Q2 2025 OrthoPediatrics Corp Earnings Call

Hannah Jeffrey: Good afternoon and welcome to ORTHOPEDIATRICS CORP's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Hannah Jeffrey from the Gilmartin Group for a few introductory comments. Please begin.

Good afternoon and welcome to Ortho Pediatrics corporation's, second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating. A question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Hannah Jeffrey from the Gil Martin group for a few introductory comments,

Please begin.

Hannah Jeffrey: Thank you for joining today's call. With me from the company are Dave Bailey, President and Chief Executive Officer, and Fred Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including the Safe Harbor Provisions for Private Securities Litigation Reform Act of 1995. The forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For discussion of risk factors, I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March 5, 2025, and its subsequent quarterly reports on Form 10-Q. During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance.

Thank you for joining today's call with me from the company. Are Dave Bailey, president and chief executive officer and Fred height, Chief Operating and financial officer.

Before we begin today, let me remind you that the companies remarks include forward-looking statements within the meeting of federal Securities laws, including the Safe Harbor, Provisions for private Securities. Litigation Reform, Act of 1995

These forward-looking statements are subject to numerous risks and uncertainties and the company's actual results May differ materially.

For discussion of risk factors. I encourage you to review the company's most recent annual report on form, 10K, which was filed with the SEC on March 5th, 2025, and its subsequent quarterly reports on form 10q.

Hannah Jeffrey: The company believes these measures provide useful information for investors in evaluating its operations, period over period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its second quarter earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for ORTHOPEDIATRICS' financial results prepared in accordance with GAAP. In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, August 5, 2025. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call.

During the call today management will also discuss certain non-gaap Financial measures which are supplemental measures of performance.

The company believes these measures provide useful information for investors in evaluating its operations period over period.

For each non-gaap Financial measure referenced on this call, the company has included a Reconciliation of the non-gaap financial measures to the most directly comparable. Gaap Financial measures in its second quarter earnings release

Please note that the non-gaap financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for orthopediatrics financial results prepared in accordance with gaap.

In addition, the content of this conference, call contains time-sensitive information. That is accurate only, as of the date of this live broadcast today, August 5th, 2025.

Hannah Jeffrey: With that, I would like to turn the call over to Dave Bailey, President and Chief Executive Officer.

Except as required, by law, the company undertakes, no obligation to revise or update. Any statements to reflect events or circumstances taking place after the date of this call.

With that. I would like to turn the call over to Dave Bailey, president and chief executive officer.

Dave Bailey: Thanks, Hannah. Good afternoon, everyone, and thank you for joining us on our second quarter 2025 conference call. As always, I want to start by highlighting the metric we're most proud of. In the second quarter alone, we helped treat over 37,000 children, bringing our total impact to over 1,217,000 kids since inception. For far too long, pediatric patients and healthcare providers have lacked appropriate support in meeting the major unmet needs in pediatric healthcare. OP remains deeply committed to changing that, and we're well on our way. Q2 2025 was another strong quarter for ORTHOPEDIATRICS, highlighted by record revenues that generated global growth of 16% and exceptionally high procedure and clinic volumes in June that remained strong in July. With two of our busiest summer months now behind us, we're pleased with our momentum and increasingly confident in another outstanding year.

Good afternoon, everyone and thank you for joining us on our second quarter 2025 conference call. As always, I want to start by highlighting the metric where most problems in the second quarter alone. We help treat over. 37,000 children bringing our total impact to over 1 million.

217,000 kids since Inception.

For far too long, pediatric patients and Healthcare Providers. Have lacked appropriate support and meeting the major unmet needs in Pediatric Healthcare.

Op remains deeply committed to changing that and we're well on our way.

Q2 2025 was another strong quarter for orthopediatrics, highlighted by record Revenue, that generated Global growth of 16% and exceptionally High procedure and Clinic volumes. In June that remained strong in July,

Dave Bailey: Growth was driven by market share gains across all businesses, with standout performances in scoliosis, trauma, 7D, and our non-surgical specialty bracing business, or OPSB. International sales were also solid, fueled by strong surgical demand in Europe and the Middle East, scoliosis set sales to stocking distributors, offset by lower trauma and deformity set sales in Brazil. OPSB continues to gain momentum as we expand the franchise's footprint through increasing product sales, such as DF2, and execution of our clinic expansion strategy. Just this morning, we announced several milestones achieved through July, including multiple US aqua hire and greenfield clinic openings and our first international clinic in Ireland, and expect additional expansion throughout the second half of the year. Beyond OPSB, our scoliosis and trauma implant systems continue to aggressively take market share, with revenue growing very rapidly, which we expect to continue in H2 and throughout 2026.

With 2 of our busiest summer months. Now behind us. We are pleased with our momentum and increasingly confident in another outstanding year.

Growth was driven by market share gains across all businesses, with standout performances and scoliosis.

trauma 7D and our non-surgical specialty, bracing business or opsb

International sales were also solid fueled by strong, surgical demand in Europe and the Middle East, scoliosis, that sales to stocking Distributors offset by lower trauma. And deformity set sales in Brazil.

Opsb continues to gain momentum. As we expand the franchise's footprint through increasing product sales, such as DS2 and execution of our Clinic expansion strategy.

Just this morning, we announced several Milestones achieved through July, including multiple Us, Aqua higher, and Greenfield Clinic opening, and our first International clinic in Ireland and expected additional expansion throughout the second half of the year.

Dave Bailey: We are pleased with the way things are progressing on the revenue and share-taking front, and we are clearly bullish about the year. We expect our business to continue to gain momentum throughout 2025 based on our success scaling OPSB, driving market share gains through leveraging existing set deployments, and the ongoing success of our innovative product launches. Beyond revenue, we remain on track to meet our adjusted EBITDA goals, which will fully pay for our 2025 set deployment and lead to positive free cash flow generation in Q4 of this year and full-year free cash flow break-even in 2026. All of this, combined with the earlier mentioned strong start to our summer selling season and the momentum we've built over the last several quarters, gives us confidence in an extremely successful second half in full-year 2025, which will also set us up well for 2026 and beyond.

Beyond opsb our scoliosis and Trauma implants systems continue to aggressively take market share with Revenue, growing very rapidly, which we expect to continue in H2 and throughout 2026.

We are pleased with the way things are progressing on the revenue and share taking front. And we are clearly bullish about the year.

We expect our business to continue to gain momentum throughout 2025 based on our success. Scaling operations and driving market share gains through leveraging our existing set, deployments, and the ongoing success of our innovative product launches.

Beyond revenue, we remain on track to meet our adjusted EBITDA goals, which will fully pay for our 2025 set deployment and lead to positive free cash flow generation in Q4 of this year.

In full year free cash flow break even in 2026.

All of this combined with the earlier mentioned, strong start to our summer selling season. And the momentum, we've built over the last several quarters, gives us confidence and an extremely successful, second half, and full year 2025.

Dave Bailey: Given these facts, we are raising our revenue guidance range from $236 to $242 million to $237 to $242 million, and we continue to expect to produce $15 to $17 million free cash flow in Q4 of 2025. In the second quarter of 2025, the T&D business grew 10% as we continued to deliver strong market share gains across multiple product lines. Overall growth in the quarter was led by strength from US trauma, PNP femur and tibia, cannulated screws, OPSB, and DF2, slightly offset by slow case scheduling and elective limb deformity early in the quarter and lower in T&D set sales to Brazil. This quarter's performance was fueled by past investments in set allocation, surgeon education, and new product adoption, leading to strong share gains across the T&D portfolio. Significant set deployments in 2023 and 2024 continue to translate into increased utilization and meaningful growth.

Which will also set us up well for 2026 and Beyond.

Given these facts.

We are raising our Revenue, guidance range from 236 to 242 million.

To 237 to 242 million. And we continue to expect to produce 15 to 17 million, free cash flow in Q4 of 2025.

In the second quarter of 2025 the tnd, business grew 10%, as we continue to deliver strong market, share gains around multiple product lines.

Overall growth in the quarter was led by strength from us. Trauma PNP, femur and tibia canalul screws opsb and df2.

Slightly offset by slow case scheduling in elective, limb deformity early in the quarter and lower in tnd. Set sails to Brazil.

This quarter's performance was fueled by past investments and a surge in allocation towards education and new product adoption, leading to strong share gains across the TND portfolio.

