KIDS

Interested in OrthoPediatrics Corp.? Here are five stocks we like better. OrthoPediatrics reported a record second quarter, with approximately 15.5% revenue growth, improved adjusted EBITDA and lower cash usage. Management is targeting $25 million in adjusted EBITDA and break-even to positive free cash flow for the year. New products, including the 3P Hip System and VerteGlide, are expected to contribute more meaningfully in the second half as additional sets are deployed. The company also anticipates potential first cases for its Veraxis fixation system later this year, pending an FDA decision. Growth opportunities include specialty bracing, international expansion and reduced competition in pediatric categories, while the company is tightening capital discipline by lowering new instrument-set deployments and restructuring its Brazilian operations to improve margins and cash collection. OrthoPediatrics (NASDAQ:KIDS) reported record revenue, adjusted EBITDA and number of children helped during the second quarter, as the pediatric orthopedic device company began to see early contributions from its newer “super cycle” products, Chief Executive Officer Dave Bailey said at the Canaccord Genuity Growth Conference. Bailey said the quarter represented an “inflection point” for the business, citing approximately 15.5% revenue growth, improved profitability and lower cash usage. The company is targeting $25 million in adjusted EBITDA for the year and free cash flow that is break-even to positive. → Applied Materials Beat Everything but Wall Street’s Expectations for Margins “It is a really good setup for us in H2,” Bailey said, adding that the company expects further records in EBITDA and cash flow during the second half. Bailey said OrthoPediatrics has experienced strong scheduling and procedure volumes during the summer, a historically busy period as children are out of school. While the broader market has included discussion of patient volumes and reimbursement, he said the company has not identified macroeconomic trends that have materially affected its business. → Texas Roadhouse and Brinker International Have the Recipe Rivals Are Missing The company launched most of its 3P Hip System sets in the final weeks of June, meaning the product had limited impact on first-half results. Bailey said the company expects implant revenue contributions from 3P Hip and the VerteGlide system to begin increasing as additional sets are deployed in the early part of the third quarter. Early surgeon feedback on both systems has been strong, according to Bailey. He said the products are designed to address procedures where children’s hospitals may not have comparable alternatives, potentially creating a pull-through effect for the company’s other technologies. → AirJoule Technologies: Short Squeeze Setup Amid Rising Risks Bailey said newer products generally carry higher average selling prices and require more efficient inventory deployment than legacy offerings. Historically, OrthoPediatrics targeted roughly one dollar of annualized sales for every dollar of deployed assets, but he said the company is now seeing figures in the range of two to four dollars of sales per dollar of inventory for certain newer products. The company is also preparing for potential first cases of its Veraxis fixation system later in the year, subject to an FDA decision. Bailey described Veraxis as an adjunct rather than a full replacement for the company’s RESPONSE fusion system, which he said continues to grow at a double-digit rate. Veraxis is intended to support more modern techniques used by surgeons to reduce pediatric spinal conditions, while strengthening OrthoPediatrics’ positioning at leading children’s hospitals, Bailey said. In specialty bracing, Bailey said the OrthoPediatrics Specialty Bracing, or OPSB, business supports the company’s strategy of serving pediatric orthopedic customers across the treatment pathway rather than only in the operating room. He noted that pediatric orthopedic specialists spend much of their time outside the operating room and that bracing can help avoid surgery for some children. OrthoPediatrics expects the OPSB franchise to grow more than 20% annually for the next several years, Bailey said, citing demand for clinics and products. A company representative said OPSB gross margin is slightly below the rest of the business because of its product mix, but that the segment generates a strong contribution margin. The company has also directed much of its recent merger-and-acquisition activity and expansion toward OPSB. Bailey said OrthoPediatrics’ earlier investment in European Union Medical Device Regulation, or EU MDR, approvals has strengthened its position in Europe. Some larger original equipment manufacturers have opted not to support certain pediatric product lines or have removed products from markets because of the regulatory requirements, he said. About half of the product portfolio available in the United States had not previously been available to European customers, Bailey said. He cited 22% international growth and said the business outside the United States could outpace domestic growth over the next several years as the company builds share in Europe. In Latin America, the company has adjusted its approach to set sales, particularly in Brazil. Bailey said OrthoPediatrics removed certain expected scoliosis set sales from guidance because sales to stocking distributors can involve long import cycles, extended payment terms and lower margins. The company is seeking to improve profitability, cash generation and accounts receivable through a revised Brazilian operating structure following the acquisition of a distributor. “We are not going to use our capital to deploy these sets with long payment terms in an area where we get very low margin,” Bailey said. A company representative said OrthoPediatrics deployed more than $20 million of new sets in 2024 and is targeting $10 million this year. The company does not expect the lower deployment level to hinder revenue growth, citing improved utilization from existing and newly launched sets. Bailey said larger competitors have reduced support for certain pediatric categories, withdrawn some products or declined to pursue EU MDR approvals. He estimated that 40% to 50% of OrthoPediatrics’ trauma and deformity portfolio may now face no direct substitute, potentially supporting pricing and contracting leverage. The company also recently signed a distribution agreement with OSSIO, whose technology is intended to absorb and potentially avoid the need for implant-removal surgery in children. Bailey said the arrangement fits OrthoPediatrics’ strategy of bringing differentiated technologies to children’s hospitals through its pediatric-focused commercial organization. As its portfolio becomes more clinically specialized, the company is increasing surgeon education efforts. Bailey said OrthoPediatrics has trained 124 surgeons on VerteGlide since its launch and continues to support clinical education and training programs globally. OrthoPediatrics Corp., founded in 2007 and headquartered in Warsaw, Indiana, is a medical device company dedicated exclusively to providing orthopedic solutions for children. The company focuses on developing, manufacturing and marketing a broad portfolio of implants and instruments designed to address a wide range of pediatric conditions, including trauma, deformity correction, spine disorders and sports injuries. The company's product lines include locking plates and screws for upper and lower extremity reconstruction, intramedullary nails for femur and tibia stabilization, and specialized systems such as the MAGEC Magnetic Growth Rod for treatment of early-onset scoliosis. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "OrthoPediatrics Sees ‘Inflection Point’ as New Products Fuel Record Quarter" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 4:30 p.m. ET President and Chief Executive Officer - David Bailey Chief Operating and Financial Officer - Fred Hite Operator: Good afternoon and welcome to the OrthoPediatrics Corp. Second Quarter 2026 Conference Call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Trip Taylor from the Gilmartin Group for a few introductory comments. Philip Taylor Thank you for joining today's call. With me from the company are David Bailey, President and Chief Executive Officer, and Fred Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For a discussion of risk factors, I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March 4, 2026, and its subsequent quarterly reports on Form 10-Q. During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors in evaluating its operations period over period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure in its second quarter earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for OrthoPediatrics' financial results prepared in accordance with GAAP. In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, August 4, 2026. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect the events or circumstances taking place after the date of this call. With that, I'd like to turn the call over to David Bailey, President and Chief Executive Officer. David Bailey: Thanks, Trip. Good afternoon, everyone, and thank you for joining us today. I'll start with our most meaningful performance metric, patient impact. In the second quarter, we helped nearly 46,000 children, another new record, increasing our cumulative impact to 1.4 million kids helped. At OrthoPediatrics, we are entirely committed to improving clinical outcomes for kids through our dedicated technology, targeted innovation, and unrivaled level of focus on serving our pediatric patients. Our second quarter results further validate the strategy we have been executing over the past several years. We continue to gain share across our core markets. OPSB is emerging as a meaningful driver of both growth and profitability. And our multi-year product launch super cycle is just beginning to contribute to results, with the largest opportunities still ahead. Revenue increased 15% year-over-year, driven by an exceptional performance in trauma and deformity and OPSB, strong scoliosis implant sales, alongside healthy international growth, partially offset by zero 7D units sold in the second quarter of 2026, and significantly fewer OUS set sales in scoliosis. We finished the first half of the year with strong momentum, delivering robust revenue growth, meaningful adjusted EBITDA expansion, and significant improvement in our free cash flow profile. Importantly, top-line strength in the second quarter across both our implant and OPSB businesses drove bottom-line adjusted EBITDA to a record $6.8 million. Our disciplined capital allocation and focus on higher quality, more profitable revenue streams, combined with working capital improvements, reduced free cash flow usage by $11 million, or 78% versus the prior year, demonstrating that our focus on profitability and free cash flow is paying off. At this point, it's evident that we have reached an inflection point in our financial trajectory, and our results this quarter give us high confidence in our commitment to achieve positive free cash flow in the second half of 2026, and free cash flow break-even or better for the full year. We believe the continued execution of our strategy reflects the strength of our competitive position, disciplined execution, and the material operating leverage potential embedded in our business. As such, our updated outlook remains aligned with our progress and our long-term growth objectives while also reflecting the disciplined approach we have consistently taken to guidance. Accordingly, we are raising our full year guidance to a range of $265 million to $269 million, representing 12% to 14% growth. As we march through our high-volume summer season, we continue to see strong surgical volumes. And we would remind everyone that the procedures supported by our technologies are not elective. Before moving into updates of our businesses, I want to provide more color on the innovation super cycle of product launches we have introduced and its importance as a strategic growth, profitability, and free cash flow driver of OrthoPediatrics over the next several years. First, it is important to emphasize that we are in the early days of the multi-year cycle, and while we are starting to see very early contributions to growth from select product launches, we are only scratching the surface of the super cycle's impact on both the patients who this technology will serve and our business. The super cycle pipeline is deep. The new technologies developed by our incredible engineering team will span all portions of OP. Deep in-hospital relationships, enabling bundling of solutions across accounts, support broader contract opportunities, and bolster share gains across our portfolio. Importantly, these products offer stronger economics for OP than many of our legacy systems. The products generally carry higher ASPs, higher gross margins, require less capital deployment, and should generate better return on capital. Many are highly differentiated, clinically relevant, and have limited to no direct competition. The bottom line is this is not just a product launch story. It's a multi-year growth, margin, and capital efficiency story. Moving to our businesses. In the second quarter of 2026, the T&D business delivered 26% growth and was the primary driver of our total company performance. The strength in the quarter was driven by increased sales across our core trauma and deformity implant systems, continued share gains, strong procedure demand, and early contributions from new platform launches, as well as continued strong growth from OPSB. Zeroing in on our pediatric plating platform, also known as 3P, we are pleased with the continued progress of the 3P Hip system. 3P Hip contributed to incremental revenue growth in the quarter, and surgeon demand remained strong. That said, the more substantial impact of 3P Hip is still ahead of us, as meaningful set deployment did not occur until late June. We expect 3P Hip revenue to continue to build and become an increasingly important contributor to T&D growth. Moving down the 3P pipeline, we also initiated a small beta release late in the quarter and performed our first 3P Small-Mini surgical cases, which couldn't have gone better. The 3P Small-Mini represents the second system in the 3P plating family. The early clinical feedback has been extremely positive, and we are excited about the long-term opportunity. Contribution from this system will remain minimal until full market release, which we currently expect in early 2027. More broadly, the 3P platform continues its push forward, and we are as confident as ever in our belief that it will become the most advanced and comprehensive pediatric plating system in our field. We continue to advance additional 3P systems. And beyond 3P, we're also excited about our plans for PNP Retrograde and PNP Skeletal Dysplasia, the next systems within our pediatric nailing platform. Additionally, in line with our mission to increase the scope of differentiated technologies we offer surgeons, we recently announced an exclusive distribution agreement with OSSIO, bringing bio-integrative metal-free fixation technology to children's hospitals nationwide. Combined with our existing Bioretec partnership, we now have a wide-ranging portfolio of bioabsorbable implant products. These products expand treatment options within our portfolio and will leverage the same commercial model as our implants. Taken together with a complementary beta launch of 3P Small-Mini, this demonstrates our ability to leverage our specialized pediatric commercial platform while advancing product offerings in procedure areas that are newer to us, such as pediatric foot and hand surgery. Overall, T&D continues to serve as a core component of our growth engine, highlighted by exceptional strength in implant sales, OPSB, and a robust development pipeline. Turning to our specialty bracing business. OPSB once again delivered an outstanding quarter with over 20% growth, and the business remains a major strategic catalyst for OrthoPediatrics. Supported by strong clinic execution, same-store growth, volume growth, new product introductions from our super cycle, and disciplined clinic expansion, the business continues to contribute meaningfully to both revenue expansion and profitability. Within OPSB, our specialty-bracing product development engine is producing a significant impact, and overall, OPSB products are playing a pivotal role in our innovation super cycle. DF2 is surpassing our performance expectations with adoption in over 150 children's hospitals and is quickly becoming the new standard of care for pediatric femur fractures in very young patients. The modular hip brace portfolio is progressing through ongoing launch activity and expanding our role in the treatment of pediatric hip deformities. Additionally, we are advancing macu4, an upper extremity prosthetic and orthotic platform that provides lightweight, modular, 3D printed solutions intended for both function and play. The pending launch of TractorFIX, a specialty bracing solution designed to manage knee and ankle contractures by connecting the brace with our external fixation systems, and a number of other products expected to launch over the next several years. We're also pleased with the early progress of the TRAXIO Halo Gravity Traction System, one of the most clinically significant products to date. TRAXIO extends our role in pediatric spine care by supporting halo gravity traction therapy and helps position OPSB as a broader pediatric care platform. This is another example of our strategy to develop clinically relevant solutions that are often overlooked by larger companies but remain highly important to children's hospitals, surgeons, patients, and families. Overall, we continue to make progress across our three-pillar OPSB strategy by growing the sales force, advancing product innovation, and executing disciplined clinic growth. In scoliosis, reported revenue was down 9% in the second quarter despite implant growth in the mid-teens. Growth in the U.S. and European implants and OPSB was more than offset by the impact of zero 7D unit sales in the quarter compared to multiple units in a comparable period and significantly lower scoliosis set sales into Brazil. Excluding these timing-related items, scoliosis revenue grew in the mid-teens on the strength of an extremely strong scoliosis summer schedule, which is continuing into Q3. Looking closer at some of the highlights within scoliosis, we continue to be very pleased with the early adoption of VerteGlide. VerteGlide contributed to the incremental revenue growth in the quarter, but similar to 3P Hip, the relative impact will continue to build as set deployments began late in the quarter and are ongoing. Early clinical feedback remains very positive, and we believe VerteGlide represents a highly differentiated growth-friendly treatment option for young scoliosis patients with complex pathology. We have completed additional training and now have 124 surgeons trained on the system. Additionally, we continue to advance the development of eLLi, our next-generation smart electromechanical lengthening spinal implant, and remain on track to perform first inpatient procedures with eLLi in late 2026, pending FDA guidance. As a reminder, eLLi is designed to deliver