KIDS - Earnings call transcript Q1 2024

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Operator

Good morning, and welcome to OrthoPediatrics Corporation's First Quarter 2024 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 Trip Taylor from Gilmartin Group for a few introductory comments.

Philip Taylor

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

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

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

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

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

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

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

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

David Bailey

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

reach our to create this a today. significant our year-over-year It of for XXXX. out children I'd demonstrates kids XX% growth the we're that to impact helped XX,XXX we earnings more remarkable expand in continue the fundamental of As with highlighting you proud metric we and of a quarter all worldwide. stuff share ability our start children like to of is and commitment to calls, helping by begin most all first we'll embodies record This

live joint host and is you largest OrthoPediatrics at where is Meeting. again, this Washington, leading of to from to D.C. just Conference, outside excited world and the pediatric in we're a join This EPOSNA Annual event. sponsor the once collaborating today, So POSNA are conference of orthopedic the the EPOS

across the our data place connecting and with sessions, most advanced cutting-edge highlighting The be to orthopedic customers our through and exciting technologies. forward no shared business clinical organizations better this presentations X We're update. will colleagues deliver there is educational mission pediatric week treatments and and looking our to the

representing on growth, progress first quarter execution top The continue compared to demonstrate OrthoPediatrics $XX.X and is we XXXX. million, of delivering across first of adjusted strong Driven in outperform performance both of generating the off growth to XX% businesses, a initiatives. our XXXX, revenue our is great maintain financial the strategic robust start quarter to results of EBITDA our margins and line plan business expectations. healthy by

Overall, improvements normal at RSV the quarter, learned early disruptions and previously RSV January, in waves staffed training our by surgical month our and spike we're closer tracking improved associates have the scheduling efficiently effectively now seen seen. Looking surgery bounced to XX% hospitals initial of quickly estimations, revenue back. the are Children's environment manage approximately are every after mitigate an and in Improvements efficiency. better Hospitals back expectations. continue new contributing to is to and levels.

these next children's monitor the those months. improved hospitals' the critical tested Throughout few will continue business, our of seasonality in progress quarters, to we will summer capacity closely. be the Given

headwind less state. this continues confidence of our impact forward to have will and that moving an less normalized toward a increase However, completely

that with growth. continue that drive market technology our products surrounds a high customers We've business OrthoPediatrics' share with built portfolio a take highly to diversified surgeon and

or business, formed newly and quarter, global Specialty the particularly OPSB, were strong. Deformity, and all international Scoliosis our the and rapidly Trauma Bracing During expanding

Tibia T&D Pega within of early strong, products, continues and of has quarter PNP O&P's Femur, T&D Tibia product First PNP well the year-over-year global Orthex, OPSB sales expectations sales PNP with XX% by led growth the of Boston and demand sales. started very growth DFX as exceeding as addition revenue was franchise strong.

surgeon eX-Fix the ahead quarters In increased numbers in by total addition, and XX% first total us. XX%. these imply accounts We strong users increased by of are quarter, believe of

we headquarters, T&D surgeon a Looking OrthoPediatrics' led and rebound which business, to commenced growth the at international strong Operations XX%, of at by service access very growth XXX% customer improving strong growth. and XX% is across at country. in increasing and recently established Pega with overall our German Scoliosis of eX-Fix reported at sales our products

We return German the seeing business this a are XX%. grew as on already investment

in growth conversion and high prestigious very in seeing and children's also effective, our where large Canada, registration share the recent to extremely strategy institutions. gains of leading product have teaching We're hospitals been country's most some largest, global account

is In is throughout improving. expected the to environment Brazil XXXX. continue internationally addition, macro This momentum in

fusion by well growth substantial sales as Europe sales. product bracing addition and with custom Scoliosis America O&P the and share of scoliosis revenue led in Boston ApiFix, XX% as taking domestic had our franchise Latin quarter international along South in another of

confident DFX, this businesses the products we OPSB opportunity a as Rhino. the sales expected from Medical OUS is we O&P growth. sales start as franchise, unrelated massive the to staff acquisition MDO, this continue there Scoliosis the both Boston contributed such tailwind trend of OPSB as to as Increases we're exclusively with this capture to a rise XXXX We to and we in and focused Boston and a to act on is scoliosis to in year. additional business, in seeing aggressively sales hire build rebound result clinics Ora and coupled as O&P are T&D that growth exactly to increased and

the levers beyond. profitability our more are for and prospects quite various remain becoming we bullish The and driving XXXX growth phase visible, OrthoPediatrics' of next about and

markets; ApiFix capitalizing data key several expanding organic publishing product sales; care. remainder launching For on focused on OPSB; products; international the longer-term of execution start in early new growth; Pega year, we're positive in and health and normalization an the legacy digital continuing on