Dave Bailey: Trauma saw particularly strong revenue gains, driven by rapid adoption of PNP tibia, cannulated screws, and DF2. We also launched additional PNP tibia sets this quarter, with more to follow, positioning it as a key growth driver for the foreseeable future. Additionally, we have recently received FDA approval for sterile products, which will start to positively impact set deployment dollars due to increased efficiency, with the first sterile product set to release in the second half of 2025. Further, DF2 continues to outperform expectations, with rapid surge in adoption and growing demand. As this product is quickly becoming the new standard of care, we continue to see support from the industry. A recent publication in JPAWSNA highlighted positive DF2 study results. These results demonstrated similar short-term clinical outcomes compared to SPICA testing, while significantly reducing hospital admission, length of stay, and need for general anesthesia.

Significant set, deployments in 2023 and 2024 continued to translate into increased utilization and meaningful growth.

Trauma fall, particularly strong Revenue, gains driven by rapid adoption of PMP tibia, canul, it screws and df2

We also launched additional PMP tibia sets, this order with more to follow positioning it as a key growth driver for the foreseeable future.

Additionally, we have recently received FDA approval for sterile products which will start to positively impact set deployment dollars due to increased efficiency.

With the first sterile products set to release in the second half of 2025.

Further, df2 continues to outperform expectations with a rapid surge in adoption and growing demand, as this product is quickly becoming the new standard of care. We continue to see support from the industry.

While significantly reducing hospital, admission, length of stay and need for general anesthesia.

Dave Bailey: This study replicates previously presented work that the DF2 brace represents an attractive alternative for managing pediatric femoral shaft fractures while optimizing healthcare resource utilization without compromising treatment efficiency. The study continues to amplify the value proposition for the DF2, and we are seeing that play out in reality with surgeons as well, thus creating a new standard of care. Looking at our 3P platform, following FDA approval of the 3P pediatric plating platform HIP system, which we announced last quarter, we just announced the completion of our first surgical case last week and are gearing up for more cases throughout the balance of the year. We anticipate this will create a nice headwind for the remainder of 2025 and 2026. The next 3P system, 3P Small and Mini, is on track to be submitted to the FDA in the coming month.

This study replicates previously presented work that the df2 brace represents an attractive alternative for managing pediatric femoral shaft fractures while optimizing Healthcare resource utilization without compromising treatment efficiency.

The study continues to amplify the value proposition for the DF2, and we are seeing that play out in reality with surgeons as well. Thus, creating a new standard of care.

Looking at our 3 p platform following FDA approval of the 3 3, pediatric plating platform, hip system which we announced last quarter. We just announced the completion of our first surgical case last week and our gearing up for more cases throughout the balance of the year.

Dave Bailey: Just as a reminder, 3P is a series of systems designed to be the most innovative and comprehensive plating portfolio in pediatric orthopedic history, and we expect to launch a few new systems each year for the next several years, bolstering both trauma and limb deformity revenue. T&D continues to be a key driver of our performance as we leverage our scale, gain market share, and launch innovative products that meet unmet needs and fuel sustained growth. Our path to market dominance in T&D is well-defined. Our OPSB strategy also continues to advance, and as the business hits more milestones, our confidence in the OPSB opportunity continues to grow. It offers a significant capital-efficient growth avenue, which we're targeting through territory expansion, accelerated R&D, and scaling our sales force.

We anticipate this will create a nice headwind for the remainder of 2025 and 2026. The next 3 piece system 3-piece small and mini is on track to be submitted to the FDA in the coming months.

Just as a reminder, 3, p is a series of systems designed to be the most Innovative and comprehensive plating portfolio in pediatric orthopedic history.

And we expect to launch a few new systems each year for the next several years, bolstering both trauma and limb deformity revenue.

CND continues to be a key driver of our performance. As we leverage our scale gain market, share and launch Innovative products that meet unmet needs and fuel sustained growth. Our path to market dominance in tnd is well, defined

Dave Bailey: Recently, execution of the OPSB strategy made significant progress, which will possibly impact the balance of 2025 and 2026, as evidenced by another strong quarter of growth in excess of 20% and now surpassing our initial guidance for 2025 territory expansion. As mentioned above, and in our press release, we have now expanded our footprint into two very large markets: New York City and California, expanded Denver and Ohio, as well as expanded for the first time internationally in Ireland. As we examine some of these recent announcements, I'd like to highlight a few key points with each. Starting with greenfield clinic expansion. First, we have entered into a new territory with our first clinic in California. The Los Angeles market provides access to millions of potential pediatric and adolescent patients, and the location in California provides us the opportunity for further expansion across the state.

Our opsb strategy also continues to advance and as the business hits, more Milestones are confident in the opsb opportunity, continues to grow. It offers a significant Capital efficient growth Avenue which we're targeting through territory. Expansion, accelerated R&D and scaling, our sales force

Recently, the execution of the OPSB strategy made significant progress, which will possibly impact the balance of 2025 and 2026. As evidenced by another strong quarter of growth in excess of 20%, we are now surpassing our initial guidance for 2025 territory expansion.

As mentioned above and in our press release. We have now expanded our footprint, into 2 very large markets, New York City, and California.

Expanded Denver, and Ohio.

As well as expanded for the first time internationally in Ireland.

As we examine some of these recent announcements, I'd like to highlight a few key points with each.

Starting with Greenfield Clinic expansion.

First, we have entered into a new territory with our first clinic in California.

Dave Bailey: We are thrilled to be establishing OPSB in this territory and will look to build off this initial clinic to further expand our footprint within this incredibly large market. Next, we've opened a new clinic in Dayton, Ohio, providing skilled clinicians a presence within Dayton Children's Hospital, as well as a new clinic in Denver, Colorado, where we continue to build our footprint. Now, looking at our aqua hire opportunity. First, we've added multiple locations to our existing clinics in the greater New York City territory. Each of these new clinics are located in major children's hospital centers. While we are already in this territory, these new clinics represent a significant opportunity within a very large market, allowing us to further penetrate this market. Notably, we have also announced our first international clinic with a small aqua hire in Ireland.

The Los Angeles Market provides access to millions of potential, Pediatric and Adolescent patients, and the location in. California provides us the opportunity for further expansion across the state.

We are thrilled to be established in opsb in this territory and will look to build off this initial Clinic to further. Expand our footprint within this incredibly large Market.

Next, we've opened a new clinic in Dayton, Ohio, providing skilled clinicians and a presence within Dayton Children's Hospital, as well as a new clinic in Denver, Colorado, where we continue to build our footprint.

now, looking at our Aqua higher opportunities,

First, we've added multiple locations to our existing clinics in the greater New York City territory. Each of these new clinics are located in major Children's Hospital centers.

While we are already in this territory.

Story these new clinics represent a significant opportunity within a very large Market.

Allowing us to further penetrate this Market.

Dave Bailey: This location is complementary to ORTHOPEDIATRICS' strong implant business in one of the country's largest pediatric hospitals and provides opportunities to expand with additional Ireland-based clinics in the future. We expect this clinic will drive further synergies with the implant business as we are growing scoliosis implant revenue there as well. This is a major step into the international market and just the beginning of the journey for OPSB International. Following a strong first quarter, the second quarter has further built on the successful start to 2025 for the OPSB business, and our recent actions have us well positioned to overperform our goals in H2 and in setting us up nicely for 2026. As of today, we now operate over 40 clinics worldwide, up from the 26 acquired with Boston OMP in January of 2024, and have expanded into six territories, surpassing our goal of four in 2025.

Notably. We have also announced our first International client with a small Aqua higher in Ireland.

This location is complimentary to Orthopedic, strong implant business, and 1 of the country's, largest pediatric hospitals and provides opportunities to expand with additional Ireland, based clinics in the future.

We expect this clinic will drive further synergies with the implant business as we are growing scoliosis implant revenue there as well.

This is a major step into the international markets and just the beginning of the journey for OpsB International.

Following a strong first quarter, the second quarter has further built on the successful, start to 2025 for the lpsb business, and our recent actions have us. Well, positioned to over-perform our goals in H2 and is setting us up nicely for 2026.