consistent and reliable power to grow the rods through advanced RF power transmission and represents our third and most complex EOS product. We are also continuing the development of [ Veraxis ], our next-generation scoliosis fusion system. Veraxis is being developed as a purpose-built pediatric deformity fusion platform designed from the ground up for growing patients and the surgeons to treat them. Together, VerteGlide, TRAXIO, eLLi, Veraxis, and our suite of pediatric bracing products and services deliver a truly unmatched portfolio of pediatric scoliosis technologies. OrthoPediatrics is the only provider enabling clinicians to treat the entire scoliosis continuum of care, including the most complex and severe spinal deformities, with a comprehensive set of advanced solutions inside and outside of the operating room. Moving to our international business. International revenue grew 22% in the second quarter, driven by a record performance in Europe, strong execution, and continued demand for OP's pediatric-specific technologies. We're in the early stages of benefiting from the EU MDR approvals from our T&D portfolio, scoliosis products, and external fixation devices. With these approvals, we are beginning to provide European markets with products they have long been waiting for, and we expect broader access to these systems to support our growth over the second half of 2026 and beyond. This strength was partially offset by the previously noted significantly lower set sales in Brazil. We remain confident that the structural improvements we've made in Brazil over the last 6 months, including the purchase of one of our Brazilian distributors, will continue to steadily improve cash collection, normalize ordering patterns, and support additional growth in market penetration over time. In summary, we believe OrthoPediatrics is entering the most compelling phase of expansion in our history. Our momentum comes from multiple levers, including our legacy implant business, OPSB, and our innovation super cycle. With this in mind, we believe we have reached the inflection point where our sustained and durable revenue growth, improved profitability, and dramatically improved cash usage, and stronger returns on capital positions us to progress toward our most meaningful mission of helping more children around the world every day. With that said, I'd like to turn the call over to Fred to provide more detail on our financial results. Fred. Fred Hite: Thanks, Dave. Taking a closer look at the P&L, our second quarter of 2026 record revenue of $70.5 million increased 15% compared to the second quarter of 2025. The increase in revenue in the quarter was driven primarily by extremely strong performance across trauma and deformity and OPSB, robust underlying scoliosis implant and bracing sales, strong growth internationally, and continued execution across the business. U.S. revenue was $54.8 million, a 14% increase compared to the second quarter of 2025, representing 78% of total revenue. Growth in the quarter was primarily driven by strong performance in trauma and deformity and OPSB, partially offset by zero 7D unit sales impacting scoliosis growth. We generated total international revenue of $15.7 million, representing growth of 22% compared to the second quarter of 2025, and 22% of total revenue. International growth was highlighted by record performance in Europe, partially offset by set sales timing in Brazil. In the second quarter of 2026, trauma and deformity global revenue of $52.6 million increased 26% compared to the prior year period. Growth was primarily driven by strong procedure demand, share gains across our core implant system, strong OPSB performance, and early contributions from new product launches, including 3P Hip. In the second quarter of 2026, scoliosis global revenue of $16.9 million, representing a 9% decline compared to the prior year period. Sales were led by strong implants and OPSB-related product demand in the U.S. and Europe, offset by the absence of 7D unit sales and fewer set sales. Importantly, the underlying fundamentals of the business remain strong, and excluding these timing-related items, scoliosis revenue would have grown in the mid-teens. Finally, sports medicine and other revenue in the second quarter of 2026 was $1.0 million compared to $0.9 million in the prior year period. Touching briefly on a few key metrics, for the second quarter of 2026, gross profit margin was 74%, an improvement compared to 72% in the prior year period. The increase was driven primarily by product sales mix, including strong growth in higher margin areas and negative growth in much lower margin areas, such as 7D unit sales and international set sales. Total operating expenses increased $1.8 million, or 3%, compared to the prior year period, to $56.4 million in the second quarter of 2026, driven mainly by increased sales commission expense, as well as additional personnel supporting clinic expansions and prior small-scale acquisitions. Sales and marketing expenses increased $2.2 million, or 11% compared to the prior year period, driven primarily by increased sales commissions and overall case volume growth, to $21.3 million in the second quarter of 2026. General and administrative expenses increased $2.4 million, or 8% year-over-year, to $32.8 million in the second quarter of 2026, primarily due to the additional personnel supporting clinic expansions and prior small-scale acquisitions. Second quarter of 2025 included $3.0 million of restructuring expenses as compared to a nominal amount in the second quarter of 2026. Research and development expenses were $2.3 million in the second quarter of 2026 compared to $2.2 million in the prior year period. Total other expense was $2.9 million for the second quarter of 2026, compared to other income of $3.6 million for the same period last year. The year-over-year change was primarily driven by unrealized, non-cash, translation impact of foreign exchange rates. Foreign exchange losses in 2026 were driven by changes in the euro exchange rate as the euro declined in value in 2026 compared to the euro appreciation in 2025. GAAP net loss per share for the period was $0.30 per basic and diluted share compared to $0.30 per basic and diluted share for the same period last year. Non-GAAP net loss per share for the period was $0.26 per basic and diluted share compared to $0.11 per basic and diluted share for the same period last year. The year-over-year change was primarily driven by the unrealized non-cash foreign exchange rate differences. Adjusted EBITDA was a record $6.8 million in the second quarter of 2026 compared to $4.1 million in the second quarter of 2025. This represents record adjusted EBITDA for the company and an adjusted EBITDA margin of nearly 10%, driven by strong growth, gross margin expansion, and operating leverage, particularly in G&A. We ended the second quarter with $47.9 million in cash, short-term investments, and restricted cash, and still have another $20 million of term loan available to us. Set deployment for the quarter was $2.9 million compared to $4.6 million in the second quarter of 2025. We continue to focus set deployment on high-return systems and remain disciplined in allocating capital to support growth. Free cash flow used in the second quarter of 2026 was $3.1 million, a $10.8 million, or 78% improvement as compared to $13.9 million used in the second quarter of 2025. Increased adjusted EBITDA, improved gross margin, disciplined set deployment, and working capital management all contributed to the year-over-year improvement. Turning to guidance, as Dave mentioned, we are raising the top and bottom end of our range for full year 2026 revenue by $2 million to be in the range of $265 million to $269 million, representing growth of 12% to 14%. We are also reiterating our adjusted EBITDA guidance of approximately $25 million. We continue to expect to deploy approximately $10 million in sets and to achieve free cash flow break-even or better in 2026. We expect positive free cash flow in the second half of 2026, resulting in free cash flow break-even or better for the full year, driven by continued improvement in adjusted EBITDA, disciplined set deployment, and continued working capital improvements. As we've discussed previously, adjusted EBITDA and free cash flow can exhibit quarterly seasonality, but we remain confident that we are on track to our annual guidance. Ultimately, we are building a company that can deliver strong revenue growth while also generating positive free cash flow. And our second quarter and broader first half results demonstrate that our strategic and financial goals are achievable. Operator, let's open the call for Q&A. Operator: Our first question comes from Rick Wise at Stifel. Frederick Wise: Good afternoon to you both, and it's great to see the solid second quarter. Help us think through a couple of things. There's so many interesting questions I'm sort of reflecting, but let's think about guidance maybe just at a high level before we get into the details. You're only guiding to 13% for the year. I hear Dave's excitement at the super cycle just beginning. I hear how strong the business is. It sounds like some of the pieces of the business that weren't exactly where you wanted are going to get better over the next -- in the second half and into next year. Why is that the right guide? And maybe help us think through what might make it better. Fred Hite: We feel highly confident in achieving it. The business continues to be seasonal, and certain revenue streams, particularly the capital equipment, 7D placements, and international stocking distributors can be timing-dependent. We finished the first half very strong with great momentum and have good visibility into the summer surgery schedule, which does give us high confidence. But I think we continue to apply an appropriate level of conservatism. And as we continue to execute through the second half of the year, we'll feel more confident, obviously, in raising that in the third quarter and then hopefully again in the -- and over-delivering again in the fourth quarter. So some of it's just timing, the seasonality of the business, and some of those variables that we've talked about in the past. Frederick Wise: And turning to the super cycle, Dave, maybe you can unpack it further for us. What did the super cycle contribute? This quarter, it's just beginning to contribute. And is this going to be a very, very gradual process of contributing? Or are we going to see a sharper, as you move into full launch and more products, or starting in the second half, are we going to see more accelerated, more visible contribution from all the new products? David Bailey: Yes, certainly pleased with where we are in the super cycle launch. As we said in the call, contribution from the super cycle really was not as strong as it will be certainly in the coming quarters as those sets get deployed and then they get adopted in hospitals and moving in the right direction. So I think certainly over the next several quarters and into the, frankly, the next several years, that's where we'll see the impact of the super cycle. I'm not certain that we're going to see some major inflection point in any one given quarter, but we did start to see some growth from the super cycle products here in Q2, certainly in the second part of Q2. Really pleased with what we're seeing there because generally speaking, we see higher ASPs, higher margin on those products, faster return on capital. And so I think when we get those products to the market and get those placed in hospitals here, close to the second quarter and into Q3 and Q4, it'll have a bigger impact on the second half of the year and probably a bigger impact on 2027, 2028. I guess one thing I would also point out about the super cycle is it's not just a few products. I mean, there are a number of products that we think we will be able to launch over the course of the next several years. And I think that as we start to see the contribution from super cycle growth, it'll be something that's very durable for a long period of time. Frederick Wise: Great. And I'm going to be selfish and ask one more on scoli. Sales down [ 9% ] but mid-teens implant growth says the business is healthy and okay timing. Help us think about what that means for the second half and the setup for '27. It seems to me that you believe that there's no reason not to believe this, that we shouldn't believe scoli sales are coming back. I'm not sure I understand the timing, but if they come back, it seems like, assuming T&D stays strong, you could be growing, approaching or exceeding 20% again. What's wrong with my thinking? Thank you. David Bailey: Well, I like your thinking. I like that it's very hopeful and encouraging. I guess we are very pleased with the performance of the scoli implant side of the business. We obviously capture 7D revenue in the scoli numbers and we sold zero 7D units. As you know, that's why we have guided this way, such that we can ensure that quarters where we don't have 7D sales, we still have great quarters like we did here with 15% growth. Certainly, we expect to see some 7D sales throughout the balance of the year and into next year when those sales will actually occur. We're not here to speculate at this stage, but certainly we expect them to happen. I think what we're seeing on the implant side, and we saw very particularly in the month of June, which is one of our busiest scheduling seasons for scoliosis implants, we saw a very strong summer that's extended into Q3, and we're extremely pleased with the fusion business, kind of the core fusion business, as well as the contribution we're seeing from VerteGlide on the EOS side of our business. Again, one of the things we like about EOS is these are high ASP products, high margin products with really good return on capital. And to see the VerteGlide impacting the Q2 revenue, we expect it to impact strongly Q3, Q4 revenue as well. I couldn't be more pleased with how the scoliosis business overall is performing. Certainly, timing blunted that in terms of the headline number for Q2, but the baseline of how that business is performing is probably as strong as it's ever performed. Operator: Our next question comes from Caitlin Roberts at Canaccord Genuity. Caitlin Roberts: Congrats on the quarter. Would love to just continue with scoli and maybe touch on the lower set sales in Brazil. Just any more color on, was this a market demand issue or just an execution challenge as you work to implement some of the initiatives that you've been working on over the past 6 months or so? Fred Hite: I would say it's not a demand issue, it is us balancing cash collections with the demand. And so as we continue to focus on profitable revenue growth, and less focus on the lower profitable demand for sets, it's just us making the decision on when we're going to release some of those sets into the market, both in Latin America and there was some into set sales in Europe as well. Caitlin Roberts: Understood. And you also talked to some of the fuller set deployment for new products coming late in Q2. For the balance of the year, how much more set deployment do you have left of the $10 million that you've guided to? Fred Hite: We're about $5 million in at this point. The operations doesn't always comply with calendars. So a lot went out the first week of July as final parts were delivered. And so that'll show up in the third quarter, obviously. So we're still on track for our $10 million. A large amount of that will go out here in the third quarter. The vast majority of it was already in hand and in our inventory, just waiting for the last instrument or specialty item needed to complete the set before it was released into the field and shows up as deployed dollars for us. But the majority will go out here in the third quarter and then a small amount in the fourth quarter to achieve the full $10 million for the year. Operator: Our next question comes from Matthew Blackman at TD Cowen. Mathew Blackman: Good afternoon, everybody. Can you hear me okay? David Bailey: Loud and clear, Matt. Mathew Blackman: Great. Thanks for taking the questions. I got two. So maybe just appreciate some of the color on VerteGlide. I think you said something to the effect of having trained 124 surgeons. I'm just curious what the denominator is for that opportunity. How far along are you in terms of surgeon adoption training on that front? And then I'll ask a follow-up, because it's sort of the same thread and similar line of questioning that Rick gave you at the outset, but we've done quite a bit of work on VerteGlide and eLLi and with very modest penetration assumptions, you could see a pretty meaningful uptick in scoli and even worldwide growth coming to the effect of a couple points of worldwide growth if you get like 5 points of penetration of those products. So I guess the question is, does that make sense, that math? I know I threw a lot at you there, sort of in the context of these two opportunities. And then as we think about '27 and beyond as these begin to scale, do you think about VerteGlide and eLLi being -- and I guess those sort of portfolio as a whole being growth-sustaining for the scoli franchise, or could it be growth-accelerating? I apologize for throwing all that at you at once, but I'm here if you need me to repeat it. David Bailey: No, I think I understand the gist of your question. Listen, I think we're reiterating here, we're very early. We're training surgeons. The majority of surgeons are now looking for patients, trying to decide which patients make most sense. As you know, and we've talked, the early onset scoliosis category is not one where surgeons are doing individually 50 of these things a year. Oftentimes, surgeons do a few of these procedures a year. That said, at the ASP and the volume of surgeons that we have trained, you could assume that when VerteGlide is fully deployed and we have the majority of surgeons trained and surgeons know which patients that qualify for this particular technology, yes, VerteGlide will definitely have a meaningful impact on growth, certainly impacting growth now and will impact growth in the second half. And I would expect that to continue into 2027. You pile on top of VerteGlide with eLLi. And again, eLLi is not available now, but we're making great progress. And I think eLLi is probably a bigger opportunity overall for us than VerteGlide. And on top of all that, Matt, what you have is, these are the most complex surgical procedures that pediatric orthopedic surgeons are doing on the spinal implant side. And I think for us to be able to bring these very unique technologies and be working with surgeons that in many cases are having some of their first experiences on the scoliosis side with OrthoPediatrics and treating some of their most problematic pathologies with our technology, we're already starting to see nice pull-through with our RESPONSE fusion systems and our other scoliosis fusion products. And I think as we time all this out with VerteGlide, eLLi, and then the Veraxis system, which we expect to do first cases probably early into next year, it's just a really nice setup overall to see scoliosis growth continue to accelerate over the next, frankly, over the next several years. So that's why I guess you hear my optimism in the commentary with Rick. I think we have a really good setup. We've got to get these products out. We're early, but it will