OrthoPediatrics (KIDS) Investor Day 2024 summary

Strategic vision and growth drivers

• Aims to increase the number of children helped, targeting 122,000 in the current year and aspiring to reach 1 million annually over the next decade, leveraging a dominant market share in pediatric orthopedics.

• Maintains a laser focus on high-volume children's hospitals, offering a broad product portfolio and specialized sales force, now present in every major children's hospital in the US and expanding internationally, with 16% global market share compared to 3% in 2016.

• Growth driven by aggressive R&D, targeted M&A, and expansion into new business lines such as specialty bracing and enabling technologies.

• Large runway for growth remains, targeting 31% global market share and 100% product coverage in the future.

• Strategic investments in clinical education, sales force expansion, and digital health platforms to support long-term growth.

Product innovation and pipeline

• Over 70 unique pediatric systems launched, with 42 products in the last 6 years and 26 more in the pipeline, covering trauma, deformity, scoliosis, and bracing.

• Launching the P3 plating system with six launches over five years, focusing on new indications, quality improvements, and digital integration for preoperative planning and intraoperative precision.

• Scoliosis business invests in early-onset scoliosis (EOS) solutions, including Rib & Pelvic System (launched 2024), VertiGlide (FDA review), and ELLI (FDA submission expected 1H25, Breakthrough Device Designation in May 2024).

• Next Generation Fusion System for pediatric scoliosis expected to launch in 2H25, designed for efficiency and digital integration.

• Accelerated R&D in specialty bracing, with four product launches in 2024 and five in 2025, including compliance sensors and new devices, with rapid product development cycles and plans to double the sales channel.

Financial outlook and operational efficiency

• Projects high-teens revenue growth over the next three years, with Adjusted EBITDA margin expanding by 300 basis points annually, reaching 13%-14% of sales by 2027.

• Cash flow positivity/free cash flow expected in 2026, supported by a strong balance sheet with ~$90 million in cash and additional credit availability.

• Capital deployment for set expansion will moderate, focusing on higher ROI products and shifting investment toward the OPSB business and clinic expansion.

• Gross margins expected to remain at 74%-75%, with higher contribution from OPSB and future upside from SaaS and digital health products.

• Aggressive OPSB (specialty bracing) clinic expansion: 18 new markets by 2027, doubling sales channel size, and targeting 27/80 markets by 2027.