financial our will to strategic strong advancement our paired continued us initiatives, goals. position The long-term of with enable our execute

solid start while we to to way guidance The of the for million $XXX of XX%. growing XXXX on breakeven drivers our cash $XXX representing outlined top continue flow raising With XX% year, to to growth on are for positioned growth business plethora to our sooner. year full line million, revenue this have profitability the improving the

compared In period. of the Moving to of the prior total and our generated million, XX% segments. Deformity $XX.X quarter XXXX, we of Trauma first representing to year growth revenue revenue

and specifically addition of the saw O&P well eX-Fix PNP performances as quarter T&D strong OPSB This as products, from Pega sales. Boston product Trauma, Tibia,

entire Our of the prior we again return T&D products, XX% once expected our with globally. meaningful Pega be share nearly Sales Pega, which portfolio international U.S. and allocations gains deeply specifically Pega of set in and investments are continue as accounts more the than across ramp a we we the penetrate for product business grew to generating breadth ever full better sales. driving

accounts several with foreseeable the quarters. trajectory distributor second and agency quarter several the the thereafter transition complete, globally Tibia the at and and are to underway, every market for that full continue GIRO likely U.S. PNP and Now is quarter for release in sets expected of arrive this XXXX will the Excitedly, OUS, next in future. Pega to

and is high extremely release helping underway, sales. and create additions demand also product, great grow market there are portfolio These DFX of full it's immediate impact. this to and The for is our will OPSB products an

they with to Product everything our We remains business. need to treat top and patient seek a portfolio surgeon surround more expansion priority customers the treat each for children.

the products Pega across business key position quarter, our share. conversion Each sustainable is high-technology account advance more the more several next dominant growth years. increasingly products, of entire new OrthoPediatrics strategy. increased a market our T&D The are share helps deliver to T&D using to well continue customers building positioned portfolio. is driving Adding like for

side, franchise. exciting new platform, months. within new in side Mark further will there within that products and our PX, pediatric we developing several which share-taking devices or coming plating world-class On the plating progress year growth opportunities in our are great solid will the EU the our the launch Further, R&D to eX-Fix positioned entirely strides We're the that franchise. spawn external T&D are us be on for CE business. to new making our XX expect surgical We've trajectory of market products there several be also made fixation continue will of

nonsurgical bracing a OrthoPediatrics' The is kids. we extremely to franchise this well and specialty business, performing view or continue more help significant opportunity OPSB, as to

opportunity want to I progress, the OPSB that reiterate of some briefly. into diving Before

to market clear-cut addition In opportunity need to they orthopedic a pediatric historically leader. children, another market strategy this provide fragmented to surgeons dominance see with our the as we scale as treat everything become for we to furthering

$XXX opportunity operating the the devices specialty of instrument and is market U.S. XX% or up-front in consigned million these bracing of we at a is not importantly, investment capital outside perspective, within inventory XXX orthopedic pediatric do in estimate From care and a conservatively require minimum custom-fit that $XXX hospitals. business million models nonsurgical children's delivered the total top room, sets.

and business of continue years. several our product $XXX force believe expanding a planned addition growth. to grow the excess can the execute what coming in sales scale well will bracing and in be successfully is innings contributing force of progress the mentioned sales years. Boston's in very with early on integrating our in rapidly, products are business in specialty As we OPSB previous this to expansion, the The OPSB strategy and the anticipate coming million developments clinics new already calls, we to build-aggressively rapidly it a of

OPSB existing products Our X new X within business will the launching R&D pipeline every support to year.

and early year. several identified new impact we've Lastly, major have as these expect next a clinic to as opportunities

$XX.X on sales. the growth generated of global million, was year. new compared XXXX, to the This by Boston prior sales as as global the revenue of Scoliosis and ApiFix quarter In scoliosis custom business. product America, Europe growth a Moving the of we representing business first led addition growth and of South well return in XX% to in in O&P bracing international strong Latin

portfolio. quarter Boston by O&P the addition by sales from XX%, led First increased Brace Boston the of domestic product

most We are proud the to considered a for studied the system brace of scoliosis scoliosis is and OPSB utilized premier in be and nonoperative portfolio. to the product have that to and world the kyphosis treatment

the business, We're our Scoliosis business international the rebound from outpaced generating growth. XXX% pleased domestic which with

robust XXXX a quarters. see XX European South in coming altogether bullish with growth, growth total summer XXXX, Scoliosis continued keep earnouts placed a of our increased improvements and surgery international We expect growth. in ApiFix on to coupled number The the America us over XXXX, response units users in of schedule strong on continuation launch

major Scoliosis with patients for which The early and highly that before. we is is in funnel never solve with unmet scoliosis, customers, technologies onset needs the novel category specifically R&D our progressing, had rich pipeline continuously have for products a