definitely start to impact the scoliosis business in a bigger way here in the second half of the year, and really through the balance of 2027 and 2028. Mathew Blackman: Great. I appreciate it, David. Thank you for throwing in that sort of pull-through halo effect as well. I think that's an important point. So, I appreciate it. We'll get back to you soon. David Bailey: It may be the biggest impact, honestly, Matt. I mean, it's probably as important as what we're seeing with the absolute growth we get with some of the EOS products. Operator: Our next question comes from Matthew O'Brien at Piper Sandler. Unknown Analyst: Great, thanks. This is Anna on for Matt. Thanks for taking our questions here. I want to ask on the bracing business. It's been growing well over 20% for a while now and you're at, I think, north of 45 clinics currently. So as this network of clinics continues to expand, I'm just wondering how the growth algorithm is shifting if a larger share of that growth is now coming from more mature same-store sales growth versus new clinics still ramping. And then with that in mind, does that change the durability or predictability of the 20% plus growth rate that we've seen historically? And then I have a follow-up. David Bailey: Yes, that's a great question. I think growth is coming across the board here. We're seeing growth as we're scaling some of these new clinics. Obviously, as we scale a lot of these new clinics, you're growing off a zero base, and so that's important. Certainly seeing growth within our existing clinics in markets where those markets are less mature for us. And so same-store sales, strong. Certainly new clinics, strong. I think what probably gets lost -- and maybe I haven't done as good a job in the past of talking about the new product launches inside the super cycle. I mean, DF2 continues to grow very, very rapidly. And I think we cite 150 of the 300 or so children's hospitals now are using DF2. Again, this is a high margin. There's no inventory for us here. We like that business. And so DF2 is growing very rapidly. And there's just a welfare of new products on the OPSB side that is contributing. And it's taken us a little longer to get that pipeline going. We didn't have an R&D team inside OPSB when we started it. And now we've got a very good R&D team that's generating some pretty compelling technologies. Like we said, we have DF2, we have the modular pediatric hip brace portfolio that's coming out, macu4 that's now out, the TRAXIO and TractorFIX. I mean, these are compelling products and if they have a similar trajectory that we had seen with DF2, they will have a very substantial impact. And I think they all contribute to the synergies that we're trying to build between our implant business, the clinic side of our business, the OPSB new product business. And I think from a super cycle standpoint, they just have a huge impact, a compounding impact on one versus the other. So I guess in short, yes, we're growing new clinics. We're feeding new clinics and the new product launch side is probably going a little better than we would have expected. Unknown Analyst: All right. That's awesome to hear. And then I guess sort of on that profitability point, profitability was really strong this quarter. And just wondering what the reasoning is for holding your profitability adjusted EBITDA target for the year, holding that constant in light of the outperformance we saw and if that has to do with 7D and international sales potentially being made up in the back half or just what the components are for the reiterated adjusted EBITDA guide. Fred Hite: Good question. So first half of the year, we're at $9 million against the $25 million target. We are up $5 million year-over-year in the first half of the year. And for the full year, we increased our $15 million from last year up to $25 million for this year. So it's a $10 million increase. We're halfway there with the $5 million increase. We've got another $5 million to increase on top of the second half of last year. And we'll get to that $25 million. So I would say just more conservatism and making sure we have plenty of room to make sure we get there and deliver the numbers. The biggest reason. Operator: Our next question comes from Ryan Zimmerman at U.S. Bancorp. Unknown Analyst: Hi, everyone. This is Izzy on for Ryan. Fred, just to start, I wanted to touch on the gross margins for a little bit. I heard your comments around what drove the strength in this quarter, but I was curious as we start to see the super cycle start to contribute a little bit more and make shifts towards these higher ASP products, how much of margin expansion in the future will be driven by mix versus volume? And do you think that 73% is still the right target for the full year? Could we see further increases? Fred Hite: Yes, obviously very pleased with the margin. It shows up when there's no 7D, which obviously we distribute that product so it goes out at a lower margin and limited set sales. So with that mix, we could see something similar to that in the third and fourth quarter potentially. But, yes, I think we are still sticking to that 73% rate for the year and we'll see what the second half of the year brings. I would anticipate there will be some 7D sales in the second half of the year, which would put pressure on that number. Your first part of your question about the super cycle, you're absolutely correct. Those products will. Today it's a very small percentage of the future -- of the total, sorry. But in the future, as that becomes a larger portion of the total business, particularly into '27 and '28, then yes, there may be an opportunity to see an increase in the future years. Unknown Analyst: Got it. Appreciate it. And just to stick on the super cycle for a little bit, Dave, could you talk a little bit more about the OSSIO distribution agreement, kind of your expectations around there and kind of what brought it to the table? David Bailey: Good question. I think this is pretty exciting for us. I mean, it's obviously a technology that we were not going to develop in-house with a bioabsorbable technology like that. We do have some experience with Bioretec where we sell a fair volume of that product as well. And so advantages of a bioabsorbable absorbable implant are obvious for pediatric patients because the majority of these implants are removed. And so in certain applications, I think these devices are -- surgeons are very interested. I think what I really like about this is how this connects to our Small-Mini product launch here in early 2027 and kind of our beta launch here in the end of 2026, because the Small-Mini starts to move our portfolio into very small bone fractures and small bone osteotomies in the foot and hand, and that's where a product like OSSIO is used quite frequently. And so I think it's very complimentary. We use the same commercial channel. Our sales force is very familiar with this type of material and the surgeons who use it. And it's a great expansion opportunity. It also -- given the fact that it's exclusive for us in children's hospitals, it's another point of leverage for us in contract negotiations because we're the only company that offers these types of technologies. And when you combine that with 3P, with 3P Small-Mini, with PNP Tibia, with all the products, our Pega Medical products, I mean, it's just a growing portfolio of products that, really, have no threat of substitute. And so that gives us a lot of leverage, a lot of confidence as we go into contract negotiations. And so I think OSSIO will certainly stand alone, will be a growth driver for us in the future, but I think combined with the full portfolio, it just strengthens our T&D portfolio substantially. Operator: Our next question comes from Ravi Misra at Truist Securities. Ravi Misra: I'll just ask both of mine up front, please. So just on kind of the commentary around what you're seeing in 3Q sounds like a pretty strong quarter. Just how should we think about the cadence for the remainder of the year? I think The Street is a little bit below what you ended up doing in 2Q for 3Q, and historically, you've done a little bit better in 3Q versus 2Q, so should that still hold? And then second, I'd love to hear any kind of updates that you could provide around the MDR environment out in Europe and it's been a little bit of a source of an edge for you, I think, in recent quarters, is that still the case? Or any more detail there would be appreciated. Fred Hite: So right now we're forecasting third quarter and fourth quarter actually pretty equal to each other as they were last year. But third quarter and fourth quarter will be a little lower than what we saw here in the second quarter, is what we're forecasting right now. A couple million dollars lower than the second quarter. I would say the June, both May and June, the early summer months were very, very strong. We feel good about July, obviously, with it in the books. But right now, forecast is a couple million lower in the third and the fourth quarter. EU MDR, very exciting for us. Similar to super cycle, I would say, early days. So we got first approvals in the latter part of last year, a few more approvals here earlier this year, and now, we're getting some sets over there. And so we're getting our customers access to those new products, but very early days. So lots of opportunity for us to deliver more sets over there, into the European market, and enable more and more surgeons to have access to it. We did attend a conference earlier this summer and showcased several of those products and garnered a lot of excitement, I'll say. So now it's a matter of getting the cash, deploying the sets, and getting them into the surgeon's hands. I would say we'll continue to see a little bit of an impact here in the second half of the year like we saw in the second quarter, and probably bigger impact in '27 and beyond as we continue for the next couple of years, continue to deploy sets over into that marketplace. David Bailey: Ravi, just to amplify that point, I think an astute question given what we've talked about, about the competitive landscape due to the EU MDR. And I think that we continue to see a landscape whereby many products didn't go through the MDR process, ours did, and so I think demand for the products that we have coming is very high because again, there's no threat of substitute for some of those products, and so we're encouraged. We have a lot of interest from both our agencies and our agency markets in Europe, as well as from stocking distributors in Europe. And so I think the next several quarters of product launch into those markets where in some cases we kind of run unopposed with some of these products will be very exciting. Operator: Our next question comes from Mike Mattson at Needham & Company. Unknown Analyst: It's Joseph on for Mike. Maybe just continuing with EU MDR and maybe just international broadly. Another strong quarter is like 22% growth in the quarter, similar to last quarter. I'm just wondering now, is this kind of like a baseline for 2026? And based off of your comments, it sounds like 2027 would be a much higher contribution in terms of the newer EU MDR products, but should we expect sequential improvement in the next two quarters or just kind of similar to what you, Fred, had just noted, that 3Q and 4Q may be down sequentially? And then I have another one after that. Fred Hite: Yes, we're very pleased, obviously, with international. If you look back last year, growth was a little more lumpy, I would say. And so there's always the possibility of that. I don't know that we're ready to call 22% growth for the next couple of years, but I'm very pleased with what we saw in the second quarter. And I think there's a lot of momentum building in that side of the business. Unknown Analyst: Okay, great. And then maybe just two-parter on OPSB. I was curious, Q1, you guys had talked about some weather-related shutdowns. I was just curious to maybe the demand for that fully flowed through into Q2, or I doubt there's anything residual left, but maybe you could expound on that. And then just international OPSB, could you guys maybe comment on how that's been growing? I believe it's just Ireland where there's a clinic, but -- and maybe how that clinic's growing and how that's -- what's your current thinking on international expansion? What markets would they be? Is this like Germany, UK? Just curious in your thoughts, is this a 2026 potential addition or later on? David Bailey: Yes, sure. So I would say, we talked about it last call, but the majority of the weather-related things in Q1 were extinguished in April. And so I would say that, that held throughout the quarter, though. We saw strong volume in our clinics. We saw nice volume in our clinics in June here through the summer, which was encouraging because sometimes, the surgical season can blunt a little bit of the momentum that we would see in clinic visits. So I think overall, that has been extinguished and was primarily extinguished in April. So nice to see a strong April and that continues throughout the balance of the quarter. You are right about our opportunities in Europe being quite strong. We have a clinic in Ireland and now I have a couple of small clinics in the UK. And what our strategy there has been primarily is to focus on areas where we also are driving strong scoliosis implant revenue, and so we've got a kind of a building, small yet rapidly growing business in Ireland and the UK for scoliosis implants. And so we are kind of capitalizing on the scoliosis implant growth with surrounding those surgeons and those accounts with bracing products. There's a lot of demand internationally for our DF2 product, for the hip bracing, for TRAXIO and TractorFIX. And so we are seeing growth outside of the United States in that. And you can imagine that we're way underpenetrated there compared to places like here in the United States, where we have 150 of the 300 children's hospitals already using DF2. So I think there is a robust opportunity for us outside of the United States. Again, right now the focus has been, Ireland and the UK and then selling products to the end markets as opposed to setting up clinics in other countries outside of the UK and Ireland. It's possible that we could scale into some of those other markets, but I think right now we have our hands full here in the United States and the UK and Ireland. Unknown Analyst: Okay, great. Congrats on the strong quarter. Operator: Our next question comes from Ben Haynor at Lake Street Capital Markets. Benjamin Haynor: First off, for me, just on the kind of the super cycle and the halo effect that you expect to get, have you seen any kind of movement or proof points on some of these kind of sole source negotiations? Have you seen anything on the margin already to this point? David Bailey: Without question. Yes. I'm definitely seeing some of that, and I think that's some of what you're seeing in the strong trauma deformity sales numbers. I mean, couldn't be more pleased with 26% growth on the T&D side. You could assume that if 3P Hip wasn't a huge percentage of that growth that we're pulling through a lot of legacy products, and so I would argue that, yes, we're definitely seeing our strategy play out well there in places where 3P has been implemented and seeing legacy pull-through there. And again, we expect to see that continue. I think part of the super cycle strategy here isn't just to sell more of the super cycle products in isolation, but to make the full product portfolio more relevant and to move to a more single-source contracts, which is already starting to happen, which is really encouraging. Benjamin Haynor: That's great. And then secondly for me, you mentioned being disciplined with the growth of OPSB. And not to be too flippant here, but with how that looks like it's going, why not get a little nuts there? Fred Hite: It's back to the strategy of driving profitable revenue growth. Driving improved EBITDA and cash flow or better break-even for 2026. And so it's a balancing act that all three of those levers at the same time can make us slow some things down. So how fast we roll things out, how fast we go after some of the OPSB clinics to conserve cash is a balancing act. And so we're managing the business a little different today than we were a few years ago when it was revenue at all costs. Operator: Our last question comes from Dave Turkaly at Citizens. David Turkaly: Fred, when you look at the two scoliosis impacts, I was wondering if you might add a little color to the size. I think it sounds like the 7D was the bigger. But the Brazil part, I thought last quarter we talked about, I think, you acquiring one of your larger distributors there, which I would almost think might have eliminate that impact, but just, I guess, your thoughts on if that had anything to do with what happened in the quarter. Fred Hite: So 7D in the second quarter of last year was very strong. A couple million bucks that didn't show up here this year in the second quarter, so pretty big impact on scoli in particular, but also on the overall business. And then in Brazil, again, we're very pleased. So in the fall of last year, we purchased the largest distributor we had down there. And that business is doing very well for us with end market pricing and market volumes. We're now selling everything to our other stocking distributors through that entity and focused on collecting cash, which is a huge focus for us for the last 6 months and will continue to be for the next couple of years. So we're making great progress, increasing the number of surgeries down there and the timing of some of these set sales, somewhat at our discretion. And so we're not overly upset about it, to be honest with you. It's just part of how we're managing the business. And the demands there when the timing is right, we'll release some of that as collections improve and receivable balances come down for some of our partners down there. So overall, very pleased with the contributions we're seeing in that business and confident that it'll continue to be a big growth driver for us in the future as we get things stabilized down there. David Turkaly: And in terms of the guide, the 12% to 14%, and sort of your divisional performance. I imagine your commentary on scoli that the implants were kind of in that mid-teens, that we should be looking at the back half, probably your divisions being kind of in that range, correct? Like scoli back up to something like 12% to 14% in that range, and maybe T&D, in that range as well, even though it was particularly strong this quarter, would that be a fair way to look at the rest of the year? Fred Hite: I think for the third quarter in particular, that's absolutely correct. I would call out that we did have some 7D sales in the fourth quarter of last year. We did not have any unit sales in the third quarter. And so if there are none in the fourth quarter of this year, then, again, that will negatively impact the growth of scoliosis, but it won't hurt the margin and it won't negatively impact our performance against our guidance because we're confident in the numbers we've put out there. Operator: Thank you. This concludes the question-and-answer session. I would now like to turn it back to Dave for closing remarks. David Bailey: Great. Well, once again, thank you all for your interest in OrthoPediatrics, and I look forward to speaking with many of you at an upcoming conference. Have a great day, or have a great evening, and we'll talk soon. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. OrthoPediatrics (KIDS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in OrthoPediatrics Corp.? Here are five stocks we like better. Record Q2 revenue reached $70.5 million, up 15% year over year, driven by 26% growth in Trauma & Deformity and more than 20% growth in specialty bracing, which offset a 9% decline in scoliosis revenue. Profitability and cash flow improved materially: adjusted EBITDA rose to a record $6.8 million, gross margin increased to 74%, and free-cash-flow usage fell 78% to $3.1 million. OrthoPediatrics raised its 2026 revenue outlook to $265 million-$269 million while maintaining its approximately $25 million adjusted EBITDA target and expectation for full-year free-cash-flow breakeven or better. OrthoPediatrics (NASDAQ:KIDS) reported record second-quarter revenue of $70.5 million, up 15% from a year earlier, as strong Trauma & Deformity and specialty bracing performance offset a reported decline in scoliosis revenue. The company also raised its 2026 revenue outlook while maintaining its adjusted EBITDA and free-cash-flow targets. President and CEO David Bailey said the company helped nearly 46,000 children during the quarter, bringing its cumulative patient impact to 1.4 million children. He said the quarter reflected continued market-share gains, expansion in the OrthoPediatrics Specialty Bracing business, or OPSB, and early contributions from a multiyear product-launch cycle. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control “We have reached an inflection point in our financial trajectory,” Bailey said, citing revenue growth, adjusted EBITDA expansion and reduced free-cash-flow usage. The company expects positive free cash flow in the second half of 2026 and free-cash-flow breakeven or better for the full year. Global Trauma & Deformity revenue rose 26% year over year to $52.6 million, driven by procedure demand, market-share gains in core implant systems, OPSB growth and early contributions from new products, including the 3P Hip plating system. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? Bailey said deployment of 3P Hip sets did not meaningfully begin until late June, leaving the larger revenue contribution ahead. The company also began a small beta release of its 3P Small-Mini system late in the quarter and completed its first procedures using the platform. OrthoPediatrics expects a full market release for 3P Small-Mini in early 2027. The company also announced an exclusive distribution agreement with OSSIO for biointegrative, metal-free fixation technology at children’s hospitals. Bailey said the agreement complements OrthoPediatrics’ existing Bioretec partnership and could support the company’s expansion into pediatric hand and foot procedures. → Why Rare Earth Processing Could Be the Real 2027 Opportunity OPSB grew more than 20% during the quarter, supported by clinic execution, same-store sales, volume gains, product introductions and disciplined clinic expansion, according to Bailey. He said the company has more than 45 clinics and is seeing growth from both newer locations and established clinics. Within OPSB, Bailey said the DF2 pediatric femur-fracture product has been adopted by more than 150 children’s hospitals. The company is also advancing modular hip braces, the Machi4 upper-extremity prosthetic and orthotic platform, TractorFix contracture-management technology and the TRAXIO Halo Gravity Traction system. Global scoliosis revenue declined 9% to $16.9 million. However, the company said underlying scoliosis implant sales grew in the mid-teens, with demand in the U.S. and Europe offset by the absence of 7D unit sales and lower scoliosis set sales in Brazil. Chief Operating and Financial Officer Fred Hite said 7D sales in the second quarter of 2025 contributed roughly a couple million dollars that did not recur in the 2026 period. The company sold no 7D units in the latest quarter, compared with multiple units in the year-earlier period. Hite said lower Brazilian set sales were not related to market demand. Rather, the company is balancing demand with cash collections and has been selective about when to release sets into the market. OrthoPediatrics acquired one of its Brazilian distributors last year and is using that entity to sell to other stocking distributors while focusing on collections and receivable balances. Bailey said the company saw a strong summer schedule for scoliosis implant procedures that extended into the third quarter. VerteGlide, a growth-friendly treatment option for young scoliosis patients with complex conditions, added incremental revenue during the quarter. OrthoPediatrics had trained 124 surgeons on the system as of the call. The company expects VerteGlide’s impact to increase as additional sets are deployed and surgeons identify appropriate patients. Bailey also said eLLi, the company’s next-generation smart electromechanical lengthening spinal implant, remains on track for first in-patient procedures in late 2026, pending FDA guidance. The company expects first cases for its Veraxis pediatric scoliosis fusion system in early 2027. Gross margin improved to 74% from 72% a year earlier, helped by product mix and strong growth in higher-margin areas. Hite said the absence of lower-margin 7D unit sales and international set sales also supported the quarterly margin. Operating expenses rose 3% to $56.4 million, reflecting higher sales commissions and personnel supporting clinic expansions and earlier small acquisitions. The year-earlier quarter included $3 million of restructuring expenses, compared with a nominal amount in the latest period. Adjusted EBITDA reached a record $6.8 million, compared with $4.1 million a year earlier. GAAP net loss per share was unchanged at $0.30. Non-GAAP net loss per share was $0.26, compared with $0.11 a year earlier, primarily due to unrealized non-cash foreign-exchange effects. Free cash flow used was $3.1 million, improving $10.8 million, or 78%, from $13.9 million used in the prior-year quarter. Cash, short-term investments and restricted cash totaled $47.9 million at quarter-end, with $20 million of term-loan availability remaining. International revenue increased 22% to $15.7 million, led by record performance in Europe. Bailey and Hite said the company is in the early stages of benefiting from EU Medical Device Regulation approvals for its Trauma & Deformity, scoliosis and external-fixation portfolios. They expect broader European access and a larger benefit in 2027 and beyond as sets are deployed. OrthoPediatrics raised its full-year 2026 revenue forecast by $2 million at both ends of the range to $265 million to $269 million, representing growth of 12% to 14%. The company reiterated guidance for approximately $25 million in adjusted EBITDA, about $10 million in set deployment and free-cash-flow breakeven or better for the year. Hite said the company had deployed about $5 million in sets through the first half, with much of the remaining deployment expected in the third quarter. Management currently forecasts third- and fourth-quarter revenue to be roughly equal and a couple million dollars lower than second-quarter revenue. Bailey said the company’s outlook reflects continued conservatism because capital-equipment placements, including 7D units, and international distributor orders can be timing-dependent. Still, he said OrthoPediatrics expects its product-launch cycle to increasingly contribute to growth, margins and returns on capital over the next several years. OrthoPediatrics Corp., founded in 2007 and headquartered in Warsaw, Indiana, is a medical device company dedicated exclusively to providing orthopedic solutions for children. The company focuses on developing, manufacturing and marketing a broad portfolio of implants and instruments designed to address a wide range of pediatric conditions, including trauma, deformity correction, spine disorders and sports injuries. The company's product lines include locking plates and screws for upper and lower extremity reconstruction, intramedullary nails for femur and tibia stabilization, and specialized systems such as the MAGEC Magnetic Growth Rod for treatment of early-onset scoliosis. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "OrthoPediatrics Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management believes the company has reached a financial inflection point, characterized by a shift toward positive free cash flow and record adjusted EBITDA margins of nearly 10%. The 'Innovation Super Cycle' is a multi-year strategic framework designed to improve capital efficiency through products with higher average selling prices (ASPs), better gross margins, and lower capital requirements. Trauma and Deformity (T&D) growth of 26% was driven by core implant share gains and early contributions from the 3P Hip system, which began meaningful set deployment in late June. The OrthoPediatrics Specialty Bracing (OPSB) business is emerging as a primary catalyst for both revenue and profitability, supported by the rapid adoption of the DF2 system in 150 children's hospitals. Scoliosis implant growth in the mid-teens was masked by a 9% reported decline in the segment due to the timing of zero 7D unit sales and reduced set sales in Brazil. International performance was bolstered by EU MDR approvals, allowing the company to introduce products in European markets where competitors may have exited due to regulatory hurdles. The company is leveraging its specialized pediatric portfolio to secure single-source contracts, using unique technologies like bio-integrative fixation to increase bargaining power with hospitals. Management expects to achieve positive free cash flow in the second half of 2026 and reach free cash flow break-even or better for the full year. The 3P Small-Mini system is currently in beta release with a full market launch expected in early 2027, targeting pediatric foot and hand surgery. The eLLi smart electromechanical spinal implant remains on track for first inpatient procedures in late 2026, pending FDA guidance. Guidance for the second half of 2026 assumes a conservative stance regarding the timing of capital equipment placements and international stocking distributor orders. Full-year set deployment is capped at $10 million, with the majority of remaining capital expected to be deployed in the third quarter to support new product launches. Zero 7D units were sold in Q2 2026 compared to multiple units in the prior year, creating a significant year-over-year revenue headwind in the scoliosis segment. International set sales in Brazil were intentionally limited as management prioritizes cash collection and stabilizes the recently acquired distributor's operations. Unrealized non-cash foreign exchange losses impacted GAAP results due to the decline in the euro's value during 2026. The company maintains $20 million in available term loan capacity to supplement its $47.9 million cash position if needed. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while summer surgical volumes are strong, they are maintaining a conservative outlook due to the unpredictable timing of 7D capital placements and international stocking orders. The company intends to potentially raise guidance again in the third quarter as visibility into the end-of-year performance improves. The super cycle is described as a durable, multi-year growth story rather than a single-quarter inflection point. Management emphasized that these new products generally offer faster returns on capital and higher margins than legacy systems. Despite the reported decline, the core fusion business remains strong, and new products like VerteGlide are creating a 'halo effect' that drives sales of legacy RESPONSE systems. Management expects the scoliosis business to accelerate through 2027 and 2028 as VerteGlide and eLLi reach full market penetration. When asked why they aren't accelerating OPSB clinic expansion faster, management explained they are being disciplined to ensure they meet their 2026 free cash flow break-even goal. The current strategy prioritizes profitable revenue growth over 'revenue at all costs' to demonstrate the business's inherent operating leverage.

This article first appeared on GuruFocus. Revenue: Record second-quarter revenue of $70.5 million, a 15% increase year-over-year. US Revenue: $54.8 million, a 14% increase, representing 78% of total revenue. International Revenue: $15.7 million, a 22% increase, driven by record performance in Europe. Trauma & Deformity Revenue: $52.6 million, a 26% increase, driven by strong procedure demand and share gains. Scoliosis Revenue: $16.9 million, a 9% decline, impacted by zero 7D unit sales and fewer set sales, though underlying implant growth was in the mid-teens. Sports Medicine/Other Revenue: $1.0 million, compared to $0.9 million in the prior year. Gross Profit Margin: Improved to 74%, up from 72% in the prior year period. Adjusted EBITDA: Record $6.8 million, compared to $4.1 million in the second quarter of 2025, with a margin of nearly 10%. GAAP Net Loss Per Share: $0.30 per basic and diluted share, consistent with the prior year. Non-GAAP Net Loss Per Share: $0.26 per basic and diluted share, compared to $0.11 in the prior year, impacted by non-cash foreign exchange differences. Cash Position: Ended the quarter with $47.9 million in cash, short-term investments, and restricted cash. Set Deployment: $2.9 million in the quarter, down from $4.6 million in the prior year. Free Cash Flow: Used $3.1 million in the quarter, a 78% improvement from $13.9 million used in the prior year. Full-Year 2026 Revenue Guidance: Raised to a range of $265 million to $269 million, representing 12% to 14% growth. Warning! GuruFocus has detected 6 Warning Signs with KIDS. Is KIDS fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record Q2 revenue of $70.5 million, up 15% year-over-year, driven by strong trauma and deformity (26% growth) and OPSB (over 20% growth) performance. Record adjusted EBITDA of $6.8 million, with margin expansion to nearly 10%, reflecting improved operating leverage and gross margin (74% vs. 72% last year). Significant free cash flow improvement, with usage down 78% year-over-year, and reaffirmed guidance for positive free cash flow in the second half and breakeven or better for the full year. Innovation supercycle is gaining traction, with early contributions from 3P HIP and VertiGlide, and a deep pipeline including 3P Small Mini, ELI, VIRAXIS, and OPSB products like DF2 and Traxio. Strong international growth of 22%, driven by record performance in Europe and early benefits from EUMDR approvals, expanding market access. Raised full-year revenue guidance to $265-$269 million (12-14% growth), reflecting confidence in continued momentum. OPSB business continues to scale with over 150 children's hospitals adopting DF2, and new products like MACU4 and TractorFix expanding the portfolio. Disciplined capital allocation with set deployment down to $2.9 million in Q2, focusing on high-return systems and improving return on capital. Scoliosis revenue declined 9% year-over-year due to zero 7D unit sales (vs. multiple units last year) and significantly lower set sales in Brazil, masking strong underlying implant growth. GAAP net loss per share remained at $0.30, with non-GAAP net loss per share worsening to $0.26 from $0.11, driven by unrealized non-cash foreign exchange losses. Total other expense swung to a $2.9 million loss from $3.6 million income, primarily due to Euro depreciation, impacting reported profitability. International growth was partially offset by lower set sales in Brazil, where the company is balancing cash collections and normalizing ordering patterns. Management expects Q3 and Q4 revenue to be slightly lower than Q2, reflecting seasonality and timing of 7D and international set sales. Adjusted EBITDA guidance of $25 million was reiterated despite strong Q2, indicating management conservatism and potential for continued FX headwinds. The company remains in a net loss position, with cash and investments at $47.9 million, though it has $20 million of term loan availability. Set deployment for new products (3P HIP, VertiGlide) only began late in Q2, meaning the full revenue impact is still ahead and may be gradual. Q: Why is the company only guiding to 13% growth for the year despite strong momentum, and what could make the guidance better?A: Fred Hite, CFO & COO, explained that the guidance reflects an appropriate level of conservatism due to the seasonal nature of the business and timing-dependent revenue streams like 7D capital equipment placements and international stocking distributor sales. He noted the company has good visibility into the summer surgery schedule, which gives high confidence, and they will consider raising guidance in Q3 and Q4 as they continue to execute and over-deliver. Q: What did the innovation supercycle contribute this quarter, and will its impact be gradual or accelerate sharply?A: David Bailey, President & CEO, stated that the supercycle's contribution in Q2 was early and will grow significantly in coming quarters as sets are deployed and adopted. He emphasized the impact will be durable over several years, with products carrying higher ASPs, higher margins, and faster returns on capital. The supercycle includes numerous products launching over the next several years, making it a long-term growth driver rather than a one-quarter inflection point. Q: Scoliosis revenue fell 9% despite mid-teens implant growthcan you explain the timing issues and the outlook for the second half?A: David Bailey clarified that the decline was due to zero 7D unit sales in Q2 2026 compared to multiple units in Q2 2025, and significantly lower set sales into Brazil. Excluding these timing items, scoliosis grew mid-teens. He expressed strong confidence in the business, citing a robust summer surgery schedule extending into Q3, strong fusion business performance, and early contributions from VertiGlide, which will have a bigger impact in Q3 and Q4 as set deployments continue. Q: Can you provide more color on the lower set sales in Brazilis this a demand issue or execution challenge?A: Fred Hite clarified it is not a demand issue but a deliberate decision to balance cash collections with demand. The company is focusing on profitable revenue growth and controlling when sets are released into the market in Latin America and Europe. This aligns with their strategy to improve cash collection and normalize ordering patterns following the acquisition of a Brazilian distributor. Q: How much set deployment remains for the year, and what is the timing?A: Fred Hite stated the company has deployed about $5 million of the $10 million guidance. A large portion of the remaining sets was already in inventory, waiting for final components, and will be deployed in Q3, with a smaller amount in Q4. He noted that operations don't always align with calendars, so some deployments occurred in early July. Q: With 124 surgeons trained on VertiGlide, how does this translate to growth, and what is the potential for ELI and VIRAXIS?A: David Bailey emphasized they are very early in the process, with surgeons still identifying appropriate patients. VertiGlide will have a meaningful impact on growth now and into 2027, and ELI represents an even larger opportunity. He highlighted the halo effect, where these complex EOS products