OrthoPediatrics (KIDS) Canaccord Genuity's 46th Annual Growth Conference summary

Key business highlights

• Achieved record Q2 results in revenue, EBITDA, and number of pediatric patients served, marking a significant inflection point and setting up for further records in the second half of the year.

• Raised guidance for the year, targeting $25 million in adjusted EBITDA and breakeven to positive free cash flow.

• Strong summer scheduling and volumes, with no negative macro trends impacting patient volumes or reimbursements.

• New product launches, including the 3P Hip System, began impacting results, with further contributions expected in H2.

• Enhanced efficiency in set deployment, targeting $10 million in new sets this year, down from $20 million two years ago, with higher asset utilization.

Product innovation and pipeline

• Current product pipeline described as the most clinically relevant in company history, with higher ASPs and improved asset utilization.

• New launches like 3P Hip and VerteGlide are highly differentiated, with strong early surgeon feedback and a halo effect on legacy products.

• Upcoming Veraxis system will complement, not replace, existing RESPONSE fusion, addressing modern surgical techniques and unmet needs.

• Specialty bracing (OPSB) products and clinics are expanding, with new technologies like TRAXIO and TractorFIX dovetailing with implant portfolios.

• OPSB franchise expected to grow over 20% annually for several years, contributing strongly to revenue and cash flow.

Financial performance and outlook

• Q2 saw record adjusted EBITDA and reduced free cash flow usage by $10 million year-over-year.

• Strategic focus on balancing revenue growth with improving EBITDA margin and free cash flow.

• Positive free cash flow expected in H2, with ongoing improvements in working capital and set deployment efficiency.

• Capital allocation will prioritize growth opportunities, with incremental EBITDA used to support inventory for new product launches.