OFIX - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Orthofix Fourth Quarter 2020 Earnings Call. At this time, all participations lines are in listen-only mode. After the speakers' presentations there will be question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms. Alexa Huerta, Senior Director of Investor Relations. you. Thank ahead. go Please

Alexa Huerta

and and everyone. call. full operator Orthofix to fourth quarter year good you, Welcome morning the Thank XXXX earnings

me it and today Executive call the Safe Rice. on President and with John. Joining Chief then statement and pass I'll are start Officer, to Financial Chief our Serbousek Harbor Officer, over Doug Jon the

The forward-looking earnings than forward-looking no undue that and of make uncertainties. risks there update forward-looking we will this do During those such forward-looking contained based historical forward-looking on any to as today's our that of statements such statements call, any any to call objectives. we occur. XX, expectations, plans, or will our involve February are the statements, facts not and provide as statements beliefs, assurance expectations place statements, are undertake statements cautioned beliefs on not guidance and obligation goals be are other we including Investors in making is We about matters XXXX. reliance on All today, will or such statements. statements strategies, revise

SEC Some factors materially made from include filed morning for XX-K be December us we XXXX results that ended actual in XX, filings statements additional heading call make disclosed as forward-looking and the this and cause on the factors under our Form to by risk the well the future. the different Factors could Risk the as year

please in Texas. Lewisville, these If you Orthofix need copies contact my at documents, office of

call investors I wish measures over determined our the financial supplement the properly long-term and point, these believe as matters results. At will financial measures. understand to fourth that accordance today's this to review refer order in to on with to may year we these release trends, for results of GAAP. to full non-GAAP various We will our In and quarter reconciliations U.S. to measures addition, XXXX our financial Please announcing short-term financial to financial press today's turn in Jon. refer U.S. call, a GAAP non-GAAP

Jon Serbousek

then performance you of quarter Thank On full will quarter update thank XXXX each update. and we the performance, you, Alexa. our year perspective delivering revenue call down Welcome joining opening million, conference year line questions. with initiatives everyone pleased before have our I the XXXX we're with fourth made provide progress review in I'll the our for fourth a for results business. basis and BGT currency an quarter call. quarter on I'll performance. a and on our will over which business our strategic close to financial total today's the X% largely was Shifting and the basis, handing our of provide $XXX Doug, within prior by before who a for on strong call, throughout implants, compared to the fourth rebound year X% of performance a of constant of the quarter, spinal our reported to driven

extremities procedure our uncertain third organization. slightly moving during business. flat December, total pleased performance All our headwinds revenue October very Despite based we into procedures. entire geographies see our basis, was and on Total hit execution compared including our revenues COVID impacted as offset to did X% the volume throughout the sequential business, by slowdown negative grew during a biologics XXXX. in quarter, elective impact November But year. to operating which revenue quarter various on reflects we're of and environment, COVID in a prior that related the elective On continued the the over with up

These in in third bone The volume. our at up seeing to X% patients our were by therapies closely we physician the the this need competitive first X% many versus conversions. starting elective of with Sales are a category growth business growth with legacy On within therapies. quarter. bone work case with our the our to offset was cover business sequential to our turn customers each down continuing And from let's performance trends COVID-XX. to growth products by be performance impacted of to declines over revenue demonstrates with in our spine tracking were I'll ability sequential continue basis, products. units. prior accounts contribution identify Now, of year,

solutions environment necessary. the service when these virtual Our team remote provide to has including patients for truly adapted fitting to flexible and

base of Moving to reported up spinal report X% quarter in we implants, are as fourth was excited XXXX. that a revenue the global to

elective is fixation spine reminder, largely number in X% products, a primary result was down used result was cells. of U.S. the preservation elective motion as spine of strong growth spinal this revenues are of disc which compared The our MX category As was procedures, procedures. reduction XX% the spine this a by and cases of being but Within made which implant as driver performed. up fixation in slowdown an caused in typically XXXX not only a implants, complex of to

reminder, lead focus as strong by break we forward. spinal the out portfolio that MX performance the prior cervical This with marketing driven and quarter environment performance $X.X be for motion has hospital The motion million require our customers. these our The continued transports will by the many a training by new preservation stays. of of has our year complex preservation cases limited offset business, This from moving revenue over demand surgeon we'll on sales COVID will the cases XXX% was last disc in implants As quarter. in growth towards typically strong overnight lengthy softness artificial regions. with hospital business up and surgeon rest policy U.S. continued

year elective as procedure continued Turning X% pressure quarter, to price market. in channel down with volumes our combined disruption in was biologic portfolio, revenue versus prior during reduction a the the primarily and

to attributed constant to versus basis XX% in year lower of on a large certain to the reported moving particularly fourth sales quarter were in and due extremities, volumes Now occurring COVID-XX and the markets, prior a on our business procedure primarily stocking the of our orders XXXX. basis, international global XX% non-reoccurrence down currency

to Next, core I we areas. our focus within provide would made have progress overview an the of each like of