Dave Bailey: We're seeing a strong wave of clinic expansion opportunity driven by high customer demand and a robust pipeline. This momentum reinforces our decision to move aggressively, and we expect to share more updates in the near future. The OPSB strategy is clearly working and has proven to be a highly successful expansion for ORTHOPEDIATRICS. The synergies with our implant business are exceptionally strong, and we remain focused on executing our plan to secure a dominant share in this market. Moving to the scoliosis business, our strong growth of 35% seen in scoliosis this quarter was again driven by more share-taking in both the US and OUS markets, with increasing demand from new markets in the EU and the Middle East.

As of today, we now operate over 40 clinics worldwide, up from the 26 acquired with Boston Olympic in January of 2024, and have expanded into 6 territories, surpassing our goal of 4 in 2025.

We're seeing a strong wave of Clinic expansion opportunities driven by high customer demand and a robust pipeline.

We expect to share more updates in the near future.

The OPsb strategy is clearly working and has proven to be a highly successful expansion for OrthoPediatrics. The synergies with our implant business are exceptionally strong, and we remain focused on executing our plan to secure a dominant share in this market.

Moving to the scoliosis business.

Dave Bailey: US scoli growth continues to be led by new users adopting ORTHOPEDIATRICS technology, including Apifix, RESPONSE, as well as our commitment to new solutions for EOS patients, in addition to 7D. This quarter, we saw even stronger surgeon conversion and are feeling the positive impact of past conversion in the busy summer season. To this point, there has been a large uptick in new surgeon users, both of Apifix and RESPONSE, resulting in strong summer case volume starting in mid-May that should extend throughout H2 and 2026. In addition, sales and placements of 7D units in key US accounts were healthy in the second quarter. The large pipeline of 7D targets will further build upon this progress, and we expect this will drive further share gains and growth in the coming quarters.

Our strong growth of 35% in the CNN scoliosis segment this quarter was again driven by increased market share in both the U.S. and international markets, with rising demand for new markets in the EU and the Middle East.

Us scoly growth continues to be led by new users adopting Orthopedic technology. Including Apex response as well as our commitment to new solutions for Eos patients in addition to 7D

This quarter, we saw even stronger surgeon conversion and are feeling the positive impact of past conversions in the busy summer season.

To this point, there has been a large uptick in new users. Both of AIX and response resulting in strong summer case volume starting in mid-May that should extend throughout H2 and 2026.

Dave Bailey: International scoliosis, while still small, is becoming increasingly more relevant as we onboard new high-volume users and rapidly grow revenue. As we look to the second half of 2025, we expect small stature EUMDR approval and will begin providing more updates as they come. Looking at our EOS product portfolio, following its FDA clearance, we expect the first cases with VertiGlide to be completed in August. The addition of VertiGlide should provide further tailwinds to an already growing business. The rest of our EOS products are progressing according to plan, and we are excited to continue to see development across our scoliosis portfolio. Moving on to international, international sales were solid in the quarter as a result of extremely strong demand in surgical volume in Europe and scoliosis set sales to stocking distributors.

In addition to sales and placements of 70 units in key U.S. accounts for healthy outcomes, in the second quarter, the large pipeline of 70 targets will further build upon this progress. We expect this will drive further share gains and growth in the coming quarters.

International scoliosis, while still small is becoming increasingly more relevant as we onboard new high-volume users and rapidly grow Revenue.

As we look at the second half of 2025, we expect small stature EU and Dr. Approval, and we will begin providing more updates as they come.

Looking at our EOS product portfolio following its FDA clearance. We expect the first cases with Vertiglide to be completed in August.

The addition of Vertiglide should provide further Tailwind to an already growing business. The rest of our EOS products are in according to plan and we are excited to continue to see Development Across our scoliosis portfolio.

Dave Bailey: While we are pleased with the many positive trends within our international business, T&D growth was offset by lower set sales in LATAM. Elsewhere, we are very pleased with international expansion progress, especially as we have our first international OPSB clinic expansion and see robust demand for new scoliosis markets abroad. Within our international business, EUMDR approval remains a large catalyst for our future growth, and during the second quarter, we achieved our first EUMDR approval through OP Canada, which included the PEGIT product portfolio. This is a huge milestone for us as we anticipate several additional approvals in the coming quarters as we continue the process of EUMDR registration and expect to launch new products in New York next year.

Moving on to International International sales were solid in the quarter as a result of extremely strong demand, and surgical volume in Europe and scoliosis set sails to stocking Distributors. While we are pleased with the many positive Trends within our international business. Tnd growth was offset by lower set sails and latan

Elsewhere. We are very pleased with International expansion progress, especially as we have our first International opsd, Clinic expansion and see robust demand for new scoliosis markets abroad.

Within our international business, undr approval, remains a large Catalyst, for our future growth. And during the second quarter, we achieved our first EU MDR approval through op Canada, which included the Pega product portfolio.

Dave Bailey: As a reminder, EUMDR approval for implants is an expensive process, but we believe it is the right thing to do for kids who need these devices outside of the US, and it strengthens our strategic position. That brings us to surgeon training and education. In the second quarter, we hosted 182 unique training experiences for over 3,420 healthcare professionals. This includes interactions from the Pediatric Orthopedic Society of North America, or POSNA, a key industry event in May. ORTHOPEDIATRICS was once again proud to be the leading sponsor and highlighted our growing portfolio of pediatric solutions with multiple events and new products on display. While at POSNA, ORTHOPEDIATRICS, the Ruth Jackson Orthopedic Society, and POSNA hosted a women's networking luncheon where we had over 150 participants. We are grateful to partner with others to support events such as this and will continue to do so in the future.

This is a huge milestone for us as we anticipate several additional approvals in the coming quarters, as we continue the process of eumr registration and expect to launch new products into your next year.

As a reminder EU MDR approval for implants is an expensive process but we believe it is the right thing to do for kids who need these devices outside of the US and it strengthens our strategic position.

That brings us to surgeon training and education.

In the second quarter, we hosted 182 unique training experiences for over 3,420 Healthcare professionals.

this includes interactions from the pediatric orthopedic Society of North America or posna a key industry Event in May

Orthopediatrics was once again proud to be the leading sponsor and highlighted. Our growing portfolio of pediatric Solutions with multiple events and new products on display.

While at Posner orthopediatrics, Bruce Jackson Orthopedic society and pasna hosted, a women's networking launching where we had over 150 participants.

Dave Bailey: And with that, I'd like to turn the call over to Fred to provide more detail on our financial results. Fred?

We are grateful to partner with others to support events such as this and will continue to do so in the future.

And with that, I'd like to turn the call over to Fred to provide more detail on our financial results. Fred

Fred Hite: Thanks, Dave. Taking a closer look at the P&L, our second quarter of 2025 worldwide revenue of $61.1 million increased 16% compared to the second quarter of 2024. Growth in the quarter was driven primarily by strong performance across trauma and deformity, scoliosis, and OPSB, slightly offset by lower growth in international revenues. US revenue was $48.1 million, a 17% increase from the second quarter of 2024, representing 79% of our total revenue. Growth in the quarter was primarily driven by trauma and deformity, scoliosis, and OPSB. We generated total international revenue of $12.9 million, representing growth of 12% compared to the second quarter of 2024 and representing 21% of our total revenue. Growth in the quarter was primarily led by increased procedure volumes and scoliosis set sales, partially offset by lower T&D set sales to Latin America.

thanks Dave.

Taking a closer. Look at the pnl, our second quarter of 2025 worldwide revenue of 61.1 million increased 16% compared to the second quarter of 2024,

growth in the quarter was driven, primarily by strong performance across trauma and deformity scoliosis and opsb

slightly offset by lower growth in international revenues.

U.S. revenue was $48.1 million, a 17% increase from the second quarter of 2024, representing 79% of our total revenue.

Scoliosis and opsb.

We generated total International Revenue of 12.9 million representing growth of 12%. Compared to the second quarter of 2024 and representing 21% of our total revenue.

Growth in the quarter was primarily led by increased procedure volumes and scoliosis set sales.

Partially offset by lower tnd, set sails to Latin America.

Fred Hite: In the second quarter of 2025, trauma and deformity global revenue of $41.7 million increased 10% compared to the prior year period. Growth was primarily driven by PNP femur, PNP tibia, DF2, and OPSB, partially offset by lower T&D set sales to Latin America. In the second quarter of 2025, scoliosis global revenue of $18.5 million increased 35% compared to the prior year period. Growth was primarily driven by increased sales of RESPONSE, Apifix non-fusion system, and revenue generated from 7D technology. Finally, sports medicine other revenue in the second quarter of 2025 was $0.9 million compared to $1.3 million in the prior year period. Turning to set deployment, $4.6 million of sets were consigned in the second quarter of 2025 compared to $7.8 million in the second quarter of 2024.

