Orthofix Medical (OFIX)·Q4 2025 Earnings Summary
Orthofix Beats on EPS and Revenue, Posts 8th Straight Quarter of EBITDA Growth
February 24, 2026 · by Fintool AI Agent
Orthofix Medical (NASDAQ: OFIX) delivered a strong Q4 2025, beating analyst estimates on both revenue and earnings while posting its eighth consecutive quarter of adjusted EBITDA growth. The medical device company reported revenue of $219.9 million and adjusted EPS of $0.24, doubling the Street's $0.12 estimate.
The quarter was highlighted by robust free cash flow generation of $16.8 million—a standout performance that contributed to near-breakeven free cash flow for the full year. Management provided 2026 guidance calling for continued profitable growth with revenue of $850-860 million and adjusted EBITDA of $95-98 million.
Did Orthofix Beat Earnings?
Yes—Orthofix delivered a double beat.
Orthofix has now beaten EPS estimates in 8 of the last 9 quarters, with Q4 2025 marking the fifth consecutive quarter of adjusted profitability. The EPS beat was driven by strong gross margin performance (71.4% adjusted) and disciplined cost management.
Ask Fintool AI AgentHow Did the Stock React?
Orthofix shares closed at $13.59 on February 23, down 2.3% ahead of the earnings release. In after-hours trading following the announcement, shares moved to $13.75, up 1.2% from the close.
The stock has traded between $10.24 and $20.48 over the past year, with the current price near the middle of that range. The muted reaction despite the strong beat may reflect investor focus on the pace of the turnaround rather than the beat itself.
What Did Management Guide?
2026 Full-Year Guidance:
Management also refreshed its 3-year financial targets, extending the timeline by one year to fully capture the benefits of Spine commercial channel optimization:
2026-2028 Targets:
- Net sales CAGR: 6.5% - 7.5%
- Adjusted EBITDA margin: Mid-teens by FY 2028
- Positive free cash flow through the period (excluding potential legal settlements)
Additional Guidance Details:
- Gross margin: ~72.5% for FY 2026
- Capital expenditures: $45-50 million
- Revenue cadence: ~5% growth in H1, ~6% in H2
- Q1 headwinds: 1 fewer selling day (~1.6% impact) + CMS TEAM pilot (~1% BGT impact)
- EBITDA margin expansion weighted to H2 due to revenue timing and R&D investment
What Changed From Last Quarter?
Several notable shifts from Q3 2025:
1. Free Cash Flow Inflection Q4 delivered $16.8 million of free cash flow versus $2.5 million in Q3. For the full year, Orthofix achieved $3.1 million positive FCF excluding M6 restructuring charges—a significant milestone given the company was cash-burning as recently as FY 2024 ($9.1M cash burn).
2. Spine Fixation Acceleration Global Spine Fixation net sales grew 10% YoY (constant currency) in Q4, accelerating from prior quarters. The company's top 30 U.S. distributor partners grew net sales 25% in Q4 and 27% on a TTM basis—evidence that the commercial channel optimization is bearing fruit. Notably, these top 30 distributors now represent over 75% of U.S. net sales, up from less than 50% at the start of 2024—a 55% increase in their revenue share.
3. M6 Discontinuation Complete The company has fully wound down its M6 artificial disc product lines, with only $1.3M of residual M6 sales in Q4 (vs $5.8M in Q4 2024). This simplifies the business and removes a drag on margins.
Ask Fintool AI AgentSegment Performance
Bone Growth Therapies continues to be the most consistent performer, delivering 7% growth for the third straight quarter. The segment benefits from cross-selling initiatives with Spine and Limb Reconstruction channels.
U.S. Limb Reconstruction grew 8% YoY and 16% for the full year, driven by the TrueLok Elevate System and FITBONE Bone Transport products. This high-growth category represents a compelling expansion opportunity.
What Did Management Say?
"The fourth quarter capped a year of meaningful operational progress for Orthofix. We delivered strong, consistent performance in Bone Growth Therapies and US limb reconstruction. The work we did to finalize our spine commercial channel supported double-digit net sales growth in our global spine fixation business."