our is In chaotic to was, previously our the during significantly during headwinds. on overhauled commentary back period, how I'd with to our on which has what of opportunity that first focused our improve look organization. spinal the implants of team, coordination sales a and beginning improved focus revenue portfolio forgiven XXXX brand. a to biologics and short which a up do the realignment, spine we Structurally, we of completed take also majority relatively our we management step across like of able accomplish products we initiative has allowed Starting than us Our enterprise. and completed our leadership. At to units quarter, single the accomplishments structure leverage different today. the review extremities, we're our the realignment set and and we an our and under with maximize to business Along to integration XXXX, better COVID

party side, the the the Orthofix. leadership now of Within added Vice Preservation. things an Affairs, the talent amount Spine, foundation at in corporate Global of U.S. brought and that Extremities. has team the I'm Director a This organization. Clinical we have of Vice of One Cells, the we proud the Motion within of talent On of spine, brought of we incredible key Global President a solid CEO, a have Head Head Managing Quality organization. complemented into becoming of a and International most Since a and to President Operations. new Spine, of legacy is in throughout talent XXXX, the roles the Biologic Global Global a President we of of we President Regulatory a Senior Spine addition of Late a added

organization to Beyond we and throughout fully team, to long-term leadership talent which strategy. growth the in now is support our continue have add will the place,

to initiative, our execution. operational second on Moving

During on realigned we made safe. we to and XXXX, near-term while some our we of but operations while us managed of ensure progress we COVID, deliver members the patients kept our stages to COVID to team of our and surprised through early the demand early In our Operations. to Global to we the facilities met be operate XXXX, and able beginning strategically under that successfully customers, initiatives. in long-term new Head guidance of tremendous uncertainty

had the we've from a or moving, last are fully with efficient in initiatives For quarters uncertainty the disruptions. and three organization. through our managing longer-term we more Today, shift dealing faster no in become away a COVID, manufacturing we U.S. Europe, have able to will row, our to at been facilities to now be beginning and supply operational

procedure unmet and solutions differentiation, is Our we needs where the and marketplace. in product products third are acquiring initiative meet to and focused on developing innovation

year. innovation our the we're the of to the able introductions new and some in product attention our activate diverted While COVID half of half product first the year, during back

announced side, FIREBIRD On Graft of we the Bone the the System, and Q-PACK. Structural Delivery AlloQuent spine Allograft System O-GENESIS SI launches Fusion

in fourth a ASC solutions. use of collaborating we single on the cervical procedure in addition, the and partnership focusing In including are the Neo Medical, we announced quarter, early a with sterile co-development where space platform pack

some the the we lengthening recently positive On system the U.S. revenue make positioned in well as integrated international FITBONE markets and the we impact intramedullary of just launched to acquired now in in and announced, XXXX, side, launch extremities a our

to are the community. first pediatric for only With cleared commitment And in pediatric a the recent our market has this clearance X have bolstered we and the to XX-K the innovation FITBONE, company product.

quality initiated XXXX. are the first of with we MX-C received At had demonstrating Surgical Journal, this Spine for strong scores our in We FDA just event, functional that of also OrthoNext the highlighted verifying products, generation neck a to to and recently global pediatric launch the JuniOrthopedics in October our at in We've five launch as In life We've of the platform significant these publication have continue this data focus MX-C our pain, of support a of for arm within Software and Cervical podium improvements benefits of clinical disc of Disc use and technology. two-year NAS Planning investment study next preparing and presentations. IDE in data the quarter presence our innovative treatment XXXX. in virtual value and on unique extremity portfolio of Artificial our solutions. strong we announced clearance had we

is initiative channel final and fourth Our development. commercial

and our a create begin invest XXXX for and organization. transforming to in commercial priority distribution stable to channels highly Our predictable is

term of A focus commercial global number that's the incredibly during have have to influenced of during add synergies capture and and in able did, changes of the years endure. to proud summary, and ability continue across accomplish what with the we build more pandemic to a our was Rebuilding In an channel. not And made add and lines easy, and had been of generate very we've such product I'm organization initial progress to as company, geographies. exactly the continue as organization relationships we or high-quality the order a partners. optimize retain I'm an was industry one challenging and as One most we pleased which early have made we to society distributor speaks and people. additions dedication to distribution our we to positively the structural was high-quality of in to our leadership the our a develop to as areas excitement our attract year long able of team but strategic ever what part

turn XXXX. what With and in a to to have and Doug review financial call foundation that, solid the Doug? about do our are we performance. excited in we We will achieve place I can over

Doug Rice

charges mentioned, information the good our And fourth the of disclosures. new the for to were to on earlier. earnings down that XX%, In margin total period. our results the fourth compared year The support will certain prior $XXX Please to compared Jon. covered the XX the net details that constant further a total fourth quarter of to lower on revenue, year down QX reconciliations was primarily sales increased X% quarter million, net and other was instrument depreciation of reserve for XXXX of XXXX. to financial increased X% a Jon sales with earnings quarter sales the primarily measures additional refer for regarding decline a a XX% Starting the in expense sales reported product provide timing basis, launches. quarter currency in prior today's the from in into related addition to well months were as non-GAAP sets inventory some of down was of release the 'XX, flat result mentioned today's a Jon morning, financial XX% orders our of as and and and in I non-GAAP basis U.S. U.S., total when measures. net then to Gross over basis resulted new call stocking and on previous on net reported are Thanks, Many everyone. discuss sales due as basis.

on quarter XXXX we to XX% period. of down sales, in XX% quarter expected For decrease XX% reduced net of XXXX. to sales, expenses year during compensation channel. and was the XXXX. in the expect net gross of due fourth from as we quarter expect marketing primarily and environment. to and Sales full COVID in were historical expense in from quarter the and a be and fourth compared our line XX% quarter of our events in pre to G&A marketing expenses XX% net spending COVID XX% in year, travel return fourth are were in sales succession XXXX, travel to increase lower charges XX% sales normal sales XXXX, and invest reduced the of The result the with of commercial spend in the decrease the the to when the GAAP event to variable margin In was in of XXXX, XX% we to to marketing range approximately and averages. prior mainly This down transition fourth

purposes, it falls expenses, stock-based year. wanted most G&A because to under For next our modeling of some compensation color give around for we

as MDR XXXX. R&D expenses the in for $XX of We period. $XX year MX-C were robust and trials EU and study in X% net our X% our This spending to clinical million in product indication build differentiation, from to to pipeline with as million support a to compensation efforts. innovation to to continue and up extremities. development, We drive sales associated fourth efforts intend quarter well the in ramp-up be reflects GAAP costs organic compliance to invest such spine prior increase expect about as stock-based product new level both our

our as in will outpaced reminder, sales growth cause significantly a to the a R&D this of near-term. As spending net percent revenue

impact related we an are million slightly to to result, fourth the our net EBITDA fourth sales, quarter an expect XX.X% quarter in including XXXX of a of points to on $XX.X compliance XXX which to we adjusting approximate As expense decreased absolute on EU directly about $XX.X Adjusted efforts, of XXXX. the R&D compared MDR basis for. basis million,

Jon on revenue overall relative revenue However, minutes. in basis, XX% adjusted to few fourth a EBITDA guidance of of adjusted the in increased up provide XXXX from XXXX. of EBITDA quarter will a XX.X%

earnings turning timing million, income of of tax provision by before expense income $X negative to quarter same tax income significantly The income during of XXX% income we XXX% million was the period the or had for tax, for taxes compared the $XX benefit of the tax as Now or impacted before in XXXX. this quarter income of to year. of taxes

was recognized non-cash the we a quarter. foreign in reserve against which charge deferred tax assets, certain a addition, In

will long use earnings For as rate. our continue our term to eliminate non-cash tax rate certain we expected that XXXX non-GAAP reflects effective in to as and impacts XX% adjusted adjusted tax our results,

adjusting tax the For XXXX spending as line adjusted items the This diluted primarily of to $X.XX, as quarter the increased fourth earnings net the per of quarter our using accelerate of $X.XX top XXXX. effective normalizing driven as compared non-GAAP the increase fourth XXXX. we was by to a earnings share After of lower growth. well XXXX, GAAP for R&D $X.XX long-term $X.XX in fourth sales quarter reported GAAP tax rate, share when for of fourth and was compared of in loss quarter to per for certain a

continue we of at the to year's cash, the Regarding compared a to with $XX XXXX position of end $XX million at million end cash quarter. maintain previous the strong year liquidity fourth of the

as Act XXXX. part in CARES million second advance of we benefits Medicare the quarter during As $XX received previously payments the mentioned, of

We advances year. this QX commence repaying those will in

outstanding continue under million no revolving We to facility. have credit borrowings secured $XXX our

new with Medical develop improving announced we During a partnership on Neo the single outcomes. solutions patient to spinal and market fourth focusing instruments use quarter,

on in the up million Capital due compared receivable. due we $XX provided prior support increased in full-year year new from due expenditures were last which partnership, expenditures period and million, of collections of to $XX timing investment. product As operating $XX term in the outstanding to expected quarter the on our launches. part the $X.X of our to activities flow to $XX spending million was during Medical Consistent for equity convertible quarter $XX through $XX.X million the we Net decreased to was $X.X flow, Neo XXXX the XXXX. the cash by million quarter strong million a was the ongoing million million operations for in million accounts with in compared fourth to free the fourth of to flow sets year, combination loan Free invested cash an XXXX. largely partnership cash flow to $XX cash million are $XX.X $X quarter operating in the quarter expenditures define new in the range instrument Capital million. from as up cash minus capital be

due to our milestone mentioned kinetics sales next I'll efforts. and call advanced compliance now XXXX, cash in in Jon. over back several innovation earlier, the in repayment turn levels MDR and spending product the to decrease flow channels However, additional EU spinal increased free on anticipated our the items, will the payment, significantly of Medicare investments our including

Jon Serbousek

Thanks, Doug.

focus a those key we in we year. the our Before design strategy the will providing look into for over made on to At our last I'd with an we're Probably focused level, a these XX promise execute wanted months, XXXX, to XXXX. shifting from high areas phase and outlook lay similar out for the phase.