In the second quarter of 2025, trauma into formity Global revenue of 41.7 million increased, 10% compared to the prior year period.

Growth was primarily driven by PMP femur, PNP tibia, DF2, and OPSB, partially offset by lower TND sales to Latin America.

In the second quarter of 2025, scoliosis, Global revenue of 18.5 million increased 35% compared to the prior year period.

Growth was primarily driven by increased sales of response.

Appifix non-fusion system.

And revenue generated from 70 technology.

Finally, Sports Medicine other revenue in the second quarter of 2025 was $0.9 million, compared to $1.3 million in the prior year period.

Turning to set deployment.

Fred Hite: Touching briefly on a few key metrics, for the second quarter of 2025, gross profit margin was 72% compared to 77% for the second quarter of 2024. The change in gross margin was primarily driven by higher 7D growth as well as higher international set sales, which both generate lower gross margins. Total operating expenses increased $8.2 million, or 18% compared to the prior year period, to $54.7 million in the second quarter of 2025. The increase was mainly driven by $3.0 million of restructuring charges, increased non-cash stock compensation, as well as the incremental personnel required to support the ongoing growth of the company, including OPSB clinics. Sales and marketing expenses increased $2.5 million, or 15% compared to the prior year period, to $19.1 million in the second quarter of 2025.

4.6 million of sets were consigned in the second quarter of 2025 compared to 7.8 million in the second quarter of 2024.

Touching briefly on a few key metrics.

For the second quarter of 2025, gross profit margin was 72% compared to 77% for the second quarter of 2024.

The changing gross margin was, primarily driven by higher 7D growth as well as higher International set sales.

Which both generates lower gross margin.

Total operating expenses increased, 8.2 million or 18%, compared to the prior year period to 54.7 million in the second quarter of 2025.

The increase was mainly driven by 3.0 million dollars of restructuring charges.

Increased non-cash, stock compensation.

As well as the incremental personnel required to support the ongoing growth of the company, including opsb clinics.

Sales and marketing expenses. Increased 2.5 million or 15% compared to the prior year period.

Fred Hite: The increase was mainly driven by increased sales commission expenses and an overall increase in volume of units sold. General and administrative expenses increased $3.1 million, or 11% year over year, to $30.4 million in the second quarter of 2025. The second quarter increase was driven primarily by increased non-cash stock compensation, as well as the addition of personnel and resources to support the continued expansion of the business, including OPSB clinics. Research and development expenses decreased by $0.4 million in the second quarter of 2025 due to timing of product development third-party invoices during the second quarter of 2025.

to $19.1 million in the second quarter of 2025.

The increase was mainly driven by increased sales commission expenses.

and an overall increase in volume of units, sold

General and administrative expenses increased 3.1 million or 11% year-over-year to 30.4 million in the second quarter of 2025.

The second quarter increase was driven primarily by increased non-cash stock compensation, as well as the addition of personnel and resources to support the continued expansion of the business including opsb clinics.

Fred Hite: Restructuring charges recorded during the second quarter of 2025 were $3.0 million and related to the company's global restructuring plan started in the fourth quarter of 2024, aimed at improving operational efficiency, reducing operating costs, as well as reducing staffing, which will benefit the second half of 2025 as well as 2026. Total other income was $3.6 million for the second quarter of 2025 compared to $0.4 million of other expense for the same period last year. Non-GAAP net loss per share for the period was $0.11 per basic and diluted share compared to $0.23 per basic and diluted share for the same period last year. Adjusted EBITDA was $4.1 million in the second quarter of 2025, roughly 50% improvement when compared to $2.6 million for the second quarter of 2024. We ended the second quarter with $72.2 million in cash, short-term investments, and restricted cash.

Research and development expenses decreased by 0.4 million. In the second quarter of 2025 due to timing of product development, third-party invoices during the second quarter of 2025

Restructuring charges recorded during the second quarter of 2025 were $3.0 million and related to the company's global restructuring plan started in the fourth quarter of 2024, aimed at improving operational efficiency, reducing operating costs, as well as reducing staffing.

Benefits the second half of 2025, as well as 2026.

Total other income was 3.6 million for the second quarter of 2025 compared to 0.4 million of other expense for the same periods last year.

Non-gaap net loss per share for the period was 0.11 cents per basic and diluted. Share compared to 0.23 cents per basic and diluted share for the same period last year.

Adjusted ebit dot was 4.1 million in the second quarter of 2025 roughly 50% Improvement when compared to 2.6 million for the second quarter of 2024.

Fred Hite: We did draw down $25 million on the Braidwell line of credit at the end of June 2025. Turning to guidance, we are increasing our expectation for full-year 2025 revenue to the range of $237 to $242 million, representing year-over-year growth of 16% to 18%. We are reiterating the guidance that our full-year gross margin will be within the range of 72% to 73%. We also continue to expect to generate between $15 million to $17 million of adjusted EBITDA in 2025. Additionally, we continue to expect approximately $15 million of new set deployed in 2025. This represents our continued focus on driving the business to free cash flow break-even by 2026, and we anticipate delivering our first quarter of free cash flow positivity in the fourth quarter of 2025. I will now turn the call back over to Dave for his closing remarks.

We ended the second quarter with $72.2 million in cash, short-term investments, and restricted cash.

25.

Turning to guidance, we are increasing our expectation for full year, 2025 Revenue to the range of 237 to 242 million.

Representing year-over-year growth of 16 to 18%.

We are reiterating the guidance that our full year, gross margin will be within the range of 72 to 73%.

We also continue to expect to generate between 15 to 17 million of adjusted ebit dot in 2025.

Additionally, we continue to expect approximately 15 million dollars of new set deployed in 2025 this represents our continued. Focus on driving the business to free cash flow break even by 2026 and we anticipate delivering our first quarter of free cash flow positivity in the fourth quarter of 2025.

I will now turn the call.

Back over to Dave for his closing remarks.

Dave Bailey: Thanks, Fred. We're very pleased with the progress made to the first half of 2025. Our focus this year is on strong execution, scaling OPSB, leveraging prior set deployments, and driving growth through innovative product launches. We're fully committed to helping more children than ever, significantly growing revenue, improving adjusted EBITDA, and reducing cash burn in 2025 and beyond. And the second quarter was another positive step towards those goals and has positioned us well for a strong second half of the year. Before closing, I want to thank all of our associates, our partners in pediatric healthcare, and you, our investors, for continuing to share our mission to help 1 million children each year. Operator, let's open the call for Q&A.

Thanks Fred.

We're very pleased with the progress made to the first half of 2025 our Focus. This year is on strong execution scaling, opsd leveraging prior set. Deployments and driving growth through Innovative product launches.

We're fully committed to helping more children than ever, significantly growing revenue, improving adjusted EBITDA, and reducing cash burn in 2025 and beyond.

And the second quarter was another positive, step towards zo's goals and as us positioned us well for a strong second half of the year.

Before closing, I want to thank all of our associates, our partners in pediatric healthcare, and you, our investors, for continuing to share our mission to help 1 million children each year.

Operator, let's open the call for Q&A.

Hannah Jeffrey: Thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ryan Zimmerman of BTIG. Your line is now open.

Thank you.

It's time. We will conduct the question and answer.

A reminder to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced.

To withdraw your question. Please press star 1 1 1 again.

Please stand by while we compile the Q&A roster.

Dave Bailey: Oh, good afternoon. Thanks for taking our questions. Can you hear me okay?

Our first question comes from the line of Ryan. Zimmerman of btig, your line is now open.

Dave Bailey: Yeah, I'm doing good, Ryan.

Oh good, the good afternoon. Thanks for taking our questions. Can you hear me okay?