X of space. in first the launched we quarter, products the first the In EOS

surgeries first have EOS Vertiglide in of Pelvic results. ] Rib completed The system and hope [ first to progress second made with quarter, FDA our new the excellent growing with producing We've half XXXX. were for RESPONSE and the in great secured approval spine called

eLLi, both a designation, Further, and growing endorsement the electromechanical the major milestone FDA patients strong way classified from FDA spine to a device for with approval recently potential our of our breakthrough eLLi's suffering rod, EOS. on

made the has next next-generation product in Lastly, to the prolific launches the period scoliosis. offering into portfolio product available Fusion to the of and impressive been on already XX substantial substantial be treating transforming Scoliosis system. history, will The of OP XX our pediatric new surgeons most most development development months progress

to Overall, international. revenue return Europe, in major international in XX% compared supported entire products quarter, Scoliosis growth. a This for portfolio. America, ordering the year-over-year the of to launch on Pega South to patterns across rebound $XX.X growth delivering of by prior Scoliosis and improved substantially products demand the million, T&D general was Moving generating normal

seen this quarter international encouraging. very The growth is

markets. As local traction benefits our seen are sales in seeing customer we within we've pleasing particularly of international of channel as we several mentioned our begin earlier, to in building are service. and Germany investment I results core the meaningful reap direct The a

has made strong internationally audit we a thrilled body footing. all EU our that the MDR XXXX off progress we notified on such started and to the we've about status, As await finalize are

completion potential the launch of second several our We thereafter. of enabling expect audit half of new in products XXXX, in the shortly Europe

of set we've more many so impressive is We lack launches product international great Europe have over general and that first the us. quarter it nicely. past headway orthopedic XXXX. X front to of believe start represents Given Overall, in years, the in a to the is X the business made an opportunities particularly improved pediatric much that new up

component pediatric how live the EPOSNA opportunities us look inception, from will this and community. forward productive and a training brings impactful of education. we updating has That to are foundational the surgeon been for to OrthoPediatrics' you pediatric for strategy. Since on meeting orthopedic why we facilitating today, orthopedic the and be community educational That's

scoliosis. of cadaver labs cervical in company us spine, the and that attending orthopedic latest the surgeons of comprehensive the to opportunity surgical Fixation This a meeting was lectures again for neuromonitoring training interactive international outstanding fellows Back program an a meeting. and of new was offers didactic by this ICSS, various great with and year's on Pelvic given forum a April, focused RESPONSE lead junction, technologies and techniques. We highlighted and sponsor pediatric lumbosacral provide on the system faculty aspects at a and engage

reached workshops including a X,XXX conducted staff members the advancing we next sawbone around world. total XX commitment of training pediatric generation In highlighting unique innovation care as to other and health of we our our ongoing in and providers labs, quarter, touches XXX the learning surgeon over station, experiences, over orthopedic and product subspecialty different and leading continue we the

eighth Lastly, OrthoPediatrics culture building, work places the of was want in one because named on for highlight the the and time, to people Indiana. continued to best I our of again that as focus

engaging are aspect has our This advantage and to to a We a positive, around the kids work. culture become fostering continues committed help ability key their do our world. to of is to associates that best our expand more and allows competitive

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

Fred Hite

Dave. Thanks,

addition by O&P. increased the quarter to first XX% worldwide and XXXX Trauma primarily performance quarter in Growth Deformity, and revenue as compared million as OPSB quarter the of the driven XXXX. of across of $XX.X Scoliosis strong first international global was Boston Our well

Trauma $XX.X XX% as of quarter a Scoliosis increase well the was our was first lines, product and revenue sales. as and driven U.S. by the primarily quarter Deformity Growth from the in Boston XXXX. O&P OPSB million, addition of

$XX.X to and of We Scoliosis OPSB. generated growth of quarter quarter driven representing the in primarily total Trauma compared by million, XX% Deformity, XXXX. of international revenue Growth first the was and

numerous sales. Cannulated In of year addition Trauma growth as the of XXXX, compared PediPlates, to revenue million driven Deformity PNP fixation period. Boston the strong Growth the and was as correction femur, across of product Deformity by Pega first quarter $XX.X external prior increased O&P and the lines, primarily our global Screws, XX% Trauma systems and well specifically product