structuring we half full focus and place, to which proud in and within that execution our within finish differentiation the and select accelerate areas in rest in teams talent first transformation can very initiatives. execution, up remain leadership, still expect commercial innovation some add complete to our to more channel. of product organization with Our has There businesses I'm the out we be is Starting occurred done in operational team of of XXXX. be the the areas the the of structuring leadership. to certain with building

execution. focus is operational next area Our

likely the While be for to adapted will our a become the agile operation the COVID our to more while to introduce management XXXX, focus time, continue chain a XXX% on products, working we've environment factor efficient globe. in and supply and customers new organization global distributors, we'll in on more operating us refinement the capital our some and patients. across situation of new innovation integrate to allowing deliver to rapidly focus In

early innovations is long-term see towards and drive time Our third differentiation. to with of product our XXXX roadmap several and the will work focus to roadmap new our current introductions. developed to continue comprehensive of considerable to in adoption late in innovation progress a refresh we We've amount And We to reviewing spent that those current and started Orthofix. have bring a marketplace. we product products new portfolio

the over we both XX ahead, inorganic coming XX organic Looking strategies. anticipate and contribution to next months, from

and and anterior spine care, of our procedural on invasive minimal efforts key will deformity side, near- cervical, segments focus spinal care. surgery On organic the medium-term posteriord

business, on and pediatric reconstruction, extremities the deformity trauma. will focus we key markets and foot especially orthopedic the For ankle in of

line up indications years open existing out work to of We the expanded addressable to to additional and to in closely also products. our broadly. expansion roll markets portfolio and to with new pursue will and differentiate spine will our We KOLs global to of to extensions thinking come. institutions help and our and of had guide products who leading with continue interaction enhancements develop development our care our teams with us work our And efforts innovative

Orthofix this highly ability speaks talent of level strategy. to created in track we around excitement recent to Our the innovation our have

R&D technologies our and inorganic efforts, in supplement to the look our portfolio top bringing aimed and products of we'll line bolstering accelerating more portfolio active into at side, to On all growth. our be internal

fourth XXXX. our to the commercial and did Our create is in same is highly focus channel and it final The area Invest predictable effective. as here channel. that remain playbooks stable

in agnostic the of network to looking said past, partnerships. model expand our we've the of As strategic and we're are these to relationships we

in our delivery continue business. the can looking our We to us focus these in organizations are help quality developing we'll number XXXX. on We of who in relationships through grew strategic and relationships people the XXXX to

guidance. Now, shifting to

top throughout half growth in mid-single-digit impacted anticipate only near revenue million clarity more assumes In over the the guidance For order the back to more with quarter be revenue second quarterly quarter $XXX of will also the to like for the to see more that to we COVID quarterly the in from to we to $XXX first the to but half continue not of become of we'll provide with half We'd and second line first point associated headwinds proceedings term, respectively. distributed. of the year expect the expect as vaccines cadence the full being show procedure low year XXXX, guidance year half in impact of a first million. on range ranges perspective, range the continue COVID will widely do heavily out the the XXXX, providing year and that than quarter the pick-up volumes provide XXXX. first This during

$XX to but the nights first $XX also disruption compared In procedures revenue segment XX% early in more from the prescribed due impact QX of recovery this in on For be most to created affected January, their in with quarter, where of decline restrictions. volumes as the our continued procedure to procedural in be part ASP, related hospital to weather February, storm the Last expect QX pressure in about procedural stay. XXXX. and that of the of The COVID seeing procedures, million additional seeing current aid healing. U.S. emergency that national the to complex would we're procedures delays areas. a decline and of want to in a multiple require we're to first We hospital not our only coming range growth further the communicate all million we bone week, stimulator patients most volumes the reduces likely on

including Our employees. of and impacted go own thoughts our those many hearts our out to

has Although challenges major country. it entire to around caused and the passed, community, and disruption the storm state our local regions

We have are great facility allowed restrictions staff with the us quarter to headquarters get With improvement and the storm this normal in to of back fortunate operations second complex cleanup. the as regard a to continue that March, following hospital to in to we to elective begin U.S., procedure and XXXX. ease trend we into volumes, anticipate will believe

fourth are to specifically. and quarters to on we volumes to but In second see of We believe continue to in our begin in improvement markets, third expected country country procedure procedures. show quarter, that procedure country elective timing volumes. markets continued will The increased international restrictions up are elective open the

investments mentioned, and will in execution XXXX. our As our channel in we innovation and commercial product have differentiation, we operational ramp developments to begin up spend, MDR EU

into hiring travel from delays project reductions will XXXX expense Our and in not restrictions, XXXX. continue

