OFIX - Earnings call transcript Q4 2021

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Operator

Good morning and welcome to today's Orthofix Medical Inc. Fourth Quarter 2021 Earnings Conference Call. My name is Candy and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for question-and-answer at the end. [Operator Instructions] I would now like to pass the conference call over to our host Alexa Huerta, Senior Director of Investor Relations. ahead. go Please

Alexa Huerta

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

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

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

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

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

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

Jon Serbousek

our an for you performance and everyone results fourth Thank On year and XXXX before over provide initiatives close call. XXXX you, perspective against business joining of our thank the lines conference full in I'll questions. progress on provide quarter for quarter strategic with our Alexa. handing Welcome review who opening update I'll our Doug our the financial will fourth before call, updates. and today's call

quarter predominantly on to In compared to international and coming across quarter from categories our growth preservation with Turning momentum million, franchises. This $XXX landscape. basis, capture strong On accomplish seeing of drove third increase able of capture X% executed to very we double-digit year-over-year product all our despite double-digit on our sequential to continue recovery build currency constant X% motion what and were prior Global fourth delivered a our quarter an we revenue Spine to performance, year executed we quarter, and Spinal performance another total with outstanding overall. the basis Implants business with with reported Global the team growth our a business growth across and Orthopedics U.S. a of FITBONE. we're quarter. market In share markets compared we prevailing XXXX. Starting will the basis pleased The macro unit. share unit, both a we're growth among the we

million years within spine fourth prior share with shortages sales with were each procedures Bone $XX our down shifting starting capture versus X% due for Now to negative the continued complex of COVID our categories, quarter performance Therapies partially on to offset by the within quarter, the the product including market PhysioStim. BGT, Growth impact of nursing or

growth patient we demonstrates in upon reached major remarkable the treated leadership the that bone sales on build our in focus in X BGT the efforts patient that announce our milestone position to committed portfolio. the happy we obtaining are with corporate quarter, million We fourth you and This for achievement. future. continue to leadership in our and this your BGT Thank to teams look to stimulation

Spinal global double-digit of year-over-year [indiscernible] a fourth was XX% that to revenue Moving to quarter in we report up excited growth. Implants, are row

made a As our the motion a reminder, spine drivers of are this with capture are category in increasing up growth new in with from and XX% majority surgeon for growth and users U.S. international elective. market products in procedure distributors over The procedures primary volumes. that market is of both preservation of revenue and fixation which considered XX% used the rebound total typically in increase share

to on fourth procedures revenue was past fiberFUSE primarily impact which X% by allograft, shortages sales quarter, gain our fiberFUSE and somewhat Strip offset due XXXX to our to portfolio, of down the continue fourth the negative growth momentum in this nursing Biologics with our fiscal quarter to year. COVID from compared Turning of introduction the

Global intramedullary were up recovery business to in deformity a our which is limb fourth the primarily our FITBONE quarter capture limb-lengthening markets Orthopedics is increase XXXX. over by result and system. Lastly, XX% on driven moving This correction. Sales international reconstruction primarily of the of focused and share

orthopedics quarter, with and success markets, mainly for full first $X bringing $X their Thank the to year full During generated team as market in over the the commercialization. FITBONE European of million. revenue FITBONE contribution over its fourth FITBONE million leadership sales, you to year from in our

Intersect board. our & to be definitive over we the of scale spending the we decision by and him solutions an that transformation look led I Hologic Directors Thomas of at Johnson medical with years where initiatives, will the we excited President to Director to West continue experience global a global as key after Tom's and He resulting currently business the CEO Company be served Thomas Orthofix. over in to President diagnostic want Board ENT, to years asset Medtronic. Prior December. to Intersect in our as XX are XX at acquired industry forward very device the share agreement experience a that Johnson. ENT, in our working how he's on and joined brings Thomas discussing of of Before

to Now, I'd of our like progress. an overview provide

solutions differentiation, We Starting acquiring execution. with past around and channel, initiatives product and unmet in we in products key procedural and strengthen year Spinal product the operational the in solid We launch marketplace, of have titanium portfolio our our needs on during developing innovation introduced product the made Mini with made FORZA Implants to XXXX, progress products interbody. and portfolio. XD-printed address commercial CONSTRUX key innovation, and