$XX.X year technologies of systems our period. quarter sales. first custom the In Boston of and revenue primarily driven scoliosis XX% was well increased of compared XXXX, by prior XD from to scoliosis sales product the Growth revenue as the million increased bracing of addition as ApiFix RESPONSE generated O&P X.X/X.X,

to first Finally, period. year million XXXX revenue $X.X Medicine/Other Sports million the quarter $X.X previous of the was compared in in

and by of first a of Turning deploy the months. XXXX sets to driven the busy strategic to were the annual year in in set inventory was $X.X to of our to compared percentage the earlier million summer sets deployment. $X.X consigned of decision in million first the in prior quarter The quarter bring increase XXXX. greater

few Touching key metrics. a briefly on

compared first the first to gross well purchase decrease gross the margin XXXX, profit compared variance of of set the in increased profit as primarily released by first to was XXXX. first for of driven For quarter XX% XX% quarter international in The margin of XXXX quarter price sales less as in the quarter XXXX was XXXX.

and the personnel or first Boston increased increase commissions of associated mainly Total O&P $XX.X count, increased operating by $X.X quarter addition expenses with The head driven acquisition. XX% was million the the million to costs XXXX. in of increased incremental

first sales in expense, primarily commission The driven O&P addition Boston quarter million increase or Sales limited acquisition. of with to the increase XXXX. coming from of increased and $XX.X $X.X marketing by million a the was XX% expenses increased

was business increased in as continued and compensation, expenses, General of the depreciation and O&P first administrative well resources XX% stock primarily the million support Boston expenses to noncash expansion as in quarter $X.X amortization. or increase acquisition such the of million $XX.X to by increases addition The our XXXX. of and as driven

due Research incremental the the as the development addition the the addition business expenses million of to in of XX% of O&P Boston acquisition. to personnel XXXX the and of future first development product to $X.X well quarter growth or and increased support million as $X.X the

quarter for did same million in XXXX first our other XXXX, not million mid-cap the quarter well million first expense the expense we to recognized $X.X income $XX period increased quarter of as consideration last of was of adjustment the In $X.X Total from XXXX, million loan. contingent as that for first the $X.X a compared other interest year. to repeat favorable of

and first in the this quarter loss a compares the million of $X.X XXXX loss EBITDA first in million $X.X quarter of Adjusted was XXXX. to of

We cash. deployments. includes quarter $XX inventory quarter well million investments $XX.X with ended Cash of for restricted Boston cash, set set usage first to paid O&P, as short-term the first and million increased increased the future support XXXX in in deployment as

With long-term as capitalized current cash as we strategy. to well to our execute our are our continue debt on facility, position well

Given of our of positive flow balance EBITDA, we are our cash sheet, breakeven strong in addition line tremendous O&P, the strength. Boston and to adjusted annual position a sight of

Turning guidance. to

million $XXX full the We from XXXX XX%. our growth representing for expectation year-over-year are year to previously million $XXX of to to to XX% raising announced million, up million $XXX $XXX revenue

million to continue We to generate adjusted between $X.X EBITDA million XXXX. of expect $X.X in to

XXXX. to than million continued Additionally, cash we our less continue focus business sets breakeven driving represents later. flow deployed of sooner expect on in rather to new than This the $XX

compared the prior to mentioned, years. year, we in plan deploy As this sets to earlier year

the closing over call Dave remarks. I for turn now to will back

David Bailey

Fred. Thanks,

momentum confident beyond. that are the first we've Looking the we XXXX proud will are we at extremely quarter, how and of this continue remainder and into started the year of

growth, our maintain entire capture across and business, to the line expectations. EBITDA margins top healthy continue outperform share record We robust

continue to cash We year initiatives OrthoPediatrics, growth breakeven toward on move for we and opportunity. capitalize will execute a XXXX be as our value to forward updating drive strategic will again and tremendous and soon. flow you look to profitability our I

In OP in the innovators surgeon kids. standing investors associates, pediatric help to to closing, of my like partners, thank care our our all and I'd are health together

open call let's for Q&A. Operator, the

Operator

[Operator Ryan from BTIG. line Zimmerman the question with Instructions] of first Our is

Ryan Zimmerman

Congrats Two-part the about to here. to year ask on start guidance. a I question here. want strong

You by you're raising $X.X the million million; about at beat by $X midpoint.

want little you a you're ahead curious anything you're that about -- seeing million. if incremental reserving or Just $X.X that of kind to maybe cautious

passing that staying million. guidance $X And same. EBITDA is the are you through part Adjusted second is the

talk that of just about business So the and us putting kind to kind of on. what into to that on flow-through revenue work higher you're

Fred Hite

Yes.

growth bit January very So January. And a first first had January, XX% in nicely. a think some RSV up all, about excited some late December to I which of that we're the strong It's quarter. sets got to start and helped to in of us see. in the obviously very into the December, little then which year it great start pretty great is quarter, pushed of We

know, for months, months play is the for wildcard always are throughout out us we June there. dramatically us, larger is Ryan, summer and typically really as July you right? summer and how until those The seasons the get unknown the surgery year

the I is on why revenue that you $X.X increasing that's didn't And really through us this million only the probably gives further the pause, year. thing far at so if it's as And on flow point. full it it will, as the think for where maybe

