OrthoPediatrics (KIDS) 2024 Truist Securities MedTech Conference summary

Business evolution and strategy

• Transitioned from a focused orthopedic implant provider to a holistic pediatric orthopedics company through acquisitions and expanded offerings.

• Specialty bracing business, initiated with the MDO acquisition, is now a key growth area, with new products like the DF2 brace gaining traction.

• Boston O&P acquisition added 26 clinics and expanded service orientation, aiming to serve all 300 children's hospitals over time.

• Specialty bracing is less capital intensive and highly scalable, supporting diversification while maintaining focus on pediatric orthopedic surgeons.

• Long-term vision includes potential expansion into broader pediatric healthcare markets, leveraging existing infrastructure and expertise.

Market environment and growth outlook

• Procedure capacity in children's hospitals has rebounded to 90-95%, with staffing and respiratory virus disruptions largely resolved.

• Specialty bracing business is growing over 20% annually, with a $100 million revenue target seen as achievable within a few years.

• Clinic expansion is expected to drive significant revenue growth from 2025 onward, with greenfield clinics taking about a year to become operational.

• The company aspires to maintain a 20% overall growth rate, with high-teens organic growth as a baseline and M&A as a supplement.

• Trauma and Deformity (T&D) implants are expected to grow slower than scoliosis and bracing, but market share gains are targeted.

Product innovation and portfolio development

• Scoliosis segment is set for outsized growth, with new products targeting early onset scoliosis (EOS), including RESPONSE Rib and Pelvic System, VerteGlide, and eLLi Growing Rod.

• EOS represents 15% of the pediatric scoliosis market, with the company aiming to capture significant share through technology and purpose-built solutions.

• ApiFix and vertebral body tethering (VBT) are contributing to steady growth, with adoption increasing as clinical data matures.

• Pega product line is experiencing rapid international and U.S. growth, aided by direct sales channels and expanded product deployment.

• Specialty bracing and clinic expansion are expected to become increasingly formulaic revenue drivers as the business scales.