further with we growth the the in We marketplace. We as progress of are gain acceleration the traction happy they year. products these anticipate made in

and and in introductions to continue growth. fuel We to provide to strategy organic and both have inorganic of Changing fiberFUSE Strip and orthopedic Opus comprehensive use a products the portfolio pipeline and with procedures. will offering for We revenue our the key also Biologics, in expanded significantly in Set. our introductions the our of Allograft year our Mg new surgeons goal spine during to portfolio technology Again future technologies. AlloQuent investments Q-Pack, is additional solutions of is Structural

pull-through exclusive will We We MTF spine markets treated also lines anticipate Biologics our recently allograft over and robust this and partnership our cellular-based portfolio is continue for patients and growing. through orthopedics XXX,XXX that to history advanced MTF with Orthofix offerings. incremental agreement Trinity of with number biologic have XXXX. Biologics of help hardware long solutions drive extended to more bringing a

incremental reconstruction pediatric markets. as with products technology highly of upgrades to early to to innovative been have year bring following in Finally, and to example unmet our the well deformity, which within this able existing included an its Orthopedics, FITBONE introduction increase in the performance strong to we new throughout investments limb our focused market needs. address The of products to indications as on global is XXXX success we addressable the

Turning second our initiative development. to commercial channel

orthopedics hardware defined when one and the quarter, product make as biologics and compared of to biologics, channels current grown prior U.S. U.S. like dedicated the these we fourth compared on X% this focused to and our XX% that U.S. orthopedics For orthopedics quarter implants, and carry channel. working channels multiple BDC and are implants, generated strategic QX, channel to as distributor initiative, our predictable which carriers for XXXX. partners and partners In of as spinal has biologics revenue year our over our we third spinal

our these support forward. the continue optimization We will moving to to and of development invest in initiatives growth channels

I'm year the to global to of during XXXX execute how accomplish proud believe what challenges year. XXXX, which we've well microchip initiative, managed final our chain of has challenging a doubt the continue able third We're and team Throughout beat. to including without positioned several proud all and very our through of supply to very operational macro a that our to organization a Moving been aspects chain. all has supply during challenges was execution. we shortage the our on managed without missing of are

continuing look turn call beyond. a was of strategy generate execution XXXX that momentum to Some and to our successful the we to momentum we're review to our I'll and that, able Doug? result a financial to performance. direct Doug of forward over With

Doug Rice

complex and quarter the $XX currency XX% the basis quarter international fourth John to reflecting by the XX% quarter. John, good sales our details were a as to basis discuss quarter a fourth of as in market reduction and financial Starting Please for were was compared and growth reserve International or the system to million net X% global inventory X% basis. of of The as non-GAAP seen lengthening some revenue a our a were MX-C decreased of recovery. some somewhat versus the international information was reported shortage, because the XXXX fourth and our of the will primarily quarter, net many our total reported XXXX. into mentioned, timing global up compared FITBONE further with costs decrease in the short non-cash the term financial due $XX increase everyone. to reconciliations measures in sales million in charges from offset fourth as total margin over million, growth due earnings today's from total offset provide procurement mix as net in over fourth other then total of our by XXXX. on of and net to as U.S. sales electronic prior morning Thanks, mainly today's In of of microchip non-GAAP release the refer U.S. in early up limb additional I year in $XXX sales quarter earnings in revenue, on results our the Gross the well sales covered on call XXXX, the up period. regarding due to the measures well when constant quarter fourth XX% procedures disclosures. orders XX% are X% changes XXXX, of for

sales. were gross year total margins of the XX% XXXX, full For net

the short-term reflects continued in For the of full similar in be as margin fourth year expected increase in well to in flat the the XXXX, microchip we year. XXXX changes impact as quarter marketing net XXXX. gross of XXXX which mix the costs to half XX% of approximately of the Sales expect sales, the fourth were sales of or to our XX%, quarter the expenses and first

out change net marketing of range our fourth decrease sales device in anticipation non-GAAP in provides year throughout a our sales and XXXX increasing on expenses in is basis, to XXXX, expenses as expense reduction growth including be travel events and support of limited were law to expect resulted by related as In million distribution XXXX, and the our period. basis GAAP absolute sales, earnings. restrictions in on Orthopedics $X.X an easing XX% hospitals. to direct Global that the saw early dollar adjusted of an year. in that XX% credit we the in quarter of of and Italian travel further expected our the increase investments XX% were BGT one-time by down This expenses [Excel prior in-person launch flat in medical the U.S. public Although, certain of non-recurring liability of relative these expenses quarter in to recent regional their investment commercial COVID-related our G&A government the stem] channels due a Italian in revenue to net a the year tax we COVID the relief from channels suppliers and of XX% of well offset fourth to from

planned our prior charges clinical The well expenses increase certain in XXXX with to related the Although, were studies, our costs quarter COVID that increased completion CEO decrease the increased year employee disruption. MDR of in to the XXXX on GAAP sales, quarter investments reflects expenses the EU from fourth X% of up we XXXX. benefits GAAP of R&D in offset suspended been product and well compliance spending to for efforts. development, spending have as fourth increases associated This by the as period. have as new XX% as transition spend strategic related to net support the

study to We clinical up two-level innovation repair to within study to trials indication spine in drive ramp growth a and as a will investments and to R&D pipeline and such our build efforts organic to continue BGT outpace the near-term. spend cause differentiation will invest product continue revenue continue cuff both MX-C robust spending our to our These orthopedics. growth and rotator in in to

on will we be be We sales, timing EU clinical points this expect lunches, our including payments. directly to of within expense the side XXXX product metrics. for related and frontloaded implementation net approximately milestone based XX% about our adjust an to XXX enrollments certain financial year of GAAP somewhat R&D non-GAAP efforts spends MDR which of impact R&D basis

spending the to XXXX EBITDA implementation as the $XX fourth related in with was XXXX The total Adjusted on to well orthopedics quick decreased We to in of A unit sales, sales clinical the net expenses for have the $XX note goodwill driven our related or future accelerate to costs building million and to of compared year. commercial in acquisition our in quarter quarter, channel EU reflected our a changes based compared the by our somewhat year the XX% MDR FITBONE million procurement investments including $XX chain P&L. non-cash in taper integration made R&D million, Adjusted full investments XX% in we in increased of disruption. after related also the our reflects we've as EBITDA sales increased to analysis, prior planned current and that to fourth XXXX, line expect our to development write-off items growth. implementations as in in supply sales fourth the reporting is incurred well XXXX. growth quarter on of EU requirements investments write-off The revenue which product our GAAP of spend. mix MDR and as the cost our XX% expense trials

million or expense GAAP tax for tax, to GAAP before of XXX% negative taxes XXX% or loss as have tax turning income same $XX period income before Now of quarter of we income of in taxes compared million to the income income XXXX. $XX expense the of

provision during to the our increase charge to is was year, GAAP impacted and addition U.S. quarter. deferred million of to in In the accounting quarter's historical a significantly $XX Due assets. a tax timing charge which by earnings this recognition rules non-cash to earnings, involving the against the non-cash the tax forecast reserves

profitability our to assets We grows in tax overtime fully continue expect realize to the our and carry NOL Company as increases. forward

the quarter. XX% For tax our utilize we the non-GAAP long-term fourth results, on effective adjusted rate

rates in in income order well earnings tax as However, expected we and impacts. general tax will the statutory effective long-term expected the current and prospectively increases tax non-cash utilize rate our adjusted certain of adjusted to elimination international a XX% recognize as

The organic per increase microchip XXXX, R&D compared by the well fourth compared decrease share the spending the we of and to $X.XX differentiation and for COVID our to long-term to of share tax increased spend them the tax an build of was in loss adjusted quarter lower as channel. per to our adjusted quarter XXXX. to was EPS out as of earnings in due when of XXXX fourth non-GAAP using impacted for effective GAAP share shortage, innovation and of XXXX the for For loss $X.XX driven expenses certain normalizing fourth reported $X.XX adjusting of XXXX $X.XX fourth After drive increased commercial quarter short-term in GAAP quarter items per global rate, as per XXXX. primarily share

to $XX of XXXX $X the balance strategy position revolving continue cash, were million third be quarter the virtually. to in Regarding early $X quarter, the have due $XX and increase in in XXXX reduction CapEx million in inflow second of completed expect year, for the in liquidity in million down the fourth with operating the $XX million an XXXX. of $XXX million end over in currently million growth we approximately receivable the year borrowings distribution QX provided We change due the the quarter in prior XXXX. the commenced to We Medicare full travel of under sales primarily to to year spine at repayment freezes XXXX bring of The for of XXXX XXXX. the as prior year, We strong facility. our support senior million. held as conferences outstanding compared million quarter maintain of credit and such instruments still just expenditures approximately the the U.S. activities XX, of in million by of the the Advance timing to of XXXX, end cash recruitment of last by accelerated suspension, $XX compared in period, Net XXX(k)-match Capital in strategic of inflow additional net accounts the fourth remaining spend was at no XXXX to secured of initiatives being the the quarter December plans. cost Medicare due feature advance to primarily compared XXXX. Advance The of quarter was an the a $XX the XXXX to million, was an million. $XX over repayments $XX and to $X

to our Consistent due abilities, and operating cash product quarter launches, was flow, instruments for free operations decreased expenditures in million million well from to as investments which investments cash be increase down a capital million XXXX with of our during $X inflow operations. growth our in cash range. the distribution technology as in of our million This investments the is which $XX inflow XXXX. year to the support We $XX we expenditures capital flow quarter the sets minus prior new the define in expect fourth as our over to in $XX facilities flow was from in

several including innovation significantly Medicare and As mentioned the due sales XXXX, milestone product XXXX compared on flow MDR the our to support of increased Kinetics of items to efforts. growth future our in decreased beginning we repayment Spinal cash 'XX, and investments to that payment spending at free the EU Advance to partial the anticipated, channels implementation in sales

For cash expect XXXX, the from increase XXXX early timing to to of of in the we Kinetics milestone operations flow modestly Medicare ending Advance due Spinal and payback the quarter the the second payment payments, XXXX. of

shifting guidance. Now to

full we at mid-single-digit $XXX be currency. $XXX represents the the to million, constant For which to in revenue expect year million XXXX, growth of range of

to the or throughout half as deferred half the momentum in the in are and revenue XXXX and continue the as COVID as back we of in anticipating We gain with the to made reported our dollar well February a currently procedures FX acceleration in the of a this as to the are overhang we companies X% medical increase perspective, significant to industry, first January headwind device being COVID subsides year, elective during restrictions saw in U.S. rates the of hospitalizations From about up. continue to variants. the strength year increase related procedure macro rates. a products year the the experience key of compared the delayed year, to Similar top-line other Omicron expect due in to of a in the result

down slightly flat expect on to We a basis. be reported to to XXXX QX

in additional likely a inability global QX show Due both pandemic strong the or prior to the be impact guidance expect of predict does during We not to this point quarters. to the to In and impact QX COVID time. versus on COVID cases the basis to year's due any growth and assume flat variants at trend our XXXX. reported the surges

long expected expect to a $XX be to our EBITDA EPS to $XX For between reflect expanding call Jon. robust our XX% and our I'll turn over our revenue. is of tax accelerate adjusted range year ranges were a million growth rate XXXX, to continued adjusted non-GAAP trajectory. of a of we XX%. now These our approximately to in the using be $X.XX full $X.XX, term delivering million the differentiated products, of pipeline in distribution And investment channel back

Jon Serbousek

Doug. Thanks

is growth an XXXX point view In inflection we company. top-line recent have years, a been low we our ahead, for business. Looking single-digit

of As the which made channels. you investments product this particular just heard, is into we've portfolio, those our in our the organization talent leadership, commercial for last year represents mid-single-digit guidance the and years result growth, across investments a largely two and over

achieve trajectory we company adjusted mid we our on into growth, As a expect areas. to growth to become a accelerate beyond, move single digit 'XX that to still we two positive and delivering high are EBITDA. focused further while To

organization. innovation product as This near-term products, and indications, an our investments in new accelerating as well core increased our as products, differentiation. new solutions adoption continued First, through delivering includes recently growth of and new strengths inorganic that the build launched and on organic

system the bolstered channels disc, last Second, physicians primary drivers lengthening surgeons our limb technology MX-C and into be of Beginning product will continuation In products worldwide. cervical development the with FITBONE our in our portfolio. innovation to recently ongoing a our of XXXX of differentiation. and of leading drive the growth year, and commercial hands interbody

to additional launched in growth products will We XX XXXX. XXXX in products top-line from launch new over benefit also we and the we expect the

of during the work required real to and are capital put areas have As areas we going XXXX business broad product investments accelerate to to we're position today expertise in the ourselves are. key our and areas growth. within our where we be to leverage and in to sweet differentiated portfolio. to market in everyone. several strength clearly years, our want our we compete everything to with All which that opportunities areas by work in no enable current is means These There to we type distribution market this plan drive increase strength accelerated product needed a growth of to of future portfolio key have

biologics; spinal and regenerative limb technologies, category and enabling solutions; includes and soft reconstruction fourth, technologies. sterile lastly, that technologies, second, surgical Starting and development innovative includes stimulation implants surgical regenerative bone tissue single-use technologies; alternative pack third, which product First, one technologies, and and deformity; and our of space adjunctive business that differentiates fundamental regenerate portfolio us bone the provides solutions, We is others portfolio, leading provides orthopedics portfolios. post-operative spine offer industry aspects and surgical our which biologic based solutions. healing healing from procedure of the with growth site a in which pediatric and simulation a a

focused of We the portfolios. investing on these regenerative are highly in development both product of

As healing portfolio submitted the we treatments. therapies PMA low cell and application fracture and for complement for that Upon approval focus bone our of FDA ultrasound the recently non-union and of both growth previously product on current expand non-union fractures technologies pulsed approval, will this fresh therapy, noted, bone our stem the a fracture. [TEMP] healing to intensity a spinal

We continue half second to XXXX. during the release expect of the initial market

tissue market. IDE be if will entry initial ongoing invest our to successful, regeneration which trial, continue cuff rotator the also our soft in into We

a U.S. through and announced making synthetic MTF meaningful our investments As We're of of portfolio of products advantage our kind with our the for in XXXX exclusive surgery recently biologics mover partnership technologies. cellular tap flagship have therapy rotator for patients Biologics with its year. a we who open every the extension allograft into the launch as XXX,XXX regenerative our in first enhance undergoing received rotator patient cuff repair reconstruction, the to over would care those cuff first to

the to also solutions launching which forward market. surgery two additional of and meets portfolio this biologics and needs offer biologics believe artificial one of a to surgeons, we portfolio differentiated any currently of is we in a products there provide so cervical cervical striving the Spinal an important will will Orthofix surgeon specific part and offering patient. partnership, of that full As disc. We're procedure, a that for an technologies, be the to look differentiated solution including solution mid-year, we an comprehensive Implants, the In of extensive products

projects. system innovative platform, anterior are key products and throughout posterior solutions anticipate the deformity of in spinal Orthofix bring create invasive a and to We and These and correction will spine to differentiated collar spine support deformity a half introduced late been minimally world portfolio product five long-term year have top-line we developing additional solutions, and and developments initiated Additionally, market reevaluating projects In organic create innovations the which for platform. R&D these a procedures. we've programs an technology and XXXX, key surgeons XXXX. system growth. cervical lumbar stand first clinical out to innovation the innovations in and FITSPINE the be engaged to this assist throughout These

reconstruction deformity. to Turning pediatric and limb

narrow such hip of is area competitive markets. focus highly differentiation key to peers business Another for our our exposure and replacements. and dedicated or markets have of within our orthopedic Many knee crowded as

deformity highlight correction. we without System compromise for precise number squarely of imaging leadership a segments developed enhancing are limb focused and However, I We we TrueLok allows Well, of at also orthopedics, record track system fixation was Texas, and Texas stability radiolucent. two. innovation Fixation in have ongoing Hospital this to want characteristics. a Dallas, segment in expertise small plan on of reconstruction in of and and our This where space, alignment portfolio we have projects and Ring a expand to to Rite become Scottish Children longstanding

of We complete market. system FITBONE new demand deformity of able care to early extensions projects and within we'll trauma products the U.S. pediatrics. be believe address in advanced leading along will Plating drive of in and deformity system a same also FITBONE in pediatric continue identified of type need with reconstructions with U.S. the the to XXXX, engineered in broadest our development the adoption growth pediatric the from the the System which We technology invest will to extremities input in is markets. lower with the surgeons orthopedic to These European the the we that that two Orthofix German our smart response an see system cutting-edge currently specific designed give U.S. JuniOrtho the and plating in new