Dave Bailey: Great. You know, appreciate all the updates and the color. Maybe talk to us a little bit about the clinic strategy for a minute, Dave. You know, what do you see now, the existing clinics? You know, how are those doing? How are those tracking from a production standpoint? And you know, with all these new clinics announced today, kind of when you expect those newer clinics to contribute to growth?

yeah, enjoy

great. Um, you know, appreciate all the updates and and the color maybe talk to us a little bit about the clinic strategy for a minute. Dave, um, you know, what do you see now? The existing clinics

You know, how are those doing? How are those tracking from a production standpoint? And you know, with all these new clinics announced today kind of when you expect those newer clinics to contribute to growth

Dave Bailey: Yeah, great question, Ryan. So I think the existing clinics that we acquired, so we had 26 clinics when we acquired Boston. I think generally speaking, we see growth in those clinics. So let's say same-store sales kinds of growth. There's more patient flow, and largely due to the investments that we've made on the sales side. Our newer greenfield clinics, as you know, take a little bit more time to kind of peak. I would say none of the greenfields we've done so far are, you know, they're not at max volume, but certainly they are contributing to revenue because it's all growth that we're getting from those clinics, but they're not, you know, there's none of them at this stage I think are maxed out.

Dave Bailey: Potentially what we have going at Nationwide Children's, which is, as you know, embedded in, you know, a super high-volume children's hospital, that one I would say is growing extremely rapidly. And, you know, we have a, I would say, a multitude of the share there. But the greenfields grow different dependent upon whether we have them in the hospital. The ones we have in hospital obviously grow much more rapidly and I think start to turn a profit much more quickly. The ones where we can't get in the hospital, but they're, you know, they're around the hospital or in a suburb, obviously those take a little bit more time to drive patients to. But overall, I think we're very pleased with the way the growth is coming through the clinics we acquired, the clinics we've greenfielded, and the aqua hire clinics.

Yeah, great question, Ryan. Um, so I think the existing clinics that we acquired, so we had 26 clinics when we acquired Boston, I think generally speaking we we see growth in those clinics. So let's say, same store, sales, kinds of growth. There's more patient flow, um, and largely due to the Investments that we've made on the sales side. Uh, our newer Greenfield clinics. As you know, take a little bit more time to kind of peek. I would say, none of the Green Fields we've done so far, are you know, they're not at max volume but certainly they are contributing to revenue because it's um it's all growth that we're getting from those clinics but they're not you know, there's none of them at this stage, I think are maxed out. Um, potentially what we have going at Nationwide Children's which is as you know, embedded in, you know, a super high volume Children's Hospital that when I would say is growing extremely rapidly and, uh, you know, we have a a, I would say a multitude of the share their, um, but the green fields grow, uh, different depending on

Dave Bailey: And I think the aqua hire clinics, obviously there was some revenue attached to some of those clinics, but using the sales force to drive more volume through those clinics and more of our products through those clinics, that's working as well. So I think to answer your last question, you know, you hopefully hear the bullish tone in my voice and obviously talking about what we think we're going to see in H2. You know, a lot of that is driven by the fact that, you know, we do have more clinics. We're ahead in terms of our territory expansion from six to four. And, you know, we hinted in the script, obviously, that there's more opportunities for us. And so I think that's, you know, part of the cause for our bullishness as we see, you know, as we head into the second half here.

Dave Bailey: Yeah, okay. And then, Fred, you know, you haven't historically guided by segment, but I'm going to ask about it anyway, which is, you know, your scoli business has done, you know, extremely well these past two quarters. You're facing a little bit tougher comps in the back half of the year. You know, on the T&D side, it's a little bit lighter. I don't know if you can comment so much, but any color you have in terms of the composition of growth as we think about it in the back half of the year, because, you know, scoli is doing exceedingly well. T&D obviously a little lighter from the OUS set sales this quarter. But just, you know, as you think about the balance of the year, particularly amongst those two segments, you know, what are your expectations when you think about growth?

In the script, obviously, that there's more opportunities for us. And so I think that's, you know, part of the cause for our bullishness. Uh as we see you know, as we head into the second half here.

Yeah. Okay. And then Fred um you know you you haven't historically Guided by segment but I'm going to ask about it anyway which is you know you're slowly business has done, you know? Extremely well, these past few quarters you you're facing a little bit tougher comps in the back half of the year, you know, on the tnd side. It's a little bit lighter.

I don't know if you can comment uh so much but any color you have in terms of the composition of growth as we think about it, in the back half of the year because you know, scrolling is doing exceedingly, well, tnd. I was a little lighter from the US set sales this quarter but just you know as you think about the balance of the Year, particularly amongst those 2 segments, you know, what are your expectations when you think about growth?

Fred Hite: Yeah, again, we don't provide guidance by segment, but I think the scoli business has done very, very well here in the first half of the year. Multiple new surgeons coming on, RESPONSE, very favorable, Apifix, as well as 7D, which gives us nice growth in the future, both in the second half and into 2026. And so, yeah, I would expect scoli growth is probably going to be on the stronger side overall. Maybe not at the 35% mark, but heavier than the company growth each of the next two quarters would be my comment on segment growth.

Yeah. Again, we don't provide guidance by segment, but I think the scoli business has done very, very well here in the first half of the year, uh, multiple new surgeons coming on.

Um, response, very favorable, happy fix as well as 7D which uh, gives us nice growth in the future, both in the second half and into 2026. And so yeah, I would expect scoli growth is probably going to be on the stronger side overall. Um, maybe not at the 35% Mark but uh, head

Heavier than the company growth. Each of the next two quarters would be my comment on segment growth.

Dave Bailey: Very helpful. Thank you. I'll hop back. Thank you.

Very helpful. Thank you. I'll hop back. Thank you.

Hannah Jeffrey: One moment for our next question. Our next question comes from the line of Matthew O'Brien of Piper Sandler. Your line is now open.

1 moment for our next question.

Matthew O'brien: Afternoon. Thanks for taking the questions. Maybe just sticking with T&D for a second here. I don't know if Fred or Dave, if you can talk a little bit about the, I guess, the limb deformity case, elective case slowdown, what caused that? And maybe if you can quantify that plus the set sales that you missed internationally, because that business just was, you know, a bit softer than we were modeling, although complex find was very good.

Our next question comes from the line of Matthew O'Brien of Piper Sandler. Your line is now, open.

Afternoon. Thanks for taking the questions. Maybe just sticking with tnd for a second here. I don't know if Fred or or Dave, if you can talk a little bit about the, I guess the limb deformity case, elective case, slow down, what caused that and maybe if you can quantify that plus. Um plus the set sales that you missed internationally because that business just was, you know, a bit softer than we were we were modeling. Although complex fine was was very good.

Dave Bailey: Yeah, I, you know, we commented in the script and I wish I had a better answer for you, Matt, but you know, our business, especially a business like that where we have extremely high share on the deformity side of our T&D business, I mean, there's, we do a large percentage of the overall sales in the United States in children's hospitals with those products. I mean, it kind of ebbs and flows with some of the volume that we see from some of our major accounts. And for whatever reason, in the first, I would say, six weeks or so of Q2, the volume was just a little lighter. And then we saw that come back pretty aggressively in the back six weeks, certainly June, very strong overall. And I'm not entirely sure why we saw that.

Yeah, I um, you know, we commented in the script, and I wish I had a better answer for you, Matt, but, you know, our business especially a business like that. Where we have extremely high Cher on the deformity side of our tnd business. I mean, there's we, we, we do a, a large percentage of the overall sales of of, uh, in the United States and children's hospitals with those products. I mean, it kind of es and flows with some of the volume that we see, uh, from some of our major accounts and for whatever reason, in the first, I would say, 6 weeks or so of of Q2, the volume was just a little lighter. And then we saw that come back pretty aggressively in the the back.

Dave Bailey: And certainly, there's nothing that is long-term and problematic about it because it rided itself very rapidly. But it did contribute to a slightly lower growth rate, I think, on the T&D in the US than we had expected. And then obviously, you have, you know, some of the set sales, which we control a little bit more in terms of the set sales that we're not taking in Brazil. So I don't think there's anything I'm too concerned about there. I wish we knew exactly why that volume ebbed and flowed a little bit like that, but it did contribute a little bit. But on the other side of that, you know, the trauma side of the T&D business was extremely strong and seemed like the trauma volumes in the quarter were as strong as they have ever been, particularly US-based.

Dave Bailey: And great to see products like PNP tibia, DF2, those things really taking a lot of share. And so it was a bit of a tale of two cities in terms of those two businesses. But you know, again, nothing long-term that we can point to here. It's just a little slower in the first part of the second quarter on that business.