pull through legacy fusion systems, potentially making this as important as the absolute growth from EOS products. VIRAXIS, the next-generation fusion system, is expected to have first cases early next year, setting up accelerated scoliosis growth over the next several years. Q: How is the OPSB bracing business shifting its growth algorithm between new clinics and same-store sales, and is 20%+ growth sustainable?A: David Bailey noted growth is coming from both new clinic scaling and same-store sales in less mature markets. He highlighted the significant contribution from new product launches like DF2, now in over 150 children's hospitals, and a pipeline including modular hip braces, MACU4, Traxio, and TractorFix. These products, with no inventory requirements and high margins, are compounding with clinic growth and creating synergies with the implant business, supporting durable growth. Q: Why is the company holding adjusted EBITDA guidance at $25 million despite strong Q2 profitability?A: Fred Hite explained that first-half adjusted EBITDA was $9 million, up $5 million year-over-year. The full-year guidance represents a $10 million increase from last year's $15 million, and they are halfway there. He cited conservatism as the primary reason, ensuring they have room to deliver on the target, with potential 7D sales in the second half putting some pressure on margins. Q: How will gross margins evolve with the supercycle mix shift, and is 73% still the right full-year target?A: Fred Hite noted Q2 margins were strong at 74%, benefiting from the absence of low-margin 7D sales and limited set sales. He expects similar margins in Q3 and Q4 if no 7D sales occur, but maintains the 73% full-year target. As supercycle products become a larger portion of the business in 2027-2028, there is potential for margin expansion beyond current levels. Q: What are the expectations for the Osseo distribution agreement and its strategic fit?A: David Bailey described the agreement as exciting, bringing biointegrative, metal-free fixation technology to children's hospitals. It complements the 3P Small Mini launch in early 2027, expanding into foot and hand surgery. The exclusive distribution in children's hospitals provides leverage in contract negotiations, as the company becomes the only provider of such technologies, strengthening the T&D portfolio with products that have no threat of substitution. Q: What is the expected revenue cadence for Q3 and Q4, and how is the EU MDR environment impacting growth?A: Fred Hite forecast Q3 and Q4 to be roughly equal to each other but a couple million dollars lower than Q2, reflecting seasonality. Regarding EU MDR, he noted it's early days with first approvals late last year and more this year. The company is deploying sets into Europe, generating excitement at conferences, and expects a bigger impact in 2027 and beyond as more products gain access to the market. Q: Is 22% international growth a baseline for 2026, and should we expect sequential improvement?A: Fred Hite expressed pleasure with international growth but stopped short of calling 22% a baseline for the next couple of years For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Second Quarter 2026 Revenue Surpasses $70 million for the First Time in Company History, and Increased 15% Year-over-Year WARSAW, Ind., Aug. 04, 2026 (GLOBE NEWSWIRE) -- OrthoPediatrics Corp. (“OrthoPediatrics” or the “Company”) (Nasdaq: KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, today announced its financial results for the second quarter ended June 30, 2026. Second Quarter 2026 and Business Highlights Helped a record of nearly 46,000 children in the second quarter of 2026 Generated new record high total revenue of $70.5 million for the second quarter of 2026, up 15% from $61.1 million in the second quarter of 2025; domestic revenue increased 14% and international revenue increased 22% in the quarter Grew worldwide Trauma & Deformity revenue 26% in the second quarter of 2026 compared to the second quarter of 2025 Achieved record adjusted EBITDA of $6.8 million in the second quarter of 2026, compared to $4.1 million in the second quarter of 2025 Reduced second quarter 2026 free cash flow usage by $10.8 million or 78% as compared to the same period in the prior year Announced an exclusive distribution agreement with OSSIO, Inc. (“OSSIO”) that brings U.S. children’s hospitals nationwide a bio-integrative, metal-free fixation technology ideally suited for treatment of fractures and deformities in pediatric patients Increased full year 2026 revenue guidance to $265.0 million to $269.0 million from its prior range of $263.0 million to $267.0 million, representing growth of 12% to 14% compared to prior year David Bailey, President & CEO of OrthoPediatrics, commented, “We have reached the beginning of an inflection point in our business as our second quarter results demonstrate our ability to simultaneously drive stronger revenue growth, increase profitability, and improve free cash flow. These metrics are expected to continue to improve driven by our innovation super cycle of higher value and more capital efficient products launched over the coming years. Our success in the quarter was highlighted by share gains in our Trauma and Deformity implant business, solid international growth, and continued execution of our OPSB strategy. While scoliosis implant sales were strong and the summer surgery schedule is encouraging, the timing of related capital placements and international set sales in the quarter negatively impacted scoliosis growth. This quarter’s results reinforce our confidence in our core business, and we are excited by the opportunity for continued improvement of our operating profile, including achieving cash-flow breakeven in 2026 and further supporting our position as the definitive market leader in pediatric orthopedics.” Second Quarter 2026 Financial ResultsTotal revenue for the second quarter of 2026 was $70.5 million, a 15% increase compared to $61.1 million for the same period last year. U.S. revenue for the second quarter of 2026 was $54.8 million, a 14% increase compared to $48.1 million for the same period last year, representing 78% of total revenue. The increase in revenue in the second quarter of 2026 was driven primarily by growth in global Trauma and Deformity and OPSB products. International revenue for the second quarter of 2026 was $15.7 million, a 22% increase compared to $12.9 million for the same period last year, representing 22% of total revenue. Growth in the quarter was primarily driven by increased procedure volumes and limited set sales. Trauma and Deformity revenue for the second quarter of 2026 was $52.6 million, a 26% increase compared to $41.7 million for the same period last year. This growth was driven primarily by numerous product lines, specifically our Cannulated Screws, PNP Femur, PediPlates, Pega systems, the addition of 3P Hip, as well as continued OPSB growth. Scoliosis revenue was $16.9 million, a 9% decrease compared to $18.5 million for the second quarter of 2025. The decrease was due to decreased revenue generated from 7D Technology as well as lower set sales to our international stocking distributors. These declines were partially offset by increased Response fusion revenue as well as the addition of Verteglide. Sports Medicine/Other revenue for the second quarter of 2026 was $1.0 million, a 10% increase compared to $0.9 million for the same period last year. Gross profit for the second quarter of 2026 was $52.4 million, a 19% increase compared to $44.0 million for the same period last year. Gross profit margin for the second quarter of 2026 increased to 74% from 72% for the same period last year, primarily due to sales volume. Total operating expenses for the second quarter of 2026 were $56.4 million, a 3% increase compared to $54.7 million for the same period last year. The increase was mainly driven by increased sales commission expense as well as additional personnel supporting clinic expansions and small-scale acquisitions. Sales and marketing expenses increased $2.2 million, or 11%, to $21.3 million in the second quarter of 2026. The increase was driven primarily by increased sales commission expenses and an overall increase in volume of units sold. Research and development expenses increased $0.1 million, or 8%, to $2.3 million in the second quarter of 2026. The increase was primarily due to ongoing product development during the second quarter of 2026. General and administrative expenses increased $2.4 million, or 8%, to $32.8 million in the second quarter of 2026. The increase was primarily due to the additional personnel supporting clinic expansions and small-scale acquisitions. Total other expense was $2.9 million for the second quarter of 2026, compared to other income of $3.6 million for the same period last year. The change was primarily driven by additional interest expense in 2026 compared to 2025, as well as changes in foreign exchange gains. Foreign exchange losses were primarily driven by changes in the Euro exchange rate, as the Euro declined in value during the three months ended June 30, 2026, compared to Euro appreciation for the three months ended June 30, 2025. Net loss for the second quarter of 2026 was $7.2 million, compared to $7.1 million for the same period last year. Net loss per share for the period was $0.30 per basic and diluted share, compared to $0.30 per basic and diluted share for the same period last year. Adjusted EBITDA for the second quarter of 2026 was $6.8 million as compared to $4.1 million for the second quarter of 2025. Weighted average basic and diluted shares outstanding for the three months ended June 30, 2026, was 24,048,690 shares. As of June 30, 2026, cash, cash equivalents, short-term investments and restricted cash were $47.9 million compared to $62.9 million as of December 31, 2025. Free cash flow used in the second quarter of 2026 was $3.1 million, a 78% improvement as compared to $13.9 million used in the second quarter of 2025. Increased adjusted EBITDA, lower sets deployed and improved working capital metrics all contributed to the year over year improvement. Full Year 2026 Financial GuidanceFor the full year of 2026, the Company is increasing its revenue guidance to $265.0 million to $269.0 million from its prior range of $263.0 million to $267.0 million, representing growth of 12% to 14% over 2025 revenue. The Company reiterated it expects annual set deployment to be approximately $10.0 million, expects adjusted EBITDA of approximately $25.0 million, and expects to achieve breakeven free cash flow in 2026. Conference CallOrthoPediatrics will host a conference call on Tuesday, August 4, 2026, at 4:30 p.m. ET to discuss the results. Investors interested in listening to the conference call may do so by accessing a live and archived webcast of the event at www.orthopediatrics.com, on the Investors page in the Events & Presentations section. The webcast will be available for replay for at least 90 days after the event. Forward-Looking StatementsThis press release includes "forward-looking statements" within the meaning of U.S. federal securities laws. You can identify forward-looking statements by the use of words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "could," "believe," "estimate," "project," "target," "predict," "intend," "future," "goals," "potential,” "objective," "would" and other similar expressions. Forward-looking statements involve risks and uncertainties, many of which are beyond OrthoPediatrics’ control. Important factors could cause actual results to differ materially from those in the forward-looking statements, including, among others: the risks related to widespread health emergencies, such as COVID-19 and respiratory syncytial virus, the impact such pandemics, epidemics and infectious disease outbreaks may have on the demand for our products, and our ability to respond to the related challenges; and the risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the SEC on March 4, 2026, as updated and supplemented by our other SEC reports filed from time to time. Forward-looking statements speak only as of the date they are made. OrthoPediatrics assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable securities laws. Use of Non-GAAP Financial MeasuresThis press release includes certain non-GAAP financial measures, such as free cash flow, adjusted diluted (loss) earnings per share and Adjusted EBITDA, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Free cash flow, which we reconcile to "Net cash used in operating activities" is cash flow from operations reduced by "Capital expenditures". Adjusted loss per share in this press release represents diluted loss per share on a GAAP basis, plus the accreted interest attributable to acquisition installment payables, restructuring charges, tariffs, European Union Medical Device Regulation fees increase, acquisition related costs, and minimum purchase commitment costs. We believe that providing the non-GAAP diluted loss per share excluding these expenses, as well as the GAAP measures, assists our investors because such expenses are not reflective of our ongoing operating results. Adjusted EBITDA in this release represents net loss, plus interest expense, net plus other expense (income), income tax charge, depreciation and amortization, stock-based compensation expense, restructuring charges, tariffs, European Union Medical Device Regulation fees increase, acquisition related costs, and the cost of minimum purchase commitments. The fair value adjustment of contingent consideration is associated with our estimates of the value of earn-outs in connection with certain acquisitions. The Company believes the non-GAAP measures provided in this earnings release enable it to further and more consistently analyze the period-to-period financial performance of its core business operating performance. Management uses these metrics as a measure of the Company’s operating performance and for planning purposes, including financial projections. The Company believes these measures are useful to investors as supplemental information because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. Free cash flow is a non-GAAP financial measure and has limitations because it does not represent the cash flow available for management's use as it does not reflect capital expenditures which will likely recur in the future. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and it should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, the measure is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as debt service requirements, capital expenditures and other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and other potential cash requirements. In evaluating these non-GAAP measures, you should be aware that in the future the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. The Company’s presentation of non-GAAP free cash flow, diluted loss per share or Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using these adjusted measures on a supplemental basis. The Company’s definition of these measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. The schedules below contain reconciliations of Net cash used in operating activities to Free cash flow (Non-GAAP), GAAP diluted loss per share to non-GAAP diluted loss per share and net loss to non-GAAP Adjusted EBITDA. About OrthoPediatrics Corp.Founded in 2006, OrthoPediatrics is an orthopedic company focused exclusively on advancing the field of pediatric orthopedics. As such it has developed the most comprehensive product offering to the pediatric orthopedic market to improve the lives of children with orthopedic conditions. OrthoPediatrics currently markets over 90 systems that serve three of the largest categories within the pediatric orthopedic market. This product offering spans trauma and deformity, scoliosis, and sports medicine/other procedures. OrthoPediatrics’ global sales organization is focused exclusively on pediatric orthopedics and distributes its products in the United States and over 75 countries outside the United States. For more information, please visit www.orthopediatrics.com. Investor ContactPhilip Trip TaylorGilmartin [email protected]

Image source: The Motley Fool. Thursday, April 30, 2026, at 4:30 p.m. ET President and Chief Executive Officer — David R. Bailey Chief Operating and Financial Officer — Fred L. Hite Need a quote from a Motley Fool analyst? Email [email protected] David R. Bailey, President and Chief Executive Officer, and Fred L. Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For a discussion of risk factors, I encourage you to review the company's most recent Annual Report on Form 10-K, which was filed with the SEC on 03/04/2026, and its subsequent Quarterly Reports on Form 10-Q. During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for evaluating its operations period over period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its first quarter earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for OrthoPediatrics Corp. financial results prepared in accordance with GAAP. In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, 04/30/2026. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call. With that, I would like to turn the call over to David R. Bailey, President and Chief Executive Officer. David R. Bailey: Thanks, Trip. Afternoon, everyone, and thank you for joining us today. We are pleased to begin 2026 by highlighting our most meaningful metric, patient impact. In the first quarter, we supported the treatment of a record 45,000 children, extending our cumulative impact to nearly 1.4 million kids helped. Pediatric patients have long been underserved by solutions not tailored to their needs. We at OrthoPediatrics Corp. are dedicated to changing that through focused innovation and a continued commitment to this most important patient population. 2026 started strong with 13% first quarter revenue growth, further highlighted by significant improvements in adjusted EBITDA and free cash flow over the prior year. We look closer at the quarter, we saw a softer start to the first quarter due to weather-related shutdowns in many of our OPSB clinics in January and February, but trends rebounded in March. Since then, momentum remains strong and is carrying into the second quarter. Growth remains solid across the business, with particular strength internationally, and continued 20% plus expansion in OPSB driven by new products and clinic growth. Importantly, we are at the earliest stages of the multiyear innovation super cycle consisting of what we believe is the most clinically significant and technologically advanced series of product launches in our history. During the quarter, we began to see small contributions from recent beta launches, including 3P Hip and Vertiglyde. These products are generating strong demand, and we are confident that as we move into full market release and increase set deployments in the second quarter, we are positioned well for more meaningful impacts in each of the upcoming quarters. Early trends are reinforcing our expectations for higher ASPs, margin expansion, and improved capital efficiency as each of these products continues to scale. As we expand our portfolio and reinforce our core orthopedic platform in this unassailable position, we see a clear opportunity for continued growth. Our consistent execution underpins our confidence in sustained revenue growth, expanding profitability, and achieving free cash flow breakeven in 2026. We continue to gain share across each of our businesses with our legacy product portfolio, and the share gain will only continue to accelerate as we execute our super cycle and further expand OPSB. Our powerful competitive position is becoming increasingly dominant and will only grow stronger as we further execute our strategy and demonstrate both top and bottom-line expansion in a way that is unique in our industry. We remain focused on enhancing shareholder value while advancing our cause of helping 1 million kids per year in the future. Accordingly, we are raising our 2026 revenue guidance to a range of $263 million to $267 million, representing 11% to 13% growth, and reaffirming our expectations for approximately $25 million in adjusted EBITDA and full-year free cash flow breakeven driven by continued share gains, OPSB expansion, and execution of our multiyear new product launch cycle. Turning to our T&D business, in 2026 the T&D business grew by 14%, driven by increased sales of our flagship trauma and deformity systems and early returns from the beta launch of new implant and OPSB systems. We continue to see success in case volume growth as we move deeper into the launch of PMP Tibia, and we will pick up additional share as we launch 3P Hip. We are also pleased to advance toward the beta launch of the next 3P system, 3P Small Mini, beyond those products, which should kick off late in Q2. We are advancing the next system within the 3P family as well as the next TMP system, PMP Retrograde. Looking closer at 3P, our 3P Hip system has exceeded early expectations. With limited set availability in Q1, we will increase supply of 3P Hip in Q2 and commence the beta launch of 3P Small Mini. We expect a more meaningful impact on growth in the second half of the year. We will also continue advancing additional systems over the next several years. The 3P platform is building strong momentum, and we believe it will become the most advanced and comprehensive pediatric plating system in our field. Overall, T&D remains a key growth driver for the business supported by consistent execution and a pipeline that is both highly clinically relevant and increasingly robust. We believe the depth and quality of our development efforts position us well to sustain innovation, drive future revenue growth, and reinforce our leadership position in the market. Looking at our specialty bracing business, OPSB remains a key growth driver and delivered over 20% growth in the quarter, contributing meaningfully to both revenue expansion and profitability. Our clinic expansion strategy continues to progress ahead of plan, supported by both greenfield openings and selective acqui-hires. Same-store sales growth remained strong, reinforced by ongoing new product introductions and continued sales force expansion. Overall, we are on track to meet or exceed our goal of expanding to 27 territories by 2027. Within OPSB, we are seeing the impact of our new product development engine. We have recently advanced the modular hip brace portfolio into commercial release and initiated the beta launch of the Traxio Halo Gravity Traction System. Early feedback for Traxio has been strong, with initial customer engagement including multiple requests for quotes for this differentiated system. In addition, we remain on track to beta launch the OP contracture management brace, which is designed to integrate directly with our Orthex external fixation platform, further enhancing synergies across our surgical and nonsurgical offerings. OPSB is progressing as planned toward our goal of delivering four to five new product introductions annually, reinforcing a consistent cadence of innovation going forward. We continue to execute effectively across our three-pillar OPSB strategy, which includes sales force expansion, targeted product innovation, and disciplined clinic growth. Overall, we are very pleased with the performance of the business and its increasingly important role within our broader growth strategy. In scoliosis, we experienced 13% growth in the first quarter 2026, driven by increased sales of Response and Vertiglyde systems, and revenue generated from 7D technology. During the quarter, we continued our push into the EOS space with Response Ribbon Pelvic and the Vertiglyde systems, which we believe provide a promising new growth-friendly treatment option for young scoliosis patients. Looking more closely at this progress, we continue to see strong demand for Vertiglyde despite very limited set availability. With approximately 80 surgeons now trained and additional training sessions scheduled, this success is triggering our move to full market release of this important system in the second quarter supported by additional set deployment to meet the rising demand. This growing adoption, along with 7D placements, is driving higher utilization of our Response fusion system, all ahead of the anticipated limited release of our next-generation scoliosis fusion platform, Veraxis, purposely built exclusively for the treatment of pediatric spinal deformity. Designed from the ground up for growing patients and the surgeons who treat them, Veraxis represents a step change in fusion technology by combining advanced implant design, streamlined instrumentation, and integrated digital planning into a single cohesive platform with first surgeries by year end. In addition, we remain on track for first-in-patient procedures with Ellie, our third and most complex EOS product, in the fourth quarter. As a reminder, Ellie is a next-generation smart electromechanical lengthening spinal implant designed to deliver consistent, reliable power through RF power transmission. We expect the first implantation of the Ellie device in late 2026. We are proud of how far our EOS products have come, and they further bolster our belief that our EOS strategy is working. We believe that OrthoPediatrics Corp. is continuing to establish an unmatched portfolio of pediatric scoliosis technology enabling clinicians to treat even the most complex and severe pediatric spinal deformities with a comprehensive set of advanced solutions. Moving to our international business, OUS had a strong first quarter, with growth in excess of 20% highlighted by great sales in EMEA and a nice performance in Brazil under our new agency structure. Continued success in EMEA is being driven by increased sales of legacy T&D products in our agency markets and a small but rapidly growing scoliosis franchise. We are pleased to have received full EU MDR approval for our T&D portfolio, scoliosis products, and most recently, our external fixation devices. We are now actively working to make these long-anticipated products available across our European markets, and we expect this expanded access to support improved EMEA growth in 2026. LATAM is building on our structural improvement in Brazil. While we are still cautious, we do believe an improvement is on track, and over the next several quarters, we expect to turn this headwind into a potential tailwind. The structural improvements we have made in Brazil through the purchase of one of our Brazilian distributors will improve our cash collection and, over time, will normalize ordering patterns and allow for additional growth and market penetration. In addition, we were once again the largest sponsor of the European Orthopedic Society meeting in Seville, Spain. In early April, we showcased a broad range of new products that had previously not been available in Europe under prior regulatory constraints. These offerings were well received by both surgeons and distributors and are expected to contribute to revenue growth in the second half of the year. Lastly, looking beyond our traditional segments, we are building on the success of our 7D experience and are kicking off the launch of our digital preoperative and intraoperative workflow management platform, Playbook, and expect deployment of beta launch sites in 2026. Beyond that, we completed the deployment and the first cases with the Iota Motion robot for pediatric cochlear implant placement and expect additional deployments throughout 2026 and beyond. OrthoPediatrics Corp. is also making deliberate, focused investments in artificial intelligence to drive meaningful clinical and operational impact. We are advancing multiple AI initiatives, including embedding intelligence into our Playbook platform, leveraging AI-enabled tools to support presurgical planning, and evaluating opportunities to enhance patient care and efficiency across our OPSB clinics. Earlier this year, we completed an internal AI flight school to build organizational readiness, and we have established a corporate objective to deploy six to eight targeted AI agents to drive tangible efficiencies. After prioritizing data security and foundational controls last year, our focus in 2026 is firmly on execution, moving from experimentation to scaled implementation that delivers real value to surgeons, clinicians, and our teams. In summary, we believe the company is entering its most compelling phase of expansion to date, supported by a multiyear product launch super cycle that will increasingly shape results over the coming years. These new technologies are meaningfully more advanced and clinically differentiated, addressing significant unmet needs and supporting higher ASPs, improved gross margins, and stronger returns on invested capital. They also enhance our ability to bundle solutions across accounts, supporting broader contract opportunities in pediatric hospitals and reinforcing share gains across our legacy portfolio. At the same time, OPSB continues to scale through both new product introductions and disciplined clinic expansion via greenfield openings and acqui-hires, a trajectory we expect to sustain over the coming years. Collectively, these initiatives are expected to drive significant improvement in profitability and cash flow generation over the long term. More broadly, we believe our hospital and surgeon partners increasingly recognize the value of working with a dedicated, self-sustaining pediatric platform focused exclusively on improving care for children. Together, we are advancing innovation in a historically underserved area of health care and building a stronger long-term outlook for patients and the business. With that, I would like to turn the call over to Fred to provide more detail on our financial results. Fred L. Hite: Thanks, Dave. Taking a closer look at the P&L, our 2026 worldwide revenue of $59.4 million increased 13% compared to 2025. The increase in revenue in the quarter was driven primarily by strong performance across Trauma and Deformity, Scoliosis, and OPSB. U.S. revenue was $45.3 million, an 11% increase from 2025, representing 76% of total revenue. Growth in the quarter was primarily driven by Trauma, Deformity, Scoliosis, and OPSB. We generated total international revenue of $414.1 million, representing growth of 22% compared to 2025, or 24% of our total revenue. In 2026, Trauma and Deformity global revenue of $43 million increased 14% compared to the prior-year period. Growth was primarily driven across numerous product lines, specifically our TRON product, X-Fix, and OPSB. In 2026, Scoliosis global revenue of $15.4 million increased 13% compared to the prior-year period. Growth was primarily driven by increased sales of Response and Vertiglyde systems, and revenue generated from 7D technology. Finally, Sports Medicine/Other revenue in the first quarter 2026 was $900,000, which stayed consistent year over year. Touching briefly on a few key metrics, for 2026, gross profit margin was 73%, which is consistent year over year. Total operating expense increased $2.5 million, or 5%, compared to the prior-year period to $51.7 million in 2026. Sales and marketing expenses increased $1.9 million, or 11%, compared to the prior-year period, driven primarily by increased sales commission expense and an overall increase in volume of units sold, to $18.5 million in 2026. General and administrative expenses increased $700,000, or 2% year over year, to $31 million in 2026. The increase was due primarily to additional personnel supporting recent clinic expansion and other small-scale acquisitions, partially offset by savings being realized from prior restructuring actions. Research and development expenses decreased by $100,000, or 5%, in 2026 to $2.2 million. GAAP net loss per share for the period was $0.45 per basic and diluted share, compared to $0.46 per basic and diluted share for the same period last year. Non-GAAP net loss per share for the period was $0.42 per basic and diluted share compared to $0.39 per basic and diluted share for the same period last year. Adjusted EBITDA was $2.2 million in 2026, compared to a loss of $400,000 in 2025. We ended the first quarter with $50.9 million in cash, short-term investments, and restricted cash. Set deployment was $2.3 million in the first quarter 2026 compared to $3.6 million in 2025. As a reminder, although the amount of sets being deployed in 2026 is lower than historical years, these are primarily all new products being launched as part of our innovation super cycle and are generating a much higher level of revenue per deployed dollar than our previous legacy systems generated. Free cash flow used in 2026 was $5 million, a 40% improvement as compared to $8.4 million used in 2025. Increased adjusted EBITDA, lower sets deployed, and improved working capital metrics contributed to the year-over-year improvement. On March 31, we amended our existing credit agreement with Braidwell LP to add a $20 million delayed-draw term loan facility. This amendment enhances our financial flexibility by providing on-demand access to additional capital through June 2027, while maintaining consistent economics and covenants within our existing term loan. Importantly, this structure allows us to preserve liquidity and avoid dilution, as the facility is fully discretionary and interest-only through maturity in 2029. We view this as a prudent addition to our capital toolkit that further strengthens our balance sheet and positions us to opportunistically fund growth or strategic initiatives while maintaining disciplined capital deployment. Turning to guidance, as Dave mentioned, we raised our expectation for full-year 2026 revenue to be in the range of $263 million to $267 million, representing year-over-year growth of 11% to 13%. We also continue to expect to generate approximately $25 million of adjusted EBITDA, deploy approximately $10 million in sets, and to achieve free cash flow breakeven in 2026. We would expect EBITDA and free cash flow to exhibit similar quarterly seasonality patterns to 2025. It is important to note some periods of free cash flow will be negative and others positive but still cumulatively tracking to our annual guidance metrics. Operator, let us open the call for Q&A. Operator: Thank you. Press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. And our first question comes from Matthew Blackman with TD Cowen. You may proceed. Matthew Blackman: Great. Can you hear me okay? Operator: Sounds good. Yes. Matthew Blackman: Great. Well, thank you for taking my questions. Good afternoon, guys. I am going to start with a question for Fred, and then I have one for you, Dave. I heard you talk about the impact of weather in January and February. Is there any way to quantify the impact on T&D from the OPSB weather-related headwinds? And is that revenue that you recapture, or is it just lost? And then I have a follow-up question for Dave. Fred L. Hite: Yes. So that comment was specific to our clinics, which were shut down a week during January and a week in February. Typically, those appointments get rescheduled. So as Dave mentioned, we saw a nice rebound across the entire business in the month of March, and that has continued in April. I would say that the vast majority of those got cleared in the month of March and now here in April, and it is all behind us by now. Matthew Blackman: Okay. But some of it did sort of scoot into the second quarter, lost in the first quarter, though. That is some of the takeaway, right? Fred L. Hite: Correct. Matthew Blackman: Fair enough. And then, Dave, on the 3P platform, I heard you loud and clear, early days but very encouraging. You are going to ramp from here. It sounds like in 2026, you will be in a more scaled launch with 3P, maybe gaining some 3P Small Mini momentum. Do you think that translates into a visible, at least to us, uptick in T&D second-half growth? Or do we need more sets, more pieces of the platform beyond 3P and 3P Small Mini to inflect U.S. T&D growth? And does that happen in 2027? Just trying to think about the moving parts here and when perhaps we see a visible inflection in that franchise. David R. Bailey: Yes, Matt. Good question. We have very few sets available on the 3P side at this stage. In fact, we have some opportunities to sell sets that we have not done yet just because we want to make them available to more and more users as we are moving those around through our loaner pool. Additional sets, hopefully coming here at the back half of Q2 and certainly Q3, will impact results as we add sets. It is not a huge volume of sets, so I do think that it is going to have some meaningful impact on the implant side of our T&D business. But these rollouts take years. As you have seen over the last several years, even products like PMP Tibia, which I think now have been out two and a half years, are still being rolled out and still impacting top-line revenue growth. What we really like to see about the early days of 3P is very strong ASP in addition to extremely high demand, very strong margins, and consistent with what we have been telling the Street for a while, this new product—and Vertiglyde as well on the scoliosis side—are dramatically more capital efficient. They require less capital deployment to drive top line, so their impact is not just in the back half of the year on top-line revenue but also on profitability and cash usage. We will see more of that from the Small Mini and more of that from PMP Retrograde and the new systems on the scoliosis side. It is very encouraging what we are seeing early on with 3P and these other systems. I think it will probably start to impact the growth of the implant side of our business here in the second half and really in 2027 and 2028. Matthew Blackman: Okay. Thank you, guys. Really appreciate it. Operator: Thanks, Matt. Thank you. Our next question comes from Rick Wise with Stifel. You may proceed. Rick Wise: Good afternoon to you both, and it really is great to see that despite the challenging start to the quarter and weather and everything, you finished strong and that momentum is continuing. Now that I have paid you a compliment, I was hoping to, at a high level, understand your thinking: despite the outperformance in the first quarter and everything we are hearing just on the execution front that just sounds so great, each part of the business working well, some of last year's challenges worked through, resolved, turning into potentially a tailwind, and the new product launches clearly well set up for installing second half. Why leave top-line guidance unchanged? Is there any particular reason other than just being careful as you set up the year, or is there anything that we should understand about maybe some challenges ahead as you start the rollout here? Just help us think about the rest of the year—you