganic question, And a in quarter? just what then the

Fred Hite

So impact Pega. the is only

$X.X rate last so July X purchased was year, pre-acquisition. about million Pega run that a So was of $X business, and million-ish

David Saxon

thanks. it, got Okay,

Operator

The Turkaly next JMP. question. from question next the for by stand with comes Please Dave

Your line is open.

Dave Turkaly

Can Great. Good you me? morning. hear

David Bailey

there. Yes. Hey,

David Turkaly

to you But is clarify not month -- Great. -- typical understand is slow typical better. that upfront sounds that Hey, lot is that or to for in not But it a XQ. it like assuming XQ terms that's started I here, may one and progresses? in it I'm in that got it how comment, month the just be of typical

David Bailey

clarify. saw smooth it comparables are we into to normal, Yes, is were to The typical It June, August, what rates. this July, Normally, and Dave nice of as me ramp. that not is at ramp pertains big let I volume. Yes. see then those June, we growth least in guess obviously, terms April. see months

did inconsistent in with year, month that a the rates year over just ramp did what kind terms as April would seeing normal. that was we that the historically pretty of in to frankly just see I year. and at saw years what trying the sharp. April That we still prior we're into It's past, that versus what see in was not of we what growth we wasn't was But prior does there steady look point what was the April that was prior It out. what

And revenues almost May where us of and Does then complete in reversal we into that carried shot summer. that makes the sense? saw up

David Turkaly

quick are mentioned they it how willing? in that Are even longer? us more initiative driving expect to taking XD how color that I thank could -- I give they that. you of out. enabling there? any rolling is you little doctors a it's and terms Thank what And you. get your Is you want and Just you conservative technologies, are Yes. get adopting follow-up, it, some just I FIREFLY enabling for guess response. your as thoughts technology a

David Bailey

XD, on Yes. We on Orthofix we side us allow & orthopedic over non time that question also opportunity to like the real side. Trauma the see & will think side -- Deformity the interested Deformity Trauma is on in surgeons, the potentially the into There's with limb Scoli and particularly technologies SeaSpine, why no pediatric that spine side. partnership. We really keenly get for particularly which the on partnership the Limb this enabling are a

for navigation high. extremely So there's the patients radiation that. I is Certainly, think demand very for pediatric with a low demand big for

that a platforms things good. And navigation that's not navigation radiation. It's held radiation. one space involve is so absorbs of I historical because of think back lot in the much the particularly patient pediatric pediatric the

radiation in not a there operating solution that's big And very is lead, people allows so now low is or the that and deal. to wear a long that and frankly even have surgery, in a

technologies the very provider surgeon enabling think healthcare high. the feedback feedback, XD is particularly I related across board to the

a market we the think been never by capital market. I thing, capital is were in The only bit surprised have sales equipment -- we

frankly, for some And consignment purchase terms us. even bit these or bit this units. are probably we that new how the a And naive hospital allow contract, in of environment on so for would of thought a is we

we've we're work to the particularly on think of consignment so the and lot months done the a start of starting a over put insights of to so to go we to these have see, options play a that QX units last year XX and And or standpoint. contract balance lot throughout from next a year of we in number

And we pending, here some happen in sales have but some believe And QX. may sales. we sales in capital going to have we're some not we have even QX,

It's what hospital probably delayed adoption taking see And product just in little again but get that the surgeon maybe Does sense? the makes like going. we the on we and of there. them so, not terms a

David Turkaly

Yes, thank you that. for

David Bailey

Sure.

Operator

from with Sam next the Brodovsky comes question for next The by stand Securities. question. Truist Please

line Your open. is

Sam Brodovsky

thanks good and taking congrats questions a on quarter. the Hey, for

on a expecting May still are finer room level guidance. The or that just Were little census back and that just bit the to it. inpatient point go there, to first one, to relating normal of June you're sort put and a to of

to that right? second still patient environment is in of The half terms be choppy assumes volume, going

David Bailey

still So normal. wasn't June, the inpatient May environment and

I think lot Total see And particularly at share, elective and the measure when scoli have we're on to deformity accounts we fixed look in the just say, a also pretty at We of places easy XXX% the elective generated. procedures that accounts. and accounts, limb it's Scoliosis, but we we they're that. volume. Sam we big done, have accounts revenue look we three fusion cite where these nearly would

mean some year. share And prior comparatively again off -- didn't it's accounts those had lose where we we to way were accounts accounts. I in not that those --

in kind normal, but and isn't odd around. was month May June of was all better, better way right. an and it April enigma was so it's It the an And for It us.

not we in full it we're the coming of it to just, no, kind signaling certainly got running like would still it tilt So wasn't expect quarters. better,

Sam Brodovsky

then have And portfolio be, how helpful. scale Scoliosis. about one the That's can on us Can you help impact an Thanks. international markets with think or some there? it. we then 'XX just just in Got that how international about from whole big should starting you could with the core much ApiFix in including being of think you that of going think do internationally products of is sort And Scoliosis. and the Thanks. more launching

David Bailey

Yes.

in going which this had and have most So to and America, really people Scoliosis and Part we I what now. America I timing -- And a EU in get the approval. Australia right But MDR EU MDR we products Scoliosis Europe and Scoli. good essentially we sell related don't obviously South we were probably guess do know probably business realize of no is never Latin to there. products that products sell launched right,

out, so --- here well number a to in products in out Europe, of that products there's pickup called States in are as And related because why MDR. U.S. that's in we not a good that approval very the sold United Sam the that EU a that of this that that accepted number we of called pending are Europe,

know exact portfolio where of the be timing don't XXXX we so And in would full the approved.

as XXXX that as have XXXX even largest for United lot is we soon of of the and that certainly Scoliosis States. our introduce as a products outside a one. ultimately But being where we it just growth will into new us into driver happens, as markets well

going year know don't It's but some overall that be in Scoliosis, a on the will it definitely business if the Scoliosis I next dollars. build, million so say time impact even few And next Scoli if the certainly huge to impact growth for will take Europe. rate the year number's to

that actually pulled the that, and of ApiFix, the some post-acquisition do procedures leadership U.S., we've capture trying Now people distributors to outside data to the data in good. of accounts, had stocking fact that have to some in we want is because to halted, sure with States through previous respect ApiFix outside we're United allowed make

Scoliosis our process a bit of strategy. we're So in the ApiFix relaunching through

kind very follow portfolio. product to with a through. expect pull to similar right? that that the brings of dynamic, full RESPONSE and up We see portfolio and our we ApiFix again, And customers

similar be the an We have but it not to growth in dynamics impact And expect markets. will again, XXXX, European those on rate. in major huge

Sam Brodovsky

for All right. questions. the Thanks taking

Operator

for at time. I Thank show no today's questions This further call. this you concludes conference participating.

now disconnect. may You

OrthoPediatrics (KIDS) 1 Aug 232023 Q2 Earnings call transcript