— Massimo Calafiore, President & CEO
"We are carrying that momentum forward with disciplined commercial execution and targeted capital deployment. While our work is not yet complete, and certain benefits from our spine initiatives are expected to continue to build over time, we are increasingly confident in our ability to execute."
— Massimo Calafiore, President & CEO
Management emphasized three priorities for 2026:
- Expanding market penetration
- Accelerating adoption of 7D FLASH Navigation
- Advancing commercial execution
Financial Trends (8 Quarters)
*Q1 2025 gross margin impacted by M6 inventory write-downs.
The trajectory is clear: Orthofix has steadily expanded margins while maintaining mid-single-digit top-line growth. The 8 consecutive quarters of adjusted EBITDA growth validate management's disciplined execution.
Key Growth Catalysts for 2026
Management highlighted several growth drivers for the year ahead:
- VIRATA Spinal Fixation System - Full market release of VIRATA Open System in H2 2026, plus alpha launch of VIRATA MIS. Purpose-built for the $2B U.S. pedicle screw market with proprietary screw design integrated with 7D navigation.
- 7D FLASH Navigation - Voyager earn-out placements grew 30% in 2025, with earn-out customers exceeding purchase commitments by 50%+.
- TrueLok Elevate & Fitbone - Full-year contribution in Limb Reconstruction, plus next-generation automation enhancements.
- Biologics Portfolio - Renewed focus with leadership changes; expecting return to market pace growth.
- Massive Innovation Pipeline - Over 12 value-creating products expected to launch over the next 18 months across all business segments.
Balance Sheet & Liquidity
The balance sheet remains stable with $85.1 million of total cash, up from $65.9 million at Q3-end, driven by strong Q4 operating cash flow.
Risks and Concerns
1. Legal Settlements - Guidance excludes "impact of any potential legal settlements." Management flagged $33.8M in litigation costs for FY 2025.
2. International Limb Reconstruction - Global Limb Recon was essentially flat (-0.1% CC) in Q4, suggesting international headwinds.
3. Delayed 3-Year Targets - Management pushed out its financial targets by one year, now targeting mid-teens EBITDA margins by 2028 instead of 2027.
4. CMS TEAM Pilot Program - The new bundled payment pilot beginning January 2026 will create approximately 1% headwind on BGT revenue in Q1, though full-year impact is expected to be immaterial.
5. Potential Legal Settlements - Management confirmed an accrual was taken in Q3 and indicated legal settlements are assumed in 2026 guidance (timing TBD).
Q&A Highlights
On the Long-Range Plan Extension (Matthew Blackman, TD Cowen): CFO Julie Andrews explained that the company is still on track for 300bps of gross margin improvement (71% to 74%) by 2028, with the 2026 guide of 72.5% putting them "right in line." The extension reflects deliberate care in executing the spine commercial channel transformation.
On Revenue Guide by Segment (Tom Stepan, Stifel): Management expects above-market growth for BGT (vs. 2-3% market), above-market growth for Limb Reconstruction with U.S. returning to double-digit growth in H2 2026, and similar ~10% global growth in Spine Fixation.
On 7D Placements (Michaela, Canaccord): 7D FLASH placements increased 30% in 2025. Notably, earn-out customers are collectively exceeding their purchase volume commitments by more than 50%, validating the shift from capital sales to the earn-out model.
On Biologics Strategy (Canaccord): CEO Massimo Calafiore noted internal leadership changes were made to give biologics "a very clear and important central focus." While declines in 2025 were primarily related to distributor transitions, management expects U.S. biologics to return to market pace in 2026.
On Tariff Impact (Mike Petusky, Barrington Research): The company expects $1-2 million tariff impact in 2026 (included in guidance), slightly higher than 2025 which was not a full-year impact.
Ask Fintool AI AgentThe Bottom Line
Orthofix delivered a clean beat-and-raise quarter that extends its turnaround momentum. The 100% EPS beat and $16.8M of free cash flow generation demonstrate the operating leverage inherent in the business model. While the stock's muted reaction suggests investors want to see sustained execution, the 8 consecutive quarters of EBITDA growth and positive FCF trajectory provide evidence that the strategy is working.
Key metrics to watch: Spine Fixation growth acceleration, 7D FLASH placements, and free cash flow cadence through 2026.
Related Resources: