Executive Summary

Q1 2025 net sales were $193.6M (reported) and $189.2M (pro forma, ex‑M6), up 2.7% reported and 4.3% pro forma constant currency YoY; gross margin was 62.8% GAAP and 70.3% non‑GAAP pro forma .
Wall Street consensus was modestly exceeded: revenue beat (~$193.6M vs $191.1M*) and Primary EPS (normalized) beat (−$0.03 vs −$0.61*); GAAP diluted EPS was −$1.35, reflecting restructuring and M6 discontinuation charges .
Guidance was lowered for FY2025 net sales to $808–$816M (ex‑M6), while non‑GAAP adjusted EBITDA ($82–$86M) and positive free cash flow were reaffirmed; management flagged distributor transitions, NGO demand reduction (~$5M full‑year), and tariffs ($3–4M) as near‑term headwinds .
Strength in Orthopedics (U.S. +10% YoY; global +11% constant currency) and BGT (+5%; fracture +6%) persisted; U.S. Spine Fixation grew ~4% YoY with temporary softness from channel optimization and specific pricing pressure at a large Midwest account .

What Went Well and What Went Wrong

What Went Well

Non‑GAAP pro forma adjusted EBITDA rose to $11.4M, up $3.8M YoY with ~200 bps margin expansion vs Q1 2024 reported non‑GAAP, as discontinuing M6 removed a profitability drag .
Quote: “We made excellent progress in adjusted EBITDA in the first quarter…” — CEO Massimo Calafiore .
Orthopedics delivered strong growth: Global +11.5% constant currency and U.S. +10%; TrueLok Elevate TBT received 510(k)/CE Mark and is set for full launch in Q3 2025 .
Quote: “TrueLok Elevate offers the potential to…reduce the need for amputation.” — press release with clinical context .
BGT net sales rose to $55.1M (+5% YoY; fracture +6%), with continued cross‑selling and AccelStim outperformance; AccelStim 2.0 earned earlier‑than‑expected FDA approval (integration with StimOnTrack) .

What Went Wrong

Reported GAAP net loss widened to −$53.1M (−$1.35 diluted EPS) on restructuring/M6‑related costs; free cash flow was −$25.1M in seasonally weak Q1 (bonuses/commissions, severance) .
Spine Fixation and Biologics saw incremental softness tied to targeted distributor transitions; additionally, a Midwest hospital/GPO JV drove outsized price pressure despite procedure volume growth .
FY2025 net sales guidance was cut ~~$10M at midpoint due to NGO revenue reduction (~~$5M) and channel disruption, with most impact expected in Q2 .

Financial Results

Consolidated Performance vs prior year and prior quarter

Metric	Q1 2024	Q4 2024	Q1 2025
Reported Net Sales ($USD Millions)	$188.6	$215.7	$193.6
Pro Forma Net Sales (ex‑M6) ($USD Millions)	$182.1	—	$189.2
GAAP Diluted EPS ($)	−$0.95	−$0.75	−$1.35
GAAP Gross Margin (%)	—	69.0%	62.8%
Non‑GAAP Adjusted Gross Margin (%)	70.3%	71.1%	69.2% (reported) / 70.3% (pro forma)
Non‑GAAP Adjusted EBITDA ($USD Millions)	$7.7 (reported)	$23.9	$9.2 (reported) / $11.4 (pro forma)
Free Cash Flow ($USD Millions)	−$29.4	$15.2	−$25.1
Cash, Cash Equivalents & Restricted ($USD Millions)	—	$85.7	$60.5

Segment and Category Net Sales (Pro Forma)

Segment/Category ($USD Millions)	Q1 2024	Q1 2025	YoY Change (Constant Currency)
Bone Growth Therapies	$52.5	$55.1	+4.9%
Spinal Implants, Biologics & Enabling Tech	$102.3	$104.3	+2.0%
Global Spine	$154.8	$159.4	+3.0%
Global Orthopedics	$27.3	$29.8	+11.5%
Pro Forma Net Sales (ex‑M6)	$182.1	$189.2	+4.3%
Impact from M6 Discontinuation	$6.5	$4.4	−31.5%
Reported Net Sales	$188.6	$193.6	+3.0%

KPIs

KPI	Q1 2024	Q4 2024	Q1 2025
U.S. Spine Fixation YoY Net Sales Growth	—	+12%	+4%
BGT Fracture YoY Net Sales Growth	—	+10%	+6%
U.S. Orthopedics YoY Net Sales Growth	—	+21%	+10%

Results vs. Wall Street Consensus (S&P Global)

Metric	Consensus	Actual	Surprise
Revenue ($USD)	$191.1M*	$193.6M	+$2.5M (Beat)*
Primary EPS (Normalized) ($)	−0.605*	−0.0319*	+$0.573 (Beat)*
EPS # of Estimates	4*	—	—
Revenue # of Estimates	6*	—	—
Values marked with * are retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales (ex‑M6)	FY 2025	$818–$826M	$808–$816M	Lowered
Adjusted EBITDA (non‑GAAP)	FY 2025	$82–$86M	$82–$86M	Maintained
Free Cash Flow	FY 2025	Positive (ex‑restructuring)	Positive (ex‑restructuring)	Maintained
Gross Margin	FY 2025	~71% (implied prior)	~71%	Maintained
Operating Expenses (% of sales)	FY 2025	Improve ~100 bps (prior commentary) [implied]	Improve ~200 bps	Raised improvement
Stock‑Based Compensation	FY 2025	—	$29–$30M	Set
Depreciation & Amortization	FY 2025	—	$37–$39M	Set
Interest & Other Expense	FY 2025	—	~$5M per quarter	Set
Tariffs Exposure	FY 2025	~$5M (initial estimate)	~$3–$4M	Improved