Orthofix. adjusted rate Despite XXXX, million adjusted earnings and our future are to about excited be $XX the We a $X.XX of expect $XX of long-term of XX%. our of share million in and tax the we $X.XX range challenging to to a the non-GAAP backdrop be using per EBITDA very

a this the leadership to assembled into drive to strategy and and a organization forward business culture work and class future. world tirelessly We team have implement

now We execution There XXXX, longer that uncertainty we doubt comes. transitioning are to the prepared headwinds address planning no was in any phase. but no in We're are navigate mode. into to

world. patients, solutions and work surgeons like open I value Operator, to session. to lines. that, transition bring high around please to continue the will question-and-answer We would to to hospitals the the With

Operator

you. [Operator Thank Instructions].

line goes Your Jefferies. Anthony first of to question Petrone of the

Anthony Petrone

hope for is healthy. Thanks, I and on XXXX on questions one my couple contribution. A everyone well product new staying end, and good morning.

launches. Just a XXXX should on I'll space. FITBONE the follow-up a follow-ups. with FITBONE sense is opportunity? where and Q-PACK be be its the pediatric about for it to couple just pediatrics, market on thinking wondering just of considering how that I'm Orthofix would And and how then focus contributions back the views trying in And currently a come of we get

Jon Serbousek

Thank you, Anthony.

on Let's that. start with FITBONE

pediatric focus deformity position or the Our in In that reconstruction. on area fixation. the and regarding around predominately basically limb highly external deformity was elective area, or around care we cases,

have international With execute JuniOrtho in addition more internal are and to address we've positioning to Plating correction And U.S. already begun a our methods. execute market. This of with we the provides to FITBONE, the heavily fixation we now System this portfolio in combined markets. ourselves as us comprehensive the

our the basically into devices. basically Regarding only to is as with Q-PACK, address that and PTC opportunity it a we product body line use also being our and introduced our not basically inter portfolio titanium antibody

So, it's a comprehensive portfolio for the surgeon to utilize.

Anthony Petrone

into quantify did would believe a out deferrals. calls of extended of way and part And is early few coming just in in there be, spine backlog. orthopedic were We this to see some overall backlog 'XX. That's then specifically we COVID, of also one of that quarter kind a follow-ups sit of I couple helpful. where is terms And week, on fourth

in a the what So, be, and And market should deferral for be in to where is classify stem we order backlog? the then the quantify more down FDA way there me the it's data, space? last recommending to post would bone add-com Thanks. expecting surveillance one post meeting

Jon Serbousek

towards kept back December, part ASC about. of segment we Let's We further of press of highly the heavily we're cervical parts saw talking in much at decreased look was pulled environment. then forward, know start electives the push more December. the part deferrals. quarter, depends going towards areas into as Deferrals, on the December. certain procedures don't continue --kept as further far to the the of into early dynamics it And with We of fourth but how in as that that

complex those require the day because cases, procedures elective has mid-February, into being the highly the in January, earlier hospital complex December where started procedure are trend month. However, multi the to highly stays. attenuate into postponed on they That continued

how those are handicap the deferred, of will themselves. on to forward. not is those that hard them cases so, much And is by that about it's complex But patients they get point sit better pushed

months see will But occur, pick in deferred the that up we to them have right come. capacity talk so, because to all cases, And might hospitals as issues now. which about it's when difficult

capacity a specifically. in how those will hospital currently over there's the high by fit weeks today capacity, So, the last specifics, do determined patients full six be and we

typically, it the for a re-class, the they or On that the position exactly October discussed takes panel's decision. XX-months the we reaffirm closed six re-class, know We to well. FDA their timing come them where on accept timing in period. their comment And don't to and as open

this a different is So, little situation.

don't to months, we it's We're re-class good data, be that close has six is news monitoring that well business. believe positioned operate we that, it that months, a that from or date. whether as The even XX regarding know So, three robust we're way the we going months months, closely. nine clinical

have We a sales and very strong service team.

We a order to have strong cash.

basis we further very counts. And as be our us We in also which then all contract robust very in clinical positions have as marketplace. far have large to data, the

those. entrants. positioned new entrants think We there will and well we're could to there new be so, be address will And

Anthony Petrone

in. thank right, back hop you All I'll very much.

Operator

question next to Mathew line Stifel. Blackman Your of of goes

Mathew Blackman

is follow questions. few just in your procedures, implant complex couple a everyone, doing morning, remind there is got can Maybe what And I've us business well. To everyone hope of skewed and up a roughest you spine the got as percent even sense? of Good I well to then start, I've questions.

Doug Rice

a because have higher As procedures. mix. the at coming we percentage a right It MX look numbers, we into our out portion now mix, the in balances of have of good we complex

that balances out about spinal as activity some we of as far So, talk implants overall that revenue. when

as time. But still as Much monitoring account the plays still level between much complex now, not basically of during simple, right one period versus the we're and that of the any we're is ASC between that we've as far out how business far environment. we've lost last type hospital this captured how back basis simple. So, of cases, monitoring low as

Mathew Blackman

growth few It Okay, enhancing on great. profitability very XXXX. investments in questions A like they're the specific sounds outlook.

that that, longer-term where up isn't this mentioned the trajectory. also going, versus on paused of deferred there and through perhaps XXXX or of part is can you in catch investments some commercial any these though, how channel, investments? spend sure Just overall want make you profitability change And to then are talk of new much second your

