OrthoPediatrics (KIDS) TD Cowen 46th Annual Health Care Conference summary

Financial and operational highlights

• Achieved strong free cash flow in Q4, with $10 million positive FCF, marking the first quarter of positive free cash flow and nearly doubling EBITDA on an annualized basis.

• Guidance for 2026 includes 11%-13% top-line growth, $25 million in positive adjusted EBITDA, and at least break-even free cash flow.

• Inventory deployment is expected to decrease from $17 million in 2025 to $10 million in 2026, reflecting improved efficiency and asset utilization.

• International growth, especially in Europe and Latin America, exceeded expectations in Q4 and is projected to remain strong in 2026, aided by recent EU MDR approvals.

• OPSB business is expected to sustain growth above 20% into 2026, with a significant runway for expansion in underpenetrated markets.

Strategic initiatives and market positioning

• Focused on balancing top-line growth with profitability and free cash flow, particularly by optimizing working capital and moderating capital-intensive expansion in select international markets.

• The T&D (Trauma and Deformity) franchise leverages a broad portfolio and deep hospital access, benefiting from limited pediatric-focused competition and regulatory-driven competitor withdrawals.

• Specialty bracing (OPSB) is tightly integrated with the core business, targeting the same customer base and offering both pre- and post-surgical solutions, with a $500 million TAM and significant greenfield opportunity.

• Scoliosis segment, representing 25% of global revenue, is gaining share with innovative products like VerteGlide and a comprehensive early onset scoliosis portfolio, targeting a $50-$80 million blue ocean market.

• The company is positioned as a unique pediatric orthopedics leader, not a general ortho or spine company, with a differentiated brand and minimal direct competition in its core markets.

Product development and innovation

• Entering a "super cycle" of new product launches, with at least one major implant system and four to five substantial OPSB launches annually.

• The 3P Pediatric Plating Platform is rolling out in phases, with the hip system moving to full launch and additional systems (Small-Mini, Knee/Femur) in the pipeline, all designed for efficiency and synergy.

• New products are designed for high asset utilization, higher margins, and minimal learning curve for surgeons, supporting rapid adoption and compounding growth effects.

• Recent EU MDR approvals have unlocked additional product availability in Europe, expected to accelerate international growth.

• OPSB business model enables fast development cycles and revenue growth without significant capital deployment, supporting both top-line and bottom-line expansion.