Management expects majority of the revised net sales impact in Q2 due to timing of international stocking orders, distributor transitions, and quarterly NGO reduction .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Spine distributor optimization	Q3: accelerated distributor transformation impacted Biologics ; Q4: strong U.S. Spine Fixation growth +12%	Accelerated targeted transitions causing short‑term softness in Biologics/Spine Fixation	Intensifying near‑term disruption, long‑term positive
Pricing pressure (Midwest hospital/GPO JV)	—	Significant price decrease offsetting +7% procedure growth	New headwind
7D FLASH Navigation	Q3: record earnouts and placements ; Q4: record placements full‑year	Focus on earnout model; continued progress	Sustained strategic anchor
BGT growth & AccelStim	Q3: +13% fracture growth; BGT +9% ; Q4: record BGT $63.9M (+9%)	BGT +5% overall; fracture +6%; AccelStim 2.0 FDA approval (integration with StimOnTrack)	Moderating but above market
Orthopedics & TrueLok Elevate TBT	Q3: U.S. Orthopedics +15% ; Q4: U.S. +21%	Global Orthopedics +11.5% CC; U.S. +10%; 510(k)/CE Mark; ~90 limited‑release cases; full launch expected Q3	Strong growth; product momentum
Tariffs / Macro	—	Annual exposure ~$3–$4M, manageable in COGS; assumes new U.S. tariffs after 90‑day pause	New risk quantified
FX	Q4 guide included ~$4M FX headwind	No longer expect FX to be negative in 2025 guide	Improving backdrop
M6 discontinuation	Announced in Q4; 2024 sales $23.4M	Pro forma recast; Q1 M6 net sales $4.4M; restructuring charges (~$8M) in 2025	Transition completing

Management Commentary

“We are taking additional proactive steps to optimize our spine commercial channel… expected to result in a stronger, more scalable commercial organization… adjusted our guidance accordingly…” — CEO Massimo Calafiore .
“We now expect full year net sales of $808M to $816M… while maintaining adjusted EBITDA of $82M to $86M and positive free cash flow.” — CFO Julie Andrews .
“AccelStim 2.0… integrates with the StimOnTrack mobile app and physician portal… expected to be available later this year.” — Massimo Calafiore .
“TrueLok Elevate… surgeons… are witnessing firsthand the transformative potential… full market launch in Q3.” — Massimo Calafiore .

Q&A Highlights

Rationale/timing for spine channel optimization: current distribution at capacity; shifting to larger, more capital‑efficient partners; short‑term pain, long‑term growth; impacts not expected to bleed into next year .
Maintaining EBITDA despite lower top line: executing remaining merger synergies (~$6M actions), cost discipline, focused investment returns .
Selling days and guidance mechanics: Q1 had 1 less selling day (~>1.5 points headwind); majority of lowered net sales guidance to hit Q2; NGO revenue reduction spreads ~~evenly by quarter (~~$1.5M in Q1) .
Segment impacts: NGO is in international Orthopedics; 7D remains focused on earnouts for long‑term pull‑through .

Estimates Context

Q1 2025 revenue beat consensus; Primary EPS (normalized) beat consensus. This supports the narrative that structural actions (M6 exit, channel optimization) are expanding adjusted profitability despite GAAP charges.
Potential modeling changes: lower net sales trajectory for 2025 (midpoint −$10M), but EBITDA unchanged—Street models likely shift mix of margin drivers (lower SBC; lower D&A; higher Opex efficiency) and timing (more Q2 headwinds).

Consensus and actuals used above are from S&P Global; values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Near‑term overhang: guidance cut and expected Q2 impact from distributor transitions/NGO reduction and a specific pricing headwind could pressure the stock despite Q1 consensus beats .
Profitability focus intact: EBITDA guide maintained ($82–$86M) with 200 bps operating expense improvement and normalized gross margin ~71% in 2025; watch execution on SBC and D&A reductions .
Strength under the surface: Orthopedics and BGT remain growth engines; 7D earnouts continue to underpin sticky procedural selling and cross‑portfolio pull‑through .
Strategic catalysts: TrueLok Elevate full launch in Q3 and AccelStim 2.0 rollout could support second‑half acceleration; monitor reimbursement coding progress and uptake metrics .
Risk checks: tariffs now quantified at ~$3–$4M (manageable); FX not expected to be negative; watch pricing dynamics at large accounts and channel transition execution through Q2 .
Cash flow path: Q1 was seasonally negative FCF; management still targets positive FY FCF ex‑restructuring; inventory/instrument efficiency and margin expansion are key to conversion .
Tactical trading: expect Q2 narrative to hinge on timing of stocking orders and transition impacts; a clean Q3 setup with product launches could reset sentiment if execution is visible .

Orthofix Medical Inc. (OFIX)·Q1 2025 Earnings Summary