6 to 6 weeks certainly in June were very strong overall and, um, not entirely sure why we saw that. And certainly, there's nothing that is, uh, long-term and problematic about it because it, right, it itself very rapidly, but it did, uh, it did contribute to a slightly lower, uh, growth rate, I think on the TND in the U.S. than we had expected. And then obviously, you have, you know, some of the set sales which we control a little bit more in terms of the set sales that we, we're not taking in Brazil, so I don't think there's anything I'm too concerned about. I wish we knew exactly why that, you know, volume had been flowing a little bit like that, but it, uh, it did contribute a little bit. But on the con, on the other side of that, the, uh, you know, the trauma side of the TND business was extremely strong and, uh, it seemed like the trauma volumes in the quarter were as strong as they have ever been, uh, particularly U.S.-based. And great to see products like PMP, Tibia DF2, those things really taking a lot of share.

And so was a bit of a tale of 2 cities in terms of uh those 2 businesses. But uh you know, again, nothing long term that we can point to here is just, uh, it's just a little slower in the first part of the second quarter on that business.

Matthew O'brien: Got it. And then to follow up on Ryan's question on the OPSB franchise, and this is a two-partner, so forgive me, but are you really trying to say the reason you decided to go and expand even faster than expected is because the existing centers plus the ones you've added are ramping faster than expected? And then, Fred, the EBITDA number for the year is steady even though you're adding more centers. And I know there's a lot of upfront costs with those centers, they're not crazy. But so would that also imply that the profitability of those centers might be coming along a little faster than we had anticipated? Thank you.

Got it. And then, to follow up on, Ryan's question on the opsb, um, franchise. And this is a 2-part so, forgive me. But are you really trying to say, the reason you decided to go and expand even faster than expected is because the existing centers plus the ones you've added are ramping faster than expected and then Fred the ebit number for the year is steady even though you're adding more centers and I know there's a lot of upfront costs with those centers and that crazy. But so with that also imply, that the the profitability of those centers might be coming along a little faster than we had anticipated. Thank you.

Dave Bailey: Yeah, listen, I don't think that we specifically set out to, you know, drastically accelerate the, you know, territory expansion on our own. I mean, the demand for this is very high. And it's still a very small business, generally speaking. And so, I mean, we're not going to place a governor on the expansion opportunities we see within OPSB. You know, we view this as, you know, there are 300 children's hospitals that we serve in the United States. We have accounts, we have sales for our implant products in every one of those. And over the course of certainly the long run, we want to be able to serve all 300 of those children's hospitals with clinics in our OPSB product portfolio. And so we are seeing a high demand for opportunities for clinic expansion in OPSB.

Yeah. Listen, I don't think that we

To, you know.

Dave Bailey: And I guess we're just not going to governor the growth opportunities there. Yes, some of that comes with some upfront cost, some upfront expense. But you know, I think the prudent thing here is that we got an opportunity to dominate that segment of the market. Our customers are very adamant about us expanding. And we're going to continue to expand in these big jurisdictions as fast as we can.

Drastically accelerate the, you know, territory expansion on our own. I mean the demand for this is very high and it's still a very small business generally speaking. And so I, I mean, we're not going to place a governor on the expansion opportunities we see within opsb. You know, we view this as you know, there are 300 Children's Hospitals uh, that we serve in the United States. Uh we have accounts, we have sales for our implant products and every 1 of those and over the course of certainly the long run. We want to be able to serve all 300 of those Children's Hospitals with uh, with clinics in our opsb product portfolio. And so it's, um, it's we are we are seeing a high demand for opportunities, for Clinic expansion and opsb. And I guess we're we're just not going to Governor the growth opportunities there. Yes, some of that comes with some upfront cost some from expense. Um, but um, you know, I think the prudent thing here is that we got an opportunity to dominate that segment of the

Fred Hite: Yeah, and when you look at it, there is a diversity of these centers. So inside of Dayton's hospital, inside Nationwide, as compared to at a satellite location, and then Aqua Hire versus Startup, what I would say is that they are all performing within our expectations and what we kind of had modeled. And so no big surprises on any of those as compared to what we expected. Very pleased with the growth, the ramp of those centers, and the profitability of those. And to Dave's point, you know, we're not going to limit the growth of those. We're going to continue to open them and take advantage of the demand that's there and just keep this thing going, not just for the next couple of quarters, but really for the next several years, given the long list of demand that's out there for us.

Market, our customers are are very adamant about us expanding and uh we're going to continue to expand in these big jurisdictions as fast as we can.

Yeah, and when you look at it, there is um, a diversity of these centers. So inside of Dayton's Hospital, inside Nationwide, uh, as compared to at a satellite location, uh, and then Aqua higher versus startup. Um, what I would say is that they are all performing within our expectations and what we kind of had modeled

And so, no, no big surprises. Uh, on any of those as compared to what we expected, very pleased with the growth, the ramp of those centers. And the profitability of those and today's point, you know we're not going to limit the growth of those. We're going to continue to to open them and take advantage of the demand that's there. And just keep keep this thing going. Not just for the next couple of quarters for really, for the next several years, uh, given the long list of demand that's out there for us.

Dave Bailey: Understood. Thank you.

Understood, thank you.

Matthew O'brien: Thanks, Matt.

Hannah Jeffrey: One moment for our next question. Our next question comes from the line of Mike Mattson of Needham & Company. Your line is now open.

Thanks Matt.

1 moment for our next question.

Matthew O'brien: Hey guys, this is Joseph on for Mike. I guess maybe to start it off, just looking at, you know, product expansion internationally, just trying to understand a little bit how you guys are going about this. Is it, you know, more bit by bit? Should we expect kind of like product launches in different tranches over the years? And then kind of just on the same point, you know, international growth has been accelerating for the last couple of quarters. You know, I heard what you called out in LATAM, but I guess I'm kind of just wondering what you guys are thinking when OUS or international will start to outpace US growth, you know, as more product launches happen. And do you think once that does happen, that's going to be a kind of consistent thing for a while?

Our next question comes from the line of Mike Matson of Nina and Company. Your line is now open.

Hey guys, this is Joseph uh on for Mike. Um I guess maybe to start it off. Just looking at, you know, product expansion internationally and just trying to understand a little bit um how you guys are going about this is it, you know, more bit by bit. Um should we expect kind of like product launches in in different tranches over the years?

Um and then kind of just on the same point, you know, International growth has been accelerating for the last couple of quarters. Um, you know her what you call that in Latin but I guess some kind of just wondering what you guys are thinking when

Owe us or International will start to outpace us us growth um you know as more product launches happen and do you think once that does happen that's going to be a kind of consistent thing for a while.

Dave Bailey: Yeah, it's a great question. You know, the international business, you know, like you called out and we called out in the script, I mean, you see that business particularly in Europe and the Middle East, Australia, some of these places in particular where we have agencies, you know, really growing rapidly. And I would say, yeah, generally speaking, you see that business outpacing the US growth, minus some of the disruption we've had in Brazil. And I think those marketplaces we have much less market share than we have in the United States. So I think generally speaking, you could expect those markets to continue to grow more rapidly than what we see in the US.

Yeah, it's a great question, you know, the international business, you know, like you've called out and we called out in the script. I mean, you see that business particularly in Europe and uh, the Middle East. Uh, Australia. Some of these places in particular where we have agencies, you know, really growing rapidly, and I would say, yeah, generally speaking, you see that business outpacing, uh, the US growth, um,

Dave Bailey: That said, it's, you know, when we see the scoli business growing the way it is in the United States, it's hard to project that we're going to grow, you know, more than 35% outside of the US. But to be fair, those are small businesses outside of the US. We have new opportunities on scoli, and just everything there is growing really nicely, again, with the exception of some of the stuff we're doing in Brazil. I think if you look at EUMDR, I think that's what you must be referring to. Yes, when products get approved on EUMDR, we think this is kind of going to be a quarter-by-quarter new product launch timeline. We did get our first EUMDR approval for a number of the PEGIT products through OP Canada.

Minus some of the, the disruption we've had in Brazil. Uh, and I think those marketplaces, we have much less market share than we have in the United States. So, I think generally speaking, you could expect those markets to continue to grow more rapidly uh, than what we see in the US that said it's you know, when we see the scoliosis growing the way it is in the United States, it's it's hard to project that we're going to grow uh, you know.