for planning corrections the preoperative the Orthofix across future connected products OrthoNext, enabling our technologies, within developed of business. clinicians limb organically on of most be the focused digital to soon will deformity major and to planning of software Turning the world. reconstruction orthopedics

preplanning making but preoperative to Our nView our and both the unique announced and provide This cervical capture our spine spine is of collaborate guidance intuitive we images, nView and real-time platforms, innovative throughout excited radiation, imaging postoperative and the sX the we and adult and co-market goal procedures. features investment broaden to jointly to correction visualization. pediatric in technology deformity agreement enabling patients. surgeons ability a and procedural and images throughout software The system and to pediatric surgical technology this solutions. XD very cervical preoperative also partnership surgical surgery low use planning nView systems to develop dose with In assistance limb pediatric January, a to to are software instantaneously XD with surgeries and available complements and

looking expansion differentiation setting with We'll Neo as of into continue we're be our emphasis. an sterile we're our To develop partnership, on procedures already focus procedures of for ACs. pack continue instrument offering and developing sites Finally, more robust hospitals surgical product our innovation, single technologies. the the alternative to care surgical use outpatient to under out to of moved continued

addition make invest optimization direct will further of of pediatrics expansion U.S. and deployment we our increase reps direct and geographies to employees the limb sense. Turning the the business our to the where with of distribution on channel, channel in focus reconstruction targeted commercial in

of fresh drive BGT long growth non-union and in fracture launch making in [cell XXXX our we're the a stem], to bone from channel With anticipated investments care.

for In Orthofix channel focus summary, channels. to few increase pull-through and efforts our lines, our years, are on channels the multiple partners improves product moving trajectory. within period inflection our future provides momentum product we generate We driving continuing excited also the which over of and about to sales at more number strategic synergies our are and last tremendous Orthofix. the reliable We and we're an into predictable very trying growth

to future accelerate line the and do sustainably invest questions. to continue Operator? that years, will open With profitable. I so We remaining like while importantly, growth for to in would

Operator

of [Operator Blackman Mathew first Stifel. comes from Instructions] Our question

is Your open. now go line Please ahead.

Mathew Blackman

then currency top-line on couple The start any the quantify to questions guidance. have is EPS? through the the housekeeping EBITDA way headwind, impact there 'XX and/or And Doug of to just Maybe point follow-ups? that I with a drops one for

Doug Rice

It's question. a good

right of It's and actually revenue translation well as mostly We're and at cost have to rate primarily the at real. where as Euro Brazilian the top obviously line. X% you're we GEOs about hedged level. the reporting to So, on exposure level most some the fairly risk dollar the

at a of and as FX it terms lot fairly in look would material at impact. EPS EBITDA I less or level the So,

Mathew Blackman

a Jon, for you. then, And couple

get segment would growth, balanced thinking to mid particular Just launch? it bone weighted digit Implants there any asking longer cuff you Spinal follow-up Is the another or up acceleration one there? across for sort upper single that and from disproportionately bridge the expectation the term business growth? contemplate growth stem? step single of the whether Essentially be to it to about just digit rotator what's Does gets then or more product new be after And in that.

Jon Serbousek

question. the for thanks Matt,

forward. as new building the hand going I commercial product maturation organization general and well well of a differentiating these through and the which innovation launch attracts there's strategies mean, two as those our channel between a go hand. combination as marketplace, think surgeons it's in as I

to better channel well when and focus and continue both portfolios. as have we as direct better on we We tract talent indirect commercial

across tighter they back So, another. and forth one

as we've orthopedics on focused been going as at -- seeing we've spine reconstruction limb well as the look far areas. growth sectors to it's we both deformity and As and where the occur,

that's in And a combination for line have our with our also a very planning standpoint. TL-HEX OrthoNext the System Plating both our deformity, so, reports a comprehensive of you and reconstruction performance partner Europe limb then FITBONE saw the JuniOrtho

with in investment also but we execute that saw had product of the regions, the many, part as fixation, to which the area look as with to to we other BGT in and stem], continue also now and in in we'll where in look we not year. spine, those BGT. spine occurred we not Europe half continue invest the second many then, BGT, good our strategy, forward only we the forward performance U.S. that [cell a For to lunch and also plans, the innovation years new well And as is in

Mathew Blackman

margins trying of go what appreciate higher explicit teens really structurally trajectory? but could guidance. Is and gave EBITDA the not then morning, long-term asking where could think anything this beyond XX% what just more there for top-line And that about we I you question as XXXX. I'm last profile from prevents to a or growth frame with even getting profitability to upper be the you single-digit

Jon Serbousek

and as We product EBITDA in basically those in is, portfolios know the get build we're be designed. refreshed we that sales where the that dollars, channels by place and there'll we rebuild years, or we out put stated consistently that so spending that leverage plan we as believe and organization our

EBITDA our in years. And so standpoint, style in our operate other incomparable we expect size from be company do and to to of and mid-term. over profitability any the And able to and increase near-term the in that that we leverage should any the park out

Operator

you. Thank

Our of comes Cohen question Jeffrey next Ladenburg. from

ahead. go now Your line is open. Please

Jeffrey Cohen

on Firstly, there study? update is MX two-level the any

Jon Serbousek

those continue see the we've as we enrollment plan sites as Jeff, are MX far enrollment two-level to and just you within we add here established sites study. on already

Jeffrey Cohen

that, Could into you of technology will is substance how commercial 'XX on and falls about of your and or they'll this standpoint, be on like bolt-on talk same current a those the it's BGT be commercial platform, that half little that to the will year largely channels kind late and and sounds the back bit platform?

Jon Serbousek

Jeff. Yes,

And that we've that. be building indication IGEA year. fracture our reminder, channel to basically we our with. in PMA the we be first the we PEMF will On non-union. a that's PMA -- from fresh submitted for within executing It very area. and been technology that this we've and channel have accounting non-union last And BGT that the strong partner as prepared half our approval [cell the to stem], have within a for also expect But and this a approval a been PMA is fall in licensed commercial we've -- that physio technology

with the the in over so, we a new last we're driver from physio we PEMF we partnered and in done channel technology the in better existing combination momentum XX in build those that channel that see technology with reps months. as our And [cell have a investing stem] and even

Jeffrey Cohen

BGT expect roughly well Would as focused as to to the be technology domestically here? [cell you stem] substance

Jon Serbousek

BGT for but Yes, been of for our we remain and U.S. this and U.S. really be contemplated outside for is looking position will focused product many U.S. it a years has on the

Jeffrey Cohen

firstly, and And guess XX income last then a years know you've of I Dug, I expense couple the number carrying there quarter. for been it's for a XX.X tax

balance, like to expect to so should on Is looks X.XX assumption? zero actual remain forward. at that we that your safe hits that level that the low So very going a

Doug Rice

tax or I if the question rate? Jeff, correctly, understand income the about you're asking volatility

Jeffrey Cohen

off expense to No, that something toggled directly it income QX million income tax now? expenses. $XX.X that that unexpected through we that that bit a were the tax come Is caused the will because come

Doug Rice

last rates. of year you're our It position long-term seeing over So, Italy our but a was to an to mentioned were and business, the you're U.S. world. we're we non-cash full the pressure In evaluation QX ability to record reflect Because expense we're to adjusted charge related where that XX% last value in the losses International a the charge. normalizing from around the moving to changes our couple U.S. deferred XX% so what reserve on jurisdictions was allowance in I GAAP interrupt GAAP to historical starting still in rates years, on tax for rate. the in our of long-term do rate the a tax DTAs assets. seeing script, tax our to to we in similar

So, expect losses of more as all the that's quarter, realize our earnings in would fully assets normalized. forwards fourth We term I continue million do tax our in expense $XX overtime. of carry rates but about simply to operating improve tax longer for look additional the to to net

Jeffrey Cohen

related and of remeasurement fourth that to we expect the amortization on acquisition-related then model should and what or line? for for quarter, we the And 'XX should XX.XX what forward Okay. going

Doug Rice

the accrete current. our to payment For long-term would sheet, over a Also final Kinetic to Spinal lot semi-ratably expect payments up final amount in will XXXX ultimate that balance notice milestone happen each of $XX quarter. to from million. liability closer that It slip in milestone, I the that

an of you give speed the the of So, that'll accretion. idea

Jeffrey Cohen

Okay.