left the rest of your guidance unchanged, basically. Fred L. Hite: Yes. We increased the full-year guidance by the amount that we did. Dave continues to talk about the super cycle, which is awesome, and we have more sets coming, which is great. Those sets will be here in the second half, or really the end of the second quarter, to help the second half of the year. But as normal, we like to wait for those things to show up and to show up in the numbers before we get too far ahead of ourselves. So in traditional fashion, we will continue to stay conservative and let the numbers speak for themselves when they show up. Rick Wise: Alright. Sounds good. I am sure it is a similar answer to the very strong performance on the adjusted EBITDA line. I heard what you said, Fred, about some quarters a little better or stronger given the demands of the business. But it seems like you are set up well there with higher-margin products coming on and volume and leveraging the fixed cost base. It just sounds like you are well positioned to do even better. Fred L. Hite: Yes. We were very pleased with the leverage that showed up through the P&L here in the first quarter. Thirteen percent sales growth, G&A grew 2%, and that to us was very encouraging. Typically, first quarter is the lowest sales quarter that we will see for the year. If you add on some incremental revenue in the second and third quarter in particular, which are typically our strongest, that should drop through very nicely to the bottom line. Rick Wise: Gotcha. Thank you very much, and great to see the excellent start to the year. Operator: Thank you. Our next question comes from Ryan Zimmerman with BTIG. You may proceed. Analyst: Hi, everyone. This is Izzy on for Ryan. Thanks for taking the questions. I just wanted to start with the international. I saw that strong 22% growth for the quarter, and I was wondering if that is the right baseline to be at for the rest of the year, or if it could potentially be a little bit stronger as you start to see more contributions from the new products, especially as that EU MDR comes online? David R. Bailey: Good question, Izzy. I am not sure we are going to get too far ahead of ourselves on 22% growth—very pleased to see it. It was certainly an acceleration of growth over 2025; I think we came in at 19% in 2025. The headline here is that we are seeing very consistent performance and consistent growth in these agencies with a lot of the legacy products. As Fred mentioned, we do not want to get ahead of ourselves in terms of set deployment and how much revenue that set deployment of some of these new products generates. But it is safe to say that we have a really nice opportunity in the second half of the year as we start to deploy some of the sets that are now approved in Europe through EU MDR. The timing of those sets coming into our warehouse and then getting out to our customers is a bit of the rate limiter—certainly not demand. As we see some of those sets come in, I think we will be able to give some updated guide as to what we think we can see in the second half of the year. It is early; we are not going to get ahead of ourselves there yet, but it was certainly good to see that kind of acceleration in growth led by our agency markets. Of note, there were very limited set sales. We have been challenged over the last several years to balance margin and top line against some of the lower-margin set sales. Most of that revenue, I would say, in this quarter and hopefully in future quarters is primarily just replenishment orders coming through our agencies and coming through our hospitals in Europe. The acquisition of our Brazilian distributor we called out certainly started to stabilize the markets in Brazil, and we hope over the course of the next several quarters to create a bit of a tailwind in a market where there is extremely high demand, but we needed to adjust our model to be able to extinguish some of that demand. As we see that develop, it is possible that growth could accelerate, but 22% growth is very strong—we are very pleased with that—and if we could stay in that ballpark, it would be a great year. Fred L. Hite: With that said, we do expect international to outgrow the domestic market for each quarter for the rest of the year. While it might not be 22%, we think it will continue to grow very nicely and probably outperform domestic growth for the rest of this year and starting into next year. Analyst: Appreciate it. Thank you. And then I saw the press release today and heard your comments about the launch of Traxio. Could you talk a little bit more about your plans there for the rollout and what we can look forward to? David R. Bailey: Yes. Traxio is a halo gravity traction product. It is primarily designed to help children and physicians who are taking care of very complex early onset scoliosis patients. The initial launch is of a few sizes of the traction device. Those devices are sold as a capital purchase, and then there is replenishment of different components of that device inside the children's hospitals. Eventually, we will launch the surgical component of Traxio, which will be the actual halo itself that attaches to the skull of these kids. What is exciting is, number one, there is very high demand. We have a lot of hospitals that have called us for quotes. There is really nothing like it available in the market. Most hospitals that do traction are having to build a lot of these devices in-house. You can imagine the demand from a pure risk management standpoint to have an FDA-approved device that can take care of that patient population. It is also really encouraging to see its connection to our EOS business and ultimately the fusion business. We have talked about treating the entire disease state of scoliosis, not just the end state for fusion. You can see Traxio and how that fits in—patients may be going from bracing to halo gravity traction, to our suite of early onset scoliosis products, to potential non-fusion products like ApiFix, and then ultimately, final fusion if required. It creates a portfolio that is unlike any in the spine space, and it is a very strong adder in terms of our value proposition to children's hospitals within scoliosis. Operator: Thank you. Our next question comes from Mike Matson with Needham & Company. You may proceed. Analyst: Hey, guys. This is Joseph on for Mike. Given the rapid growth you have been calling out in OPSB, just being an increasing part of revenue for the whole company, I am wondering if you can provide more color on SG&A expenses as a percentage of revenue from here. Should we expect maybe some small gross margin improvement moving forward, with the real margin expansion coming on operating leverage? Fred L. Hite: Absolutely. Just like we saw in the first quarter, the true leverage down to the EBITDA line is coming from G&A. This year, it is both on the cash and the non-cash portion of G&A. I think the leverage we saw in the first quarter will be similar in the rest of the year in each of those quarters. A little bit on sales and marketing, but that is not our focus—it is all really on the G&A side of the business. The dollars may go up a little bit on G&A as the business grows in the second and third quarter pretty dramatically, but the leverage will come through very nicely. Analyst: Okay, that is great. And then, on pull-through for the scoliosis products, I know it may be early days, but you called out great beta launches generating demand and Response growing really well. How does that compare to expectations prior? I believe you said the real pull-through driver for scoliosis would maybe be driven by Ellie. Is that still the case? David R. Bailey: Certainly, Ellie is the most complex and probably the largest opportunity on the early onset scoliosis side. But we have seen remarkable interest in Vertiglyde—maybe more interest in that particular type of technique for the EOS indication than we had expected when we launched. We have nearly 80 surgeons already trained, and at this point we are having to have surgeons notify us well in advance when they schedule cases just to move inventory around. On pull-through, a number of surgeons and children's hospitals that are not historically large users of our fusion platform, Response, are the main users of the EOS product, Vertiglyde. That is exactly part of the strategy. We want to grow into this blue ocean growth opportunity in early onset scoliosis with Vertiglyde and Ellie and Ribbon Pelvic, and it also brings opportunities to show just how good we are on the scoliosis side to major institutions where they may use a lot of our trauma and deformity products but have not had much experience with Response and our fusion system. We are picking up pull-through already. You can imagine it is fairly small given the limited access to Vertiglyde, but we are certainly involved with children's hospitals and physicians that historically were not as exposed to our fusion platform. As the EOS portfolio more fully launches—more sets available on Vertiglyde, Ellie launching, followed by continued deployment of Response and the launch of our next-gen fusion system, Veraxis—that is a very compelling set of technologies and a value proposition for the hospital. Not to mention bracing on top of that providing halo and synergies, as well as now the Traxio system on the EOS side. It is a really good setup for us in the coming several quarters and really several years as those products roll out. Analyst: Maybe one quick one. Now that you are finished with EU MDR approval in Europe, are there other geographies you are targeting for further catalog expansion? Is it time to be thinking about moving into China? David R. Bailey: We have a very small presence in Japan, essentially no presence in India, and no presence in China. Historically, we have spent our dollars focusing on EU MDR. There is remarkable demand for our products in some of those markets, particularly India, where we have strong surgeon connections. While it is not part of guidance right now, in time it would be natural to extend into some of those bigger markets. Over the coming years, that could be a real opportunity for us. Analyst: Okay, makes sense. Well, congratulations on the strong quarter. Operator: Thank you. Our next question comes from David Turkaly with Citizens. You may proceed. David Turkaly: Hey. Good evening. I just wanted to follow up on that last one. Did you give timing for the Veraxis system? David R. Bailey: We expect first surgeries for both Ellie and Veraxis by the end of the year. David Turkaly: And does that mean that domestically that is cleared? What is your approval process with that device? Is that a 510(k)? David R. Bailey: Yes. It is a 510(k). We are working towards that at this point; it is not yet cleared, but we would expect it in the back half of the year. Certainly, timing is a bit of a wildcard, but our success with these 510(k) products has been very strong. Generally, with all the testing, we get these things through pretty rapidly. I do not expect Veraxis to have a huge impact on revenue in the second half of the year—more of a 2027–2028 rollout. Our goal is to get surgeons access to that product so we can start getting feedback at some point in the fourth quarter, and I think we are on track for that. David Turkaly: Great. And I think you said OPSB grew 20% in the quarter, and I am looking back at notes—I think you said six territories maybe this year. Can you give any color if you have done any of those and what you expect in terms of greenfield or acqui-hire specifically for 2026? David R. Bailey: So far, the guide has been by 2027 we would be at 27 of these markets. I think we are at or a little ahead of that. I would expect we would reach the necessary six markets in 2026 for sure. There is continued demand and opportunities for both greenfield as well as acqui-hire. There are also opportunities within some of the existing open territories to expand our clinic presence. Same-store sales in clinic locations where we have had a presence for a year are going extremely well. We are seeing increased revenue there. There are opportunities to more fully penetrate territories we are already in while we balance that against opening new territories. Deeper penetration in existing territories does not take as much expense, and when we have opportunities to accelerate patient care and revenue where we already are, we weigh that against how much we would want to accelerate into new territories. It is very safe to say we are on track, if not ahead of track, in 2026, and will meet or exceed our objectives for 2027. David Turkaly: Thank you. Operator: Thank you. Our next question comes from Caitlin Roberts with Canaccord Genuity. You may proceed. Caitlin Roberts: Hi. Thanks for taking the questions. In LATAM, you noted you purchased your largest distributor in Brazil. How much of the LATAM business does this distributor encompass, and would you look to the same formula and acquire more distributors down there to drive more consistency in the region? Fred L. Hite: Historically, we have had about 15 stocking distributors. This was one of the larger, but not the majority of the sales down there—roughly one-fifteenth of our sales in Brazil. The good news is we now have a legal entity and an operating entity down there, and all of our other sales into Brazil are going through this legal entity, which dramatically enhances our ability to collect cash in Brazil, to deliver inventory on a more timely basis because we are now stocking inventory in Brazil, and to better serve those other stocking distributors. We do not, at this time, have big plans to buy additional distributors. It is all about the ability to collect cash more efficiently and to better serve our partners down there so we can continue to grow that entire region in more and more procedures. Caitlin Roberts: Understood. And just on Veraxis, what are your thoughts on the competitive landscape in pediatric spinal deformity as you look to launch? David R. Bailey: The pediatric spinal fusion portion of our business is the most competitive—it always has been. Most companies on the adult side have good deformity correction systems that kind of dual-function in pediatric deformities. With Veraxis, we have a system that is built from the ground up with pediatric spine surgeons, not a system designed for adults. When physicians see the development work done by their colleagues from major children's hospitals, the competitive position of that product, in conjunction with products we offer that are not offered by really any other competitors, creates a value proposition that is hard to beat. We are excited. It is early—we have not done first case—but I am excited to see how it stacks up. Response, which has been in the market for a number of years, continues to take share. Leapfrogging our own best-in-class technology will hopefully accelerate further the share taking we have experienced over the last several years. Caitlin Roberts: Great. Thank you. Operator: Thank you. Our next question comes from Benjamin Charles Haynor with Lake Street Capital Markets. You may proceed. Benjamin Charles Haynor: First off, on the almost 80 Vertiglyde surgeons trained, can you talk about the number of folks that are doing these sorts of procedures—kind of an 80/20 where X surgeons are doing 80% of procedures? What does the total look like in terms of people doing these procedures? David R. Bailey: Great question. This is a tough one because the technology that surgeons have had access to for some of these procedures has been so limited that the technology itself has been a limiting factor to who would actually use guided growth for spinal deformity correction. It is fair to say that every children's hospital that does spinal deformity correction—which is, say, 300 procedures—has at least one physician there, if not more, who would be willing to take care of these EOS patients. Certainly, places like Children's of Philadelphia, Boston Children's, Wash U, and several others are doing higher volumes of those very complex procedures. In total, between Ellie and Veraxis, it is a sub-$100 million, maybe $80 million market opportunity with essentially very limited competition and a deep unmet need. Our customers recognize we are willing to take on these complex things they care about, and that is what we are seeing from the pull-through already on Response. Benjamin Charles Haynor: Thanks for the color there. And then on Traxio, obviously it would improve the economics versus MacGyvering these sorts of things. What do the economics look like for the hospitals that make these capital purchases? And how did the relationship with Syntech Group come about? David R. Bailey: We got connected to Syntech through partnerships we have in Montreal. As you know, we have an operation there after the acquisition of Pega, and we formed a nice relationship as they have helped us with different products on the nonsurgical side through specialty bracing. On economics, this is one of those products that, if you do this procedure, it is almost a must-have for children's hospitals. Not all children’s hospitals perform the procedure—you need hospitals that can have patients stay inpatient for several weeks. Often these kids get halo and literally live in the halo device for as long as six weeks before they ultimately have a surgical procedure. The economics are probably pretty strong for children’s hospitals; they have these patients in the hospital and then are doing multiple surgical procedures thereafter. Traxio is not a $1 million PO the hospital has to issue, so it is not such a large capital purchase that we are seeing resistance. There is an opportunity to partner Traxio with 7D, Vertiglyde, Response—these very novel systems that you just cannot get from any other company—to leverage opportunities to bundle our services and products. We are in more of those bundling discussions now at major children's hospitals than we have ever been in the history of the company. As more differentiated products like Traxio launch, our position in those negotiations strengthens and, again, hopefully drives accelerating revenue in the next few years. Benjamin Charles Haynor: Lastly, thinking about opportunities outside of orthopedics within pediatrics—any updates there? Any conversations that are happening? Anything that folks should expect the remainder of the year? David R. Bailey: We have long walked alongside a number of technologies in other subspecialties in pediatric health care. We like to think of ourselves as a beacon for entrepreneurs who could help us meet unmet needs in pediatric health care. When the time is right—the right company with the right culture where we could help scale revenue globally—we would be opportunistic, but nothing is pending at the moment. We will continue to be good partners with companies like Iota Motion, which is a little bit outside of our call point, and help those companies commercialize. When the time is right, we will probably step into some of these other subspecialties. Benjamin Charles Haynor: Excellent. Thanks for taking the questions, and congrats on all the progress. David R. Bailey: Absolutely. Thanks, Ben. Operator: And as a reminder, to ask a question, please press 1-1. Our next question comes from Ravi Misra with Truist Securities. You may proceed. Ravi Misra: Hi. Thank you for taking the questions. Good evening. Maybe a philosophical question here. I