Ryan Zimmerman

the Are relative business, beat. you Fred? that in back guide EBITDA putting to the And Okay. the

Fred Hite

of pretty drops so Yes. large, it again, the are months is summer And range The the so through. much that's EBITDA when number, wide.

expectation, And we $X.X was like in a than then summer to the maybe as little increase what but quarter, we the look throughout and wait year. basically you see on or better and first we that as can months want move saw the it negative our so million,

Ryan Zimmerman

been it. just last me. in. asset contribution for looks one Got to And then good like it's real Boston O&P and bring a

you hear your development. to And thoughts of surgical O&P longer-term really, it's base. kind with broader can clinic relative Just, to on customer what Boston plans of Dave, really love your do the

David Bailey

volume I from customers -- probably product this our Boston see heard transaction We you've think than question. say of other great, O&P any gotten into the me inbound greater Ryan, not we've the point. we've this Good interest is done if to or up related Yes. acquisition before, as

providing need the there in serious this Boston XX about So so have there's clearly United Northeast. done space well that exclusively that in focused service expand a in States. that want institutions to has to everywhere a company out obviously bracing And and we the to in

that. time. to So It's take some huge going us to opportunity do

I opportunities clinic there to is pace we'll what think as by clinic guidance give to of expansion. is to fall probably standpoint. year, of us we in able going shortage from be this the look But no think like some terms the a expansion for

here up. Children's of of kind locations. going not in our ask done but by some that just spin volume And some inside which the year-end, of us outpouring believe, here clinic those highest some is, we'll I in an from possible do first we're We moving children's these forecasting or time Columbus, Nationwide to Children's take a of deals States. of it's hospital clinics It's opening have and some -- the the have We number things to National United that. have of

few should months. the next So here start in that

in positive long really the term. terms So of

on start X already of lastly, selling sales X our but a to revenue side one, see new of we're two, already all or channel strategy great about ago, year; to really we've see opportunity sales when and first added TAM it's clinic the just we've in products then in that of have of to realize talked that or and kick the stuff, do the fact we pleased accelerating and added to It's expansion. we in, the large number what then growth doing, the the which portfolio should X think -- contribute acquisition are I a of expansion and then definitely here start and most as products few to is X huge MDO strategy: contributing really X-part the to a years Not the have; to those see that of products pace those R&D, of products have we since X really clinic to number clinic we portions XXXX growth. channel this opportunity, exciting. we've think this benefit really expansion to number

to it's given a us think reason be bullish. very I

Operator

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

Matthew O'Brien

of maybe business for with far how what $XX O&P Boston guidance know about increase you that modeling ahead up on mentioned Boston I it roughly to in million the really guys we're on were related, it's the And well that, I has Boston a Just schedule? start $X contribution. million? historically. kind its to so the $XX like the all O&P -- just kind extra I frame more being we Or do how year, of the of think had think O&P So Is you're million so of own? year. we related done running that's this expecting kind

Fred Hite

assume all. wouldn't No, I at that

historical I you that to levels. it's think can similar assume

as from will. in Boston second $XX the third is and But we've I typically very million million that if extra of $X falls not the the in past, and legacy the fourth the quarter quarter, and in think the pleased in mentioned XX% you XX% with first quarter. business, about XX%

David Bailey

a to MDO of really that we're that that, more specify product we that excess above-average segment extremely mean in every minus doing are since been has the good growth see and seeing we And certainly we say, but is the this it's do mean Yes, want in the on we for adding we've so let's been really ever of product all Matt. long and well lines it's time, added the those really and taken side clinics year, to the since to acquisition. last business I stage. took portfolio just OPSB, T&D clubfoot XX% the OPSB, growth. on seeing I growing products then performing Boston momentum. have -- positive across see mean I right? growth I at

a So right that product what OPSB, every really let's yes, now. that's of non-Boston pleased this the across listen, from growth there. say, perspective, line going we're component But is seeing story for

Matthew O'Brien

Okay.

hear. to That's Okay. great Super encouraging.

Just about the too but point. assuming and to strong. O&P, from it's be seem like any numbers ApiFix commentary momentum kind of early Pega maybe kind of the halo other there they're and I'm Boston is to -- back other effect areas some that extremely getting

about just coming historical the more curious from just of the Pega. core is especially or of that business where that growth the organic business I of some I'm growth, and durability So some with now in know not you're about traditional I some mean, But thing. you're XXX% OrthoPediatric's be grow going durability that of every talking more to quarter would just the helpful. that the franchises

David Bailey

Yes.

also a inventory I has hospitals. it's maybe of just the the been secret some inside a what out of and we of stifled years. no utilization bit we're of that implant lot seeing, throughput that little first Trauma that on side inventory mean, It's put pure the think secret Deformity, I no over course because children's of last few

terms inventory, to almost landed to that so the and normalization what surgical the see of we've I is think we're of in combination market. a normal a fact of And a seeing back we're lot starting

drive And pull aggressive in pretty first see of in And that out of year the especially efficiencies XXXX that we're to and put terms from because you you -- real XXXX. that into starting in up we seeing so we're inventory. product the see inventory growth might launch we're half being efficiencies and some that real wanting this assume to of

growth of see that obviously, when out were legacy we on that come betting good because, it's a we So that put lot to volume inventory. of

a first lot obviously of would inventory returns seeing of really Pega. I of the that argue we're

And so growth still seeing great domestically.

