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ORTHOPEDIATRICS CORP (KIDS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong topline growth and improved profitability metrics: revenue rose 17% year over year to $52.4M, gross margin expanded to 73%, and adjusted EBITDA improved to a loss of $0.4M from a loss of $1.1M in Q1 2024 .
  • The company raised full-year 2025 revenue guidance low end by $1M to $236–$242M and reiterated gross margin (72–73%), adjusted EBITDA ($15–$17M), and ~$15M set deployment, citing momentum in OPSB, set leveraging, and new product launches .
  • Relative to S&P Global consensus, KIDS posted a revenue beat and a normalized EPS beat: revenue $52.411M vs $51.683M*, EPS (Primary/normalized) -$0.39 vs -$0.45*; GAAP EPS was -$0.46 .
  • Key catalysts: continued 7D navigation placements driving scoliosis adoption, VerteGlide launch, progress on EU MDR approvals, and OPSB clinic expansion; management highlighted minimal tariff exposure given 95% domestic/Canada sourcing .

What Went Well and What Went Wrong

What Went Well

  • Scoliosis strength: revenue +34% YoY on growing RESPONSE and ApiFix adoption, 7D-enabled pull-through, and OPSB braces; FDA approval and initial launch preparation for VerteGlide strengthens EOS portfolio .
  • Gross margin expansion: 73% vs 72% last year, benefiting from higher domestic mix and fewer international set sales; normalized EPS better than consensus; adjusted EBITDA loss cut by >50% YoY .
  • Management tone confident: “We delivered another strong quarterly performance… remain on track to meet our Adjusted EBITDA goals… well positioned for the rest of 2025” — David Bailey .

What Went Wrong

  • GAAP net loss widened to $10.7M and GAAP EPS to -$0.46, driven by higher operating expenses (+18% YoY) including personnel and stock comp; sales and marketing +17%, G&A +22% .
  • International softness: double-digit growth but pressured by LatAm and lower OUS set sales, which contribute little to profitability; deliberate constraint on South America set sales to focus on cash metrics .
  • Sports Medicine/Other declined 25% YoY to $0.9M, offsetting strength elsewhere .

Financial Results

Income Statement and Profitability (quarterly)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$54.573 $52.667 $52.411
Gross Profit ($USD Millions)$40.060 $35.565 $38.262
Gross Margin %73.0% 67.5% 73.0%
Operating Loss ($USD Millions)$(5.566) $(14.055) $(10.981)
Net Loss ($USD Millions)$(7.919) $(16.069) $(10.659)
GAAP EPS ($)$(0.34) $(0.69) $(0.46)
Adjusted EBITDA ($USD Millions)$3.977 $3.023 $(0.379)

Actual vs Wall Street Consensus (Q1 2025)

MetricActualConsensusDelta
Revenue ($USD Millions)$52.411 $51.683*+$0.728
EPS (Primary/Normalized, $)$(0.39)$(0.45)*+$0.06

Estimates marked with * are Values retrieved from S&P Global.

Revenue Mix and Segments (Q1 2025 vs Q1 2024)

CategoryQ1 2024 ($USD Millions)Q1 2025 ($USD Millions)YoY Change
U.S. Revenue$34.305 $40.891 +19%
International Revenue$10.380 $11.520 +11%
Trauma & Deformity$33.302 $37.867 +14%
Scoliosis$10.203 $13.664 +34%
Sports Medicine/Other$1.180 $0.880 -25%

KPIs (Q1 2025)

