KIDS — OrthoPediatrics Corp.

Summary of OrthoPediatrics Corp. Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $70.5 million, a 15% increase year-over-year.
• Adjusted EBITDA: Record $6.8 million, up from $4.1 million in Q2 2025, representing an adjusted EBITDA margin of nearly 10%.
• Net Loss: GAAP net loss per share remained at $0.30, while non-GAAP net loss per share increased to $0.26 from $0.11 due to foreign exchange impacts.
• Gross Profit Margin: Improved to 74% from 72% year-over-year, attributed to a favorable product sales mix.
• Free Cash Flow: Usage reduced by 78% to $3.1 million compared to $13.9 million in Q2 2025.
• International Revenue: Grew 22% to $15.7 million, driven by strong performance in Europe.

2. Strategic Updates and Business Highlights

• Patient Impact: Helped nearly 46,000 children in Q2, raising cumulative impact to 1.4 million.
• Product Launch Super Cycle: Early contributions from new products, particularly in trauma and deformity (T&D) and specialty bracing (OPSB), are expected to drive future growth.
• T&D Growth: 26% growth driven by strong demand and early contributions from new product launches, including the 3P Hip system.
• OPSB Performance: Over 20% growth, with significant contributions from new product introductions and clinic expansions.
• Scoliosis Revenue: Reported a 9% decline, primarily due to zero sales of 7D units and lower set sales in Brazil, although underlying fundamentals remain strong.

3. Forward Guidance and Outlook

• Full-Year Revenue Guidance: Raised to $265 million - $269 million, reflecting 12% to 14% growth.
• Adjusted EBITDA Guidance: Reiterated at approximately $25 million for the year.
• Free Cash Flow: Expected to achieve break-even or better in 2026, with positive free cash flow anticipated in the second half.

4. Bad News, Challenges, or Points of Concern

• Scoliosis Sales Decline: Despite strong underlying demand, the absence of 7D unit sales negatively impacted revenue.
• International Set Sales: Lower set sales in Brazil were attributed to timing and cash collection strategies rather than demand issues.
• Market Timing: Some revenue streams are timing-dependent, leading to conservative guidance amidst strong growth momentum.

5. Notable Q&A Insights

• Guidance Clarification: Management expressed confidence in achieving guidance but noted seasonality and timing issues could affect quarterly performance.
• Super Cycle Impact: Initial contributions from the super cycle are expected to grow significantly in the coming quarters, with a gradual ramp-up rather than immediate large impacts.
• Scoliosis Business Outlook: Management remains optimistic about the scoliosis segment, expecting recovery in sales as 7D unit sales resume and new products like VerteGlide gain traction.
• International Expansion: Focus remains on Ireland and the UK for OPSB growth, with potential for further international clinics in the future.
• MDR Environment: Positive expectations for EU MDR approvals, which could enhance product availability and competitive positioning in Europe.

Overall, OrthoPediatrics demonstrated strong performance in Q2 2026, with significant growth in key areas despite some challenges in specific segments. The company remains optimistic about future growth driven by product innovation and strategic initiatives.