XX% about globally. was it think I

business smaller States United from of growth our all for we the international, pretty expect agencies time. for distributors, converted a mean our stronger outside see much Pega that to of have do But all Pega So strong I us. long and in we to now

say April. would now Tibia forecast annual PNP I PNP almost better than also is number think expected. sales on I to performing Admittedly, we're we Tibia our through had

to going driving usage pretty And of so the is for indicator rebirth it bit a PNP Femur, also that is work I that's product. trauma which profile think a of in product strong largest us. a is And our that,

things cranking. those So really

our And don't lie stride numbers now X.X made that and now, rate, to then ago. in that eX-Fix that really we starting it's see And still I States. the later, years The Orthex the acquisition of years to X.X has United growth. grown business catch growing what, its at terms just of outside mean ever portfolio since

least top player We at in in hospitals, children's we're eX-Fix X U.S. market. the a think the in

those momentum for of working as And that's year. a we the things us. think of the all into balance about are so heading And good

starting Last we're -- I better to saying is And sales, some forward, a and the longer better ApiFix going beat think continues with from that's thing, for We're been going term XX have and driving we've and I what halo to is data. ApiFix benefit long the there. but response ApiFix cranking think data time.

where a business, continuing money the field creates of mouth products. entire guys about few whole a can And around putting of OPSB, deal company. as time. we're it is, across I very gives see us course, serious a our surgeons people going their they're pediatric And with to surgeons wow, in a gives their They that make halo to see of orthopedics. people long trust be sense sense investments that also a think for that us doing permanence of these just advance the the big Boston, not It are

Operator

Our with comes Rick from Wise the next question Stifel. of line

Frederick Wise

gross some maybe for into A obviously, quarter, to a of year little the couple quarter little us how you said you me. sort the but et took pressures weeds you gross can of for it OUS a the a quarterly Very and lower heard the were exciting getting than Talk things margin, margin will, the mix through perspective. what about us. help in progress that about variances, from think if bit. Fred, the set of I purchase we sales cetera. price thinking,

it does sort it over up way to plays understanding course the Can back step us in you more second step in of sequentially? quarter, gets of that understand that the help Does XX%, that some kind how the out the we up sequentially range. it of Are XX% year?

and for Just the implications now. quarter help us year by the

Fred Hite

Yes, absolutely.

on rate margin lot really volume. the gross a varies So based

And the many, highest gross years, so the third the over typically rate. margin many is last quarter

like year. was I think it last XX%

much the The margin and the quarter X And is quarters with in typically quarter second lower quarter. revenues those typically obviously, the a middle, the then smaller, first the being than those fourth second-highest is quarters. in little

an would second increase yes, quarter. quarter to So second first compared quarter and increase then third another compared expect possibly quarter I to

Frederick Wise

that to year for So despite of the still start getting kind area the or? mid-XXs

Fred Hite

Yes. Yes.

Frederick Wise

that? You're still comfortable with

Fred Hite

last call I think XX% time. the on I mentioned XX%,

Frederick Wise

Great.

it. Dave, pipeline. pipeline. talking to tell can about talk to Obviously, couple Turning about you're really excited Maybe things. exciting the about a of I you're us

ones have a the detail, which more focus us of a on product more timing. of sense in little Some organic you'd and little launches most just

a dig highlighted of more. into but couple You maybe them, a little

you could in And but there, that expectations. as such breakthrough and this electromechanical rod for break the part deal lot launch that, big of of a if might down. just A is why what growing some opportunity designation mean

David Bailey

sure. Yes, Great.

the right, and off So QX is near-term in we or launched kicked just with I kind QX. had products here of that think opportunity,

out I as PNP we'll don't mentioned know, Tibia, of have, earlier, the have really we doing PNP -- Tibia, that on I mean well. So mean I sets Fred, XX% I

Fred Hite

Maybe XX%.

David Bailey

XX%. Maybe

for that patients I developed that been story GIRO's way of for received. think of So product fracture that even DFX age the with going a side, for story be us. us. certainly to see it has that the that's performing, the a the it's really well OPSB been performing for a on we under care was volume X, inventory hasn't launched,

So we've got here now, our well. they're the going in and hands, of them products, kind those

as said, hear never us cases product represents our That you had first space. first a space. And point, line. that the EOS about about product lot And doing I with, scoliosis in this up talking EOS until we've of a Started XX% procedures.

And on Hopefully, is that this out producer of that in was going with I which X as will of this launched Vertiglide get you a procedures going device Then this Rib talked is year. which sales products, can different be Pelvic think, we electromechanical the for the designation. So or have [ strong substantial, growing second very we revenue we device just breakthrough device the in Q the mentioned, ] then us. half eLLi, rod another RESPONSE it about, that. received which on -- just first and and and

want use early for customer complicated our that everything surgeon surround to a a single single mean the true they very provide of Again, the onset solution. very, -- onset not form, I scoliosis to could with in companies spine scoliosis. set with strategy a kind the have to across of indication. is space may line the early we product a single of or Most adult adult ortho

And so very excited.

that think creates, with we our world portfolio set difficult portfolio will a again, requires in only of product world really circumstances. that type in that in the very for be I seriously top the because the that company the institutions of of all seriousness

breakthrough discussions one-on-one it the direct very this get what that. it from the gives of no us these of we're designation a based get FDA, device see a be But FDA FDA Certainly, the to gets capacity based sense Rick, FDA approved. approval with device. have on have to going and able do The testing there's that to process confidence to of essentially our allows that device and wants to with a approved, this lot to us one-on-one on to us guarantee, clear

way significant technology our so time FDA. the And our time personally care had we've it got treated in by the maybe this, I pediatric was first why history it's health where it's think that's about this so ever first that to the in the a history, patients I'm that company's excited and company's deemed of

I a of these it's able year I think think next again, lives life, like the of and device And just a surgeries. or a some that's these stronger in so, just us. And realization breakthrough a be -- a those to think certain for can't it's I but need or And improve well, that's And have the potentially company. device procedures, helping life-saving us indication dreams get are a the involved just who be some not imagine in some children. of we be for profile real can in while, kids -- out so this. a our kids' been shaping that implanted around real within for And there's of for of to accomplishment

Frederick Wise

That's exciting.

Operator

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

Michael Matson

Yes.

to So about I wanted ask Europe.

I terms mentioned and it be think It there detail products were you're the some meaningful commentary could on clearances or sounds that provide little Can what's you you're like of new there? something. product audit number just an expecting you of in some more happening a expecting. there new

David Bailey

Mike. Yes, great question,

of the that So none developed product of the basically, you can X organically, over particularly none years and yet. portfolio products think assume our course hit market those we've it's of about and products that those developed, almost have how the European last

so look at the yet deck and European we U.S. we're see hit just much in most rapidly have and markets the put market. slide developed you of other outside And hasn't if the certain very market growing out into that U.S., and still how of Europe, the

launch opportunity new a this So to to as for you of think really several brands massive that of are us can kind Europe. new

and mean Spain. haven't the seen have of Germany, Here, them Society Society products. they the Ireland, here access Italy, of EPOS, the Pediatric in had a markets between I at America D.C. here, European exhibited like see U.K., those -- surgeons the these these lot combination In European to France, we're Orthopaedic Pediatric but They'll North certainly meeting the products.

for we get And us this so this a is can when approved. big deal

We are audit. MDR for ready the EU

everything of getting to with question, files, of ready body into our It's just audits. is technical They're We're notified kinds offices. all these a frankly, backed roll. updated. Our up

will to it products. we've not we and December happens, XX of or U.S. or that and market. That's I XX think next we big done, early of when for of months. put to as audit soon be into can it or represents Is deal products as it almost But certain start European November ready launching launch so year? And why a X the we get said these I'm us, it's years a kind X the date.

Michael Matson

Okay. it growth non-O&P about implies but we then don't I O&P was you that sort assume that XX% really growth, if disclose of know for organic of your million, the sort $X.X And like business. Boston

was So it that your is probably over it's I seems safe like XX%. mean, organic to assume growth reasonable?

David Bailey

say yes. assessment, I'd extremely an Mike, that's reasonable

Operator

Our next of comes line Dave from Citizens question with Turkaly the JMP.

David Turkaly

to just you're around terms something been think, bouncing going of that hope the our to a asked. in hire that you how that some for And And been that think do I've could you hasn't that little, have $XXX do staff people came But of that said could I you then you today ask Boston. curious, footprint just was -- I with kind that? and you and you you even What build memory so need Sorry, And I can quickly I refresh to mentioned, them? how think count million. I add? you head many

David Bailey

Yes.