KPIQ1 2025Prior Reference
Set deployment (consigned) ($USD Millions)$3.6 $4.3 (Q1 2024)
Free cash flow usage ($USD Millions)$8.4 (usage) Improved 36% YoY
Cash, ST investments & restricted cash ($USD Millions)$60.8 (Mar 31, 2025) $70.8 (Dec 31, 2024)
Gross Margin %73.0% 72.0% (Q1 2024)
Total Operating Expenses ($USD Millions)$49.243 $41.897 (Q1 2024)
Sales & Marketing ($USD Millions)$16.572 $14.169 (Q1 2024)
G&A ($USD Millions)$30.280 $24.730 (Q1 2024)
R&D ($USD Millions)$2.351 $2.998 (Q1 2024)
Weighted Average Shares23,230,871 22,820,779 (Q1 2024)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$235.0M–$242.0M $236.0M–$242.0M Raised low end by $1.0M
Gross Margin %FY 2025Not provided (prior) 72%–73% Initiated range
Adjusted EBITDAFY 2025$15M–$17M $15M–$17M Maintained
Annual Set DeploymentFY 2025~$15M ~$15M Maintained
Free Cash FlowQ4 2025First full positive quarter expected Reiterated first positive quarter Maintained
Free Cash Flow BreakevenFY 2026Not provided (prior) Breakeven targeted 2026 New disclosure
Tariff Impact AssumptionsFY 2025Not provided (prior) Minimal; absorbed in guidance Clarified risk stance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Enabling Technologies / 7D NavigationEnabling Technologies division launched (Q3); 7D placements aiding Scoliosis adoption (Q4) 7D placements continue to open large accounts; navigation supports future EOS and fusion products Strengthening adoption
Supply Chain / Tariffs / MacroLimited commentary95% COGS domestic/Canada, minimal tariff exposure; nonelective procedures cushion macro Risk contained
Scoliosis product performanceStrong YoY growth: +52% (Q3), +62% (Q4) +34% YoY; VerteGlide FDA approval; EOS portfolio broadening Sustained momentum
Regional trendsInternational +12% (Q3) with set sales; Q4 +5% international Double-digit growth but LatAm softness; limiting South America set sales to improve cash Focus on profitable growth
Regulatory / EU MDRNot detailedExpect EU MDR approvals begin 2H 2025; wave launches in EU; eLLi pathway constructive Upcoming catalysts
OPSB specialty bracingBoston O&P addition; OPSB contributing Territory expansion (North Carolina); 4+ OPSB launches planned; bracing sensor, hip dysplasia focus Scaling
R&D executionMultiple launches and growth drivers cited FDA approvals: VerteGlide, sterile PNP Femur/Tibia, ORTHEX half-pins; 3P Hip beta launch this summer Accelerating pipeline

Management Commentary

  • “We delivered another strong quarterly performance from both a revenue and profitability perspective... remain on track to meet our Adjusted EBITDA goals... well positioned for the rest of 2025” — David Bailey .
  • “We expect our business to gain momentum throughout 2025... increasing our full year revenue guidance to $236M to $242M... adjusted EBITDA of $15M to $17M” — David Bailey .
  • “Minimal exposure to tariff-related impacts... approximately 95% of our cost of goods sold come from domestic suppliers and our Canadian entity” — David Bailey .
  • “We received final FDA approval for VerteGlide... 3P Pediatric Plating Platform Hip System... total FDA approvals for the year to 5” — David Bailey .
  • “We ended the first quarter with $60.8M in cash, short-term investments and restricted cash... reiterating gross margin 72%–73% and adjusted EBITDA $15M–$17M” — Fred Hite .

Q&A Highlights

  • Scoliosis trajectory and EOS portfolio: Management sees VerteGlide, RESPONSE, ApiFix and EOS solutions driving adoption at major children’s hospitals; breadth across the scoliosis continuum differentiates OP versus adult spine competitors .
  • Guidance calibration: Low end raised $1M; caution on summer seasonality and judicious international set sales to protect cash collections, particularly in LatAm .
  • 7D navigation as leading indicator: 7D placements accelerate RESPONSE fusion adoption, especially in accounts with low prior pedicle screw sales; navigation will benefit upcoming EOS devices and new fusion system .
  • eLLi regulatory path: Breakthrough designation and constructive FDA dialogue suggests a rational, cost-effective submission without a multi-year PMA study; tone similar to successful VerteGlide approval .
  • Capacity and OPSB expansion: Two shifts with room to add a third; multiple OPSB product launches and territory growth planned in H2 2025; potential OPSB expansion in Europe .

Estimates Context

  • Q1 2025 revenue beat: $52.411M vs $51.683M consensus*; EPS (Primary/normalized) beat: -$0.39 vs -$0.45*. GAAP EPS was -$0.46; adjusted diluted loss per share was -$0.39 .
  • Given raised revenue guidance and reiterated profitability targets, Street models may need to reflect stronger U.S. mix, ongoing OPSB momentum, and timing of EU MDR-driven OUS launches .