Dave Bailey: A number of those products did have CE, so, you know, there wasn't a big expansion opportunity for us there, but it was fantastic, frankly, to see that we got the first one done, and we expect several more in the future. So I think what you'll see from us, you know, back half of this year, certainly in 2026 and 2027, is, yeah, not launching all of these products simultaneously, but launching new products that are, you know, well used here in the United States into European jurisdictions almost on a quarter-by-quarter basis. And I do think that you could expect at least the European business, Australian business, some of those businesses that are very stable to continue to grow, particularly on the T&D side, continue to grow faster than the US business.

You know, back half of this year certainly in 2026 and 2027 is yeah, I'm not launching all of these products simultaneously. Uh, but launching new products that are, you know, well used here in the United States, uh, into European jurisdictions, almost on a quarter by quarter basis. And I do think that you could expect that at least the European business Australian business. Some of those businesses that are very stable, uh, to continue to grow, uh, particularly on the tnd side continue to grow faster than, uh, than the US business.

Matthew O'brien: Okay, great. That's super helpful. Thanks for that color. And then I guess just a real quick one for clarification. So VertiGlide, those first cases are, I think you just said it's this month. Is Ellie the next product launch there in EOS, or you know, is there anything smaller that you guys just haven't talked about?

Okay, great, that's that's super helpful. Thanks for that um, color. And then I guess it's just a real quick 1, uh, for clarification. Um, so very good Glide. Um, those first cases are, I think you just said it's this month, um, is Ellie the next project, uh, product launch their in EOS or, you know, is there anything smaller that you guys just haven't talked about?

Dave Bailey: No, I think Ellie is the next. So, you know, we believe there's three products really needed to effectively take a major share of the EOS market, and that's the RESPONSE ribbon pelvic, which we launched last year. The VertiGlide device, which, yeah, as I said, we'll do our first cases here in the next few weeks, which is, you know, awesome, a culmination of several years of work and work with FDA and surgeons to get that much-needed device out. So super excited about that. And then Ellie is the next big one, I would say. And product development, I think on the R&D side, is on track at this point. We're hoping to get that product before the HNC, hopefully early next year.

No, I think Ellie is the next. So, you know, we believe there's a 3 products really needed to, to effectively take a major share of the EOS, uh, market. And that's the response ribbon pelvic, which we launched last year, the vertical by device. Which, yeah, as I said, we'll do our first cases here in the next few weeks, which is uh, you know, awesome at culmination of several years of work and work with FDA and and surgeons uh to get that much-needed device out. So super excited about that. And then Ellie is the next uh, big 1. I would say

and um,

Dave Bailey: You know, if we do cases next year, I think that would be great, but it's, you know, it's not going to be a full-blown launch, I would say, next year. But that will really complete the development for us within the EOS portfolio.

Product development, I think on the R&D side is, is on track at this point. We're hoping to get that product before the agency, hopefully early next year. Uh, you know, if we do cases next year, I think that would be great but it's, you know, it's not going to be a full-blown launch. I would say next year. But, uh, that will really complete the development for us within within the EOS portfolio.

Matthew O'brien: Okay, great. Well, congrats on the record, Porter.

Okay, great well um, congrats on the record quarter.

Dave Bailey: Thanks, Joseph. Really appreciate it.

Thanks, go. Really appreciate it.

Hannah Jeffrey: One moment for our next question. Our next question comes from the line of Ben Hayner of Lake Street Capital Markets. Your line is now open.

1 moment for our next question.

Matthew O'brien: Good afternoon, gentlemen. Thanks for taking the questions. First, for me, on OPSB, are there any changes to your guys' preferences on acquisition versus De Novo? You know, are there certain sort of, you know, geographic market dynamics that favor one or the other? Any, any, any color there on what you, what that might look like in the future, or is it just kind of how it's looked in the past?

Our next question, comes from the line of Ben Hur, Blake Street Capital markets. Your line is now open.

Dave Bailey: Yeah, Ben, that's a great question. You know, I think we would, we would generally prefer the greenfield opportunities, particularly when, you know, when we already have a clinic established. And so if we're in a jurisdiction or a state where we have clinics established already, we are, we have reimbursement. We're in a position where we could see patients. I think greenfield, assuming we can get a good location in or near the hospital, is preferred. The revenue ramp takes a little bit longer, but you know, we don't have to make a, you know, one of these small acquisitions. So I think that generally speaking, in those markets where we already have established, that's why Dayton makes a ton of sense. We already were established in Ohio.

Good afternoon, gentlemen, thanks for taking the questions, uh, first from me on opsb are, are there any changes to your guys's preferences on acquisition versus do, uh, denovo? Um, you know, are there certain sort of, you know, Geographic market dynamics, that favor 1 or the other, any any, any color there on the on? What you what, that might look like in the future? Or is it just kind of, uh, how it how it puts in the past?

Dave Bailey: While it took us some time, it's a fairly easy setup on the greenfield side, and you know, and there's very limited cost associated with that. On the aqua hire, generally, we're doing executing aqua hire in circumstances where we don't have any current footprint, any current established infrastructure. And so, you know, we can do an aqua hire in a big jurisdiction, for example, or a big state that gives us license to then start setting up some greenfields. And so in that instance, we think the aqua hire makes the most sense. Obviously, it comes with a little bit of revenue. We get an established footprint, and then there's a number of opportunities for us to grow off of that base. I think that's probably the right call just because it accelerates the greenfield expansion opportunities for us in an area like that.

Yeah, Ben that's a great question. You know, I think we would, we would generally prefer the Green Field opportunities. Um, particularly when you know, when we already have a clinic established and so if we're in a jurisdiction or a state, where we have clinics established already, we are, uh, we have reimbursement, we're in a position where we could see patients, I think Greenfield. Uh, assuming we can get a good location in or near the hospital is. Preferred the revenue ramp takes a little bit longer but you know, we don't have to make a, you know, 1 of these small Acquisitions. So I think that generally speaking in those markets where we already have established, that's why Dayton makes a ton of sense. We already were established in Ohio, uh, while it took us some time, it's a fairly easy setup on the Green Field side. And you know, and and there's very limited cost associated with that on the aqua hired. Generally, we're doing executing Aqua higher in circumstances where we don't have any current footprint. Any current um uh established

Infrastructure. And so, you know, we can do an aqua higher in uh, a, a big jurisdiction, for example, or a big state that gives us license to then start setting up some green fields. And so, in that instance, we think the aquire makes the most sense. Obviously comes with a little bit of Revenue, we get an established footprint, and then there's a, a number of opportunities for us to grow off of that base. I think that's probably the right call, just because it accelerates the Green Field expansion opportunities for us in an area.

Like that.

Matthew O'brien: Got it. That's definitely helpful. And then on the EOS side of things, you know, that's great that the VertiGlide first cases will be in the next handful of weeks. You know, obviously, there's some anticipation out there for Ellie. You know, I know you guys have had confidence that that ultimately leads to a pretty big halo effect. You know, do you still get that sense from talking to potential customers there?

Got it that that's definitely helpful. And then on, on the EOS side of things, you know, that's great. That the the Vertiglide uh First cases will be in the next handful of weeks. Um you know obviously there's some anticipation out there for Ellie you know. I know you guys have had had confidence that that ultimately leads to a pretty big halo effect.

You know, do you still get that sense from talking to to to potential customers there?

Dave Bailey: Without question. I think, you know, as much as, you know, we're very pleased, obviously, with the kind of growth that we're seeing on scoliosis. I would say, though, the halo effect, just from the fact that we are making those kinds of investments in the areas of really great unmet need in scoliosis treatment, that halo effect is, in fact, already benefiting the business in terms of getting opportunities with customers that, you know, maybe you have known us for a long time but haven't given us an opportunity to earn their fusion business. And I think that is happening. And so, and so that's a driver. In addition to 7D and Apifix and all the other things, I think just the fact that we're making the investment on the EOS side is, you know, it's a big deal to our customers.

without question, I think, you know, as much as

you know we're very pleased obviously with the kind of growth that we're seeing on scoliosis uh I would say though the the the halo effect

Dave Bailey: And it shows a commitment that I think is very unique. And, you know, partially, you know, you think about that commitment we're making and then the commitment on the specialty bracing side and partnering on there. I mean, all of that is creating a really nice halo around the scoli business, and we think that'll continue.