Jon Serbousek

building XXXX Let's and in new first. channel and talked XXXX talk But on a them investments are distributors with also talking that of basically differentiations initiative, spend spend into for new product organization. is distributors, prepared we're falling my time bringing have I good that some continue the always new when And projects platform inorganic referenced are we're We've remarks. of them. we'll and currently you're we innovations energy and activities, looking we train in the working portion where and it through type initiative. about basically continuing This additional on-board about to which the then our on

at look we as So, well. that

is his a in The remarks, research we're prepared that comparable of spend company, are be in a spending and that the Doug to for or this and organizations MDR, others all what which other EU to the mentioned positioned heavy European percentage the market. at think lift side EU development we this in is

Doug Rice

is at obviously, midpoint in the of expecting comment growth new our was on this that time longer sort COVID, range. time, profitability not is the term that last year overall pre-COVID, we guidance did XX% the in this investment that Matt, Doug just our not give

of chatting which in short-term, get to for we've certainly sort on hope And with XX% the to here would of the reflects gave expenses our your long-term with so, we 'XX. is all I that regards that XX% question be the impacted range short-term we a meet back, investments FITBONE full certainly do in coming plans travel and to customers our able certainly and But we about the to say And like sales other pay hope year, to reflects around EBITDA, to commissions 'XX and partners. of while for been things investments. COVID that beginning and at both but didn't we

we say way through and in flow how did. So, guided a EBITDA balance I'd the on terms it's investing we're why we overall, of

Mathew Blackman

cervical one couple were Okay, developments a recent in just discs. Jon, thoughts your and competitive I And the then if particular, last get want in to in one now there of on environment. and BGT in. could I sneak

so those any may just new on two competitors Thanks thoughts So growth much. outlook franchises? how these impact your in

Jon Serbousek

- as tracking been at we've months. the so in as look we into now. cervical at been six last selling far is with let's And cervical the disc start infancy its disc. entry years monitoring We've our adoption. in closely latest Yes, for the this market And it for very as activities the

market. benefits We're that we to with and success having other category, from innovative innovations competitors disc, business especially latter that new that to but is surgeons disc I in So, converting new benefited only And that great want into surgeons artificial we're try cervical by new also it not because high-tech marketplace. companies, the excite disc us. additional to MX the having technologies, converting believe think, we're market,

time we area, in developing channel and investing great this BGT deal the Regarding business. also a of spend our

such we're we're that enhancing stem We talking ways BGT, of looking product. basically have multiple that at as also investments and in on other track,

have invested repair, Additionally, repair, of cuff ongoing we it's clinical the trial. shoulder clinical area rotator our trials in

it's entrants in, to we'll invest an that we'd so, And want come exciting new in. see area it's

to so, And pretty we're entries. well we're as and that I well marketplace competitive any full of positioned we take the positioned stated advantage earlier, address think

Mathew Blackman

so Thanks much.

Operator

line Your securities. the next of Kirkley comes from JMP question Dave

Dave Kirkley

The come you imagine and product. you 'XX. were to all implants side, potentially we color little spinal the bit. Great, I to to, may And thanks get thank you going get I to push would back want maybe to well. back love we you that could, might share. think might but looks any I'd Doug, revenue guidance in just we for as like if know grow it where a the implants Obviously, the is on back based disc to maybe

growth? easy year what Given color bone that expect I maybe you'd any all that comps, be either as growth extremities, XXX was or have from chaotic, to they'll biologics XXX on that know therapies implicit like did in mean, mentioned, return or I but so XXXX to might guidance. this they you for them in

could that'd you great? help If be out,

Doug Rice

the Jon got with color about let we've down, in but its provide going the Yeah, it. more the the Dave. overall, low the look And some back question, rest mid-single-digits the growth we a activities I'll spine COVID the of let from it got QX, But midpoint related year. half on I'll as back categories, of I'll product of of is no, and Jon good script, 'XX handful we to comes year, pressure exceed and the at which think XX%. growth but XXXX, obviously. the as We color start that will numbers half rates in versus in product of some you into Jon QX on exit of And to said as different including categories, at provide implants.

Jon Serbousek

Certainly.

now. want follow XX, as also, far the interest They present technologies coming is that's population other as the with that in. and they And to new as in area boom, age if also start implants Let's combined, we're implants, it spine into in conditions went spinal the to far it predominant get now. it's demographics right in themselves. where The spine XX excitement U.S. spine there's a ones. And high, And the want middle procedures. these period new the we'll doing let's the millennials to innovate among come through call a with, in a are baby of period. And there procedures. the start the large the group, you you as XX another it, And and bring call to started XXXX let's XXXX the post basically to which of if the area for low back new innovation to an out surgeons products, take

well wanting think we're And that from and demographics. discs in as advance, being also but but invasive we rewarded in to marketplace. innovation only not and artificial demonstrated by positioned we positioned product approaches we're are So, minimally other think well surgeons space that

rounds Regarding space forward. in FITBONE. a and and us, pediatric to deformity it going comprehensive ankle it good approach the augment see especially allows us out to and space. the also a business, providing portfolio position a foot provide with will It for our reconstruction we our extremities And

also growing rod FITSPINE mention initiative, We pediatric our no which about where correct will there's be a which allows come to in surgery presentation. a deformity second into which done to did is procedure environment a a play,

which is efficacy the you a the And these to on the service. quite area, recognized BGT provides excited new about advancing But is or area slow environment now to about recognized versus secondary are in versus a for and its highlighted cases non-healers. been to already allowed a starting areas slow in. And I great are we're this So, that. repair we're be think I has are having that healer non-union when value non-upper healers that basically healthcare that do an a of

future well. have we a So, going And into our in that. basically expanded value will pay we the shoulder think, great position as dividends in indications

Dave Kirkley

of them implants. them or I forward, of I'm to much your I just of together as imagine percent imagine be as MX, if a that any biologics implants, maybe looked at there. part color of know we closer to over growth? move would expect you're expect not, spinal share Fusion I think there's as maybe would should there businesses I up, closely mean, of anything But you would both don't if should what I what spine cells. the and could your follow we would then not aligned that say, is, you that, quick track sort mean, more to biologics use those of Great. And, we your those and how with time, sort with that in let's getting maybe saying your you in if other the And terms just some procedures

Doug Rice

reason one the would under leverage area. in Yes, to get more closely the the one was that cells fundamental individual forward, we biologics management put and direction in businesses be them those expect to going and we why that and aligned align spine

our we very expect Trinity partner. MTF product So, line with would pleased our and biologics We're that.

You can't find MTF. a better partner than

looking And expand portfolio well. so, we're as that to

is We program fiberFUSE another coming that, the have also product. into which

Fixation Spine and continuing the also collaboration portfolio Cells between biologics better the organization. are So, the have expand we and to

Dave Kirkley

you. Thank

Jon Serbousek

Thank you, Dave.

Operator

the Your BTIG. Ryan question next of of Zimmerman from comes line

Ryan Zimmerman

taking for thanks morning, everyone. Good Hey, the questions.

you're won competitive from if you're wondered So, could little think you BGS bit you then conversions. some within And share, taking And where the follow-up. mentioned just I one kind have share you of Jon, I taking down expand who I a BGS side?

Jon Serbousek

not we in XXXX that organically, the year, also on focused attracting business new distribution only but growing Throughout the area.

street. And taker as share so, for the We in have came where mapped opportunity we're we it on opportunity that it far the mean, from. as regard. equal really I look

particularly work. we And been we to for successful have good we've reputation areas. do on so, work have team. couple and very we'll marketplace come work on don't And that. And of Because we talented very a management sales the reps continue area. is in a a the And one sales want to specific reality in

Ryan Zimmerman

relates just, Okay. I'd of you to particularly standpoint, you and revolver got your $XXX there. love out for M&A? that comments on leverage sitting kind just level, Doug, it a you just, million as your for from comfort

Jon Serbousek

of really and terms with We're in capital Yeah, good firepower. no to Ryan, our question, happy invest grow. ability our structure and our

tap, And $XXX the of us lows how in us provide And going year would at that draw we're come able be sure of to get times to As we afraid were leverage. we be of say can I'd recognize through and that or up it's lowest we're look can look knew beyond quickly to with the during in have, invest. like certainly to comfortable. have year, comment, comfort our not to investments, that, to good to revolver to scale down, acceleration make inorganically. able to would be that think out fairly use to able I million, million that it down rationalize cash And things cash. last level, We'd deal three have were in specific, with puts flow you that business pay COVID. and top And not we to a two a we'd development we'd terms leverage afraid certainly the we do we but to got mentioned, really on as end the position the $XXX we've almost

Doug Rice

use certainly And ability right ever to And our financial business take and we'll add deals and would our team. to programs into technologies that. I products up than ramping we've to full this screened Ryan, is that new of screening motivated we're this new now. do and put basically company, basically more development I'm we're

Ryan Zimmerman

Got it.

that me, help Okay, maybe this and for in lastly capital of on year, Doug, - $XX back spend targeting then for you. in I'll is hop that queue. year? million the you're kind could CapEx The in there's million just elaborate, that $XX understand to specifically manufacturing instruments, us is expansion, of dollars lot a you Thank kind are just where just of those going

Doug Rice

I'd tooling some say, technology and to we're that new things got investments also a in. got spend And and as we've products then instrument investing that probably is third molding related our into CapEx. sets. of We've well, and works our

question. hope your answers I that So,

Ryan Zimmerman

you. Thank

Operator

comes Jeffrey Ladenburg of from Company. question & Your Cohen next one with Thalmann

Jeffrey Cohen

Hi, are you? Jon, Doug, how

Jon Serbousek

Great, Jeffrey.