Estimates marked with * are Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and normalized EPS beats alongside gross margin expansion signal effective execution and mix benefits; continue to expect strong U.S.-driven margins and disciplined OUS set deployment .
  • Bolded catalyst: VerteGlide FDA approval and EOS portfolio breadth should support scoliosis share gains at large children’s hospitals; 7D placements enable pull-through across RESPONSE and future devices .
  • Guidance confidence: Raised FY25 revenue low end; gross margin 72–73% and adjusted EBITDA $15–$17M reiterated; targets absorb tariff scenarios and anticipate positive free cash flow in Q4 2025 and breakeven in 2026 .
  • Watch international mix: Management is prioritizing cash collections and profitable growth, especially in LatAm; expect fewer low-margin OUS set sales and healthier free cash trajectory in H2 .
  • OPSB scaling: Territory adds (e.g., North Carolina), new bracing launches, and potential international clinics create capital-light growth optionality and TAM expansion .
  • R&D cadence: Multiple 2025 approvals, 3P Hip beta launch this summer, and constructive eLLi pathway offer medium-term product catalysts; navigation integration strengthens differentiation .
  • Near-term trading setup: Summer seasonality is a variable; monitor 7D-driven adoption, VerteGlide initial cases, and cadence of EU MDR approvals for incremental upside to revenue run-rate and estimate revisions .
Sources: Q1 2025 8-K and press release **[1425450_0001425450-25-000047_kids-20250507.htm:1]** **[1425450_0001425450-25-000047_kidsq12025earningsrelease.htm:0]** **[1425450_0001425450-25-000047_kidsq12025earningsrelease.htm:1]** **[1425450_0001425450-25-000047_kidsq12025earningsrelease.htm:2]** **[1425450_0001425450-25-000047_kidsq12025earningsrelease.htm:5]** **[1425450_0001425450-25-000047_kidsq12025earningsrelease.htm:6]** **[1425450_9ac140e8f458451ba88d85efd2387408_0]** **[1425450_9ac140e8f458451ba88d85efd2387408_1]** **[1425450_9ac140e8f458451ba88d85efd2387408_2]** **[1425450_9ac140e8f458451ba88d85efd2387408_8]** **[1425450_9ac140e8f458451ba88d85efd2387408_9]** **[1425450_9ac140e8f458451ba88d85efd2387408_10]**; Q1 2025 call transcript **[1425450_KIDS_3426253_0]** **[1425450_KIDS_3426253_1]** **[1425450_KIDS_3426253_2]** **[1425450_KIDS_3426253_3]** **[1425450_KIDS_3426253_5]** **[1425450_KIDS_3426253_6]** **[1425450_KIDS_3426253_8]** **[1425450_KIDS_3426253_9]** **[1425450_KIDS_3426253_10]** **[1425450_KIDS_3426253_11]** **[1425450_KIDS_3426253_12]** **[1425450_KIDS_3426253_13]** **[1425450_KIDS_3426253_14]** **[1425450_KIDS_3426253_15]** **[1425450_KIDS_3426253_17]**; Other Q1 2025 press releases **[1425450_1187b2cc364b47ea9eba4372b921a4d6_0]** **[1425450_53e6971545a343978ad9e3cdc8513073_0]** **[1425450_24d2cd4d8fa546f2939fcd3a0e0b80f5_0]**; Prior quarters press releases Q4 2024 and Q3 2024 **[1425450_f4cab4720b31478593a5eb2caa386499_0]** **[1425450_f4cab4720b31478593a5eb2caa386499_1]** **[1425450_f4cab4720b31478593a5eb2caa386499_2]** **[1425450_f4cab4720b31478593a5eb2caa386499_3]** **[1425450_f4cab4720b31478593a5eb2caa386499_11]** **[1425450_14d7c5d78e0e4b669803ba7b763f0fac_0]** **[1425450_14d7c5d78e0e4b669803ba7b763f0fac_1]** **[1425450_14d7c5d78e0e4b669803ba7b763f0fac_2]** **[1425450_14d7c5d78e0e4b669803ba7b763f0fac_8]** **[1425450_14d7c5d78e0e4b669803ba7b763f0fac_10]**. 
Estimates marked with * are Values retrieved from S&P Global.