So is what Dave, just the scaling we've force. been sales of about, the talking

were kind kind great and where there the when helpful people of particularly staff. that couple of of sales was people that get those then few to Orthopaedics, a leading for folks acquired have really great force. we teams had when now really came trying have sales the Boston have direct -- done sales So MDO. And literally, some -- and and been MD We Boston no we some an we in United and United others a one-person outside and of we're for States people that actual States managers,

added pediatric we And and in don't about those sales have so entirely the partner relationships people really of they know. surgeon orthopedic international don't who aspiration up close distributors. around We doorstep want with on was here the these to the customer a people the our people with want show world. And XXXX separate, to current they channel. XX within so U.S. have every Obviously, we to be very

bring the with our that that to people they And the some the channel all relationship their room and exclusively be can obligated able stand surgeons then that sales so side fact nonoperative aren't the leverage into and in work operating we to to on OrthoPediatrics but and work certainly, know day long, in want focus clinics.

really so talking And that's we're what about.

of majority added would the for I I already. those think don't probably we've but salespeople added, I sure, have -- We know say

started internationally, you year. sales And talked And already. here. even we into those million will the expands the our obviously, business scale portfolio balance assume could clinics about for that a so continue expand as that and and P&L to And figure that forecasted we've $XXX our got channel. And expands building have to the costs we've to further business want maybe of

I associated just build top all that big the little on to think continuing that to you a and we drive right very want the of don't this it, several heard I next course us that us opportunity we line for well TAM really here a do a years. -- million. way love call, me us business over strong now, $XXX a but the the new it's the for see next this around space, metrics large and are And financial to new growth say with big with resistance should several for all in growth is years. a put over number in to go systems business very the very,

Operator

comes Our the Brodovsky next line question from Truist of Sam Securities. with

Samuel Brodovsky

hear you me can okay? Guys,

David Bailey

Loud and clear, Sam.

Samuel Brodovsky

into higher-level I and on your the estimation back remind as any is in year? out component in it market start to contemplated volumes sort the there. wanted question, commentary appreciate relates system capacity capacity coming And the on the just to And there off could year. us you where back potentially just guidance start backlog congrats a online? Can come what's a that to Great. if solid this in there's of

Fred Hite

don't increases I anticipate guidance. capacity Yes. in try to think dramatic in our we

in pretty demand is pent-up guidance that January, try a either. the we the RSV flow through little bit there's don't some huge honestly, that's forecast in And than So our of it's to much see what include from to into system carryover use we to feel December and guidance. other what going we today

Samuel Brodovsky

Great. And then EOS. switching to

the quickly? ApiFix do Or uptake going it broader Is there? you you that mature that could room even Just product a can before there's for as we to to quickly you new think see see we data more be think bit about what adoption? similar think with where do to potentially to adopt saw little how needs opportunity,

David Bailey

really good Yes. That's question. a

currently does. the that a So every than ApiFix they asking that I spine practice think that something different is with to the surgery EOS is is don't and procedure what's EOS about surgeons do. this This ApiFix within this not do -- not their surgery, nonfusion is surgeon different

procedures. are child remains do difficulties, a early really surgeons those to with procedures, to technologies are substantial treatment happening that struggling that and perform right fact scoliosis, those young isn't kid The there are having is a option nonsurgical adequate procedures onset that's These find now available.

So technology think hunger orthopedic use I wins benefit this in are There's have can space. these from forced times, products. of a of community technologies surgeons to types kids. of to great that pediatric last And the resort kind a lot

are procedures these happening. So

I indications, we these would X a think care so products we take need competitive think distinct real And out advantage. round gives tough us of a that will, set and if to we we have this with you technology can of products, which then X really very better different technology, we believe

complicated. very haven't on. conditions, we're fairly had willing just believe, say, as fairly And with spot as of rare to a think the uptick extremely EOS they're these not of I be that uptick to I partnerships we again, historically company it prestigious difficult care ortho -- majority minds taking take these that mean customers lines. take is the in these our the the product surgeons on places do things strong kids. think revenue, And of great in, the in really the are much can also pretty but I And that the

that gives more the products. balance drive us of usage creates, an halo probably kids we again, help to of our business, will also but around the another So opportunity other think profile of kind

Operator

closing currently And David further to over I'm remarks. questions at to I'd back like the call hand showing for this no time. Bailey

David Bailey

here Thank today. EPOSNA. you. Well, joining week us I'd at for like everybody We've an to got exciting thank

this think history. community the largest of orthopedic pediatric meeting be will in the I

done customers, just and the momentum have And into us out heading better about balance we and so a meet and to we've what fantastic quarter XXXX. off no of talk we're with for get place excited there to show the all

questions, and we as Great call. reporting the on being to care. go things everybody Take forward look on progress. how appreciate So we'll

Operator

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

may now You disconnect.

OrthoPediatrics (KIDS) 7 May 242024 Q1 Earnings call transcript