Jeffrey Cohen

if wondering as exclusives, or changes on upgrades as further at you distributor any least was channels I any fine. on and far modifications color could domestically. your shed Just

Jon Serbousek

we're move how agnostic as - stated, to we're Domestically, we I forward.

from at relationships. by to add, make we'll would building the to right talent we're partner, and the we process, more to for in create time We're non-exclusive where populated go if don't, strategic channel and we exclusive, our a us today, partners that and So, have that someday, that's longer-term build everybody commit with work to and great. has that's relationship. us. get like happen. And their been we'll heavily right and And want it's looking find If is way but and non-exclusive more the and relationship and we'll it's a exclusive channels, stronger along On ultimately we're goal stronger as basically take more time to relationships objective. the and stronger in stronger interested the

And so, around we'll create that talent. a business

Jeffrey Cohen

it. got Okay,

you Can about know prefilled being your selling used that so, the going you how's that are specific up there? biologics approaches the taken question And As on a firm? on helping percentage I also to and a biologic, there earlier, specifically that is that being you're O-GENESIS. seeing follow Dave's are drive on talk larger, larger

Jon Serbousek

or can graft. of deliver to, basically that's it O-GENESIS, on the percutaneously system. Yeah, you invasively minimally anywhere And be beauty the want used

that really on procedures we're also to And As in launch of and the where to with and of bring is blend of days COVID forward we're in driving adopted new as all part so are hospitals out be product in going making into early and go is forward. looking the far in at, we we sell. period less partly we're is the area, our We've XXXX we're during surgeons time, the fall, many that. of dynamic that technologies launched but that apt when headway to

especially on That's certain we're of so, we're because we're for Trinity with that And around you go part prefills working Also, mentioned right now, that prefills. has working it. pipeline it's looking Trinity, leverage on, there. still characteristics the

we're So, future, in but they're prefills right looking to not Trinity the forward prefilled now.

Jeffrey Cohen

U.S. for about a me, it. us as you. lastly if could to? able bit Got there, then provide and your more talk And versus you Thank outlook little far you're a international little as sales, the color

Jon Serbousek

And and to basically new was both the and need in are continue diversifying to right have to we're We'll U.S. they and there. they into U.S. now. foot will business, FITBONE founded. excited building And a business We're as pediatrics. such a ankle forward O-U.S. And basically business. the it. make that and we technologies channel area, that extremities sales. grow it to our strong the do high-quality we break look together that, we're better to diligently very impact, working about bring between build channel That's where to are and very put spine And extremities

the stronger, both talent We've building in them and that. the On is emerging markets forward of Europe in year. side, look business. key markets, Australia, international of distribution kind in to continental hired the executing and and we're it's reverse XXXX spine The U.S. the the in we international the

Jeffrey Cohen

it. Got

for thanks taking questions. Okay, the

Jon Serbousek

you. Thank

Operator

comes Jim of & Sidoti Your Sidoti Company. next from of question line

Jim Sidoti

Good you hear morning. Can me?

Jon Serbousek

Hey, Jim, yeah, we got you.

Jim Sidoti

shut survived hope you that of then? well, down or keep you ago, all were able facility a did bit the you you're Hope Great. weeks to open weather have to couple

Jon Serbousek

to direct for have didn't Not up power team transportation. facility storm in Dallas, didn't and the it the just we that a want harm's way heat, closing travel well put Dallas do on to that to facility. ended like the doesn't the We office.

the elected just and take team. protect way we our conservative So, to that

Jim Sidoti

because for just the is? additional cost New of right, already figure just that And product I that me All York. answered. Yeah, give questions, been that think was have one in by probably Can my a a lot wiser. something what The update the XXXX? ballpark registrations is on go questions that me, should you to away

Jon Serbousek

just things we would the that engage expect compliance our Europe level a It's $X over a good efforts. you of 'XX of trials in and us million as that and for back Jim. spend complete is the question, with of as with year XXXX, year, in we this invested year and during year would have basis in is we weighted half top-line deferred we supporting in significant as towards spend uncertainty. as much then about and saw to It's primarily people thorough majority guided a be compliance going underlying effort U.S. systems. be and need, year, this in efforts. the we I the investment next us already, of both robust clinical and the those It's terms and would going spend the expect it But that would could That's to significant points from And that we professionals be of taper XXX in But our and and review next we the there.

Jim Sidoti

Okay.

Doug Rice

a if it don't had for don't is it have that Jim extremities that, do to do was a if some [ph] we or note European this based, I add our our of decision Because to have peers businesses, might And on that. European they business highly is competitors But strategic that spend. this.

spend. you And focused, so, - there U.S. type this when see you are of if won't

look regions to in have decided you company, And Europe to a also and of And We products. be going the to we're invest sell other mark able we're certain be outside required that CE Europe. for so, your going is company-to-company. to global comparing to at

think a long-term decision, it's expensive that it's we strategic an decision. but was So, great a decision,

Jim Sidoti

right. Thank All you.

Jon Serbousek

Jim. Thanks

Operator

comments. at management are I would the to any you. call questions now for like no closing time. Thank turn additional this There further or back to over

Jon Serbousek

call. next Thanks, Have joining look to progress you today. thank on our you day. forward We great our operator. for a quarterly And again updating us on

Orthofix Medical (OFIX) 26 Feb 212020 Q4 Earnings call transcript