would love to understand the thinking at the company around balancing this 11% to 13% growth outlook amidst what appears to be a pretty significant product cycle. You have talked in the past about competitors leaving the space, giving you opportunities as a pure play focused on pediatrics. Then again, at the same time, set deployment is around $10 million this year. Why not really accelerate the set deployment to capture revenue? Are we underestimating the leverage potential from sets out in the field, or is it just something you are being conservative and measured about? David R. Bailey: That is a great question. There is certainly a healthy tension within the organization as we think about how fast we want to accelerate revenue versus generate positive free cash flow, and then, when we generate positive free cash flow and that becomes a bigger number, how much of that we would want to use to accelerate growth. You are right—we have a great opportunity in front of us to launch these new products and continue to scale legacy products, given the evacuation in the market of some quasi-competitors. We have been on a quest over the last few years to deliver increasing EBITDA and to deliver free cash flow breakeven. Our commitment is unwavering there, and nothing will knock us off that path to deliver that in 2026. As we think about 2027, 2028, and through 2030 as the super cycle ramps, I am not sure our strategy will be to maximize the capital that the business would ultimately generate. We would probably start utilizing some of the additional free cash flow to scale some of these products—that would be the smart competitive thing when you have the opportunity we have. In the short term, delivering on our commitments, balancing top-line revenue growth against profitability expectations, as well as the drive to free cash flow breakeven, is what we have in front of us. Then we will have bigger decisions to make—good opportunities to execute and maybe put out a little more inventory when we get more into the first, second, and third inning of the super cycle. At this stage, we are in the batter’s box. As we get into 2027 through 2030, it is likely we would want to put more inventory on the street, particularly inventory that has the kind of margin that products like 3P and Vertiglyde have and the return on capital that is so much better than our legacy systems. Ravi Misra: Thanks. And then just one last one. On the roughly 80-surgeon base around Vertiglyde, should we think of that as seeding the field for Ellie once that comes in, or is that a different subset of pediatric specialists? David R. Bailey: Very astute. We talk about Ellie—in theory, since it is not approved yet—and the potential features with surgeons when we go through training. Any surgeon who is training or interested in training on Vertiglyde is most certainly a candidate for the use of Ellie as well as our Response Ribbon Pelvic, which is great news. You will also see increased sales of our small stature systems on the Response side because these are very young patients and surgeons who treat those patients. Ellie is not a substitute for Vertiglyde, and Vertiglyde is not Ellie. There are different indications within this very complex patient population that require Ribbon Pelvic, Vertiglyde, and Ellie. Capturing mindshare within the surgeons who treat that patient population is very good for our prospects in the future. Operator: I would now like to turn the call back over to David R. Bailey for any closing remarks. David R. Bailey: Great. Thanks, operator. We appreciate all of your time, and we will be at a number of conferences over the course of the next several weeks. We look forward to meeting with you all there. Thanks, and have a great evening. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. OrthoPediatrics (KIDS) Q1 2026 Earnings Transcript was originally published by The Motley Fool

First quarter revenue growth of 13% was achieved despite weather-related clinic shutdowns in January and February, with a strong rebound in March momentum. Management is initiating a multiyear 'innovation super cycle' featuring the most clinically advanced product launches in company history, including the 3P Hip and Vertiglyde systems. International growth exceeded 20%, driven by agency market success in EMEA and structural improvements in Brazil following the acquisition of a local distributor. The Specialty Bracing (OPSB) segment grew over 20%, supported by a three-pillar strategy of sales force expansion, product innovation, and disciplined clinic growth. New product launches are intentionally designed for higher ASPs and improved capital efficiency, generating more revenue per dollar of deployed set capital than legacy systems. The company is transitioning from AI experimentation to scaled implementation, targeting the deployment of six to eight AI agents to drive operational efficiencies. Full-year 2026 revenue guidance was raised to $263 million–$267 million, reflecting confidence in sustained share gains and the impact of new product rollouts. Management reaffirmed the goal of achieving full-year free cash flow breakeven in 2026, supported by approximately $25 million in adjusted EBITDA. The 'super cycle' impact is expected to be more meaningful in the second half of 2026 as beta launches transition to full market release with increased set availability. First-in-patient procedures for the Veraxis next-generation fusion platform and the Ellie electromechanical implant are targeted for the fourth quarter of 2026. International revenue is projected to outpace domestic growth for the remainder of the year, aided by full EU MDR approval across the T&D and scoliosis portfolios. A $20 million delayed-draw term loan facility was added to the existing credit agreement to enhance financial flexibility without immediate dilution. The acquisition of a Brazilian distributor is expected to normalize ordering patterns and improve cash collection, turning a previous headwind into a tailwind. Set deployment spending decreased to $2.3 million from $3.6 million year-over-year as the company prioritizes higher-efficiency new product sets. Operating leverage improved significantly, with G&A expenses growing only 2% compared to 13% revenue growth, reflecting realized savings from prior restructuring. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management expects the 3P platform to impact implant growth in the second half of 2026, with more significant contributions in 2027 and 2028. Early 3P results show very strong ASPs and high demand, though current set availability remains a near-term rate limiter. The company remains committed to the 2026 free cash flow breakeven target and will not sacrifice that goal to further accelerate growth this year. Management suggested that once the business is self-sustaining, they may use future free cash flow to more aggressively scale inventory for high-margin products. The 80 surgeons already trained on Vertiglyde represent the primary target audience for the upcoming Ellie electromechanical implant. Capturing mindshare in the early onset scoliosis (EOS) space is driving pull-through for the company's legacy Response fusion systems. Traxio addresses a gap where hospitals previously had to 'MacGyver' in-house solutions for complex scoliosis cases. The system serves as a 'must-have' entry point for children's hospitals, facilitating broader bundling discussions for the entire scoliosis portfolio. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

First Quarter 2026 Revenue Increased 13% Year-over-Year WARSAW, Ind., April 30, 2026 (GLOBE NEWSWIRE) -- OrthoPediatrics Corp. (“OrthoPediatrics” or the “Company”) (Nasdaq: KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, today announced its financial results for the first quarter ended March 31, 2026. First Quarter 2026 and Business Highlights Helped a record of over 45,000 children in the first quarter of 2026 Generated total revenue of $59.4 million for the first quarter of 2026, up 13% from $52.4 million in the first quarter of 2025; domestic revenue increased 11% and international revenue increased 22% in the quarter Grew worldwide Trauma & Deformity revenue 14% and worldwide Scoliosis revenue 13% in the first quarter of 2026 compared to the first quarter of 2025 Achieved adjusted EBITDA of $2.2 million in the first quarter of 2026, compared to ($0.4) million in the first quarter of 2025 Reduced first quarter 2026 free cash flow usage by 40% as compared to the same period in the prior year Increased full year 2026 revenue guidance to $263.0 million to $267.0 million from its prior range of $262.0 million to $266.0 million, representing growth of 11% to 13% compared to prior year David Bailey, President & CEO of OrthoPediatrics, commented, “We delivered a strong start to 2026 with 13% first quarter revenue growth and significant improvement in adjusted EBITDA and free cash flow, reflecting solid execution across the business. Momentum built throughout the quarter and was driven by broad-based strength, including robust international performance and OPSB growth supported by new products and clinic expansion. We are successfully scaling OPSB, taking share in our surgical business, and advancing innovative product launches, while improving profitability and remaining on track to meet our adjusted EBITDA goals. Looking ahead, we are entering a highly compelling phase, underpinned by a multi-year product super cycle expected to drive higher ASPs, margin expansion, and improved returns, while enhancing our ability to deepen hospital partnerships, and strengthen our leadership in pediatric care.” First Quarter 2026 Financial Results Total revenue for the first quarter of 2026 was $59.4 million, a 13% increase compared to $52.4 million for the same period last year. U.S. revenue for the first quarter of 2026 was $45.3 million, an 11% increase compared to $40.9 million for the same period last year, representing 76% of total revenue. The increase in revenue in the first quarter of 2026 was driven primarily by organic growth in Trauma and Deformity, Scoliosis and OPSB products. International revenue for the first quarter of 2026 was $14.1 million, a 22% increase compared to $11.5 million for the same period last year, representing 24% of total revenue. Growth in the quarter was primarily driven by increased procedure volumes and limited set sales. Trauma and Deformity revenue for the first quarter of 2026 was $43.0 million, a 14% increase compared to $37.9 million for the same period last year. This growth was driven primarily by Trauma, Pega products, Ex-Fix, and OPSB. Scoliosis revenue was $15.4 million, a 13% increase compared to $13.7 million for the first quarter of 2025. The growth was driven by increased sales of Response and VerteGlide systems, and revenue generated from 7D technology. Sports Medicine/Other revenue for the first quarter of 2026 was $0.9 million, which stayed consistent year over year. Gross profit for the first quarter of 2026 was $43.4 million, a 13% increase compared to $38.3 million for the same period last year. Gross profit margin for the first quarter of 2026 was 73%, which stayed consistent year over year. Total operating expenses for the first quarter of 2026 were $51.7 million, a 5% increase compared to $49.2 million for the same period last year. The increase was mainly driven by the incremental personnel required to support the ongoing growth of the Company, including increased non-cash stock compensation. Sales and marketing expenses increased $1.9 million, or 11%, to $18.5 million in the first quarter of 2026. The increase was driven primarily by increased sales commission expenses and an overall increase in volume of units sold. Research and development expenses decreased $0.1 million, or 5%, to $2.2 million in the first quarter of 2026. The decrease was driven primarily due to the timing of product development during the first quarter of 2026. General and administrative expenses increased $0.7 million, or 2%, to $31.0 million in the first quarter of 2026. The increase was primarily due to the additional personnel supporting clinic expansions and small-scale acquisitions, partially offset by savings being realized from prior restructuring actions. Total other expense was $2.5 million for the first quarter of 2026, compared to other income of $0.5 million for the same period last year. The increase was primarily driven by a decrease in foreign exchange gain. Net loss for the first quarter of 2026 was $10.7 million, compared to $10.7 million for the same period last year. Net loss per share for the period was $0.45 per basic and diluted share, compared to $0.46 per basic and diluted share for the same period last year. Adjusted EBITDA for the first quarter of 2026 was $2.2 million as compared to a loss of $0.4 million for the first quarter of 2025. Weighted average basic and diluted shares outstanding for the three months ended March 31, 2026, was 23,685,055 shares. As of March 31, 2026, cash, cash equivalents, short-term investments and restricted cash were $50.9 million compared to $62.9 million as of December 31, 2025. Free cash flow used in the first quarter of 2026 was $5.0 million, a 40% improvement as compared to $8.4 million used in the first quarter of 2025. Increased adjusted EBITDA, lower sets deployed and improved working capital metrics all contributed to the year over year improvement. Full Year 2026 Financial Guidance For the full year of 2026, the Company increasing its revenue guidance of $263.0 million to $267.0 million from its prior range of $262.0 million to $266.0 million, representing growth of 11% to 13% over 2025 revenue. The Company reiterated it expects annual set deployment to be approximately $10.0 million and expects to generate approximately $25.0 million of adjusted EBITDA for full year 2026, and breakeven free cash flow in 2026. Conference Call OrthoPediatrics will host a conference call on Thursday, April 30, 2026, at 4:30 p.m. ET to discuss the results. Investors interested in listening to the conference call may do so by accessing a live and archived webcast of the event at www.orthopediatrics.com, on the Investors page in the Events & Presentations section. The webcast will be available for replay for at least 90 days after the event. Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of U.S. federal securities laws. You can identify forward-looking statements by the use of words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "could," "believe," "estimate," "project," "target," "predict," "intend," "future," "goals," "potential,” "objective," "would" and other similar expressions. Forward-looking statements involve risks and uncertainties, many of which are beyond OrthoPediatrics’ control. Important factors could cause actual results to differ materially from those in the forward-looking statements, including, among others: the risks related to widespread health emergencies, such as COVID-19 and respiratory syncytial virus, the impact such pandemics, epidemics and infectious disease outbreaks may have on the demand for our products, and our ability to respond to the related challenges; and the risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the SEC on March 4, 2026, as updated and supplemented by our other SEC reports filed from time to time. Forward-looking statements speak only as of the date they are made. OrthoPediatrics assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable securities laws. Use of Non-GAAP Financial Measures This press release includes certain non-GAAP financial measures, such as free cash flow, adjusted diluted (loss) earnings per share and Adjusted EBITDA, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Free cash flow, which we reconcile to "Net cash used in operating activities" is cash flow from operations increased by "Capital expenditures". Adjusted loss per share in this press release represents diluted loss per share on a GAAP basis, plus the accreted interest attributable to acquisition installment payables, restructuring charges, tariffs, European Union Medical Device Regulation fees increase, acquisition related costs, and minimum purchase commitment costs. We believe that providing the non-GAAP diluted loss per share excluding these expenses, as well as the GAAP measures, assists our investors because such expenses are not reflective of our ongoing operating results. Adjusted EBITDA in this release represents net loss, plus interest expense, net plus other income, income tax charge (benefit), depreciation and amortization, stock-based compensation expense, restructuring charges, European Union Medical Device Regulation fees increase, acquisition related costs, and the cost of minimum purchase commitments. The fair value adjustment of contingent consideration is associated with our estimates of the value of earn-outs in connection with certain acquisitions. The Company believes the non-GAAP measures provided in this earnings release enable it to further and more consistently analyze the period-to-period financial performance of its core business operating performance. Management uses these metrics as a measure of the Company’s operating performance and for planning purposes, including financial projections. The Company believes these measures are useful to investors as supplemental information because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. Free cash flow is a non-GAAP financial measure and has limitations because it does not represent the cash flow available for management's use as it does not reflect capital expenditures which will likely recur in the future. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and it should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, the measure is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as debt service requirements, capital expenditures and other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and other potential cash requirements. In evaluating these non-GAAP measures, you should be aware that in the future the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. The Company’s presentation of non-GAAP free cash flow, diluted loss per share or Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using these adjusted measures on a supplemental basis. The Company’s definition of these measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. The schedules below contain reconciliations of Net cash used in operating activities to Free cash flow (Non-GAAP), GAAP diluted loss per share to non-GAAP diluted loss per share and net loss to non-GAAP Adjusted EBITDA. About OrthoPediatrics Corp. Founded in 2006, OrthoPediatrics is an orthopedic company focused exclusively on advancing the field of pediatric orthopedics. As such it has developed the most comprehensive product offering to the pediatric orthopedic market to improve the lives of children with orthopedic conditions. OrthoPediatrics currently markets nearly 90 systems that serve three of the largest categories within the pediatric orthopedic market. This product offering spans trauma and deformity, scoliosis, and sports medicine/other procedures. OrthoPediatrics’ global sales organization is focused exclusively on pediatric orthopedics and distributes its products in the United States and over 75 countries outside the United States. For more information, please visit www.orthopediatrics.com. Investor Contact Philip Trip Taylor Gilmartin Group [email protected] 415-937-5406