KIDS — OrthoPediatrics Corp.

Summary of OrthoPediatrics Corporation Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Q4 2025 revenue reached $61.6 million, a 17% increase year-over-year. Full-year revenue for 2025 was up 15%.
• Adjusted EBITDA: Improved to $4.8 million in Q4 2025, a 59% increase from $3.0 million in Q4 2024. Full-year adjusted EBITDA rose nearly 75%.
• Free Cash Flow: Generated $10 million in Q4 2025, marking the first quarter of positive free cash flow in the company's history. Total cash usage for the year decreased to $15 million from $41 million in 2024.
• Gross Margin: Increased to 73% in Q4 2025, up from 68% in the prior year.
• Net Loss: GAAP net loss per share was $0.43, improved from $0.69 in Q4 2024. Non-GAAP net loss per share was $0.30, slightly higher than $0.29 in the previous year.

2. Strategic Updates and Business Highlights

• Market Position: OrthoPediatrics remains the market leader in pediatric orthopedics, focusing on innovative solutions tailored for children.
• Product Launches: Initiated a significant series of product launches, including the 3P Hip system and VerteGlide, with expectations for continued innovation driving growth.
• International Growth: International revenue grew by 33% in Q4, with strong demand in the EU and Australia. The acquisition of a Brazilian distributor is expected to enhance market penetration.
• Expansion Plans: Plans to broaden the product portfolio into other pediatric subspecialties and leverage existing commercial channels for growth.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected to be between $262 million and $266 million, representing 11% to 13% growth year-over-year.
• Adjusted EBITDA: Projected at approximately $25 million for 2026.
• Free Cash Flow: Aiming for breakeven in 2026, with anticipated quarterly seasonality similar to 2025.

4. Challenges and Points of Concern

• Competitive Pressure: Notable competition in the scoliosis segment, with concerns about maintaining market share against emerging competitors.
• R&D Spending: A decrease in R&D expenses raised questions about potential impacts on the product pipeline, though management reassured that efficiency in product development remains high.
• Regulatory and Market Risks: Potential delays in product approvals and market acceptance, particularly for new technologies like eLLi and iotaMotion, could impact growth.

5. Notable Q&A Insights

• Scoliosis Growth: Management highlighted strong growth in the scoliosis segment, driven by new product launches and increased surgeon adoption, despite competitive pressures.
• Product Pricing and Margins: New product launches are expected to command higher prices, positively impacting margins over time.
• Expansion into Adjacent Markets: The company is exploring opportunities in pediatric cardiovascular and ENT markets, leveraging its established commercial infrastructure.
• 7D Technology: Slow growth in 7D placements was noted, with optimism for future performance as interest grows despite current bureaucratic hurdles in customer onboarding.

This summary encapsulates the key financial metrics, strategic initiatives, future outlook, challenges, and insights from the Q&A session, providing a comprehensive overview of OrthoPediatrics' performance and strategic direction.