In the areas of really great unmet need in scoliosis treatment that that halo effect is in fact already benefiting the business in terms of getting opportunities with customers that, um, you know, maybe you have known us for a long time, but having given us, uh, an opportunity to earn their Fusion business and I think that is happening. And so, and so that's a driver in addition to 70 in Apex. And all the other things, I think just the fact that we're making the investment on the EOS side is, um, you know, it's a big deal to uh, to our customers and it shows a commitment uh that I think is very unique and, you know,

Partially, you know you think about that commitment when we're making and then the commitment on the specialty bracing side and partnering on there. I mean, all of that is creating a really nice halo around the Scully business and we think that will continue

Matthew O'brien: Okay, got it. And so essentially, you get some benefit from Ellie, and that makes it really no need to kind of rush cases out there as, you know, after you get approval.

Okay, got it. And it is so essentially uh you you get some benefit from Ellie. Uh and then that makes uh it it really no re need to to kind of rush rush cases out there as, you know, as Effie approval.

Dave Bailey: Yeah, I mean, we have some training to do on VertiGlide. So VertiGlide, what we just got approved, and we're going to start, obviously, with the surgeons that have invested so much time in this technique, and you know, we'd be doing that first. We're definitely not in a huge rush to expand that everywhere. We want to get some first cases under our belt. But once we do, you know, I would expect that to go pretty rapidly. We have the inventory to support it. It'll be, you know, a bit of a training exercise to support that. And then, you know, we do think that of the three products in the EOS portfolio, that Ellie probably represents the biggest opportunity. And I think it's probably the most widely used type of technique for early-onset scoliosis. And so we are very excited about the opportunities that Ellie will provide.

Yeah, I mean we we have some training to do on vertigo, so vertigo, what we just got approved? And we'll, we're going to start obviously with the surgeons that have invested so much time in this technique and, you know, we'd be doing that first. We're we're definitely not in a huge rush to expand that everywhere. We want to get some First cases under our belt, but once we do, you know, I would expect that to go in pretty rapidly. We have the inventory to support it.

Dave Bailey: It's just, you know, we got another year or so before I think we can start enjoying that.

Uh it'll be, you know, a bit of a training exercise to support that and then you know, we do think that of the 3 products in the Eos portfolio that Ellie probably represents the biggest opportunity. Uh and I think it's probably the most widely used type of technique for early, onset, scoliosis, and so we are very excited about the opportunities that Ellie will provide. It's just, you know, we got another year. So before I think we can start enjoying that.

Matthew O'brien: Got it. Excellent. Well, thank you, gentlemen, for taking the questions.

Dave Bailey: Good questions. Thanks, Ben.

Got it. Excellent. Well, thank you gentlemen for taking the question.

Good questions. Thanks Ben.

Hannah Jeffrey: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. Our next question comes from the line of Richard Neuwieter of Truist Securities. Your line is now open.

As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced.

Ravi: Hi, good afternoon. This is actually Ravi on for Rich. So I want to kind of get into the trauma kind of portfolio a little bit. You've been releasing a number of new products and another press release this afternoon. Just want to kind of understand, get a sense for where you think there are, you know, holes in that bag right now that you still need to fill and maybe what the end market, what a freight might be from a wear and wear perspective in that space. And then my second question just up front. Just on deformity, trying to understand, you know, your commentary around stronger June and July trends. Do you think potentially there were some cases maybe that were delayed to the summer months or so? I explained some of the two-to-short fall. Just any more color you can provide there. Thank you very much.

Our next question comes from the line of Richard newer of truist Securities. Your line is now open,

Hi, good afternoon. This is actually ravean for Rich. Uh so I wanted to kind of get into the uh the trauma kind of portfolio a little bit. Now you can reducing a number of new products. Uh another press release this uh afternoon just want to kind of understand and get a sense for where you think there are. You know, holes in that bag right now that that you still need to fill in the what the End Market close rate might be uh from where I'm going with perspective and in that space and then um my second question just up front uh just on deformity trying to understand you know your commentary around stronger GE

Dave Bailey: Yeah, good question. So I don't think that cases were delayed. Again, I mean, some of these product lines we, you know, not all, but you know, we can kind of measure overall surgical volume with a few of our product lines that we have. I mean, we have near 100% share in certain product lines because they're the only such products that exist, you know, in the deformity correction space. And so, you know, again, we see sometimes this ebbs and flows. And so I don't know that anything was being pushed into into the summer. That's possible. But, you know, the net net was it was just a little light and then came back to kind of normal volumes. We didn't certainly make that up, obviously, in June. When you talk about the trauma and deformity portfolio, I think 3P, you know, you saw a press release here.

June and July Trends. Do you think potentially there were some cases maybe that were delayed to to to the summer months or so. I explained some of the 22 shortfall to having more color. You can provide better. Thank you very much.

Yeah, good question. So I I don't think that cases were delayed. Um, again, I mean, some of these product lines we, you know, not all but you know we we can kind of measure overall, surgical volume with a few of our product lines that we have

Dave Bailey: We did our first 3P case here last week, which was a huge milestone for the business. The 3P system does span deformity correction as well as trauma. So the 3P surgery that was done last week was, in fact, a trauma or a deformity application for it. And so I think that, again, for a business that has a lot of share, this will be a nice jolt to that business to be able to have the 3P hip system that's largely around deformity. The other areas where we may have holes, and I think 3P really helps address that, is that there's a lot of specialty plating, more anatomic plating opportunities for us that, you know, that we don't have products for.

I mean, there's we have near 100% share in certain product lines because they're the only such products that exist, you know, in the deformity correction space. And so you know again we see some of the times this EPs and flows uh and so I don't know that anything was being pushed into into the summer and that's possible. Uh, but you know, the net, net was, it was just a little light. Uh, and then in came back to kind of normal volumes. We didn't certainly make that up, obviously, in in June, um, when you talk about the trauma and deformity portfolio, I think 3p. You know, you, you saw a press release. Here, we did our first 3p case, uh, your last week, which was, uh, a huge milestone for the business. The 3-piece system does ex does span deformity correction, as well as trauma. So the 3p surgery that was done last week was in fact, a trauma or a deformity application for it. And so I think that again for a business that has a lot of share, this will be a nice uh a nice jolt to that business, to be able to have the

Dave Bailey: And so for us to be able to develop this, what we think will be the most comprehensive plating system with specialty plates for trauma and for limb deformity across almost every bone and every anatomic structure available on the pediatric side will certainly expand the indications for use for that system. And I would also say that, you know, our existing plating system that is out there now, it's a system that we've had for, you know, more than 10 years. And I think the technology has advanced in locking screw technology and variable angle screw technology, and maybe not advanced as much on the pediatric side, but certainly on the adult side. And I think that 3P brings technology to bear in the trauma and deformity section, a segment of the pediatric orthopedic market that's never been seen.

Dave Bailey: And so it will be a nice opportunity for us, certainly over the course of what will probably be three years here, where we'll be launching multiple systems every year in the 3P family. It's going to be a nice opportunity for us to continue to grow that business and continue to take share.

Plates for trauma and for Linde deformity across. Almost every bone and every anatomic structure. Uh, in in available, on the Pediatric side will be uh, certainly certainly expand the indications for use for that system. And I would also say that, you know, our existing plating system that is out there. Now, uh, it's a system that we've had for, you know, more than 10 years. And I think the technology has advanced in locking screw technology and variable angle screw technology and uh and maybe not Advanced as much on the Pediatric side. But certainly on the adult side and I think the 3p brings technology to bear in the trauma and deformity section segment of the pediatric orthopedic Market, that's never been seen. And so it, it will be a nice opportunity for us. Certainly over the course of what will probably be 3 years here where we'll be launching multiple systems every year in the 3p, uh, family. It's going to be a nice opportunity for us to continue.

To uh, to grow that business and continue to take care.

Hannah Jeffrey: I am showing no further questions at this time. I would now like to turn it back to Dave Bailey for closing remarks.

I am showing no further questions at this time. I would now like to turn it back to Dave Bailey for closing remarks.

Dave Bailey: Great. Thanks, Operator. Thank you all for your continued interest in orthopediatrics. And I think Fred and I will be at a number of conferences in the near future. So look forward to seeing several of you there. Have a super evening, and we'll talk to you soon.

Hannah Jeffrey: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Alright, thanks operator. Uh, thank you all for your continued interest in orthopediatrics and uh I think Fred and I will be at a number of conferences in the near future. So look forward to seeing uh several of you there uh have a super evening and we'll talk to you soon.

Thank you for your participation. In today's conference, this concludes the program. You may now disconnect