expect is So, or XX during of XX.X the part XXXX? should the XX we

Doug Rice

ultimate current and a fair to lot The simply payment, value go of a third-party value an liability payment. simulations that is that's we the through today's accounting to dollars, with discounted

roughly part quarter just And so, fourth million, that the $XX liability the at XX end was is XX. the of the a of

Jeffrey Cohen

commentary specific you've 'XX both see seeing forward labor that issues into you internationally? any going as lastly, and then been as or well expect domestically And Okay.

Doug Rice

on as was large for to out going ongoing is just going West that institutions, they it's the Jeff, issue ongoing this labor institutions, plus far months three XX, I companies. XX very see and an and an are issue, with institution. be as dynamics Mid in recently Coast, going all their in just East,

institutions them. ready far as well is that. come do news motivated are good surgeons And that that, ready positive those side patients those out the news, to good there the them as is with the that the for we'll to to So, there that and as I care as think, right of be

Operator

comes from Company. Sidoti & Our from next question Jim Instructions] [Operator Sidoti

open. is Your go now ahead. line Please

Jim Sidoti

somebody what adjustments even gross repeat margin hear asking for non-GAAP me change. your for Can a questions guidance to or was XXXX? nice you It's the for about

Doug Rice

be first expect year those for XX% Gross we the chip late margin approximately at so We've shortage some 'XX, and year for of mix. half last got the primary the the items pressure sales XX%. experienced reflects at we are to in that

Jim Sidoti

spine Is that a I assume set. mostly products the or And and both? the is instruments wanted $XX then capital million the million to you said in million to did more I function And of new distributors you that's of think primarily this combination business? year than focus you're is CapEx, which $XX $XX the that spending about more to or roughly going for new for I on because be

Doug Rice

both. it products two-thirds distribution rolling Stem] is related to the [Excel spend out. and cash takes instruments of MX support increase is It to It's $XX in our distribution. XXXX. majority buckets for a of to more level of bit over the that like and a million that just a I characterize CapEx would about in of It's $X about big little million increase increased

the also some got as are in facilities in operations drivers. We've of those primary some So, our well. investments

Jim Sidoti

be double-digit I happen to to seems there out beyond away, some I and but And one levers you I because that But new have the distribution. push? if going for lot question. this at look And at like products it's think not right you can just mean, increased have for last growth me. going Do is feels just the here And to target a you then point mean, stem you it's point. you of have grower, long-term strictly that know you coming be a becomes some at this mid-single-digit the did MX,

Doug Rice

And does We've our at not now. new activity trajectory where stated right also, product is include the basically any M&A.

I the think all as look far to at high organic that. as we the have where actually provided. as but we our that improve what a so I be we far as ultimate, that's the grow as going now we're for Orthofix. very see channel as and of now, we And and to that I fair basically doubles future at good can't and comfortable so side singles, we our improve portfolio really right markets say are and right don't rest see do

Jim Sidoti

I Okay. I little with mean, of to wellness getting end be bit. to that's there's registered? just light products want a approvals taper regard one that spending And it's at mean to thing, the seen clear a for [indiscernible] then the like starting does tunnel off

Doug Rice

and MDR We're spending Europe, our know yes. your each to levels. I there, anticipating in related your were correctly, if about you I questions say maintaining getting CE Marks word but questions saying

Jim Sidoti

of end that Is the at there to tunnel light process?

Doug Rice

Yes.

we MDR. $XX then, about we XXX about XXXX basis in deadline or this the spending call spent everything a spring million 'XX. to start are comes of of We perspective, out as about on track. for million And year. spend together points tapering from -- we expect advance So We'll in $X

Operator

no waiting are questions There additional you. at this Thank time.

remarks. pass the management So, team I'll for closing over conference to

Jon Serbousek

Thank you wonderful for be talking to joined and you Have beyond, who throughout everyone XXXX today. forward year very year. in the a positive day. look I we'll a the and call to

Operator

This conference call. concludes today's

lines. now disconnect your may You

Orthofix Medical (OFIX) 25 Feb 222021 Q4 Earnings call transcript